News / Europe

New Eurozone Focus: Spain's Debt, Economy

Civil servants hold up placards as they protest against government austerity measures in Madrid, July 23, 2012.Civil servants hold up placards as they protest against government austerity measures in Madrid, July 23, 2012.
x
Civil servants hold up placards as they protest against government austerity measures in Madrid, July 23, 2012.
Civil servants hold up placards as they protest against government austerity measures in Madrid, July 23, 2012.
VOA News
The debt-ridden Spanish government and the country's troubled economy are the newest face of the European debt crisis.

Stock markets across Asia, Europe and the United States plunged on Monday on fears that Madrid will need an international bailout after the country's borrowing costs soared above the level at which Greece, Ireland and Portugal all were forced to secure rescue packages.

Economy minister Luis de Guindos denied that Spain would need help beyond the $122 billion package Europe has already sanctioned for the ailing Spanish banking system.

But as Spain's autonomous regions sought new assistance from the central government for their own debt woes, interest rates on Spanish debt jumped to more than 7.5 percent, the country's highest level in the 13-year history of the euro currency union. The interest rate is well above the seven percent level that pushed the Greek, Irish and Portuguese governments into bailouts.

Spain's stock market fell sharply Monday for the second straight day of trading. Officials attempted to curb the freefall, banning the practice of short-selling of financial stocks for three months, on the theory that it contributes to a declining market. In short-selling, investors bet that the price of stocks will fall, borrowing stock from a broker, selling it, and then attempting to buy it back at a cheaper price, to pocket the difference.

Spain has imposed sharp austerity measures, cutting government spending and increasing taxes. Thousands of workers have taken to the streets in recent days in protest, but the government says the changes are necessary to rein in the government's deficit.

The underlying problem for Spain is its weak economy. Spain has the fourth largest economy in the 17-nation eurozone, but about a fourth of its workers are unemployed.

Its economy also is contracting, not growing. In a new report, the central bank said the country's economy shrunk four-tenths of a percent in the April-to-June period, with the government predicting that the decline will continue into next year.

Additionally, there is renewed eurozone attention on Greece and Italy.

Auditors from the European Union, the European Central Bank and the International Monetary Fund are gathering in Athens to take a new look at the government's efforts to impose budget cuts so it can receive more money from the country's second bailout in two years.

Greek Prime Minister Antonis Samaras on Sunday compared the financial woes of his country to that of the United States during its Great Depression in the 1930s.

Italy, another country with burgeoning debt, also is facing an increase in its borrowing costs.

Economics professor Nicola Borri said the Spanish economic upheaval has directly affected the interest rate Rome is paying on its debt.

"So it is not clear right now, if the 100 billion euros that Europe has pledged to save Spanish banks will be able to stop the banking crisis that is right now happening in Spain, and it is not clear yet which is the real trouble in the Spanish provinces. So I think that this uncertainty at the Spanish level is definitely affecting our market as well," said Borri.

You May Like

Lebanese Media Unite to Support Palestinians in Gaza

Joint newscast billed as Arab world’s first unified news bulletin in support of Hamas-controlled Gaza Strip More

Photogallery Australian PM Alleges ‘Coverup’ at MH17 Crash Site

Meanwhile, Russia's ambassador to Malaysia denies plane's black boxes were opened before they were handed over to Malaysian officials More

Despite Advances in AIDS Treatment, Stigma Lingers

Leading immunologist tells VOA that stigma is often what prevents those infected with disease from seeking treatment More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nature of Space Exploration Enters New Agei
X
Elizabeth Lee
July 20, 2014 2:36 AM
Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.
Video

Video Diplomatic Crisis Grows Over MH17 Plane Crash

The Malaysia Airlines crash in eastern Ukraine is drawing reaction from leaders around the world. With suspicions growing that a surface-to-air missile shot down the aircraft, there are increasing tensions in the international community over who is to blame. Henry Ridgwell reports for VOA from London.
Video

Video Undocumented Immigrants Face Perilous Journey to US, No Guarantees

Every day, hundreds of undocumented immigrants from Central America attempt the arduous journey through Mexico and turn themselves over to U.S. border patrol -- with the hope that they will not be turned away. But the dangers they face along the way are many, and as Ramon Taylor reports from the Rio Grande Valley in Texas, their fate rests on more than just the reception they get at the US border.
Video

Video Scientists Create Blackest Material Ever

Of all the black things in the universe only the infamous "black holes" are so black that not even a tiny amount of light can bounce back. But scientists have managed to create material almost as black, and it has enormous potential use. VOA’s George Putic has more.
Video

Video Fog Collector Transforming Maasai Water Harvesting in Kenya

The Maasai people of Kenya are known for their cattle-herding, nomadic lifestyle. But it's an existence that depends on access to adequate water for their herds and flocks. Lenny Ruvaga reports for VOA, on a "fog collector."

AppleAndroid