[QODLink]
Counting the Cost
Was the Spanish bank bailout botched?
It has been a big week in Europe, with what was once seen as a periphery crisis now clearly heading towards the core.
Last Modified: 24 Jun 2012 12:02

It has been a big week in Europe, with what was for a long time seen as a periphery problem now clearly heading towards the core.

The big economies of Spain, Italy and even France are now looking increasingly shaky.

Spain's problems are probably the most acute; the cost of borrowing is around seven per cent for Madrid at the moment and that is a psychologically important level as it is the level at which Greece, Ireland and Portugal needed international financial assistance.

But there are some concerns that the $125bn Spanish bank bailout was botched.

The eurozone is not lending the money to the banks directly. Instead, it is being passed through the government, which in effect adds to the nation's debt problems and makes it more difficult for Spain to borrow money.

JPMorgan believes that Spain's bailout will push the country's debt-to-GDP ratio to 108 per cent - up from the current figure of around 70 per cent.

And then there is the risk of contagion and the impact it may have on Italy. Italy does not have the same property and unemployment crises as Spain, but its debts do stand at 120 per cent of its GDP.

On this episode of Counting the Cost, Al Jazeera's Paul Brennan meets one Spanish family feeling the full force of Spain's problems.

Then we speak to Ebrahim Rahbari, an economist at Citigroup, which was the first to say that Spain would need a bailout and ask him if he thinks the bailout will really succeed in targeting the banks' instability.

 
Watch each week at the following times GMT: Friday: 2230; Saturday: 0930; Sunday: 0330; Monday: 1630. Click here for more Counting the Cost.

Follow Kamahl Santamaria @KamahlAJE and business editor Abid Ali @abidoliverali

346

Source:
Al Jazeera
Topics in this article
People
Country
City
Featured on Al Jazeera
At least 25 tax collectors have been killed since 2012 in Mogadishu, a city awash in weapons and abject poverty.
Tokyo government claims its homeless population has hit a record low, but analysts - and the homeless - beg to differ.
3D printers can cheaply construct homes and could soon be deployed to help victims of catastrophe rebuild their lives.
Lack of child protection laws means abandoned and orphaned kids rely heavily on the care of strangers.
Featured
Booming global trade in 50-million-year-old amber stones is lucrative, controversial, and extremely dangerous.
Legendary Native-American High Bird was trained in ancient warrior traditions, which he employed in World War II.
Hounded opposition figure says he's hoping for the best at sodomy appeal but prepared to return to prison.
Fears of rising Islamophobia and racial profiling after two soldiers killed in separate incidents.
Group's culture of summary justice is back in Northern Ireland's spotlight after new sexual assault accusations.
join our mailing list