Home > Man-Made Disasters > ‘The Worst Crisis We Have Ever Lived Through’: Spain Faces ‘Total Emergency’ As Global Markets Tumble

‘The Worst Crisis We Have Ever Lived Through’: Spain Faces ‘Total Emergency’ As Global Markets Tumble

By Ambrose Evans-Pritchard, The Telegraph – ““We’re in a situation of total emergency, the worst crisis we have ever lived through” said ex-premier Felipe Gonzalez, the country’s elder statesman.

The warning came as the yields on Spanish 10-year bonds spiked to 6.7pc, pushing the ‘risk premium’ over German Bunds to a post-euro high of 540 basis points. The IBEX index of stocks in Madrid fell 2.6pc, the lowest since the dotcom bust in 2003.

Chaos over the €23.5bn rescue of crippled lender Bankia has led to the abrupt resignation of central bank governor Miguel Ángel Fernández Ordóñez, who testified to the senate that he had been muzzled to avoid enflaming events as confidence in the country drains away.

Markets are on tenterhooks as Spanish yields test levels that forced the European Central Bank to respond last November with its €1 trillion liquidity blitz. ‘Nobody is short Spanish debt right now because they are expecting ECB intervention,’ said Andrew Roberts, credit chief at RBS. ‘If it doesn’t come — if we take out 6.8pc — we’re going to see a hyberbolic sell-off,’ he said.

Italy felt the full brunt of contagion from Spain on Wednesday, with 10-year yileds back near 6pc. The euro fell to a 2-year low of $1.239 against the dollar. Crude oil and metal prices plummeted and save-haven flight pushed rates on 2-year German debt to zero. Gilt yields fell to 1.64pc, the lowest in history.” Read more.

World markets tumble back into the red as fears grow Spain will need an EU bailout – “World markets tumbled back into the red today as fears grew Spain will need an EU bailout. The Dow Jones Industrial Average was down more than 1 per cent on doubts the nation will be able to afford to recapitalise its fourth biggest lender Bankia. There are also increasing worries that other Spanish banks will also need bailing out. The FTSE 100 Index was nearly 2 per cent or 96.8 points lower at 5295.3 as Spain saw the yield on its 10-year bonds rise to a record euro-era high of 6.68 per cent at one stage. This is close to the 7 per cent level that pushed Greece, Ireland and Portugal into taking a bailout in a sign that investors had little faith in the country’s ability to deal with its debts. Chris Beauchamp, market analyst at IG Index, said: ‘Investor confidence wanes by the day, and it could only be a matter of time before the Spanish government is forced to ask for financial aid.'” Read more.

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