money The Bailout 32
15 - 21 JUNE 2012
The inevitable happened on Saturday 9th June when the Spanish government agreed to a bailout, Spain’s Prime Minister, Mariano Rajoy, attempted to portray the cash lifeline for Spain’s troubled banking sector as a triumph. However the Prime Minister chose not to tell the Public until the Sunday, the big question is why? The main reason is that there remain a number of unanswered questions, such as the problem of where the €100bn is coming from - the soon-to-be-retired by EFSF or the new European Stability Mechanism (ESM), which is due to come into effect in July. Regional Manager of Richard Hunter, head of equities at Blacktower Costa Blanca Hargreaves Lansdown stockbrokers, said: “The Spanish announcement is not a solution to the eurozone’s ongoing woes, but it is a statement of intent.” “Despite the fact that details have to date been sketchy on the ultimate resolution of the European crisis, one constant has been a declaration by the authorities that the area will remain intact. “Some much-needed time has now been bought in Spain, which will allow the
Christina Brady
market at least a temporary sigh of relief.” As a result Global stock markets surged in relief on Monday, although market experts warned the respite from the crisis would most certainly be only temporary. The truth is this isn’t really a bailout for Spain; it’s a bailout for the Euro. Europe is treating the tumour rather than the patient. How many more times do these bank rescues have to fail? No previous bailout has had the intended effect; to the contrary, the countries which decreed the largest sums have suffered the worst downturns. The solution might be winding down the afflicted banks, converting bonds into equity, and forcing the shareholders and bondholders to take the consequences of their poor decisions rather than shuffling their losses off onto taxpayers. Also with Greeks returning to the
Global stock markets surged in relief on Monday
polls on Sunday 17th June, the crisis engulfing the eurozone is far from over amid speculation that the absence of tough conditions attached to the loans being readied for Spain could give ammunition to attempts by Greece, Ireland or Portugal to renegotiate the terms of their bailouts.
Now is the time to make sure your money is in the right place and working for you, if you would like a free impartial financial health check regarding your money, savings and investments, or have any questions please don’t hesitate to contact me on 658 892 330 email christina.brady@blacktowerfm.com
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity. Blacktower Financial Management Ltd is licenced by the UK by the Financial Services Authority and is registered with both the DGS and CNMV. Blacktower Financial Management (Int) Ltd is licenced in Gibraltar by the Financial Services Commission (FSC) Licence No: 00805B and registered with the DGS in Spain.