In another sign of the trouble that has nearly brought down the Spanish bank system, the countries banks borrowed 326.4 billion euros from the ECB last month, the Bank of Spain reported. Spain is due to get a 125 billion euro bailout from its neighbors and the IMF. Most of this money will then be loaned to its banks.
This will leave the government in need of a bailout of its own, probably. The national unemployment rate and a new recession makes that case more and more likely. The ECB borrowing is another sign that recent downgrades of Spain’s sovereign paper may not capture how much trouble the country is really in.
Douglas A. McIntyre
