Business

Spain in Vain: Fitch Downgrades Spain Two Notches Above Junk Status, Calls For Bailouts Grow

Spain in Vain: As Fitch Downgrades Spain Two Notches Above Junk Status, Calls For Bailouts GrowSpain’s Mariano Rajoy, U.K.’s David Cameron, Germany’s Angela Merkel

As if the pressure on European Union leaders to figure out a way to recapitalize Spanish banks wasn’t strong enough, Fitch Ratings has just downgraded Spain’s sovereign credit rating by three notches to a BBB, two steps above junk status, citing “policy missteps” and the country’s severely exacerbated economic crisis as the reason, the Wall Street Journal reports.

Spanish Prime Minister Mariano Rajoy says he is waiting on a full assessment of the Spanish banking sector before he reveals Spain’s capital needs.

In the meantime, Europe leaders called emergency meetings on Thursday to figure out how to deal with the Spanish crisis. The Fitch downgrade comes hot off the heels of Spain admitting that its banking sector needs financial assistance and that its government is losing access to capital markets.

“Spain’s Mr. Rajoy said at a news conference, after meeting his Dutch counterpart Mark Rutte, that he won‘t disclose any figures on the cleanup of Spain’s banking system until the International Monetary Fund releases its assessment of the country’s banking sector,” the Journal reports.

“He added that the government would also wait to disclose figures until it receives in the coming weeks an evaluation of the banking system commissioned to two foreign consulting firms, Roland Berger Strategy Consultants of Germany and Oliver Wyman of the U.S.,” the report adds.

As many Blaze readers know, Spain’s banking sector suffered greatly after the country’s real estate market fell apart. Add to that the fact that Spain is also trying to address its monstrous budget deficit and you can see things are pretty serious over there.

EU leaders have been waiting on a scheduled International Monetary Fund (IMF) report to see what kind of capital assistance Spain needs. However, with the sudden spike in Spain’s borrowing costs, some leaders may forego the report and decide on a rescue package anyway.

Spain in Vain: As Fitch Downgrades Spain Two Notches Above Junk Status, Calls For Bailouts GrowSpanish Prime Minister Mariano Rajoy

“Germany, in particular, has resisted calls from Spain and other euro-zone countries to allow Spanish banks to directly tap Europe’s rescue fund, the European Stability Mechanism, set up to bail out governments in fiscal straits,” the Journal reports.

“The Group of Seven leading industrialized nations have pressed European leaders to act more aggressively to contain Spain’s problem before the euro-zone debt crisis inflicts more damage on the world economy and financial markets,” the report adds.

Fitch reports that the cost of saving Spain’s banks could cost up to €60 billion to €100 billion ($75 billion to $126 billion). The EU really doesn’t have that kind of capital lying around.

U.K. Chancellor of the Exchequer George Osborne said Thursday that Spain needs “an injection of money to recapitalize” its banking sector.

“You would need to sort out immediately the situation in the Spanish banking system and resolve the uncertainty there,” he told BBC radio when asked how the EU could solve its debt and economic crisis.

Many analysts believe British Prime Minister David Cameron will try to convince German Chancellor Angela Merkel to agree to “decisive action” during a meeting in Berlin on Thursday. Cameron has called on EU leaders need to act immediately and to do more to address the EU’s financial crisis or else the 17-nation union will suffer a breakup.

Opposing the idea of giving Spain access to any sort of EU bailout fund is Dutch Prime Minister Mark Rutte, a strong Merkel ally.

“The immediate needs of Spanish banks have overshadowed EU discussions for longer-term solutions for regulating and safeguarding its banking system,” the Journal reports. “Earlier this week, Ms. Merkel signaled acceptance of the need for an EU-wide bank supervisor for the largest banks. On Wednesday the EU proposed legislation for dealing with failing banks that aims to shift the cost of future bank collapses away from taxpayers and onto investors.”

However, some analysts think that by the time the months-long plans take effect, Spain’s problem would already be well out of hand.

“The Spanish banking system is the most important thing to deal with in the short term,” said Swedish Finance Minister Anders Borg.

Comments (48)

1 2
  • Beachbaby
    Posted on June 8, 2012 at 9:35am

    Eurotrash. One world money is brought about by the antichrist. May as well lay down and die like the dogs they are.

    Report Post »  
  • raderby
    Posted on June 8, 2012 at 6:17am

    and the bailout will do exactly what? delay epic fail until just before our election, so world upset can act as a vote mover in our country?

    All a puppet show. The USA was settled and made by people getting out of that sewer called Europe. We need to get as unhooked from that pile of lazy failed socialists as we can. They made their darned bed – they can burn in it.

    NO FREAKING BAIL OUT MONEY FROM USA. Clear enough? zero money via any path

    Report Post » raderby  
    • historyguy48
      Posted on June 8, 2012 at 7:16am

      What difference does it make? We’ve begun QE-3 and that will just put another bunch of nails into our dollars coffin. Fractionalized banking is falling apart around the world and there isn’t a darn thing we can do to stop it!
      We are in CHECKMATE! No matter which way we twist and turn the end will be the same, the King falls.
      Welcome to the new America, born in poverty and, if our communists have their way, slavery!
      Enjoy what we have while we have it because it will soon get ugly, real ugly. GB knows this but is hoping that God will intervene which he doesn’t fo very often.

      Report Post » historyguy48  
    • poorrichard09
      Posted on June 8, 2012 at 8:45am

      The strain in Spain makes bankers complain. : )

      Report Post »  
  • TeaPartyForRomney
    Posted on June 8, 2012 at 3:45am

    The Blaze missed that Fitch also threatened to lower Americas credit limit also if they don’t lower our debt problem: http://tiny.cc/3gqkfw

    Report Post »  
  • wntsmallgov
    Posted on June 7, 2012 at 11:52pm

    I would start pulling all our troops back from the bases overseas from any country that is starting to default. I do not want our troops in the middle.
    I would cut our tax rate on the manafacturing and get them to start re building the structure for the tyep of buisness we need here.
    If this keeps going there will be a WW III in Europe.

    Report Post » wntsmallgov  
    • lukerw
      Posted on June 8, 2012 at 1:21am

      Agreed… DeRegulate Businesses & kill ObamaCare (we can always fix it later).and promote US Industry & Jobs… “as if” a Global Crisis was “actually” happening!

      Report Post » lukerw  
    • G-WHIZ
      Posted on June 8, 2012 at 12:25pm

      Thet are all getting too broke to fight a WW3. WWIII has already started years-ago! The private-bank-Fedreal-Reserve is just part of it. One of the last-needed bullets is [the 6-NWO-Treaties] yet to be signed by our USA. These WILL remove the last vestiges of our own sovereignty, and GIVE IT ALL TO: THE NEW WORLD ORDER!!!

      Report Post »  
  • RightPolitically
    Posted on June 7, 2012 at 10:31pm

    How long before Frau Merkel puts her foot down like a jack boot on Spain’s throat?

    Report Post » RightPolitically  
    • CTCompton
      Posted on June 8, 2012 at 2:34am

      Not to long now. I expect to see a NEW united states of Europe with only 10 strong men or nations giving their power to Germany and the Roman Church. One last hurrah as the world heads into its last death throng. They will then attempt to solve the Moslem problem in the Middle East with the last Crusade! They will move into the Middle East and set up their Throne in Jerusalem professing to be God here on earth. However, Russia and China will unite over this and go to war with Europe. They (Russia and China) will have made the mistake of allowing Europe to bury America and Great Britain. And will have no choice but to attack them as they (Europe) will have gotten too strong. This attack will bring on the second coming of Christ, as if God did not intervene, NO FLESH WOULD SURVIVE THIS EUROPEAN AND ORIENTAL WAR!

      The NEW Europe is coming! And America will fall along with many other countries!

      Report Post »  
  • RightPolitically
    Posted on June 7, 2012 at 10:22pm

    It ain’t pretty over there. The crazy stock market has gone up over the past couple of days. Tomorrow those gains will more than disappear. Like someone trying to dance on ice cubes in the deep blue sea, there’s going to be a mighty big splash before long.

    Report Post » RightPolitically  
  • blackyb
    Posted on June 7, 2012 at 10:22pm

    Spain is counting the votes for the upcoming election. They might help Obama a bit if he will bail them out. Who is to know? We might better do some tallying and checking in this coutry as Spain does not like Americans that much and they are getting quite a population of Muslims who may or may not be interspersed with those who like to see us fail. I guess the rain in Spain will not stay the same, but then again what does? Life is fluid and the floods must be upon us for it is a challenge just to get to speak, eat and even breathe freely anymore without someone saying we are all hogging this or that. I think “they,“ whoever ”they” are should just shut up and mind their own business. Leave us and our votes alone, just make sure citizens are voting and getting One vote per. Is that asking too much after hundreds of thousands have died over the years to protect our vote? That is a lot of blood spilled then to have to sit back and watch people want the very crosses come off of the graves of those who died to allow us and them to have a cross. It is time, past time to take our country back and tell them all, who wants our way of life destroyed where to go and stay put.

    Report Post » blackyb  
  • critterbait
    Posted on June 7, 2012 at 10:13pm

    Glenn is right that we the people can fix this ,that the Gov just can not or will not fix it…No matter where you are stop and look what’s around you ,you will see the resources are right in front of you…Yes it may take lot’s of hard work ,yes you may have to use junk but as long as it work’s it can be used as a stepping stone.If you trust in God you may not get what you want, but I bet you will get what you need when you need it.. Let the Banks fail , we will rebuild , what choice do we have now ?

    Report Post »  
    • blackyb
      Posted on June 7, 2012 at 10:25pm

      When we rebuild make sure the trash is taken out and it is build on the foundation it is supposed to be built upon. Best thing is to not give up and use what we must to rebuild. Take the worms out of our government and send them packing.

      Report Post » blackyb  
  • Mr Sanders
    Posted on June 7, 2012 at 10:11pm

    I wonder how many staples and bandaids Germany has in its arsenal to keep the patients’ wounds from ending up on the ICU floor?

    How many more $B’s will the Fed buy of our debts t shore up Europe? No one of consequence is buying our debt – anyone notice that? Can we say Q E III?! Insanity!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    US has 1034 tones of gold [ so we all think] which equates to $57.6B and our government spends $36B per Day….. umm….. hello!?

    How about this Germany [Ms. Merkel]… say the ancient word. open mouth. press tongue against roof of mouth. release tongue downward. start pushing air across your vocal cords. and slowly form an ‘O’ shape upon the exit of the word……. N O! N E I N! Do it before its too late [ don't let Spooky Dude talk you into anything... okay]

    Report Post » Mr Sanders  
    • Mikev5
      Posted on June 7, 2012 at 10:35pm

      It’s funny but the EU is looking more and more like Frankenstein all pieced together yet still dead inside where it counts.

      Report Post » Mikev5  
  • soybomb315
    Posted on June 7, 2012 at 10:11pm

    Will either Obama or Romney have the balls to stay out of the euro mess and not bail out banks? If either one says yes, I could vote for him

    Report Post » soybomb315  
    • wntsmallgov
      Posted on June 7, 2012 at 11:55pm

      I would not vote for Obama even he handed me a 200mil check. We need to get Mit in then make sure his Generals know that it is time to pull all troops out of Europe.

      Report Post » wntsmallgov  
  • Silversmith
    Posted on June 7, 2012 at 10:04pm

    buy gold NOW – buy food – buy a gun. Just in case.

    Silversmith

    Report Post » Silversmith  
    • AxelPhantom
      Posted on June 7, 2012 at 10:31pm

      Not a financial advisor but my theory is this…

      If Europe goes first, you will know it is time to really get preps here finalized when there is a massive flight of safety into the dollar (and gold and oil decline quickly and significantly). It will not last, but will be a short blip followed by a massive crash as the businesses here that have expanded extensively into international markets start registering equally massive losses.

      More money printing/monetizing by the fed will put the dollar on parody with the value of crashing European currencies and then Europe will print to cover their losses and we will print more; so will begin the cycle of hyperinflation and the funeral for the capitalistic system.

      Report Post »  
  • Mikev5
    Posted on June 7, 2012 at 10:01pm

    The Volcano is rumbling look out its going to be very hot and messy when it blows.

    I forgot stinky also watch the rats run for cover

    Report Post » Mikev5  
  • The-Monk
    Posted on June 7, 2012 at 10:01pm

    If they want a socialist economy, let them have a socialist economy.

    Just don’t bother the rest of us for money.

    Hey Germany…. don’t give them a single Euro, Mark, Dollar or Frank. Give them the finger.

    Report Post » The-Monk  
    • Mikev5
      Posted on June 7, 2012 at 10:04pm

      That’s great Monk the finger I like it

      Report Post » Mikev5  
  • nobull14
    Posted on June 7, 2012 at 9:45pm

    They are going to collapse no matter what we do ? and if it could not get any worse they between 35-50 % Muslims they brought into each euro country . so between there prayers 5 times a day they can’t get anything done. The whole of Europe is going to flush and reset . It is going to get real bad soon

    Report Post »  
  • lisa2994
    Posted on June 7, 2012 at 9:45pm

    Rand Paul just endorsed Romney!!!

    Report Post » lisa2994  
  • Teabunny
    Posted on June 7, 2012 at 9:45pm

    http://www.zerohedge.com/news/chinese-bank-run
    A Chinese Bank Run?

    Report Post » Teabunny  
  • Mutiny
    Posted on June 7, 2012 at 9:38pm

    Go Romney go, he will stop the spend!!!!

    Wait what?

    His budget doesnt cut Obama’s current spending levels?

    WTF is that!!!!!

    It doesnt matter who we elect if we dont cut real spending now.

    Report Post » Mutiny  
    • soybomb315
      Posted on June 7, 2012 at 10:13pm

      But romney said obama doesnt know how to fix an economy – that means we have to vote romney, right?

      Report Post » soybomb315  
  • DGuy
    Posted on June 7, 2012 at 9:35pm

    No doubt that little tax cheat Timmy will print some more USDollars to ‘help them out’… Idiot…

    We need to let these fools FAIL so they can learn first hand how Socialism DOES NOT WORK.

    Report Post »  
  • TRILO
    Posted on June 7, 2012 at 9:30pm

    Liars and cheats every last one of them. The ponzi scheme is about to come crashing down.

    Shhh… go back to sleep.. Merkel and Bernanke will figure is out and save the world.

    Oops… Russia just shot off a “test” intercontinental ballistic missle that could be seen as far away as Israel. Show of force over our involvement and rhetoric in Syria? Never mind… go back to counting your sheep and so you can get back to sleep.

    Report Post » TRILO  
    • MrButcher
      Posted on June 7, 2012 at 9:34pm

      Russia is doing a lot more than shooting off ICBM’s.

      Report Post » MrButcher  
  • Netsurfer2
    Posted on June 7, 2012 at 9:22pm

    It’s going to get interesting when it all gets ugly soon! There is nothing anyone can do! We need to repeal everything that the government has done and start over (healthcare included). Cut government extremely and make it easier for the private sector to grow! Even more, get the lawyers out of our government and slam the door shut!

    Things like this will never happen, because so many are crooked in our government that it isn’t funny anymore! It really doesn’t matter who gets in, they are all puppets! They will continue to take away our rights as time goes! They could care less about the average person! The whole system is crooked!

    I expect many hardships to come in the coming months! There is nothing you can do, it’s all going to collapse (financial markets)! You woke up the dragon, now you will have to feed it and go without!

    If you think this is funny, imagine what it will be like when you see people starving in the streets of America! China will want our food, especially when their people become more unemployed and their markets dry up! Then it will be World War Three!

    Report Post » Netsurfer2  
    • soybomb315
      Posted on June 7, 2012 at 10:15pm

      Given the republican choice, I’m afraid the best we can hope for is another shot in 2016 – if we make it to then….Of course, if Romney wins – then we have to wait until 2020. doh

      Report Post » soybomb315  
  • Tal-El
    Posted on June 7, 2012 at 9:22pm

    Their problem is not bank capitalization; that is a symptom. The problem is that they have 25% unemployment and 50% are “employed” by the government, so only about 25% of them do anything productive. Nevertheless, they all want to live very well as if they all were actually making something that anyone would want to buy for good money. This fundamental inequality has already brought Europe down and we are next.

    Report Post »  
    • G-WHIZ
      Posted on June 8, 2012 at 12:27pm

      The workers also retire at 35(orso), and will necessarilly dissapear, soon, completely…just what the NWO needs to happen!

      Report Post »  
  • Magyar
    Posted on June 7, 2012 at 9:18pm

    Que lastima! After just seven years of Socialist leadership, Spain’s economy was destroyed. Then they elected a conservative…. but it was too late— They were doomed and now they are in failure….

    Unfortunately– Just the beginning….

    Report Post »  
  • NOBALONEY
    Posted on June 7, 2012 at 9:18pm

    Geithner pledged to help Spain restructure, and IMF‘s Lagarde stated the IMF won’t help Spain financially. Obama favoring “green” Spain, or is it that a Spanish company SCYTL will be counting the votes this November 6th.

    Report Post » NOBALONEY  
  • lukerw
    Posted on June 7, 2012 at 9:13pm

    Socialist Ideology… gets in the Way… of Rational Thinking!

    Report Post » lukerw  
  • rickc34
    Posted on June 7, 2012 at 9:05pm

    Let them collapse. Let the muslim nations bail them out. They are not even close to being an allie to the US after going muslim.

    Report Post »  
1 2

Sign In To Post Comments! Sign In

Sign Up For Our Newsletter!

Glenn Beck Radio

Listen to Glenn Beck 24/7 Listen Now
Restoring Love