The latest round of the Spailout was approved today following demonstrations yesterday that brought a million people to the streets of Spanish cities.
But the latest round of the Spanish bailout announced today brought no relief for Spanish bond markets, and demonstrations are continuing.
RT reports on Thursday’s massive protests:
The program notes:
Police have used rubber bullets and tear gas to disperse angry protesters thronging the streets of Spain. Dozens of people were injured and a number of activists detained during the latest nationwide anti-austerity demonstrations. In a major show of strength, hundreds of thousands have been taking part in the protests. People marched in 80 cities across the country to protest against more suffocating austerity which is to come. That’s after the German Parliament gave the green light to the 100-billion Euro bailout for the country’s battered banks. The EU’s finance ministers are now expected to approve the conditions for the financial lifeline to Madrid. Carlos Delclos, a sociologist at Pompeu Fabra University, believes the situation in Spain is only going to go from bad to worse.
A bailout that’s already fizzling
As expected, following Thursday’s legislative approval of the massive budget cuts, the eurozone money ministers who demanded the cuts came up with their reward, another cash infusion.
From James Kanter of the New York Times:
Euro area finance ministers agreed Friday on an interim bailout payment for Spain’s troubled banking sector, but borrowing costs rose to worrisome levels for a second day on lingering concerns about how much more money might be needed as the recession drags on.
Approval of the 30 billion euro, or $37 billion, loan to Spain had been expected after the German Parliament signed off on the aid package on Thursday.
The loan is “warranted to safeguard financial stability in the euro area as a whole,” ministers said in a statement following the discussion held by teleconference. The goal was to “return of all parts of the Spanish banking sector to soundness and stability,” the ministers said.
Ministers also agreed that loans for Spanish banks could amount to as much as €100 billion, the limit authorized at a summit of E.U. leaders in late June as part of a deal aimed at taming borrowing costs in vulnerable countries in exchange for tougher oversight.
But the market reaction with worse than apathy, cdriving stock prices down and sending Spanish borrowing costs even higher, reports the London Telegraph:
Spain’s stock market suffered its largest one-day fall in two years after the country revealed it will not return to growth until 2014 and will have to pay an extra €9.1bn next year just to service its debt.
Spanish 10-year bond yields hit a euro-era high of 7.3pc, a level widely believed to be unaffordable in the long term, while the spread between those bonds and the German benchmark Bunds widened to a record 600 basis points.
The Spanish stock market fell 5.79pc and the Italian MIB was down 4.4pc, while the euro hit a session low against the US dollar.
Budget Minister Cristobal Montoro said that his country’s recession would ease this year, with GDP contracting by 1.5pc, two percentage points lower than previous estimates. However, he revised next year’s outlook down from 0.2pc growth to a 0.5pc contraction, before a rise of 1.2pc in 2014 and 1.9pc in 2015.
He also expects Spain’s unemployment level to continue its 12-month rise to hit 24.6pc this year, before falling marginally to 24.3pc next year and 23.3pc in 2014.
The BBC reported last night on the mounting unrest in the country:
Spanish police have fired rubber bullets to clear demonstrators in Madrid as a day of nationwide protests against spending cuts ended in unrest.
Protesters set alight rubbish bins as riot police charged them in the city centre, near the parliament building.
Seven people were arrested and at least six injured, officials said.
Earlier, tens of thousands of people held largely peaceful protests across Spain against the latest government austerity measures.
Public sector workers crowded the streets of Madrid, Barcelona and several other cities, chanting slogans against government “robbery”.
Among those protesting were firefighters and police officers, as well as health and education workers. “We have lived through bad times, but this takes the biscuit,” fireman Francisco Vaquero, 58, told the Reuters news agency.
Here’s a brief clip of last night’s protest in Las Palmas in the Canary Islands from vlogger Pedro Antonio Jiménez Pérez:
Fianlly, a report from AlJazeera: