These autonomous Spanish regions are bankrupt. They have been disguising their deficits by not paying suppliers using dubious accounting. They spent money in the boom years recklessly when EU banks were giving them blank cheques.
Their creditors have rumbled them finally and will not lend them any further funding.
Valencia has to repay creditors almost €9bn this year. They have not got the money.
Central government will need to bail them out because the creditors want their money back and will not roll the debt over.
The tab mounts up for the national governments whose deficit will balloon. Bankia, the regions and other struggling banks in the pipe line. It’s estimated the bill will amount to a staggering €290bn!
Spanish 10 year bond yields reached 6.5% today. Unsustainable levels.
The end game is now being played out.