Europe was thrown back into the maelstrom of financial markets after the first Spanish region called for government help, which sent the country’s financing costs to record levels, and Madrid and Rome have banned again bets on falling shares. Stocks and Euro went down while Catalonia has joined the list of Spanish regions that would be able to access help from central government. Meanwhile, Greece’s international creditors: ECB, IMF and EU fear that the monetary union will fall apart.
According to The Guardian, German Finance Minister, Wolfgang Schauble will meet Tuesday with his Spanish counterpart Luis de Guindos, amid fears that Spain’s increased bond yields will require this state to ask from EU and IMF an aid program of €300 billion euros, The Guardian reports. The 10-year term bond yields of Spain rose Monday to 7.59%, its highest level since the creation of the euro and Madrid stock exchange fell by 5%, after new negative information about the financial situation of the Spanish regions. Markets have been shaken by hints from the politicians in Berlin that Germany was preparing for the Greece exit from euro area.
Italy is shaken
Ten cities in Italy are in danger of default, Naples and Palermo topping the “blacklist”, according to the daily La Stampa, a situation which highlights the debt pressure on local authorities of the third major euro area economy. “At least ten cities with over 50,000 inhabitants, are in danger of bankruptcy,” wrote La Stampa, citing unidentified government experts.
The Italian newspaper article comes after last week two regions of Spain announced that they would seek help from central government to help pay their debts. Several of the 17 autonomous regions in Spain, including Catalonia, Andalucia and Castilla La Mancha, may also request financial aid.
New York Stock Exchange shaken by the situation in Europe
Wall Street shares started trading on Monday on a heavy fall and the demand for US dollars and Treasury bonds, considered safe investments, is rising because of fears that Greece is again in danger of default and Spanish bond yields increase. Dow Jones has dropped by 1.84%, Standard & Poor’s 500 by 1.83% and the Nasdaq by 2.45%, according to MarketWatch. The panic was triggered by information from the press that the IMF is about to stop aid for Greece, while the authorities in the Spanish region of Murcia announced they will seek the assistance of the government in Madrid.
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