3 Reasons Spain’s Bailout Is A Failure

When we last examined the situation in Spain, A New Eurozone Crisis Country Replaces Greece, we discovered Spain replaced Greece as the leading crisis nation in the eurozone.

Spain’s ex-premier sums it up as “We’re in a situation of total emergency.” This is the worst situation Spain has faced since the end of the Franco dictatorship. With banks going insolvent and resignations of central bank governor Miguel Ángel Fernández Ordóñez.

Now we see the picture of Spain centers around three important variables. First, everyone else is going to want the same ‘no-strings’ deal. Second, the capital revenues required and where they will be coming from. Finally, is the money received to bailout banks actually revenue or the fact that the government does not actually have the capital bailout?

The underlying message is no different than what is being received in the U.S. Namely, banks are too big to fail, when in fact they are not. The real message is that all the bailout money that is going to banks in the U.S. and around the globe is a “loan” and loans are not capital revenue but debt.

So as the U.S. increases its national debt through loans to banks so do other nations. However, the eurozone differs from the U.S. from the fact there are seventeen nations and this is a serious messaging to be sending to the other nations. That they can be bailed out with loans increasing their national debt.
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