US markets were closed yesterday for Memorial Day, but elsewhere in the world the show went on as per normal. The “show” at the moment remains dominated by the eurozone’s travails – though Spain has now taken centre stage from Greece, with fears growing that a Spanish banking crisis will force the European Union into evermore-costly bailouts. EU sources this morning are quoted saying that Spain’s financial sector could need as much as €100 billion of support.
As Euromoney reports, the worrying thing about the €19 billion Bankia bailout was that it came “after the bank reclassified what it had previously classed as SME loans as in fact loans to the troubled property sector.” Analysts are now wondering what nasty surprises are lurking on other banks’ balance sheets.
Based on official statistics, Spain’s government debt-to-GDP level is 68% – low in comparison with many other European countries. Germany, France, the UK and Italy all have higher debt-to-GDP levels, while Portugal, Ireland and Greece’s are all north of 100% (above 150% in Greece’s case). But Spain has much more private sector debt as a percentage of GDP than other major European countries (bar the UK). And as events during 2007-08 showed, all too often private debt turns into public debt during crises – particularly in the case of bank liabilities.
The story as far as gold and silver are concerned remains the same: continued range trading. Gold continues to trade between $1,550 and $1,600, while silver is gravitating around $28.50. Given though that the Comex reopens today after the holiday yesterday, it will be interesting to see whether or not trades there can restart the bullish trend we saw at the end of last week.
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Spanish Debt Crisis In The Spotlight
Published 05/29/2012, 08:48 AM
Updated 05/14/2017, 06:45 AM
Spanish Debt Crisis In The Spotlight
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