In the next installment of the Euro-zone financial crisis, Spain has a number of banks that are teetering. There has been something of a run on Spanish Banks, and many people are starting to think Europe will run out of time if it does not act more decisively soon.
The Spanish Budget Minister said Tuesday that a cash injection was required, and turned to the various European institutions for help. One UBS analyst suggested the support required might be as high as €120 billion for the system. The Chairman of Banco Santander, Spain’s biggest bank, floated a €40 billion figure.
The issue is that as interest rates rise on Spanish bonds, with current 10-year Spanish Sovereign bond rates headed towards 7%, Spain is effectively being shut out of the global bond market.
Greece remains complicated, Spain is getting complicated, Italy may or may not be digging out of its debt woes. Ireland and Portugal are also continuing to deal with these issues. The prospects that this will go away soon are slim, and the probability of continued turbulence is high, and catastrophic events, though avoided to date, certainly cannot be ruled out.