SPAIN: Contagion ?

Today´s markets are moved by FEAR. Fear  that the European debt crisis is spreading to Spain and tensions between Koreas.

Three developments in the past couple of days have put Spain in the market’s cross-hairs:

First, the Spanish central bank had to take over a savings bank over the weekend. ( Caja Sur )

Second, this was followed yesterday by 4 other savings banks merging.

Third, the IMF yesterday urged Spain to do more to overhaul its banking system warning that its  response has been too slow. It also commented on some of its structural rigidities, as in the labor market.

In addition to its much larger size, Spain also differs from Greece in that the bulk of Spain’s debt issue is not (yet) a sovereign issue as it is in Greece.  As in Portugal, the debt is still largely a private sector issue.  However, all share that common trait of requiring external financing.

Let´s remember that Spain needs to refinance € 54 Billions of Debt  by July !!!