As crisis worsens, surprise visit by Spain’s de Guindos to Berlin
Spain’s Economy Minister Luis de Guindos announced in front of the Spanish Parliament, Spain would not need a complete bailout or rescue package. Despite this optimism it has now been announced that he is flying to Berlin tomorrow.
Speculation on Greece’s bankruptcy and the call for financial aid in some areas in Spain has enhanced that many investors have become doubtful. A negative fall could be seen at the German stock index DAX which fell 3.5%. Before Spain’s and Italy’s stock markets had not permitted naked sales. This led to a wide decline across the whole of Europe. The Euro fell down to 1.21 Dollars, which was the lowest point since June 2010. In Spain and Italy the stock even crashed down 5%.
Out of fear of a demand decrease a lot of raw materials such as oil were sold. Also a decline of Wall Street was recognizable. The Dow Jones lost 1.7% right at the beginning. Also the S&P 500 (~1.6%) and Nasdaq (~2.2%) declined at the opening bell.
Currently, it is very probable Spain will get a full Bail-Out Program. For Spain it is almost not possible to cover all referencing costs. Already this morning the interest rates of the ten year old bonds rose 7.5% higher. Also the yields of the bonds went up.
Spain’s Commerce Secretary Luis de Guindos announced in front of the Spanish Parliament, Spain would not need a complete bailout or rescue package. Despite this optimism it has now been announced that he is flying to Berlin tomorrow. He is going to meet German minister of finance Wolfgang Schaeuble. What exactly will get discussed in Berlin is not clear to this point.