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Spain rescue is impossible "hopefully domino effect does not come to Spain"

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June 05, 2012 – Comments (7) | RELATED TICKERS: DIA , QQQ , SPY

Minister claims Spain rescue is impossible

 

Updated Wednesday, June 6, 2012 0:19 am TWN, AFP

 

 

 

 

MADRID--Spanish Budget Minister Cristobal Montoro said Tuesday it was technically impossible to rescue the debt-laden economy, the fourth largest in the eurozone.

“Spain cannot be rescued in the technical sense of the term. Spain does not need that. Spain needs more Europe, more mechanisms allowing the integration of Europe,” he told Onda Cero radio.

Montoro did not explain why a rescue would be impossible but many analysts fear the size of the economy would stretch the resources of existing European rescue mechanisms.

As bond markets charge exorbitant rates to lend to Spain, however, investors fear Madrid may be forced to seek external aid to finance a bailout of the bad loan-ridden financial system.

Stricken Spanish lender Bankia alone has asked for a total 23.5 billion euros (US$29.4 billion) to help repair a balance sheet that has a vast exposure to the property market, which crashed in 2008.

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7 Comments – Post Your Own

#1) On June 05, 2012 at 7:28 PM, rd80 (99.11) wrote:

As bond markets charge exorbitant rates to lend to Spain

Those 'exorbitant' rates are a bit over 6% on 10-year paper.  High by today's standards, but it hasn't been that long since that was typical for high-grade paper. 

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#2) On June 06, 2012 at 3:09 AM, awallejr (80.13) wrote:

Spain does not need that. Spain needs more Europe, more mechanisms allowing the integration of Europe

Your heading is misleading. My quote above says what was really meant.  Stop misleading.

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#3) On June 06, 2012 at 2:40 PM, IBDvalueinvestin (99.58) wrote:

The quote was by Spain's own Minister not mine.

" Minister claims Spain rescue is impossible"

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#4) On June 06, 2012 at 4:26 PM, awallejr (80.13) wrote:

That wasn't his quote.  THIS is his quote : “Spain cannot be rescued in the technical sense of the term. Spain does not need that. Spain needs more Europe, more mechanisms allowing the integration of Europe,”

Now what he means by the "technical sense" who knows since he wasn't asked to explain it.  Your headline, however, made it sound as factual that Spain couldn't be rescued and contagion "hopefully" wouldn't follow.  Totally misleading.

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#5) On June 07, 2012 at 3:53 PM, IBDvalueinvestin (99.58) wrote:

Now what he means by the "technical sense" who knows since he wasn't asked to explain it.

Its not hard to figure out what he means by "Spain can't be rescued in a technical sense" It means that based on the amount of debt of Spain the European Union has not put enough money aside to be able to bailout Spain. 

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#6) On June 07, 2012 at 8:05 PM, awallejr (80.13) wrote:

Which is what he said as Spain not needing that. So I guess he didn't say a " Spain rescue is impossible."  Ok we are going in circles now.

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#7) On June 12, 2012 at 1:42 PM, JaysRage (93.90) wrote:

I can translate.....

1)  The Spanish property bubble was WAY bigger than anyone thought it could possibly have been.  

2)  The tips of those icebergs are now showing as the regional banks were forced to consolidate with larger banks and those larger banks have to reveal their balance sheets.

3)  It's a price that's more than the Euro-zone could pay if the price came due.....or if interest rates went up another couple of points.  

Summary:  If everyone could just pretend that Spain is a healthy economy and put the interest rates below 3%, we could just go about our merry way.   We don't need a bailout.....we just need some confidence in our ability to pay this bad boy off....or enough time that property values rise high enough to manage this one out on its own.  

Irony:  If the U.S. were forced to pay 6% on its debt, it would be far worse off than Spain.    

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