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Spain could test the euro to its limit
Posted By admin On June 19, 2010 @ 3:58 am In Money Watch | Comments Disabled
London Telegraph 
June 19, 2010
As the euro has continued to plunge on foreign exchanges, Spain has become the main focus of fears that economic and debt imbalances between southern and northern Europe will tear the single currency apart.
News that the head of the International Monetary Fund was in the country fuelled swirling rumours that Madrid is about ask for help.
Spain has been hammered by collapse of its construction sector and the bursting of a property bubble built on cheap credit that has contaminated financial institutions. One in five workers is unemployed burdening already strained state expenditure further.
Markets have not been reassured by a savage package of Spanish spending cuts and there are growing rumours that Spain needs an urgent EU-IMF cash injection, £200 billion is one rumoured figure. Panicky German officials too have been accused of destabilising Spain amid concerns in Berlin that Madrid is not cutting enough, leaving banks in Germany exposed to market contagion because they own hundreds of billions in Spanish debt.
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URLs in this post:
 London Telegraph: http://www.telegraph.co.uk/news/worldnews/europe/spain/7837917/Analysis-Spain-could-test-the-euro-to-its-limit.html
 Image: http://www.homegain.com/housead/homes_for_sale/index?entryid=11502
 IMF drawing up £500bn package to save Italy, Spain and the euro: http://www.prisonplanet.com/imf-drawing-up-500bn-package-to-save-italy-spain-and-the-euro.html
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 Spain: the new crisis in Euroland: http://www.prisonplanet.com/spain-the-new-crisis-in-euroland.html
 Spain requests €100 billion Euro loan to prevent financial meltdown: http://www.prisonplanet.com/spain-requests-e100-billion-euro-loan-to-prevent-financial-meltdown.html
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