Spanish stocks have plummeted after investors refuse to believe that the troubled country’s government can salvage its ravaged banking system.
The nation saw its stocks hit a nine-year low as confidence continues to flee and debt continues to pile up. Spain’s Prime Minister Mariano Rajoy blamed soaring borrowing costs on the advancing debt crisis across the Eurozone, and tried to dismiss fears that Madrid will be crushed by the debts of its banks.
Shares in Bankia, which were suspended on Friday as the government unveiled its largest ever recapitalisation plan, plunged 27% before recovering. The government has already pledged to pump up to €19billion into the troubled bank. The Spanish newspaper, El Mundo fanned fear by claiming that a further €30bn was required to rescue four other banks, CatalunyaCaixa, Novagalicia, Banco de Valencia. Speculation is rife over whether the Euro central bank will be forced to step in and help salvage the situation, but Rajoy denied this insisting that; “There will be no rescue of Spanish banks,”
Spain’s woes were increased further after today’s retail sales figures were at their lowest level since 2004. The figure slumped by 9.8% in April. Spain is sliding deeper and deeper into recession and it appears that its government is in denial over its circumstances. Rajoy is adamant that the country won’t need a bailout but as we’ve seen in other nations his word doesn’t mean an awful lot.
In Ireland the people are preparing to vote on the new European fiscal treaty. Many voters are angry at what has occurred in their country with many feeling that they should vote against the treaty. However, unemployment has soared and austerity is biting hard into many people’s wallets. Fear is palpable in the country with many voters terrified that Ireland could go the way of Greece if they vote with their hearts and say no.
“The ‘Yes’ campaign is doing better not because it is campaigning well, but because of the mood of the country – an element of fear of being left on the outside,” said Eoin O’Malley, a politics lecturer at Dublin City University.
“Irish people are happy that Ireland is not in the news. They don’t want to put it into the news,” he said.
The Irish have rejected two European treaties in the past but were then forced back to the polls to get what some commentator’s say is ‘the right choice’. This time however the Irish government is insisting that this time there will be no second chances. It has warned voters that a clause in the treaty states that only those who sign up can access the euro zone’s permanent bailout fund, the European Stability Mechanism, warning of unpaid wages and empty bank machines should a No vote win the day.
In effect blackmailing the electorate?
The Pound to Euro exchange rate is currently trading at 1.251
The Pound to US Dollar exchange rate is currently trading at 1.567
The Euro to US Dollar exchange rate is currently trading at 1.252
The Euro to Pound exchange rate is currently trading at 0.799
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