Thursday, 25 November 2010

Spain: Too big to fail for EU?

Three important points:

1. Spain's economy is too big and if it fails, other stronger countries may have trouble in rescuing it. Euro will be the victim.

2. Self-fulfilling prophecy. “If investors expect Spain to have trouble refinancing its debt, now or somewhere down the road, then Spain will have trouble,”

3. The soundness of Spanish banks. They have too much bad debt on real estate and are exposed to Portugal's problematic debt.

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