Spain to ask for aid as EU fights debt crisis

A few days ago Spain was purportedly going to need another €30 billion to €70 billion to recapitalize Spanish banks. I suggested the amount would be at least triple that and it did not take long to do so. Yahoo! Finance reports Spanish bailout could reach 100 billion euros A bailout for Spain's teetering banks, once requested by Madrid, could amount to as much as 100 billion euros, two senior EU sources told Reuters on Saturday.

Official Denials From Finance Minister Finance Minister Says "Nothing to Hide" Asks for ECB Audit of Banks, Denies Need for Rescue Fund

By Marc Chandler:Greece has been the model for Portuguese and Irish aid. This may or may not have been fair and appropriate. After all, the nature of the Portuguese and Irish problems were dissimilar from Greece and each other. Spain's is more like Ireland's. The key differences include Spain's size, officials have progressed on a learning curve, and the now perceived greater vulnerability of the whole EMU project.

As any clear-thinking person should have expected, Schäuble rejects ECB help for Spain

BERLIN (Reuters) - A deal is in the works that would allow Spain to recapitalize its stricken banks with aid from its European partners but avoid the embarrassment of having to adopt new economic reforms imposed from the outside, German officials say. While Berlin remains firm in its rejection of Spain's calls for Europe's rescue funds to lend directly to its banks, the officials said that if Madrid put in a formal aid request, funds could flow without it submitting to the kind of strict reform program agreed for Greece, Portugal and Ireland. ...

By EconMatters: Spain formally became the fourth country to ask for bailout aid from the eurozone on Monday, June 25. Spain's short-term borrowing costs nearly tripled at auction on Tuesday. Market participants expect Moody's to further downgrade Spain's sovereign debt to Junk status.

By Marc Chandler:Investors ought not let recovery in the global capital markets in response to the broad brush strokes of an aid package for Madrid obscure the fact that the underlying quagmire just got deeper. The favorable market response is largely technical in nature and related to extreme positioning and the out-sized moves in May.