Top Ten Questions To Ask About Spain's Bailout
Interest-Rates / Spain Jun 10, 2012 - 11:39 AM GMTBy: DK_Matai
1. Recapitalisation of Banks: Will the commissioned bank auditors and global markets conclude that €100bn is enough to recapitalise Spanish banks?
2. Access to Sovereign Debt Markets: Will Spain continue to have access to markets to be able to sell its government bonds post its first banking bailout?
3. Flight of Capital: With capital flooding out of Spain's banks, is a €100bn tranche likely to be enough to prevent further bailouts of its banks and government at a later date?
4. Source of Cash: Analysts in financial markets across the globe will be asking themselves where precisely is the cash going to come from to help Spain?
5. No Cash Left: Where else is the Eurozone likely to go wrong in its risk management calculus before the limited money in the common funds runs out?
6. Euphoria: Is the rise in market indices in the wake of Spain’s bailout going to be short-lived just as soon as the markets realise that the Eurozone recession is not going to go away and the Greek election results may be unsatisfactory?
7. Eurozone Growth: With the US and emerging market economies like China and India slowing down fast, how can Europe grow its way out of this crisis?
8. Italy: Post Spain's bailout could the markets target the next major incumbent? Could Italy -- often seen as the next domino to fall -- be under full attack?
9. Non-Equivalence: Will citizens and governments in Greece, Ireland and Portugal be infuriated when they realise that Spain will face few of the harsh economic conditions imposed on them -- including cutting wages, slashing spending and selling off public assets -- in return for a Eurozone bailout?
10. Addressing Root Cause: Does this bailout fully address the source of the problem that Spain has, which has resulted in 25+% general unemployment and 50+% youth unemployment?
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By DK Matai
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