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Spain poised to seek bailout - (www.ft.com)
Spain could request bailout aid for
its struggling domestic banks as
early as Saturday during conference calls between officials from all 17
eurozone finance ministries, making Madrid the fourth member of the single
currency bloc to need a rescue from EU authorities since
the outbreak of the sovereign debt crisis. People briefed on planning for the
calls, one with senior officials and a second with finance ministers
themselves, said leaders want to move preemptively in order to assuage growing
market uncertainty. The decision was first reported by Reuters. There were
signs on Friday that the Spanish government may back away from a formal request
for aid after news of the calls was made public. Spanish media quoted deputy
budget minister Fernández Currás on Friday as saying the reports were “false”.
Strike threatens to derail crucial Greek election - (www.ap.com) A strike
announced Thursday by Greek municipal employees is threatening to derail the
crucial June 17 national election, which could determine whether the
debt-crippled country continues to use the euro. The POE-OTA union, which
represents thousands of people who work for cities, villages and other
municipalities, says its members are paid far less for doing elections-related
work than other government employees. Municipal workers are a key part of the
voting process, from setting up voting centers with ballot boxes, booths and
ballots to handling last-minute documentation for voters.
Europe’s troubles affect wide variety of U.S. firms - (www.washingtonpost.com) From manufacturers in the Midwest to upscale retail shops in Manhattan,
a wide variety of American companies are feeling the pinch of Europe’s economic contraction,
helping to hold back recovery in the United States. Ford, the iconic U.S. car
company, says that Europeans are not only buying fewer
cars but also replacing fewer parts. Kraft Foods, which is behind
such brands as Swedish Fish and Dentyne, says sales of candy and gum in Europe are
lagging. And jeweler Tiffany & Co. saysfewer European tourists are shopping
at its flagship Fifth Avenue store. Europe is suffering a financial
crisis, fueled by dwindling investor confidence in the debts of such countries
as Greece, Portugal, Spain and Italy and a beleaguered banking sector. In the
United States, analysts are worried less about the financial system and more
about the impact on companies outside Wall Street.
Madrid Leans on Its Troubled Banks to Buy Its Bonds - (www.nytimes.com) While the Spanish government was able to sell all the bonds it wanted to
on Thursday, it mostly sold to the usual buyers: Spain’s increasingly fragile
banks. And so, as Madrid tries to come up with the money to bail out its banks,
its main lenders are increasingly becoming many of those same institutions. If
it sounds like the most vicious of circles, it is. Economists warn that over
the long term, Spain will have trouble meeting its substantial financial
requirements until foreign investors return to the market as regular buyers,
injecting new money into the system. Until late last year, foreign investors
were doing just that. But lately, much of the foreign money has been staying
away.
Capital Flight Leaves Banks In Germany Awash In Deposits -
(www.bloomberg.com) As Europe’s
sovereign debt crisis escalates, Germany is becoming a magnet for
depositors keen to stow their savings in the euro area’s safest market. Deposits
in Germany rose 4.4 percent to 2.17 trillion euros ($2.73 trillion) as of April
30 from a year earlier, according to European Central Bank figures. Deposits in
Spain, Greece and Ireland
shrank 6.5 percent to 1.2 trillion euros in the same period, including a 16
percent drop for Greece, the data compiled by Bloomberg show. As banks in
Europe’s periphery fret over lost deposits, German lenders are awash in
liquidity that comes on top of more than 1 trillion euros the
ECB has made available in three-year loans to banks since December to ease the
flow of credit. The prospect of Greece leaving the 17-nation euro region is
fueling the capital flight as parties opposed to the terms of the country’s
second bailout prepare for a new ballot on June 17 after winning most of the
votes in elections last month.
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