Cyrpus Deposit Grab Solution To Be Adopted In New Zealand

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It appears that the solution to the Cyprus banking crisis is appealing to TPTB. A few days ago Hanbelsblatt reported Commerzbank CEO Joerg Kraemer as saying the Italians should pay for bank robbery bailouts through their savings.

translationed version

net financial assets of the Italians therefore amounts to 173 percent of gross domestic product (GDP). This was significantly more than the net financial assets of the Germans, which corresponds to 124 percent of GDP, said Kramer Handelsblatt Online. “So it would make sense, in Italy a one-time property tax levy,” suggested the Bank economist. “A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product.”

Now it appears that the New Zealand government are also liking this idea of resolving banking debts by getting its citizens paying for it via their deposits as reported in the Green Party press release.

The National Government is pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”

Even in the US there has been noise made in that line too last month as reported by Bloomberg. The U.S. Consumer Financial Protection Bureau is looking at gaining more power over retirement savings. After all there is over $19 trillion that can be tapped in an emergency.

The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.

“That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,” bureau director Richard Cordray said in an interview. He didn’t provide additional details.

 

Source: Green Party (New Zealand)Handelsblatt, Bloomberg,   New Zealand Government’s Open Bank Resolution

How Russia Could Take Revenege Over Cyprus Deal

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Europe has already had a taste of what Russia can do in 2009, due to the dispute with Ukraine over an unpaid gas bill. That winter the tap was turned off and maybe that was point, to remind Europe not to cross Russia in future. Steve Keen in this CNBC article takes a look at the possible way in which an angry Russia can hit back.

putinGermany might be telling the world not to blame it for Cyprus’ bailout plan, but one analyst told CNBC that Russia could avenge the loss of billions of dollars it has invested and deposited on the island by cutting Germany’s energy supply.

As the Cypriot parliament prepares to vote on a controversial and unprecedented proposal to levy a tax on bank accounts held on the island, the deal has been described as a covert move by Germany and its euro zone partners to tackle what they perceive as Russian money laundering in Cyprus.

Twenty percent of total deposits of the Cypriot banking system are held by Russians and many Russian businesses are registered in Cyprus, making any plan to levy a 15.6 percent tax on deposits over 100,000 a moot point for Russia. The country has also given Cyprus a $3.3 billion loan that Cyprus wishes to extend.

Russia’s leaders have already condemned the European bank levy proposal, with President Vladimir Putin calling it “unfair, unprofessional and dangerous” on Monday. On Tuesday, Russian Prime Minister Dimitry Medvedev added to the growing Russian frustration over the move. “Quite strange and controversial decisions [are] being made by some EU member states. I mean Cyprus. Frankly speaking, this looks like the confiscation of other people’s money,” Medvedev said on Monday.

Steve Keen, professor of Economics & Finance at the University of Western Sydney, told CNBC that Russia could retaliate against the perceived proxy attack on its citizens, and their money.

“If you try to target the Russians, and there’s President Putin acting under the image of the ‘strong man’ of Russia, why would he not then decide to shut down gas supplies to Germany until that was righted?

“If you’re going to attack money laundering then attack it directly, don’t make Cypriot peasants and small businessmen collateral in your campaign against Russian oligarchs. Declare the campaign rather than doing it under the carpet like this too,” he added.

“Russia has been willing to play that card before,” Keen said, alluding to when Russia’s largest state-owned gas and oil supplier Gazprom reduced gas supplies to Europe in 2009 during a dispute with an Ukrainian energy company.

With 36 percent of Europe relying on Russia for its gas supply, the threat or act of limiting supplies gives Russia a powerful card to play should it wish to push home a political point against Germany.

“It is an explosive political situation,” Nick Spiro, head of Spiro Sovereign Strategy, told CNBC. “This is a rubicon which should have never been crossed…This bailout agreement has Germany’s political fingerprints all over it,” Spiro told CNBC Europe’s “Squawk Box.”

“If Germany’s aim was that the larger deposit holders, the Russian ones, were going to bear the brunt of this, then obviously it’s backfired,” he added.

Steve Keen told CNBC that the proposal was tantamount to “blowing the brains out of capitalism” and such a proposal would destroy the euro and the idea of a monetary system.

“It’s mind-boggling that German bureaucrats and politicians can think that this is a sensible way to share the pain,” Keen said. “If you destroy the trust that depositors have in their bank accounts, you fundamentally destroy the oil of capitalism.”

“This is an absurd decision which has to be blocked somehow. If the Russians block it or the Cypriots block, somebody has to block it,” he said, ahead of a crucial debate in the Cypriot parliament over whether to ratify the plan.

Approving the plan is central to Cyprus receiving a 10 billion euro bailout from the European Union and International Monetary Fund (IMF) but as yet, the outcome of the vote is uncertain.

The Cypriot President Nicos Anastasiades reportedly told German Chancellor Angela Merkel and the European Union’s economics affairs commissioner Olli Rehn on Monday that he would stand by what was agreed at a euro zone finance ministers’ meeting last week but “insisted that EU partners offer some additional help,” a state spokesman, Christos Stylianides, told state radio on Tuesday.

(Read More: Cyprus President Is a ‘Fool:’ Gartman)

Stylianides added that President Anastasiades is also likely to talk to the Russian President, Vladimir Putin, on Tuesday.

Against a backdrop of protests in Cyprus and sharp declines in global equity markets on Monday, the German finance minister attempted to deflect blame from his country, saying the solution had not been a German idea and that he was open to it being changed.

“The levy on deposits below 100,000 euros was not the creation of the German government,” Wolfgang Schuble told reporters in Berlin on Monday. “If one reached another solution we would not have the slightest problem,” he added. On Tuesday, however, Schuble said that Germany pressed for a “bail-in” of Cypriot depositors to protect European taxpayers.

Source: CNBC

Your Banks Mess Up, But Its Your Fault

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Wolfgang Schauble, Germany’s Finance Minister is not one for holding back when it comes to pointing out the ills of other countries. Schauble has clearly laid the blame for Ireland’s bank collapse at the hands of the Irish. While partly this is true, he neglects the enormous part played by the ECB. It was the ECB’s interest rate decisions which Schauble’s Germany benefited from, that caused credit bingeing countries all their problems. He also neglects the ECB’s decision to force the Irish taxpayer to pay back gambling bondholders and help keep German banks afloat.
If that’s the best analysis Schauble can do regarding Ireland then God help the German taxpayers because I wouldn’t trust this lawyer to run my finances. When it comes to German banks exploding, Schauble’s attitude is, it’s never the banks fault. I woudn’t fancy been forced to bail out German banks along with bailing out the rest of Europe.
Wolfgang Schauble, Germany’s powerful federal minister for finance, has said it is all Ireland’s fault its banks collapsed, plunging the economy into a deep recession, and absolves reckless European bondholders of all blame.

In a frank interview for a new documentary called State Secrets and Bank Bailouts, Schauble dismisses claims that European bondholders should be made share in the responsibility for unsustainably pumping up Ireland’s banking system with billions.

“The cause in Ireland is something Ireland itself created – not Luxembourg, not France, not Germany, but Ireland – and it benefited from it for some time,” Schauble claims.

“Then everyone has to bear the consequences of a wrong-headed policy.”

In the documentary, presenter Harald Schumann, a former editor of Der Spiegel, asks Schauble to publish a list of the bondholders who cashed in from the German-backed decision by the European Central Bank not to make them bear the cost of banking recklessness but instead to shift this bill on to the citizens of peripheral European states like Ireland.

“Why don’t you publish a list of creditors so we can have an informed debate about it?” he asks. Schauble dismisses this view as being “naive.”

“[Banks are] very intermingled. And if one bank is not solvent anymore, then it will immediately trigger doubts about the solvency of the next bank because it may have credit at the other,” Schauble states.

“Everyone should solve their own problems. If everyone swept in front of their own door, the whole neighbourhood would be clean,” the German politician added.

“The Irish were very aware that their banks were less stringently supervised then the German banks,” he said.

Most economic common sense in Ireland unfortunately comes from independent politicians (the mainstream politicians are the best money can buy). In this case Stephen Donnelly easily dismisses Schauble’s argument.

In this major documentary, independent TD Stephen Donnelly disputes Schauble’s views of the Irish crisis, which are widely accepted in Germany.

“The gun was held by the European Central Bank,” Donnelly states, “The suspicion is that the European Central Bank said you will continue to pay these bondholders to whom you owe nothing or we will pull the emergency funding out of your banking system. Thereby collapsing your banking system, thereby collapsing your economy. To me, that is gunboat diplomacy.”

Former finance minister Brian Linehan backed up Donnellys claim before he died stating that Trichet made him bail out the bondholders. Even current finance minister Michael Noonan claims to have the letter from the ECB forcing Ireland to bailout the banks at the taxpayers expense, otherwise emergency liquidity would be withdrawn.

Source: Irish Independent

Germany On Verge Of Bailing Out Cyprus

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This euro crisis just gets better and better. Cyprus is locked out of the bonds markets for over a year now and is being kept alive by a loan from Russia but badly needs a bailout. Thats where the dilemma lies for Germany which will bear the brunt of any bailout. A lot of the depositors in Cypriot banks are Russian black money and with an election later this year, it would be very embarrassing for Merkel to be seen to supporting handing over German taxpayers money to pay back dodgy Russians.

When German officials said they would save the euro zone at all costs, the prospect of bailing out Russian oligarchs was not what they had in mind.

But eight months before a crucial election in Germany, Chancellor Angela Merkel is facing charges that Europe is doing just that as the tiny island of Cyprus, a haven for Russian cash, threatens to become the next point of contention in the euro crisis.

In recent days, Germany has signaled that it is reluctantly edging toward a bailout for Cyprus, after lifelines have been extended to Greece, Ireland and Portugal to prevent potentially calamitous defaults. While Cyprus makes up just a sliver of the euro zone economy, it is proving to be a first-rate political headache.

“I don’t think that Germany has ever in the history of the euro zone crisis left itself so little wiggle room,” said Nicholas Spiro, the managing director of Spiro Sovereign Strategy in London. “But Germany wants the euro to succeed and survive, and they are saying we can’t afford a Cyprus bankruptcy.”

But giving a bailout to Cyprus is trickier than it seems. Cyprus’s politicians would prefer not to take European money, which comes with the harsh austerity conditions that have spread misery in Greece. And they can argue that Cyprus was doing relatively well until Greece’s second bailout, when Greek government bonds — of which Cypriot banks held piles — lost considerable value.

The question of keeping the euro together had seemed to be conveniently fading for Ms. Merkel, who in the fall put her full backing behind the euro zone, quieting fears of a breakup. But Berlin seems to have been caught off guard by the political tempest stirred up by Cyprus, which has been shut out of international bond markets for a year but has been kept afloat by a $3.5 billion loan from the Russian government.

Here, is where it get hilariously funny 😉

With that money running out, Germany and its European partners have been locked in a fierce debate over whether and how to throw Cyprus a lifeline. The problem is, most of the money lost by Cypriot banks was Russian, and the worry is that most of the bailout money could wind up in the hands of Russian oligarchs and gangsters. That fear, backed by a recent report by German intelligence, has stoked a furor even among some of Ms. Merkel’s political partners. “I do not want to vouch for black Russian money,” Volker Kauder, a prominent member of her conservative bloc, said recently.

The Russian presence is thick on Cyprus, a picturesque Mediterranean island and a onetime British colony. The bustling, large city of Limassol has an enclave of restaurants, shops and fur boutiques so packed with Russians that locals call it “Limassolgrad.”

You know when something is true, when you get an official denial.

Officials in Cyprus say there is no proof that the Russian cash in its banks is of dubious origin, and they insist that they cracked down on money laundering before joining the European Union. The officials point to an evaluation by the Organization for Economic Cooperation and Development showing that Cyprus is compliant with more than 40 directives against money laundering.

With a population of slightly over 1 million, Cyprus is looking for about €22 billion for its banks.And  I thought Ireland messed up its banks bigtime.

While any lifeline for Cyprus would be small — about $22 billion compared with about $327 billion for Greece — the quandary has reverberated in Europe’s halls of power, and especially in Berlin, which appears to have been backed into a corner by Ms. Merkel’s commitment to keep the euro zone together no matter what.

The outspoken German finance minister, Wolfgang Schäuble, recently cast doubt on whether Cyprus should even be considered for a bailout, given its small size and the stark reality that it is not nearly as vital to the euro’s existence as the larger economies of Spain or Italy. His blunt assessment reportedly drew an admonishment from Mario Draghi, the president of the European Central Bank, which has spent hundreds of billions of euros on a program intended to discourage financial market speculators from attacking euro zone countries.

Already Cyprus is implementing austerity measures and they are having predictable consequences.

With Russia refusing to provide any further financing unless the so-called troika of creditors — the European Central Bank, the International Monetary Fund and the European Commission — provides most of the bailout, the Cypriot government has few options. It signed a memorandum of understanding in November with the troika, setting off a wave of austerity measures that are already starting to hit the enfeebled Cypriot economy.

The salaries of public sector workers have since been slashed by up to 15 percent, state pensions are to be cut by up to 10 percent and the value-added tax is set to rise. “The island has been hard hit, and there is an atmosphere of fear,” Mr. Faustmann said. “People are not sure if they will keep their jobs, and if they do, how long they will have them.”

Mr. Faustmann estimated that it would take at least a half-decade for the Cypriot economy to recover — assuming that the conditions required by Germany and the troika do not send Russian money fleeing from the banks. “If that happens,” he said, “then Cyprus is dead.”

Source: NY Times

Cyprus Bailout MoneyTo Benefit Russia

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Cyprus is on the verge of a bailout from the EU but according to Testosteronepit it is Russian “black” money that will benefit. Either way, Cyprus needs €17 billion for its bankrupt banks following in the path of other Eurozone countries whereby the banks destroyed the nation and governments under orders, signed its citizens up to repaying the banks debts.

German Bailout Chancellor Angela Merkel, who is trying to avoid any tumult ahead of the elections later this year, has a new headache. Cyprus, the fifth of 17 Eurozone countries to ask for a bailout, might default and exit the Eurozone under her watch. Using taxpayer money or the ECB’s freshly printed trillions to bail out the corrupt Greek elite or stockholders, bondholders, and counterparties of decomposing banks, or even privileged speculators, is one thing, but bailing out Russian “black money” is, politically at least, quite another.

Cyprus is in horrid shape. Particularly its banks. Their €152 billion in “assets” are 8.5 times the country’s GDP of €17.8 billion. “Assets” in quotation marks because some have dissipated and because €23 billion in loans, or 27% of the banks’ entire credit portfolio, are nonperforming. That’s 127% of GDP! And then there are the Russian-owned “black-money” accounts.

A “secret” report by the German version of the CIA, the Bundesnachrichtendienst (BND) was leaked last November, revealing that any bailout of Cyprus would benefit rich Russians and their €26 billion in “black money” that they deposited in the now collapsing banks. The report accuses Cyprus of creating ideal conditions for large-scale money laundering, including handing out Cypriot passports to Russian oligarchs, giving them the option to settle in the EU. Much of this laundered money then reverses direction, turning minuscule Cyprus into Russia’s largest foreign investor [read…  The Bailout of Russian “Black Money” in Cyprus].

Now Cyprus needs a bailout of over €17 billion but Merkel faces an enormous task back home in convincing a sceptical public in bailing out Russian interests.

Now Cyprus needs €17.5 billion—just about 100% of its GDP—of which €12 billion would go directly to the murky and putrid banks. The package should be wrapped up and signed on February 10 at the meeting of the European finance ministers.

“I cannot imagine that the German taxpayer will save Cypriot banks whose business model is to abet tax fraud,” grumbled Sigmar Gabriel, chairman of the opposition SPD that has been a supporter of euro bailouts; and Merkel, hobbled by opposition within her own coalition, had relied on them to get prior bailouts passed. “If Mrs. Merkel wants to have the approval of the SPD, she must have very good reasons,” he said. “But I don’t see any….”

The Greens are resisting the Cyprus bailout for the same reasons. And 20 members of Merkel’s own coalition are categorically opposed to it. For the first time, Merkel has no majority to get a bailout package passed. The opposition smells an election advantage.

Before the German finance minister can vote in the Euro Group of finance ministers for disbursement of bailout funds, he must seek parliamentary approval. The German Constitutional Court said so, inconveniently. But without his yes-vote, which weighs 29%, the qualified majority of 73.9% cannot be reached. The bailout disbursement crashes. That’s what Cyprus is contemplating.

Fearing defeat, sources within the government now made it known that they wouldn’t even present a bailout package unless Cyprus agreed to “radical reforms,” including massive privatizations of the bloated state sector—precisely what communist President Dimitris Christofias has ruled out.

The Russian “black money” is so unpalatable that even the bailout-happy President of the EU Parliament, Martin Schulz, got cold feet. Before a bailout package could be put together, he said, “it must be disclosed where the money in Cyprus is coming from.”

Markus Ferber, head of Merkel’s coalition partner CSU, demanded a guarantee that “we help the citizens of Cyprus and not the Russian oligarchs.” In addition, he wants Cyprus to reform its naturalization law. If Cyprus wants to get bailed out, he mused, it must make sure “that not everyone who has a lot of money can get a Cypriot passport.

Source: Testosteronepit

Greece Once Again Threatens The Euro

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During the week the Greek finance minister was caught out lying about a troika bailout outcome but now Greece needs to face up to labour reforms over the weekend or else…

Tim Geithner’s carefully scripted plan to avoid European “reality” until the US election is unraveling. While previously Greece was not supposed to be an issue until after November 6, the recent escalation with the Greek FinMin openly lying about a Troika interim bailout outcome (which may or may not happen, but only following yet another MoU which would see Greece fully transitioning to a German vassal state in exchange for what is now seen as a €30 billion shortfall over the next 4 years, and which would send Syriza soaring in the polls in the process ensuring that a Grexit is merely a matter of time) has forced a retaliation. According to the Greek press, the Troika now demands that Greece resolve its objections to labor reforms (which as reported earlier have forced the ruling coalition to split) by Sunday night, or else… The implication, it appears, is that absent a compromise, the next Troika tranche of €31.5 billion is not coming, and Greece is out.

……

From Kathimerini:

The government is facing a Sunday deadline for a full agreement on the package of measures that will see it cash in the next bailout tranche of 31.5 billion euros. The three-day extension it got in order to get maximum backing within the three-party coalition will be necessary as minor partner Democratic Left insists on an improvement in the terms concerning labor reforms that it staunchly opposes.” Will Greece come through in the clutch? And if not, just what happens with the EURUSD on Sunday night as Greece calls the Troika’s bluff? Deja vu shades of early summer, and plunging European risk come to mind…

It will not be an easy agreement to reach and any fallout will be assessed on Monday by the Euro Working Group.

The Euro Working Group (EWG) of eurozone finance ministry officials will convene again on Monday to discuss whatever conclusions Athens has come to and prepare the blueprint that the Eurogroup of euro area finance ministers may discuss on Wednesday through a video conference that sources from Brussels say is likely to take place in order to discuss Greece.

The prime minister appears determined to have the measures passed immediately through Parliament, either in one or in two draft laws, ordering on Thursday the preparation of the bills required.

At the same time there are also disagreements within PASOK, the other minor coalition partner, as a number of deputies are threatening to vote against a Finance Ministry measure regarding privatizations.

Source: ZeroHedge

Spanish Minister Laughed At For Bullshitting

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At this stage nobody fully believes that Spain doesn’t need a bailout. For various reasons (don’t want to damage Obama’s re-election chances being one) it hasn’t requested one but its a matter of time. So when the Spanish Minister of Economy Luis de Guindos turns up at the London School of Economics and tells them everything is honky dory and there is no chance of Spain requesting a bailout, he got the response you would expect. Laughter !!

You know that something is seriously wrong with your economy when you tell an audience of learned academics and students at an elite university that your country doesn’t need a bailout, and the room rings with the sound of laughter.

Spanish Economy Minister Luis De Guindos Addresses Media
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Spanish Economy Minister Luis de Guindos speaks during a news conference.

That’s what happened when Spanish finance minister Luis de Guindostook to the stage at the London School of Economics (LSE) and became an unexpected comic figure on Thursday evening.

“Spain doesn’t need a bailout at all,” de Guindos said, straight faced and somber, as mirth spread throughout the audience — even de Guindos’ assistant interpreter couldn’t mask a smile.

Not to be perturbed by the disbelieving audience, whose giggles audibly spread throughout the room, de Guindos said that Madrid’s reform program was sufficient to stave off a full sovereign bailout and that the European Central Bank’s (ECB) bond-buying program would suffice to help Spain recover.

“What we have is a proposal from the European Central Bank to trigger intervention in the secondary market with certain conditions,” he said. “They have demanded that in order to intervene … they want certain conditionality.”

De Guindos, speaking in broken but clear English, said that Spain supported the ECB’s bond-buying scheme and that there was a distinction between Spain seeking a full bailout that would be overseen by the troika (the ECB, the European Commission and the International Monetary Fund) and accepting the enhanced credit line that the ECB is offering through bond buying, called the Outright Monetary Transactions.

De Guindos stated that as well as the ECB’s actions it was important that “the commitment of European institutions for the future of the euro[EUR=X  1.3052    0.0035  (+0.27%)   ] was demonstrated in the form of a commitment to fiscal union.

 “Spain is going to actively support a banking union for the euro zone, a fiscal union for the euro zone,” he said. “In order for Spain to recover, it’s extremely important to dispel and to eliminate all doubts about the future of the euro.” 

As in comedy, timing is everything and de Guindos’ comments come after weeks of speculation and market frustration over whether or not Spain will seek a bailout. 

The nervousness and chagrin of European stock markets has been seen in Spanish bond yields edging up towards 6 percent and a week of choppy trade as Spanish Prime Minister Mariano Rajoy denied a report that he would seek a full bailout for Spain this weekend.

Descending from comedy to farce, the finance minister’s presentation was interrupted by protestors in the LSE audience holding a banner saying “Spain for Sale” and heckling the minister.  Unpopular austerity measures have caused several days of protests in Madrid as thousands of demonstrators called for the end of budget cuts and the dissolution of government.

De Guindos told the London audience that Spain faced no other choice.

“Sometimes governments have to take unpopular decisions,” de Guindos said. “I fully understand the discouragement of the population because of these measures, but we believe these measures are totally necessary to return Spain to a stable situation to return to growth in the future.”

Despite the laughter caused by de Guindos’ bailout comment, the economic reality confronting Spain is sobering. Unemployment now affects one in four people, and businesses, large and small, are abandoning the country in droves causing government tax revenue to tumble

Added to pressure on the government is a forthcoming decision by Moody’s, which could downgrade the country’s credit rating to junk status, along with warnings from Fitch and the country’s central bank governor issued on Thursday.

The chances of any light relief for Prime Minister Rajoy look slim as he attends the so-called Club Med summit in Malta this weekend.

Rajoy will meet his French and Italian counterparts, Mario Monti and Francois Hollande at the summit. 

Reuters reports that Italy and France, fearing contagion from Spain into their own beleaguered economies, will look to persuade Spain’s leader to cut to the punchline — and seek a bailout.

Source: CNBC

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