Spain to ask EU for bail out

BRUSSELS — The euro zone struck a deal on Saturday to hand Cyprus a bailout worth €10-billion ($13-billion), but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risks of a wider run on savings. The eastern Mediterranean island becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the euro zone for financial help during the region’s debt crisis.

The European Stability Mechanism, which will have a lending capacity of 500 billion euros, will take over from the European Financial Stability Facility, a temporary mechanism that has so far been used to bail out Ireland and Portugal

Prime Minister Mariano Rajoy in in the battle of his life following additional revelations by Spain's former treasurer that Rajoy personally received undeclared cash payments. Let's start this start this story with a flashback snip from my February 4 report Ledger Book Shows Rajoy Received 35 Payments Totaling €322,231; Rajoy's Incredulous Denial; Anger Rises.

By John Lombardo:Last July, ECB President Mario Draghi famously promised to do "whatever it takes to preserve the euro." European stock and bond prices rallied on the news, which apparently caught even a number of Draghi's cohorts on the ECB Governing Council off guard. However, in relatively short order, the ECB followed his proclamation with the announcement of the OMT, or Outright Monetary Purchase, program in early September.

Paolo Manasse, 5 April 2011The meeting of the European Council on 24-25 March focused on shoring up the battered Eurozone infrastructure through the European Stability Mechanism. This column argues that the mechanism is seriously flawed. It says it is unlikely to withstand the shock of a severe financial crisis and may even spread the damage to high-debt countries, while leaving the Eurozone in the grip of paralysing vetoes.Full Article: The trouble with the European Stability Mechanism

Moody's cut ratings on the European Stability Mechanism and European Financial Stability Facility.