Spanish bulls' final run

Sun 22 Jul

(subheading)The German public is running out of patience for seemingly endless bailouts (subheading end)


Recently the European Union's bailout fund for banks, the European Financial Security Facility (EFSF), agreed to send EUR100 billion (EUR30 billion from Germany) to prop up faltering Spanish banks. Spain agreed to another painful round of austerity measures in order to receive the aid. It was backed by the German parliament, which signed off on the deal last week. Before the ink had dried though, investors' wobbly confidence in Spanish banks sent Spain's borrowing rate above 7%. This is generally considered the maximum rate that can reasonably be paid back by borrowing countries without causing irrevocable damage to their economies.

Some bullish investors have been spooked, and the bears are on the prowl. Things look quite bleak on the financial horizon for Spain in the coming months, perhaps even years. Its economy is service-oriented (tourism) and housing-based, with too little diversity. And to make matters worse, there is little demand for either. The situation has become so dire in Spain that some are even suggesting that violent social upheaval may take place. This could make the earlier turmoil in Greece seem tame.

Few politicians hold out hope that this latest bailout will be the one to stem the tide of financial red ink, and many experts believe that it is only a matter of time before the requests for a lifeline to the PIIGS (Portugal, Italy, Ireland, Greece and Spain) increase and the time between those requests become shorter. However, the spigot for bailouts is slowing to a trickle. From the perspective of the German public, the majority of whom are uncharachteristically in agreement, it appears as if good money has been thrown after bad with each new rescue.

The balancing act for Chancellor Angela Merkel's CDU, as well as  their coalition partners CSU and FDP, is to figure out how long bailouts can remain a politically viable option. By keeping these weaker economies afloat, she helps the German economy continue to sell its goods to fellow Europeans. Nevertheless, both the political and financial cost is massive. Despite Ms. Merkel's popularity at home, she cannot expect the German media and public to continue to give her a carte blanche when it comes to the hemorrhaging of hard-earned German cash to the economies of the PIIGS.

Most Germans, and many Europeans, believe that the cash-strapped banks in the PIIGS countries have reached this point by reckless investments, inflated balance sheets and general mismanagement. As a result, austerity is their just reward. Perhaps the biggest question in most of Europe's collective mind is: Who will crack first? Lending countries or borrowing ones? Whichever it is, one thing is certain. The bulls have been dragged from the ring.

Write a comment ...
Post comment

Olympiaturm Turns 50

Munich's Olympic Tower was  opened exactly 50 years ago - on February 22nd 1968 - for the first time. With its exactly 291.28 meters, it is to this...

Why Hillary Is Good For Your Health

Hillary the hawk at Stachus
Passing through the basement floor at Stachus these days you might not be sure if you can trust your eyes, as Hillary the Harris Hawk is likely to...

Oh dear, Obikes

Obike Muenchen
So far since launch, 6800 Obikes bikes have been positioned in Munich. More and more of these bicycles-for-rent are being deliberately damaged. Not...

Winter Tollwood 2017

Tollwood Winter Festival
Tollwood Winter Festival 2017 is currently taking place at the Theresienwiese in Munich.
This year's festival motto is: "We, all. Let's stand up and...

Engineering Jobs Fair in Munich

Munich Engineering Jobs - accepting CVs
The Association of German Engineers (VDI) is hosting its annual engineering recruitment fair on Thursday 16th November in Munich. The day-long event...

Second S-Bahn weekend maintenance closures

SBahn delays
For the second - and last - time of the year, the S-Bahn Stammstrecke (main line) will be out of service due to repair and maintenance works.


Munich Security Conference 2018 - City Center becomes a restricted area

Munich Security Conference 2018
This year's Munich Security Conference (MSC) will be held from February 16 - 18th, 2018 at the "Hotel Bayerischer Hof" again. On the agenda are, in...

Institutionalist Ciudadanos won the election, but pro independence parties retain majority

Ines Arrimadas, leader of Ciudadanos with 37 seats obtained most of the support from voters (25,3), but it wasn´t enough to break a majority of pro...

DB Sprinter Hits Technical Issues

It should have been the glorious end of a long and expensive journey; after more than 25 years of planning, political discussions, building halts and...

Is an Executive MBA Worth it?

Chicago Booth MBA
The Future of Business Education: Is an Executive MBA Worth it? Join Chicago Booth in Munich for a candid panel discussion and audience Q&A with...

Rosenheimerplatz Knife Attack - multiple victims

UPDATE: Munich police have now confirmed the man being held is in fact their prime suspect and the emergency situation is now over. UPDATE: a man...

Munich Top City for IT and Engineering

Munich top city for engineering jobs
Back in 2014, a study by the European Commission confirmed that Munich is the city that offers Information and Communication Technology (ICT)...

Advertise with The Munich Eye
Public Service Advertisements
Shades of Love
Spanish Finca for rent Web Site Optimisation
Newspaper sudoku