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Spain’s Borrowing Costs Push Above 6.5%

Worries about the solvency of its banks, particularly the bailout of huge Bankia, rating agency calls that the Spain economy has entered a double-dip recession, and nearly 25% unemployment have pushed Spain’s borrowing costs above 6.5%. Most economists believe that…

By Douglas A. McIntyre
Published May 28, 2012, 6:21am ET · 1 min read

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Worries about the solvency of its banks, particularly the bailout of huge Bankia, rating agency calls that the Spain economy has entered a double-dip recession, and nearly 25% unemployment have pushed Spain’s borrowing costs above 6.5%. Most economists believe that this level cannot be sustained by a country that needs capital to feed deficits that may not fall much for years. Or, they may balloon if the nation’s economic recession turns into a depression. Unemployment levels alone could upset that tipping point.

Spain’s problem raises the difficult issue of whether the EU and IMF would bail out the country, and on what terms. Because Spain is so much larger that Greece, aid could run well into the hundreds of billions of euros. Europe’s rescue facility will reach over one trillion euros, if proposed support for it continues, by some estimates. On top of that, the IMF has about two hundred billion euros at its disposal. Altogether, Spain’s needs could tax these funds, if another nation like Portugal also needs substantial aid.

According to the Financial Times:

Spreads on Spanish 10-year bonds over German Bunds were also flirting with euro-era highs, climbing above 500 basis points.

Douglas A. McIntyre

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Douglas A. McIntyre

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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