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Catalonia wants 5 billion with no strings attached. More money than ever left spanish banks in June. The finance minister says Spain’s economy will get worse from now until the end of the year. All here
http://www.telegraph.co.uk/finance/debt-crisis-live/9502734/Debt-crisis-live.html
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Must be a sign of the times that 5 billion doesn’t sound such a big deal! The Uk spends 20 billion+ every year on housing benefit. But you do wonder what has happened with Catalunya – it was supposed to be the economic tiger or the equivalent of the UK south-east…
Meanwhile borrowing costs for Spain and Italy continue to dip.
Yields on Spanish and Italian bonds have plunged to three- month lows on optimism the European Central Bank and the single currency’s 17 members will agree on a plan to use short-dated sovereign debt purchases to curb governments’ borrowing costs and win them time to implement fiscal changes.
Perhaps the markets didn’t realise Rajoy is back from his holidays 😉
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@DBMarcos99 wrote:
Must be a sign of the times that 5 billion doesn’t sound such a big deal! The Uk spends 20 billion+ every year on housing benefit. But you do wonder what has happened with Catalunya – it was supposed to be the economic tiger or the equivalent of the UK south-east…
…Catalunya and Madrid are the economic tigers of Spain, together they contribute over a third of Spain’s GDP. I suspect the actual amount of money requested is secondary to the politics being played out here.
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@angie wrote:
Latest news today regarding Spain apart from Catalonia’s request for 5 billion Euros, is that Spaniards (consumers and businesses) have withdrawn money from Banks at a record rate in July, deposits have shrunk 5%, as the country’s recession has deepened. 🙄
I’m trying to think of a reason not to feel extremely nervous right now.
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In reality what a shrinkage of the deposits with that size means when you are using fractional reserve banking is that the ability to finance other things have gone down 90-95 times as much depending on what sorts of credits you are talking about. With the ways the banks have been faking numbers it could in reality be 200 times as much. So if customers pull one billion in deposits it means that people looking for financing gets a much harder time to find it. 90-95 billions less. Imagine how this affects the way investments are made. This will raise interest rates extremly if it’s not kept down artificially by the eurozone by pumping new money into the system.
Understanding fractional reserve banking is a must to understand how horrible the state of the worlds economy is in at the moment.
If Spanish banks would use true valuations on their porfolios on for example real estate it would mean ridiculous amounts of new deposits needed to ofset the drops in market value of said porfolios. This is what most people don’t understand and why it’s a pyramid scheme waiting to come down. Only way they know how to handle it is to print new money to offset this … by making the population poorer.
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Regarding bank deposits, the same has been happening in Italy and Greece for some months. Basically people with savings are moving their Euros into a German bank so if the country exits the Euro their savings won’t be converted to Lira/Drachma/Peseta. In theory, the hyper inflation kicks in, currency is devalued, then they are sitting pretty on a stack of Euros that are still actually worth something on the international market.
Not my theory I hasten to add, I don’t pretend to know about how things will pan out (I’d be a millionaire by now if I did). Just one of the main reasons for bank withdrawals.
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Valencia has now asked for 4.5 billion tomatoes more (nay euros) than it previously requested, this following the recent request for 5 billion euros from Catalonia to central gov’t.
http://www.bbc.co.uk/news/business-19422198
Think how much Valencia could have saved if it had sold those tomatoes it wastes each year 😛
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These bail out requests are small beer. They are simple emergency loans to enable them to pay the most pressing overdue bills. The amounts they really need are in the region of €35bn. Markets won’t touch them they have nowhere else to go.
The crunch is coming this autumn. Spain will request help just a matter of time. -
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Full EU bailout for Spain gets ever closer. They are just currently wrangling over the conditions and how much.
http://www.telegraph.co.uk/finance/financialcrisis/9521465/Brinkmanship-as-Spain-warns-over-bail-out-terms.html
Merkle in Madrid today to set her seal on the deal. I my view Spain will probably benefit in the long term by having none Spaniards run their economy and control the money supply. -
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Logan your post echoes more or less what I just posted on ‘Quick, Run for the Hills’, the Politicians and Government take no notice of the populus nor do they take notice of public opinion such as ‘regulate their gung-ho ridiculous property market’ and start to instill some confidence. 🙄 Something they’ve ignored for over 10 years now 😡
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On the BBC website.
Six questions for Spain -
I totally agree with all three comments below, it’s a b—-y farce if ever there was one 😆
Either Rajoy will try and moderate the cuts slightly from originally planned, or, he will go for it and people’s anger will spread, they are probably altering things even now to try and placate things to come. It could well be yet another fudge to buy more time from the inevitable 😕
Either way the announcement is due at 4pm UK time 🙄
Interesting questions on that link katy, what I didn’t know though, was that Catalonia is also the grumpiest region, sounds to me like Ubeda when truth be told 😆
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Breaking news it seems from The Olive Press:
Andalucia gets it’s bowl out now.
http://www.theolivepress.es/spain-news/2012/10/08/junta-to-request-e5000-million-bailout-this-week/
Combined regions requests now top 13 Billion Euros just to tide them over 🙄
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