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Paul Hanna / Reuters
Spain's economic crisis includes protests like this one in Madrid on Friday, where people rallied against layoffs at Banesto bank.
Spain will seek financial help from its Eurozone partners but exactly how much won't be known until private audits are undertaken, the country's economy minister announced Saturday.
Earlier, European finance ministers discussed plans to offer Spain up to $125 billion (100 billion euros) in a bid to stabilize its banks -- and ease concerns over the even bigger European debt crisis. That amount was described as an upper limit, not an indication of what Spain would ask for.
After Spain's announcement, the Eurozone ministers issued a statement that they expected a formal request "shortly" and are "willing to respond favorably."
Spain earlier said it wanted to wait for two independent audits — due by June 21 — before deciding on whether to seek aid, and it was not clear if those audits were being stepped up.
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Spain had resisted asking for a bailout since previous ones for Greece, Ireland and Portugal came with demands for tax increases and spending cuts.
Economy Minister Luis de Guindos emphasized the aid would not come with "micro-economic conditions".
U.S. Treasury Secretary Tim Geithner issued a statement praising the "concrete steps on the path to financial union" for the Eurozone.
Investors and politicians have been increasingly concerned that Spain might not be able to find the money to prop its ailing banks by itself.
Spain warns time is short as G7 discusses eurozone crisis
A report from the International Monetary Fund estimated Spanish banks need a recapitalization injection of at least $50 billion following a stress test it performed on the country's financial sector. That report came out early Saturday, three days ahead of schedule, underscoring the urgency of the situation.
Officials said there had been a heated debate over the IMF's role in Spain's bank rescue, which Madrid wanted kept to a minimum. It will not provide any of the money.
In the end it was agreed that the IMF would help monitor reforms in Spain's banking sector, while EU institutions would ensure Spain stuck to its broader economic commitments.
Eurozone policymakers were eager to shore up Spain's position before June 17 elections that could push Greece closer to a Eurozone exit and unleash a wave of contagion.
Nonetheless, some analysts said financial markets might be calmed by the announcement when they reopen on Monday.
"The figure of up to 100 billion (euros) is more encouraging and pretty realistic; it's an attempt to cap the problem," said Edmund Shing, European head of equity strategy at Barclays.
"The issue, however, is there is still a lack of detail about where the money's coming from, which is crucial. The market will treat it with some caution until they see how it will be funded."
World Bank on Greece crisis: Spain and Italy could be next
The Eurogroup said the funds could come from either from a temporary rescue fund, the EFSF, or the permanent mechanism, the ESM, which is due to start next month. Finland said that if money came from the EFSF, it would want collateral.
EU sources said there was a preference to channel money to Spain through the ESM, rather than the EFSF. Under the ESM, an approval rate of 90 percent or less is needed to trigger aid, and the fund also has more flexibility in how it operates.
"That's why it's so important that the ESM ... be ratified quickly," German Finance Minister Wolfgang Schaeuble said.
Spain has already spent $20 billion bailing out small regional savings banks that lent recklessly to property developers.
Spain's biggest failed bank, Bankia, will cost $25 billion to rescue and its shareholders have been wiped out.
The race to resolve the banks' troubles comes after Fitch Ratings cut Spain's sovereign credit rating by three notches to BBB, highlighting the Spanish banking sector's exposure to bad property loans and to contagion from Greece's debt crisis.
It said the cost to the Spanish state of recapitalizing banks stricken by the bursting of a real estate bubble, recession and mass unemployment could be between $75-$125 billion. The higher figure would be in a stress scenario equivalent to Ireland's bank crash.
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Italy could yet get dragged in too. Its industry minister, Corrado Passera, said the economic situation in Italy had improved since the end of 2011, but remained critical. "Europe was more disappointing than we had expected, it was less capable of tackling a relatively minor problem such as Greece," Passera told a conference.
While Spain would join Greece, Ireland and Portugal in receiving a European financial rescue, officials said the aid would be focused only on its banking sector, without taking the Spanish state out of credit markets.
That would be crucial to avoid overstraining the Eurozone's rescue funds, which would struggle to cover Spanish government borrowing needs for the next three years plus possible additional assistance for Portugal and Ireland.
Conditions in the plan would be related to the banks and would probably not add to the austerity measures and structural economic reforms that Spain's government has already put in place, EU and German sources said.
A "bailout lite" would help salvage Spanish pride. Spain is the world's 12th largest economy and No. 4 in the Eurozone. EU and German officials have cited national pride as a barrier to requesting a full assistance program.
The Associated Press and Reuters contributed to this report.
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The problem isn't spending, it is production. If a country does not make enough to sell abroad, they will not earn enough money to offset the money they spend on import. So their money supply will shrink. When that happens, the government spends more than it is receiving in taxes in order to add new money to the economy. The money that has been added piles up as debt. Sometimes the money is printed, sometimes it is borrowed from foreign investors, and sometimes it is borrowed from banks. If you try and run your country this way forever, eventually the amount of debt you will have piled up will be unmanageable and you won't be able to keep doing it.
What we are now seeing is the end game of this stupid thinking. The countries that produce the least are falling first. This will ripple on until all the countries that have been living beyond their means and running a trade deficit will fall. Here in the US, our accumulative trade deficit since 1980 is about $10 trillion. Put that in perspective against the $125 billion bailout the Spaniards are seeking for their banks. How could we have sent $10 trillion out of the US since 1980 if we collectively only had $1.5 trillion in 1980? The answer lies in the federal debt - that's how the money was made.
greek has fail what make bailout spain work
the Bush meltdown... the gift that keeps on giving!
The Republican Party and their capitalist sympathizers must remember the truth about the debt crisis. The deficits were also caused by costly wars that many right-wing conservatives supported, not only because of entitlements that many people rightfully won. The banking debt crisis started under Republican administrations by taking out regulations that prevented many of the risks and abuses of the financial system.
I'm sorry to say but I dont think that we should me helping countries that still owe us billions, plus we have problems in our on country with people out of a job, and we have people losing their own homes.
God bless America.
Economic Collapse in USA - happened before... we called it the great depression
Pandemic in USA - Happened Before - 1918 and killed 675,000 americans and 27% of americans were sick
Solar Flare - 1859 in America - caught telegraph wires on wire and shocked operators
Some how Americans think stuff will never happen to them here.
maybe not this year or next, but soon the roosters will come home to roost on our fiscal coop
who cares about a bird infestation? At least we won't go hungry we can just eat the roosters.
this has nothing to do with spain it is BANKERS bailing out other BANKERS. the rich taking care of their own and somewhere down the line the common people will have to pick up the tab.
I bought a bird feeder. I hung
It on my back porch and filled
It with seed. What a beauty of
A bird feeder it was, as I
filled it lovingly with seed. Within a
Week we had hundreds of
birds
Taking advantage of the
Continuous flow of free and
Easily
accessible food.
But then the birds started
Building nests in the
boards
Of the patio, above the table,
And next to the
barbecue.
Then came the poop. It was
Everywhere: on the patio
tile,
The chairs, the table ..
Everywhere!
Then some of the
birds
Turned mean. They would
Dive bomb me and try to
Peck me even
though I had
Fed them out of my own
Pocket.
And others birds
were
Boisterous and loud. They
Sat on the feeder and
Squawked and
screamed at
All hours of the day and night
And demanded that I fill
it
When it got low on food.
After a while, I couldn't even
Sit on
my own back porch
Anymore. So I took down the
Bird feeder and in three
days
The birds were gone. I cleaned
Up their mess and took down
The
many nests they had built
All over the patio.
Soon, the back yard was
like
It used to be ..... Quiet, serene....
And no one demanding
their
Rights to a free meal..
Now let's see.
Our government gives
out
Free food, subsidized housing,
Free medical care and
free
Education, and allows anyone
Born here to be an
automatic
Citizen.
Then the illegal's came by the
Tens of
thousands. Suddenly
Our taxes went up to pay for
Free services; small
apartments
Are housing 5 families; you
Have to wait 6 hours to be
seen
By an emergency room doctor;
Your child's second grade class
is
Behind other schools because
Over half the class doesn't
speak
English.
Corn Flakes now come in a
Bilingual box; I have
to
'press one ' to hear my bank
Talk to me in English, and
People
waving flags other
Than 'Old Glory' are
Squawking and screaming
In the
streets, demanding
More rights and free liberties.
Just my opinion, but maybe
it's time for
the government
To take down the bird feeder.
Well well well!
Another socialist European government with too many people sucking on the government teat looking for a handout. The forecasts are coming to pass... Greece, Spain, Portugal, France, etc., etc.
Reminds me of the story with the grasshopper and the ant...
Spain is not a socialist country. It is a democracy with a capitalist free market economy. From Wikipedia:
"Spain is a democracy organised in the form of a parliamentary government under a constitutional monarchy. It is a developed country with the twelfth largest economy in the world by nominal GDP, and very high living standards, including the tenth-highest quality of life index rating in the world, as of 2005."
http://en.wikipedia.org/wiki/Spain
Using words you don't comprehend can lead to trouble.
Rather than Europe continue to screw up the world and tank our stock markets, why don't they just cancel all of their debt and start fresh? Come to think of it, why doesn't the whole world just do that? Enough, already!
Huh - So the countries get a break but the people they owe money to are screwed. Did you think through your plan or was it a gut reaction
His plan makes a lot of sense in a number of ways. The people they owe money to will do better if the economy is thriving. The people they owe money to are well off for the most part and can afford to take a hit, some 401k's but not 100% of retirements is in other countries debt. The people they owe money to are going to lose it in the end anyway, all they are doing is sucking out a few extra interest payments before they lose all of their principal. The people they owe money to can loan them money again after they wipe the slate clean and start collecting interest again. The people they owe money to took a risk loaning out their money and charging interest in the first place, anytime you put your money in someone else's hands you take a risk. If you want to preserve wealth then buy stuff, real estate, gold, cars, boats, guns, antiques, art, a business, or whatever. The people who they owe money to will learn a valuable lesson, that alone is worth the money they lent them in the first place. Wipe the slate clean best move that can be done for the world right now.
Shoot, Everybody knows, the rich as ALWAY'S pounded the poor, ALWAY'S have ALWAY'S will. Only the rich will come out of this deal, (well) richer and us common folks will have to suck it up tis a doggone shame the whole World is greedy, selfish bunch of lazy pencil pushers, we have too many government agents and we can't get anything done from Washington, to the smallest county's and everthing in between, Our bridges are falling apart, our roads are in bad shape some of our damns haven't been inspected in years and the list goes on and on and on and on and on,,,,,,,,,,,,,,,,,,, please make it stop
Lay the bankers off and sell off the existing businesses to the ones that survived. Screw a banker who wants public dole. We'll never see dollar one because all the money they pay back loans with will be money someone else paid in exorbitant fees. Banks are not supposed to enrich huge numbers of people anyway. The money needs to stay circulating in the part of the system that spends it. The bankers will just go on making bad bets. Banks have less accountability than welfare mothers. And they cost a lot more to keep afloat these days....
It isn't the bankers that want the public dole. It is the people that we are bailing out in Spain. They can't find the money to pay the people the promises they made.
The Euro-trash just never run out of running out of money. Greece has been bailed out twice as has Portugal. This currency union was borne of nothing more than hubris. Even some of it's founders now acknowledge it was poorly designed. The work of proud politicians and ministers without portfolio which has had the collective effect of nothing less than economic suicide on the part of (formerly) independent nations.
The daily lives of all Europeans are slowly being placed in the hands of nameless, faceless and unelected bureaucrats in Brussels but almost nothing is being done to resolve immediate problems; let alone deal with the structural issues.
If some of that sounds familiar it should. We as a nation are proceeding down the same road with alarming speed. We must take our country back from those who would further emulate the failed socialist notions of Europe and their insane employment and "benefit" programs which were bankrupting them even before the great worldwide recession.
I would hope that the world economies that matter will have learned something from this sub-prime mortgage mess that suckered everyone into getting in on who was just out to make a make a killing but didnt.
If the IMF is helping to fund this bail out that means the US tax payer is footing the bill. They just hide it under the IMF name. I hope your all happy. We get to work until we are 70 while Spain retires at 56 years.....
Nice that the American tax payer gets screwed again by the Democrats.
It's true, the IMF is basically funded by the US. And now the UN and NATO wants to tell us what to do?! No way in hell!
I know lets check the Politicians accounts..I bet they got enough to buy them selves there own Country..haha
Yup and here come the war in the very near future,they need to knock down the population..Any sucker out there willing to die for there Corrupted politicians? LOL
The politicians are hired by the banksters and corporations, not elected. When will people wake up and realize that the bi-partisanship is a smokescreen perpetuated to distract the rank and file and it is really just two heads of the same beast? Unfortunately, when Wall Street and the big investment banks almost took down the U.S. economy in 2008 with investment products they knew were not sustainable, we crossed the line of being able to work ourselves out of this mess with GDP growth. We can't get back. The U.S. is in the early stages of a long, slow and painful decline.
The banks gambled and they lost. Why do we the tax payer have to bail them out. They've been screwing customers with over charging for years. They pay almost nothing in interest anymore. Send a message...let them fall. Those left will be more careful. Maybe it's time to re-invent banking. Stop the insanity and GREED!
If you were a Bank. You could Gamble with other peoples money, if you win you keep it, if you loose other people cover your losses and loan you the money to pay them back at 0%. Wish you were a bank??
The EU/Euro is doomed to fail. Everybody is pressuring Germany (the only adult in the room) to abandon "austerity" and just turn on the currency printing factory.
Not all of the EU members behave the same or should enjoy the same standard of living. Just like every experiment in Socialism/Communism, the only ones that suffer are the ones who act responsibily. There always the ones who are expected to bail out the lazy freeloaders.
Here we come QE3. Print more fiat currency backed by smoke and mirrors. The treasuries have been looted by banks here and all over the world. While the U.S. middle class vanishes, the banksters enjoy the Hamptons.
As soon as I heard that Spain was getting a bailout, i went ahead and stocked up on toliet paper, toothpaste, and toothbrushes. You can never be to prepared, expecially where it looks like we (the US) are/is heading with our debt.
Who's going to bailout America when America finishes bailing out Europe?
So far, the United States has contributed absolutely nothing to Europe. The U.S., under President Obama, has repeatedly stated that it cannot assist in the bailout. It has been persuading Germany and to a lesser extent France, to assist financially.
Maybe we can get the country of Amercia to give us a bailout. (I am sorry I just couldnt resist, hehehehehehe).
Notice how the Teabaggers have no problems with poring billions into bailing out Banks?
British teabaggers! You have quite an imagination. I thought that was an American thing!
Surely there must be some USA or foreign companies willing to layoff their workers and go set up in Spain so their people can work. We did it in the US & we all no what happened, bankers got rich, CEO got fat bonuses & our unemployed got their benefits extended. Unfortunately the end of this scenario is fast approaching.
The Hell with this United Europe thing. I think each country should go back to it's own currency and end this Bailout crap of all these worthless countries. If they fail they fail. The United States and all other countries should Nationalize their Banks, it's the only answer. This "Global" economy crap is bringing us all to bankruptcy.
Sticking your head in the sand doesn't make problems, or reality, disappear. There will always be a global economy, and allowing the banks to crash will result in devastation for hundreds of millions of families worldwide. Like global warming, pretending it doesn't exist won't change reality.
We are heading for a global meltdown anyway. China has taken so many jobs from the U.S. and the rest of the world that it's sending us all toward a cliff. And it's the Greed of these Business'es that is behind it all. It will be nice to see that these Greedy business people will have their money Not worth a good Crap just like the rest of us. 1929 all over again. It's coming folks.
Hope Greece's bailout is the stunning success ours was.
Steve the dog man--and that is the PROBLEM with 'bail outs' that have no conditions tied to future behavior.
Throwing money (BORROWED MONEY, yet!) at a group that is already over extended without requiring them to STOP doing what got them so extended will NEVER work. It only passes the buck without solving the initial problem.