Eurozone ministers have formally approved the €100 billion bailout for Spain’s ailing banks but the country’s financial woes have not lessened. In fact, they have got worse.
Heavily-indebted Valencia has become the first region to request a ‘loan’ from new rescue fund set up on July 13th, although the Valencian government, like the Central Govenment before it, is refusing to call it a ‘rescue’ or ‘bailout’. If it looks like a duck, walks like a duck and quacks like a duck….
In addition, the yield on Spanish 10-year bonds shot up a quarter percentage point to 7.28%, a rate generally regarded as unsustainable in the long run. Spain’s Ibex stock index plunged 6%, its worst fall in two years, with bank shares averaging losses of around 7%.