100 billion used to be a big number. These days, it barely buys you a little time.
Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros ($125 billion) to shore up its ailing banks and Madrid said it would specify precisely how much it needs once independent audits report in just over a week.
A bailout for Spain’s banks, struggling with bad debts since a property bubble burst, would make it the fourth country to seek assistance since the region’s debt crisis began, after Greece, Ireland and Portugal.
According to Nicholas Spiro at Spiro Sovereign Strategy:
(The) decision by the Spanish government to announce its intention to formally request external financial assistance is the most significant and alarming development in the two-year-old euro zone crisis.
One of the two southern European economies that matter most to the future of the euro zone, and the bloc’s fourth-largest, is no longer capable of managing its own financial affairs.