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Spain's bailout is just a loan

Jun 10, 2012


JPMorgan Chase analysts recently estimated that Spain could need as much as 350 billion euros, the Telegraph reported.

Second, rather than injecting the money directly into Spain's banking system, European nations will lend it to Spain. This means that Spain, already more than 700 billion euros in debt, could end up more than 800 billion euros in debt. The new debt has been promised at a considerably lower interest rate than the market currently charges Spain -- recently more than 6 percent for a 10-year loan. Still, every little bit of extra debt hurts.

It appears that Spain is supposed to borrow more until its debt problem is resolved. Seriously. These economists have to spend years in school to understand how this miracle is possible.

"The cheap, state-backed funds will mean that Spain’s national debt rises from the 72pc of gross domestic product (GDP) forecast this year by the IMF to about 80pc..."


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Category: In The News
Blog Author: Dr. Stephen Jones