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Spaniards react with anger, relief to $125 billion bailout plan

By Catholic Online (NEWS CONSORTIUM)
June 11th, 2012
Catholic Online (www.catholic.org)

Sunny Spain, once prideful at being the European Union's fourth largest economy has been thoroughly humbled and humiliated over the past several months. Many urban professionals there have seen their dreams go up in smoke, and Spain currently has the EU's highest unemployment rate, with one in four without a job. A bailout plan is now in the works to secure Spanish banks, but it is a hollow victory for many here. Spanish Prime Minister Mariano Rajoy says even with the plan, even more here will soon be without work.

LOS ANGELES, CA (Catholic Online) - A European financial lifeline of up to 100 billion or $125 billion is currently in the works to shore up Spanish banks, Rajoy said this past weekend.

A somber Rajoy declared that "This year is going to be a bad one." The conservative politico said that the Spanish economy, bludgeoned with its second recession in three years, will continue to contract the previously predicted 1.7 percent in 2012 even with the help.

Spain is the fourth and largest of the 17 countries of the EU to request a bailout. Spain's economy, in the hierarchy of European nations is the fourth largest after Germany, France and Italy.

Finance ministers of the eurozone said this past weekend that it was prepared to lend up to 100 billion. The funds come from one of three pools of emergency financing eurozone countries can access.

The bailout comes at a very high price for the Spanish people, amounting to 21,000 of new debt for each person. This amount is almost the equivalent of the average salary in a country of 47 million people. 

Drastic austerity cuts have rattled and demoralized the populace. Rajoy has ordered higher taxes and has taken away obstacles to hire and fire workers, and cut deep into cherished government programs, including education and national health care.

Rajoy stepped around the word "bailout" in his address over the past weekend. Rajoy insisted that Spain's rescue package is a line of credit. He also noted that the assistance will not come with the outside control as was imposed upon the nations of Greece, Ireland and Portugal when their public finances were bailed out.

On the bright side, German Finance Minister Wolfgang Schaeuble noted that Spain's debt was more favorable than Germany's, with Spain at 78 percent of GDP and Germany's at 82 percent.

In addition, Irish opposition finance spokesman Michael McGrath criticized his government for not having negotiated better terms, saying it needed "to start fighting Ireland's corner in a more vigorous and forceful way."

The financial lifeline to Spanish banks is likely to lessen tension regarding the Spanish economy, five times larger than Greece's and on markets concerned about the country's ability to pay its own way.

Spain's government will make a formal approach for aid once independent audits of the country's banking industry have been carried out.

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