Spain Secures Massive Bailout

There’s good news for Spain today. Rafael Nadal won his seventh French Open and the European agreement to rescue Spain’s banks for $125 billion. This bailout looks pretty bad for Spain’s prime minister who two weeks ago said they didn’t need any money. The markets have a different opinion since Spanish stocks are up strongly today.

The politicians in Spain are contorting themselves in an effort to say this isn’t what it is – a bailout. The desired results are already apparent. At one point, Spanish bonds were trading at 548 basis points over German bonds. That spread is now down to 466 basis points. This latest bailout is a big chunk of money and it’s why everyone is so focused on Greece’s elections next weekend. If Greece again decides to ditch austerity, that could knock them out of the eurozone. I don’t think it will come to that but it’s a real possibility.

The futures in the U.S. markets hint at a decent open.

Posted by on June 11th, 2012 at 9:09 am

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