(ES) Spain Fin Min de Guindos is negotiating with EU leaders for a European bank funding mechanism.
(ES) In news related to Spain, as the country’s officials continue to deny that a bailout is necessary, Spain’s foreign affairs spokesman for parliament Jose Maria Beneyto said a bailout would not be “the apocalypse.”
(ES) Research from HSBC estimates that a bailout of Spain could cost up to €450B over 3 years. In mid-March, an EU official said there is was about €240B remaining in the EFSF at that time. The ESM, which may become effective later in 2012, is expected to have initial funding of €500B.
How to interpret these headlines?
I think the short answer to the question “how much” is: Too Much. The undoing of the EU may very well be initiated by Greece, but it will be completed by Spain in the form of a massive bailout request… Both EFSF and ESM combined would barely have enough to fund for a Spanish Bailout, but with the political uncertainty in Spain and the high level of unemployment rate that is affecting the very foundation of its economy are not inspiring confidence that Spain will ever recover, least pay back the loan…
All in all, I see more trouble brewing in Europe and I believe EUR is likely to suffer another round of massive sell-offs in the next few weeks… the key is timing your entries, especially considering the golden opportunity that last Friday’s Non-farm Payroll has brought us… (Sell on rally EURUSD).
How Much Would A Spanish Bailout Cost Europe?
June 4, 2012 by 5 Comments