More evidence that fiat money always fails in the end.
Spain too big for EU rescue fund as China recoils
As Spain edges closer to a full sovereign rescue, economists have begun to doubt whether the EU bail-out machinery can raise such large sums funds at viable cost on global capital markets.
While the International Monetary Fund thinks Spanish banks require €40bn or so in fresh capital, any loan package may have to be much larger to restore shattered confidence in the country.
Megan Greene from Roubini Global Economics says Spain’s banks will need up to €250bn, a claim that no longer looks extreme. New troubles are emerging daily. The Bank of Spain said on Thursday that Catalunya Caixa and Novagalicia will need a total of €9bn in new state funds.
JP Morgan is expecting the final package for Spain to rise above €350bn, while RBS says the rescue will “morph” into a full-blown rescue of €370bn to €450bn over time — by far the largest in world history.
