Photo: Bloomberg TV
Investors are clamoring over Spain’s high borrowing costs and its apparent need for a bailout. Even Spanish Finance Minister Luis de Guindos reportedly bringing this up with German Finance Minister Wolfgang Schaeuble at a meeting this week.But Jim O’Neill, Chairman of Goldman Sachs Asset Management, told CNBC’s “Investing Edge” that this did not really make sense.
“It’s not obvious to me why Spain needs a full bailout, particularly when it comes to IMF bailouts; it’s still not obvious to me why the IMF is that involved. The euro area on a regional basis has no current account balance of payment deficit,” he said. “I don’t really think this is a real problem with Spain. It’s just the latest one in the chain—it’s the system itself that is falling apart.”
He argued that Spain’s troubles stem from different problems than did those of Greece, Portugal, and even Ireland, suggesting that Spain’s illiquidity problems stem more from the loss of confidence and continuation of the crisis than the housing bubble itself.
“How would you put in a package to support that? Because the housing bubble burst might not be over yet. What Spain needs is to be recognised as an adult supported member of EMU because if they do that for Spain it’ll probably just switch to Italy in any case.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.