The EUROZONE, which has no legal framework, will provide 30 billion Euros of loans to Spanish banks before the end of July 2012 !!! The ultimate total might be 100 billion Euros !!!
The first obvious question is "Why are the loans to be made directly to the banks and not the Spanish state ?" It would seem that the answer or reason at present is not very convincing !!! We have to wait and see what happens to-day.
The second question is "What is the real reason why Spanish Banks need refinancing ?". Part of the answer would seem to be that the Banks financed the "Property Boom" in Spain after the EURO was introduced, but this "boom" suddenly stopped !!! It went sour because there were too many unsold flats and houses and unrepaid loans !!!
Big profits had been booked and but now big losses must be put through the accounts !!!
Today the 27 Leaders of the 27 Countries in the EU will meet to discuss the problem, although non-Euro countries are not concerned !!! There is a growing anxiety that more Euro bail-out costs could hit the "EUROZONE", or even the EU !!!
How long will Germany and its politicians be prepared to underwrite the losses which stem from "inflation" and "unemployment" and "economic errors" in other "EUROZONE" countries ? One should see this clearly. If a NON-eurozone country "becomes bankrupt", a "Bail-out" cannot be expected !!! Sympathetic help, yes, but not a bail-out !!!
The real test will be next year !!! On the one hand there will be elections in Germany and that may decide the future of ANGELA MERKEL !!! If she is no longer Chancellor, she will be replaced !!! After all, President Hollande replaced Sarkozy !!!
On the other hand there will also be elections in the EU !!! All MEP's (Members of the European Parliament) must be re-elected, but no Elector can count on the possibility that any one of them will do or say anything about the EURO crisis !!! The EU organization garanties this, but the Lisbon Treaty must first be changed !!!
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