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Eurocrisis: 4 Reasons Spain May Need a Dreaded Bailout

Eurocrisis: 4 Reasons Spain May Need a Dreaded Bailout

Spain, whose economy is the fourth-largest in the euro zone, may be seeking a bailout soon, a step its government has been seeking to avoid.

Portugal, Ireland and Greece have all received bailouts from the International Monetary Fund (IMF), European Central Bank (ECB) and the European Commission. But the desperately needed funds have come with many strings attached, to balance budgets and impose unpopular austerity reforms.

But a bailout is looking more inevitable in Spain:

1) In the month of July, Spanish banks lost every 1 out of 20 euros deposited with them.

2) Plus, new data show that the Spanish recession is worse than thought. The country’s economy shrunk by 1.3 percent in the second quarter.

3) Statistics also reveal that the recession Spain is in actually started three months earlier than previously thought.

4) Earlier this week, the regional government of Catalonia said that it would need a 5 billion euro bailout from the Spanish central government’s rescue fund. Catalonia accounts for one-fifth of Spain’s economy. Analysts are predicting it will be running a higher-than-predicted deficit of 2.5 percent and Rajoy’s conservative central government has said it may have to take Catalonia’s finances under its direct control — a proposal that regional prime minister Artur Mas has said would lead to “snap elections.”

Catalonia is one of six Spanish regional governments in need of government help to roll over its debts and fund its budgets. All told, these regions have a combined debt of 145 billion euros.

In a country whose population has been hit hard by nearly 25 percent unemployment and government austerity, the severe decline in consumption is no surprise and suggests that imposing austerity measures cannot pull Spain (or any government) out of its financial crisis.

European Council president Herman Van Rompuy has said it is up to Spain to decide to seek a bailout or not; prime minister Mariano Rajoy has said he is waiting on getting more details from the European Central Bank first.

On the brighter side, Spain — despite wildfires threatening forests and vegetation in the Canary Islands — saw a boost in tourist income in July of 9 percent.

 

Related Care2 Coverage

Spain Burns: The Price of Austerity (Videos)

Eurocrisis: The Holiday, Like the Olympics, Is Over

4 Ways La Crisis Is Changing Spanish Society (Slideshow)

 

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Photo of unemployment protest in Barcelona by bonnieann1815

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34 comments

+ add your own
7:36PM PDT on Sep 16, 2012

I agree with Lauren B. It seems the countries that have gone with the Euro are now in dire financial troubles and their citizens are suffering more and more. The big financial conglomerates and the elite have become their own demise!

8:30PM PDT on Aug 30, 2012

Brent; I agree completely, If a bank fails, suck up and withstand the consequences, never fester failure as socialism embraces. Although the gold standard will not work, because there is not enough gold.

5:45PM PDT on Aug 30, 2012

CARLOS B.

A VER SI DICIENDOTELO EN ESPAÑOL ME ENTIENDES MUCHACHITO.

Ya deja de decir tarugadas y ponle atencion a los adultos. No mas ladras y ladras sandeces dandotelas de "conservador" y eres tan ignorante que no sabes que el mas famoso presidente conservador, ABRAHAM LINCOLN fue quien creo el GREENBACK en su gobierno, sin pagarle intereses a nadie. Gratis. SIN DEUDA y es la razon por la que lo mataron los banqueros. Y si Obama o Bush o Romney lo estuviera haciendo igual, NO TENDRIAMOS LA CRISIS FINANCIERA QUE TENEMOS AHORA..

Read what I explained below to YOU, so you understand is NOT Socialism, or even Capitalism what is choking the economy, it is a fraudulent monetary system performed by Private Banks to the detriment of everyone except banks themselves.

WE ARE THE VICTIMS OF A SOPHISTICATED FORM OF FRAUD.

4:18PM PDT on Aug 30, 2012

When we people learn. LET THE BANKS FAIL!!!! NO BAILOUTS!!! Do you not realize these bailouts only make things worse in the long run. How can anyone think adding more debt to a debt that cannot be repaid at an even higher interest rate be a good thing. How can that work? It cant. The only real solution is to default now, End the federal reserve, end the ECB End Fractional Reserve lending and Get back to a Gold Standard. Oh ya and lynch every one of the criminal banking elite

3:02PM PDT on Aug 30, 2012

The austerity measures implied by the imminent bailout, are hindered by Catalonia's presence in the Spanish economy. The Catalans will not abide by any central government cuts and regulations. Spaniards and Catalans are at loggerheads on all policias, fiscal, economic and above all, educational. In the last 10 years fiscal imbalance (9% of GDP), has been detrimental to Catalunya. Catalans know that Spain wants to eliminate their language and culture.
Independance for Catalunya is the only sustainable solution.

1:33PM PDT on Aug 30, 2012

" I already prepared for it with Beer and Pizza! HAHAHAHA"

Carlos, with your manic laughing, I wouldn't follow you (or your links) out the Exit if a theater was on fire. Enjoy the beer, it should make you even more fun.

12:58PM PDT on Aug 30, 2012

If you watch nothing else today....please watch this short illustration lesson. This is a non-partisan video produced by an accountant , Hal Mason, retired after 27 years with IBM. He looks at the budget, its revenues and expenses, and very simply illustrates the problem. Amazingly, we get all the media talking heads blathering and shouting for hours and never get clarity. This guy provides all the clarity you need in just a of couple minutes.

http://www.youtube-nocookie.com/embed/EW5IdwltaAc?rel=0

12:44PM PDT on Aug 30, 2012

Carlos states: @Dennis D- "theri boy Former Goerge Bushjr that got us here" -You are a racist! That was extremely racist and disgusting! You should be ashamed of yourself! You racist POS!

Interesting twisted logic there. So in your mind Conservatives are a Race? And Dennis' comment so enraged you that you had to insult him rather than reply?



11:02AM PDT on Aug 30, 2012

Message to Mike C elect the Republicans end social programs fatten the corporations and banks dissolve woman's rights increase both religious and racial hatred

10:40AM PDT on Aug 30, 2012

sad. But nothing is being done, they are just continuing to give money to the bankers, the ones that caused this to begin with

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