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Wednesday, June 16, 2010

EU Denies Spanish Bailout

As Spain continues to "tank", a Spanish newspaper "El Economista" has reported today that a Euro 250M had been discussed at a special IMF board directors meeting.

The report drew a response from Amadeu Altafaj, a spokesman for the EU executive, who is quoted in the Telegraph as saying that the report was "very bizarre"

"I can firmly deny it."

Be that as it may, Francisco Gonzalez, chairman of BBVA, admitted this week that "the majority of the Spanish companies and financial groups are shut out of the international capital markets".

Without the means to devalue, and by being forced to accept excessive German fiscal restraints, the weaker countries of the Eurozone have now reached the stage where politically further austerity measures are impossible (their populations will not accept them).

Therefore something has to "give".

They will either exit the Euro voluntarily, or be forced from it by bankruptcy and domestic turmoil.

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