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

Multimedia Social Media Documenting, Not Driving, Hong Kong Protests

Unlike in Arab Spring uprisings, pro-democracy protesters in Hong Kong aren't relying on Twitter and Facebook to organize, but social media still plays a role More

Bambari Hospital a Lone Place of Help in Violence-Plagued CAR

Only establishment still functioning in CAR's second city is main hospital 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.
The Legacy of Jimmy Carter: The Preacher from Plainsi
X
October 01, 2014 10:45 AM
It is common in the United States to see tourists flock to sites associated with America's presidents. Some are privately owned and others are run by the National Park Service or the National Archives -- but most have helped draw business and people into the towns and cities where they are located. As VOA’s Kane Farabaugh reports, there is one particular presidential hometown that is unique in what it has to offer those who make the trip.
Video

Video The Legacy of Jimmy Carter: The Preacher from Plains

It is common in the United States to see tourists flock to sites associated with America's presidents. Some are privately owned and others are run by the National Park Service or the National Archives -- but most have helped draw business and people into the towns and cities where they are located. As VOA’s Kane Farabaugh reports, there is one particular presidential hometown that is unique in what it has to offer those who make the trip.
Video

Video Hong Kong Protests Draw New Supporters on National Holiday

On the 65th anniversary of the founding of Communist China, Hong Kong protesters are hoping to stage the largest pro-democracy demonstration since the 1989 Tiananmen protests. VOA's Brian Padden visited one of the protest sites mid-day, when the atmosphere was calm and where the supporters were enthusiastic about joining what they are calling the umbrella revolution.
Video

Video India's PM Continues First US Visit

India's prime minister is on his first visit to Washington, to strengthen political and economic ties between the world's oldest and the world biggest democracies. He came to the U.S. capital from New York, the first stop on his five-day visit to the country that denied him an entry visa in the past. From Washington, Zlatica Hoke reports Modi seemed most focused on attracting foreign investment and trade to increase job opportunities for his people.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid