While Greece and Portugal may be dominating debt crisis headlines at the moment, Spain is the lingering country that could be “too big to bail.”
Spain’s economic problems are somewhat similar to Greece and Portugal, in that the country has had extremely low growth since the financial crisis erupted, do to a slowdown in its key industry, home-building. Unemployment has boomed as a result, and it now hovers around 20%.
But according to economist Luis Riestra, the country also has a much bigger banking crisis on its hands, with local banks, called cajas, needing a federal bailout that may cost 15% of GDP. Bigger Spanish banks also remain under pressure.
The country is going to the markets to sell its debt, with the risk of not meeting goals increasing as the rollover debt deadline of July looms.
The size of debt it needs: 66 billion euros ($89 billion) of rollover debt and an additional 110 billion euros ($149 billion) of new debt, according to Riestra.
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