Spain Presses for Bank Aid, But Germany Resists

Posted June 4th, 2012 at 2:20 pm (UTC-5)
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Spain is pressing for direct European financial aid to rescue its debt-ridden banks, but Germany is holding steadfast against such assistance without imposing new spending conditions on the Madrid government.

With financing uncertain for Spain's $24 billion takeover of the Bankia financial institution, Spanish Prime Minister Mariano Rajoy is attempting to win approval for funding from the bailout fund created by the 17-nation euro currency bloc. Both France and the European Commission signaled their support on Monday.

But the spokesman for German Chancellor Angela Merkel said it was up to individual national governments, not banking systems, to seek bailout funds, and then to adhere to spending conditions attached to the loans. The spokesman said, “That of course is also true for Spain.”

Stock markets throughout Asia, Europe and the U.S. were mostly falling again on Monday, with concerns about the European debt crisis weighing heavily on investors' decisions.

One German investment analyst, Robert Halver of Baader Bank, said the eurozone crisis seems unending, but could be eased if the European Central Bank invested heavily in Italy and Spain to give them time to boost their economies.

“History is repeating itself, we are again in full crisis mode. Last year: crisis, this year: crisis. The politicians have learned nothing. It would be so easy though. The ECB should massively interfere (intervene) and buy time for countries like Italy and Spain so that they can pursue reforms. Nobody can bear this cacophony, this waiting, this riding out any more.”

But for many in Spain, like out-of-work Madrid resident Ada Adon, finding work has proved difficult in the country with the eurozone's highest unemployment rate.

“It is really hard in Spain to get a job right now because there are no jobs, and if somewhere you might have a chance, they do not want to pay what is more or less normal. Plus, everything is so expensive: supermarkets, food…. Everything is really difficult now.”

Meanwhile, Portugal, another of Europe's debt-ridden countries, cut the projection for its economic growth to two-tenths of one percent for the coming year. Lisbon also announced that it is pumping more than $8 billion into three of the country's largest lenders to cope with increased loan losses.