Photo: Spanish Seek Bailout
Spain has now become the latest and largest country seeking a European bailout that could hit the $125 billion mark.
The requested bailout would allow Spain to stabilize its economy and more importantly calm the eurozone monetary system. The bailout request comes on the heels of the Portugal, Irish and Greek bailouts however it is important to note that the Spanish economy is five times larger than Greece’s.
The massive aid is expecting to go the country’s banks for recapitalization and does not appear to come with any austerity conditions. Spain had already put in place severe austerity measures on its citizens. The continuing European recession, prolonged unemployment and financial crisis further weakened the Spanish economy.
The request for the bailout is to be decided by the 17 countries that make up the eurozone. The new Prime Minister of Spain, Mariano Rajoy, did not appear to appreciate the severity of his country’s financial position, vowing only 10 days ago to not seek a bailout.
Last week Spain’s credit rating by Fitch was downgraded to BBB, only two levels above non-investment grade.