The Next Greece? A Sketch of Spain. BARCELONA — Joan Miró’s farmhouse in Mont Roig, about fifty miles from here, is well known from the Catalonian artist’s own depictions of it. The best of them, a work he called La Ferme (the farm), was owned by his friend Ernest Hemingway, whose widow later gave it to the National Gallery in Washington. The house itself still stands today, but it is empty, rundown, and neglected.
Its walls are peeling and what furniture remains is in bad condition; the cobbles in the front courtyard where Miró and his family often dined alfresco are hardly visible among the weeds. The Spaniards tend to enshrine the homes of famous artists—Picasso’s in Málaga and Dalí’s near Cadaqués. So what’s behind this obvious disregard for the house of Spain’s third great artist of the last century? The answer provides a case history in miniature of Catalonia’s economic woes. Miró’s heirs, who own the property, have had it on the market for three years, but they can’t sell it.
Related Essay Britain’s Royal Pain. Europe braces for Spanish banks bailout - Europe. Eurozone finance ministers are holding a conference call on Spain's expected request for aid to shore up its distressed banking sector, European government sources said. The eurozone greenlighted the "holding of a teleconference of the Eurogroup on Saturday at 4:00pm (1400 GMT) to agree a declaration on Spain's intention to request aid and the Eurogroup's commitment to granting it," a European government source said.
The move came as the International Monetary Fund released a report on Friday which estimated that Spanish banks need at least a 40bn euro (about $50bn) capital injection following a stress test it performed on the country's financial sector. "And some leaks coming out of that meeting - unconfirmed - suggest they are talking about something in the region of as much as $125bn," he said. Spain has not yet asked for assistance, our correspondent said. "All that Madrid has to do is ask for that bailout ... No decision yet. Spanish Economy Minister Luis de Guindos says Spain will seek financial help. Sunday 10 June 2012 07.10 Eurozone finance ministers tonight agreed to lend Spain up to €100bn to recapitalise its banks.
After a 2.5-hour conference call of the 17 finance ministers, the Eurogroup and Madrid said the amount of the bailout would be sufficiently large to banish any doubts. "The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to €100bn in total," a Eurogroup statement said. Spain said it wanted aid for its banks but would not specify the precise amount until two independent consultancies - Oliver Wyman and Roland Berger - deliver their assessment of the banking sector's capital needs some time before 21 June.
"The Spanish government declares its intention to request European financing for the recapitalisation of the Spanish banks that need it," Economy Minister Luis de Guindos told a news conference in Madrid. He said the amounts needed would be manageable, and that the funds requested would amply cover any needs. Joseph Stiglitz: Spain Bank Bailout 'Not Going To Work'
By Tiziana Barghini NEW YORK, June 10 (Reuters) - Europe's plan to lend money to Spain to heal some of its banks may not work because the government and the country's lenders will in effect be propping each other up, Nobel Prize-winning economist Joseph Stiglitz said. "The system ... is the Spanish government bails out Spanish banks, and Spanish banks bail out the Spanish government," Stiglitz said in an interview.
The plan to lend Spain up to 100 billion euros ($125 billion), agreed on Saturday by euro zone finance ministers, was bigger than most estimates of the needs of Spanish banks that have been hit by the bursting of a real estate bubble, recession and mass unemployment. If requested in full by Madrid, the bailout would add another 10 percent to Spain's debt-to-gross domestic product ratio, which was already expected to hit nearly 80 percent at the end of 2012, up from 68.5 at the end of 2011. Instead, Europe should speed up discussion of a common banking system, he said. Europe’s Depressing Prospects: Two Reasons Why Spain Will Leave the Euro.
Normally I don’t like to write about European prospects in the midst of a very rough patch in the market because in that case there isn’t much I can say that isn’t already being said. I find it more useful to wait for those recurring periods in which the markets recover and optimism rises. Still, given the conjunction of political uncertainty in Beijing, low Chinese growth numbers, and another round of deteriorating circumstances in Europe, I will spend most of this issue of the newsletter trying to outline the possible paths countries like Spain must face.
For several years I have been saying that Spain would leave the euro and restructure its external debt. I should say that I specify Spain because it is the country in which I was born and grew up, and so it is also the country I know best. There are two reasons why I was and am fairly sure that Spain cannot stay in the euro (or, which amounts to the same thing, that Germany will leave the euro instead of Spain). The death spiral. Spain’s Death Spiral and the Hypocrisy of the Euro. Anyone out there who thinks the euro zone debt crisis is over – and you know who you are – should take a good look at what’s going on in Spain. If Italy represented the biggest threat to the euro in 2011, then Spain will be the big story of 2012. Whatever numbers you look at, Spain is in a death spiral, a self-defeating circle of recession and austerity that is sending one of Europe’s most important members into an economic dark ages.
Spain today represents all of the failings of the monetary union, from its misconceived inception to its misguided approach to the debt crisis. Here’s just a brief summary of the ugly statistics: (1) The government in Madrid expects the economy to shrink by 1.7% in 2012 – its third contraction in four years. (2) Unemployment continues to rise. It is now more than 23%, and youth unemployment is above a staggering 50%. (3) Housing prices are down 22% from their peak, and are likely to continue to drop, perhaps by 20% or more.
Spain: Simmering anger in Seville. 6 June 2012Last updated at 08:32 ET Paul Mason reports on how the economic crisis is changing lives in Seville The Spanish version of the soprano cornet is tiny: it curls like a golden snail in the hand of the player. There is only one valve, and it is tweaked, like a tap, so that the melody it produces swoops and squeals. In an English brass band there is only one soprano and its job is to add a sweet echo, one octave higher, to the main melody. In the La Pasion Sevilla brass band, all the cornets are sopranos. In fact, between the massed ranks of burly working class men playing their cornettas, and the heavy drum detachment at the back, there's only a few trumpets and horns to add harmony and depth.
The result, if you stand close as the band shuffles behind a statue of the Madonna through the humid alleyways of Triana, Seville, is an aural mixture that is at the same time saccharine sweet and physically painful. Many in Seville have held onto the certainty of tradition in turbulent times. Cheap Spanish vacation? The Euro euro is keeping Spain way too expensive for tourists. Lourdes Segade/Bloomberg via Getty Images.
Economic chaos and mass unemployment are bad news. But to the curious traveler, they are an opportunity for a bargain. So it’s only natural for a cost-conscious American reading headlines about economic catastrophe in Spain and Greece to wonder: Is there a cheap vacation there for me? The answer is: not really. The reasons why underscore the difficulties the euro is creating for the continent’s hardest-hit countries. A comprehensive comparison of travel prices is difficult to undertake, of course, but thanks to the rise of soulless international hotel chains we can at least approximate the cost of staying one place rather than another.
The point isn’t that Spain is an egregiously expensive place to visit. And currency dynamics are the key reason. But they haven’t, because Spain is only a small part of the eurozone. Moody's downgrades Santander UK along with 16 Spanish banks | World news. The credit rating agency Moody's has downgraded 16 Spanish banks along with Santander's UK arm, citing the Spanish government's reduced ability to shore up the banks. Santander UK, whose rating was lowered to A2 – a notch higher than its Spanish parent – insisted there was no impact on its business and that it was an autonomous subsidiary with 90% of its assets held in the UK, where it is also regulated. Moody's admitted it was unlikely that the UK Financial Services Authority would allow Santander UK to substantially weaken itself in order to support the parent. increasing instability. Earlier Moody's had also downgraded four regions in Spain. The moves from the credit rating agency came after a day of fears that Spain will be the next domino to fall if Greece leaves the euro, as the country was forced to deny that there was a run on its fourth-biggest lender, Bankia.
Bankia shares fell almost 30% at one point after reports – later refuted – that depositors were withdrawing their funds. Brendan O'Connor: McCreevy's role in Spain's crash - Comment, Opinion. Brendan O'Connor – Updated 02 December 2012 11:53 PM As Spain teeters on the edge of needing a full sovereign bailout, one of the factors that could bring down the whole eurozone, Bloomberg has been pointing one of the fingers of blame for the current crisis in the Spanish banks firmly at our own Charlie McCreevy. Until recently, he was effectively the EU's financial regulator, the guy who should have been enforcing its rules on banking and markets, from 2004 to 2010, when he was Commissioner for Internal Markets and Services. And all this time, Spain's banks were cooking the books, storing up their recent trouble, and apparently the bould Charlie was "one of the more candid advocates of Spain's approach".
A few years ago it was generally thought that Spain's banks had somehow dodged the financial crisis. This is because Spain's banks had been massaging the numbers to make it look as if they were doing okay when in fact they were making huge losses. It's classic stuff. Sunday Independent.