Monday, June 11, 2012
BNI depositors are unable to make withdrawals / payments, payments of utility bills, mortgage payments, taxes says Peter Giordano, Adiconsum: “Grave of the Bank of Italy’s attitude that takes action without considering the impact on depositors, and especially on single-income families and pensioners.” Adiconsum Bank of Italy asks for an urgent meeting and the lifting of the moratorium.
The Bank of Italy authorized the suspension of payments by Bank Network Investments SpA (BNI) without communicating anything to the depositors.
The Extinction Protocol
Very serious and unacceptable – says Peter Jordan, Secretary General Adiconsum – the attitude of the Bank of Italy SpA in each BNI, because highly prejudicial to the interests of customers.
Bank of Italy, in fact, after extending the receivership of the bank, thus giving the impression of an imminent rescue, then gave the green light for compulsory winding up, without giving any prior notice to the depositors, leaving them in no condition to perform any type of operation, even basic ones for daily survival, such as withdrawals / payments, utilities payments, rates, taxes. We must unfortunately note that offensive measures as those adopted to customers BNI – Giordano complaint – not an isolated case. Decisions without taking into account the heavy impact, particularly on savers in possession of a single bank account on which accrediting salary or pension, are not new to Bank of Italy, and also affected depositors of Banca MB.
The Extinction Protocol
Following another 140 deaths across the country, the Foreign Secretary pointedly refused to rule out foreign military intervention.
“Syria is... on the edge of a collapse or of a sectarian civil war, so I don’t think we can rule anything out,” he said.
“But it is not so much like Libya last year, where of course we had a successful intervention to save lives. It is looking more like Bosnia in the 1990s, being on the edge of a sectarian conflict in which neighbouring villages are attacking and killing each other,” he told Sky News.
After a hesitant start, Nato gradually increased its role in Bosnia in the mid-1990s to enforce a no-fly zone with considerable air power to deter Bosnian Serb forces. There have been calls for similar action in Syria from some quarters in Washington, where Gen Martin Dempsey, chairman of the Joint Chiefs of Staff, has said “military options should be considered”, though diplomacy remained the preferred option.
Despite fierce Russian and Chinese opposition to foreign military intervention, Mr Hague suggested that Moscow was increasingly concerned about a Bosnia-style conflagration and hinted that it could be won round to a more robust international response.
“The Russians are not wedded to Assad being in power, they just want Syrians to decide their own future. Well, that’s exactly what we want - but they can’t decide their own future while they are being killed, their bodies burnt, the [UN] monitors shot at.
“So it requires Russia to use its leverage to say to the Assad regime: ‘you have to follow the Annan plan’. And if we call a conference together it will be about ensuring that such a plan is fully implemented so that there’s a cessation of violence and a political process in Syria.”
Western states have scrambled to respond to the disintegration of a peace plan brokered by Kofi Annan, the international envoy to Syria, that followed massacres of Sunni villagers widely attributed to members of the president’s Alawite minority. As many as 186 people, many of them women and children, were killed.
Those atrocities led the rebel Free Syrian Army to abandon the UN-backed ceasefire and to strike in three districts of Damascus that had hitherto escaped relatively unscathed.
Shooting and explosions could be heard across the city for more than 12 hours on Saturday night, with government tank shells struck buildings in two central districts of Damascus, forcing residents to cower in basements but failing to repulse fighters from the FSA. Such exchanges had previously only been taken in suburbs of the capital.
Challenging the government’s increasingly tenuous hold elsewhere in the country, rebels also engaged Mr Assad’s security forces in major battles in the cities of Homs, Deraa and Idlib, as well as in villages near Latakia on the Mediterranean coast.
The Syrian opposition’s newly appointed leader, Abdelbasset Sayda, proclaimed that the regime was “on its last legs” amid signs that a once ragtag rebel outfit was transforming itself into a capable guerrilla force. Opposition activists declared that a turning point in the conflict had been reached, and pledged to step up their offensive in the capital.
The insurgents have been emboldened by increased funds and weapons from Arab gulf states, said activists.
“The FSA has become more powerful and well organised,” said Yahya Awash, a resident of the suburb of Douma, a scene of heavy recent fighting. “They have more weapons and troops and so can make more complicated operations.”
The rebels’ mounting confidence has transferred itself to the civilian population, with 50 demonstrations reported by the opposition in Damascus, more than ever before.
A general strike in Damascus called to protest the recent massacres has also proved surprisingly successful, suggesting that the capital’s merchant class - a key pillar of support for the regime - may be turning against Mr Assad.
Opposition activists claimed that as many as 90 per cent of shops had closed their doors, despite efforts to intimidate them.
“During the strike, the military forces tried to burn some stores or force the doors open, but they were powerless,” said Omar Dimashki, a businessman and activist, who said he had shut all 20 of his showrooms.
“Some were frightened and so tried to open their shops, but, when they saw that they were the only ones open, they shut them. We feel that Damascus is in our hands now.”
Elevated Indiana radiation levels — specifically near the border of Indiana and Michigan — have prompted explosions, military helicopters, thousands of eyewitness accounts, but where is the mainstream media coverage? Now independent radiation experts are reporting increased levels in some other states, with one particular station noticing an increase since just around 11:45am mountain time on Thursday. This coincides with community board posts created just around the same time in a number of locations, even before the incident hit the public. In one such posting on a law enforcement website discussing the radiation increase, an individual from Chicago states “We’ve been encountering some high readings at the labs here.”
Independent radiation monitoring station owner Joey Stanford has uploaded a video showing spiked radiation levels as far as Colorado. Some individuals are questioning the actual source of the increased radiation, stating that it could be solar-based.
Stanford created the video in response to the growing concerns over elevated radiation levels stemming from Indiana. Indiana radiation levels normally hover around 5 and 6 counts per minute (CPM), but the levels drastically increased to as much as 7,139 CPM without warning. Afterwards, the EPA disabled the online measurement tool. Here is the screens hot of the tool showing the skyrocketing levels.
You can view Joey Stanford’s video below — remember that Joey is in Colorado, not Indiana so the elevated levels are not nearly as high:
Joey’s report echoes what many stations are finding, with live Twitter updates reporting a consistently increased amount of radiation since the initial event around 11:45 AM on Thursday. Some Twitter updates from last night’s Radiation Monitor, Joey’s own station all the way in Colorado, read:
252 CPM, 2.0462 uSv/h, 1.9820 AVG uSv/h, 7 time(s) over natural radiation
324 CPM, 2.6309 uSv/h, 2.1884 AVG uSv/h, 8 time(s) over natural radiation
222 CPM, 1.8026 uSv/h, 1.7459 AVG uSv/h, 6 time(s) over natural radiation
Once again, this is nothing compared to the 7,139 CPM reported near Indiana, however it shows that there is a possibility of correlation. While the answer as to what is going on is not clear, it is clear that it has piqued the interest of government officials. Military helicopters, aircraft, and Department of Homeland Security hazmat fleets have reportedly been dispersed towards the area based on eyewitness photos and accounts.
Read more: http://naturalsociety.com/indiana-radiation-elevated-levels-other-states-media-stays-silent/#ixzz1xUczaxG2
Russia’s Eastern Military District took delivery of a “regimental” set of S-400 Triumph air defense missile systems, the Defense Ministry said on Saturday.
Russia currently has four S-400 regiments - two in the Moscow region, one in the Baltic Fleet and one in the Eastern Military District.
By 2020, Russia is to have 28 S-400 regiments, each comprised of two battalions, mainly in maritime and border areas.
The S-400 Triumph long- to medium-range surface-to-air missile system can effectively engage any aerial target, including aircraft, unmanned aerial vehicles, and cruise and ballistic missiles at up to 400 kilometers and an altitude of up to 30 kilometers.
The Russian Defense Ministry has said there are no plans so far to export the S-400, which will be produced only for the Russian Armed Forces.
Two churches in northern and central Nigeria have been attacked, one by gunmen and the other by a suicide bomber, witnesses said.
There was no immediate word on casualties and no claim of responsibility. Attacking churches has become a trademark tactic of the Islamist group Boko Haram.
In Biu Town, in north-eastern Borno state, witnesses said three gunmen started firing at people outside a church before entering the main building. "Many people have been killed and wounded," said Hamidu Wakawa, who was at the church.
In the south-western city of Jos, a man drove a car to the entrance of the Christ Chosen church and detonated a bomb, said Emmanuel Davou, 53, who lives nearby.
Christian youths set up roadblocks and had to be dispersed by police, he said. "Angry youths have gone wild, even attempting to prevent the security personnel from getting to the scene of the incident. They had to force their way out by shooting in the air to disperse them."
The police spokesman for Borno state, Samuel Tizhe, said five gunmen attacked the church, killing one woman and wounding three other people, before they fled.
Police casualty figures from Islamist attacks are often lower than those given by witnesses caught up in them.
In the attack in Jos, a man drove a car to the entrance of the Christ Chosen Church and then blew it up, said Emmanuel Davou, 53, who lives nearby.
Emmanuel Ayeni, police commissioner for Plateau state, of which Jos is the capital, told journalists 41 people were being treated for injuries in a local hospital.
"The circumstances of the two killed by mobs is still unclear," he said.
Boko Haram has been blamed for hundreds of killings over the past two years. Its leader, Abubakar Shekau, frequently says attacks on Christians are revenge for killings of Muslims in Nigeria's volatile "Middle Belt", where the largely Christian south and mostly Muslim north meet and sectarian tensions run high.
The group usually targets security forces, although attacks on Christian worshippers are increasingly common. Last Sunday a suicide car bomber killed at least 12 people at a church in the remote northern town of Yelwa.
A leading Israeli government politician on Saturday accused the Assad regime of using chemical weapons against Syrian civilians.
Photos he has seen, said Israel’s Deputy Minister for Development of the Negev and Galilee, Ayoub Kara (Likud), left no doubt that the forces of President Bashar Assad have used chemical weapons against Syrian men, women and children.
Kara also told Israel Radio that Israeli doctors are currently on the border between Syria and Turkey treating people injured in the violent clashes between Assad’s troops and opposition forces.
Earlier Saturday, Kara, a Druze Israeli, told a meeting of Druze community leaders in the Golan Heights that Israel is ready to accept Syrians injured in the 15-month long crackdown by the government that has killed more than 13,000 people according to Syrian activists.
He added that Israel is willing to send doctors to Jordan in order to treat the wounded.
“Israel is ready to receive casualties who are evacuated from Syria to Israel, and alternatively we are ready to send medical assistance through Jordan to those unfortunate children and babies whose families have been annihilated by the shabiha of the Syrian regime,” Kara said. The shabiha are pro-government militiamen who have been accused of perpetrating some of the worst atrocities against civilians in recent months.
There was no confirmation from other government officials regarding the deputy minister’s comments.
Israel’s Foreign Minister Avigdor Liberman has said several times in recent months that Israel is ready to offer humanitarian assistance to Syrian civilians affected by the violence there.
The Times of Israel
Author of the Gloom Boom & Doom Report, has bad news for Greece.
In the new issue of Barron's he explains, "There is no resolution to the problem in Europe because no one wants to accept austerity."
Having said that, he explains what the best outcome would look like for Greece:
The best outcome for Greece probably would be to exit the euro zone. But the new Greek drachma would depreciate by 50% to 70% against the euro. The Greeks don't want their pensions paid in a depreciating currency. Nor do they want austerity, as their pensions and government salaries would be cut by 50%.
Given the unpleasant nature of that outcome, it's no surprise that Europe's debt crisis continues to drag on. According to Barron's, Faber think we won't see a "breaking point" for three to five years.
Given all this, it's no surprise that Faber is a fan of gold:
I am also warming to gold shares. Gold corrected to $1,522 last December from $1,921 in September. It rebounded to $1,795 in February and is back down around $1,600. The correction could last longer, but given that governments will print more money, gold is relatively effective as a currency. My preference is physical gold, but I would also own some gold shares, which have been decimated.
Read more: http://www.businessinsider.com/marc-faber-best-outcome-for-greece-horrible-2012-6#ixzz1xUUMdHrm
With Western pressure growing on Bashar Assad over the latest massacres of defenseless women and children in Syria, Iranian officials again are warning the world against any action against the Middle East dictator.
The pro-Assad “resistance” has its finger on the trigger and the aggressors will not survive the conflict, a senior commander of the Revolutionary Guards, Brig. Gen. Massoud Jazaeri, told Mashregh, a media outlet run by the Guards. Iranian officials often refer to Iran, Syria and Hezbollah in Lebanon as the resistance front.
Mashregh reported in March that Iran’s armed forces had formed a joint war room that included officers from Syria, Iran and Hezbollah for a coordinated military response to an attack on Syria.
“A conflict in Syria will engulf the region and its main victims will be the people of Syria themselves,” Jazaeri warned the protesters. “The Zionist regime and the interests of the enemies of Syria are all within range of the resistance fire.”
Citing a conspiracy to weaken the resistance front and that foreign hands were involved in the events in Syria, Jazaeri said, “At the right time, people of the region will retaliate against these actions. The defeat of the enemy at this stage will be a big event and, God willing, we will witness that.”
There have been several reports alluding to the Revolutionary Guards’ involvement in the Syrian suppression. Recently the deputy commander of Iran’s elite Quds Force, Cmdr. Esmail Ghani, said his forces have been playing a “physical and nonphysical” role in Syria.
The Guards last year called Syrian protesters “rabble-rousers” who are “puppets of Zionists and the United States” and that their chanting slogans against Iran and Hezbollah “will be their last stand.”
On Thursday, U.N. observers were fired upon as they tried to reach the site of the latest massacre of civilians, many of them women and children, who were shot or stabbed, the fourth such massacre in two weeks. More than 10,000 civilians have so far lost their lives in the brutal suppression ordered by Assad and abetted by Iran and Hezbollah.
Meanwhile, the head of Iran’s Basij militia made clear that Iran will not tolerate the fall of Assad.
Brig. Gen. Mohammad Reza Naqdi, who has been sanctioned by the U.S. Treasury Department for human rights abuses in Iran, told Lebanese TV Al Manar, “After the expulsion of the Americans from Iraq, and the disruption to their defensive posture in protecting the Zionist regime, America in order to defend the regime of the occupier of the Quds (Jerusalem) is after a new scenario in Syria. … But they will be defeated.”
The Basij commander warned Israel against any attack on Iran or Syria, stating, “Today all the people of the region are ready for wiping out this cancerous tumor, and reaction to any aggression will be the freedom of Quds.”
Naghdi also said the West was wrong in believing that international sanctions against Iran will force the Islamic republic to accept demands that it yield on its clandestine nuclear program.
“Sanctions have had a lot of effect on Iran, but one positive one is the growth of science and internal production. … If the American president did not have his hands in the blood of nations of the world, specifically Iraq, Afghanistan, Lebanon and Palestine, and had not embraced torture, we would have given him a national medal for his service to the Iranian nation for imposing sanctions.”
Naghdi predicted that America will be forced to pack up and leave the region, taking with it all of its forces.
The mullahs ruling Iran, based on centuries-old hadiths, believe that an attack on Syria and Iran and an ensuing counterattack on Israel will trigger the coming of “Mahdi,” the Shiites’ 12th imam and the last Islamic messiah. Both those events are looking increasingly likely as Assad continues to murder his own people and Iran continues its quest for nuclear weapons.
After months of speculation, denials, and hoping for something – anything – to turn up, Spain has formally requested a bailout, by far the largest economy to do so. After an emergency telephone conference of eurozone finance ministers yesterday, an official statement was issued saying that the sum involved could be as large as €100bn.
Spain, whose banks are struggling with toxic property loans and assets, becomes the fourth member of the 17-nation eurozone to get a bailout since the continent's debt crisis erupted two years ago. In announcing the request, Luis de Guindos, economy minister, said the final figure was still in question and would remain so pending results of two independent audits of the banking sector, due by 21 June. But he insisted it would fully cover the needs of the country's banks, and not be followed by a request for further funds.
The minister was also at pains to stress that no further austerity measures would be attached as conditions for receiving the funds, which would be used expressly for the banks that need them, rather than to help cover Spain's public debt, which, as a ratio of gross domestic product, is lower than Germany's.
Only 10 days ago, Mariano Rajoy, Spain's Prime Minister, was adamant that his country's banking sector would not need bailing out. Few observers were persuaded, not least because of widespread suspicion that the full extent of Spanish banks' toxic debt is still unknown.
Back in the early days of the financial crisis, it looked as if Spain's economy – the fourth-largest in the eurozone – could withstand the squalls coming its way. But then its boom, based on inexorably rising property prices, began to totter and collapse. House prices went into freefall, and unemployment, a mere 8.3 per cent in 2007, began to rise, first to 18 per cent in 2009, and to the fearful figure of nearly 25 per cent now.
By 2009, the financial sector was sitting on €445bn of property-related loans, and regional governments saw their incomes plunge as the lucrative issuing of new construction licences and taxes dried up. Austerity measures were introduced and some lenders nationalised, but Spain's borrowing costs continued to rise. It became clear that it would be just too expensive for the country to borrow the money necessary for a bank rescue from the markets.
Eurozone finance ministers said in a statement that the bailout money would be fed directly into a fund Spain has set up to recapitalise its banks, but emphasised that the Spanish government is ultimately responsible for the loan. Still, that allows Spain to avoid making the onerous commitments forced on Greece, Ireland and Portugal when they sought bailouts.
Spain's rescue may not be the last. Attention will now switch to Italy, and Cyprus could also seek help. As the Swedish Prime Minister, Fredrik Reinfeldt – whose country does not use the euro – said: "We're talking about one of the greatest financial rescue operations the world has seen."
In regard to the depth of the downturn, the comparison is very different between countries. In the US and Germany, the loss of output since 2008 of about 5-7pc hardly registers against the losses registered during the Great Depression, when output fell by 25pc.
But the recession here in the UK has been greater. Contrary to the folk memory of a disastrous decade, in the 1930s the UK did relatively well. Of course, unemployment at first rose alarmingly – and this counted for far more then as living standards were lower and there was less support for the needy. Yet output here only fell by about 8pc, and it subsequently recovered rapidly.
In the popular imagination, the slump of the 1930s was set off by the sharp falls in share prices in the Wall Street Crash of 1929. In fact, the direct effect of the Crash was probably not that great. More important was the international banking crisis which followed the collapse of the Austrian bank, Creditanstalt, in 1931.
This time we have not had major weakness in share prices, but we have had a major asset price collapse, namely in real estate prices - in America, Spain and Ireland. As a direct result, we have certainly had a major banking crisis.
This was a key feature of 1930s America. Interestingly, though, despite the economic downturn, there were no bank failures here. That meant that the policy of very low interest rates and concomitant low bond yields could succeed in boosting private spending.
The depressing aspect of today’s situation is that the banks are so weakened by the combination of losses on past loans and fears of euro meltdown that even official interest rates close to zero are not having much of a stimulative effect. Moreover, tighter regulation has made banks more risk averse at just the time that economic recovery demands that they should be more enterprising.
As regards policy to get out of the mess, there are both similarities and differences. In 2009, there was an international conference in London to try to sort the problem out. The same thing had happened in 1933. And then, as now, it does not seem to have done any lasting good. In the 1930s, the possibility of reaching a global solution was hampered by the difficult relationship between the old hegemon, the UK, and the new powers, the US, Germany and Japan. Now the US, as the declining hegemon, squares off against China and the emerging markets.
Then, a rigid fixed exchange rate system, the Gold Standard, was a key part of the problem. Today, this role is played by the euro. But for good measure, we also have the informal fixed exchange rate system operating between the United States and much of the emerging world.
Thankfully, one major absentee in today’s conjuncture - so far anyway - is protectionism. Just as today, the Great Depression occurred against the backdrop of the British government struggling with a high level of debt. Indeed, the problem then was much worse. In 1929, the ratio of government debt to GDP was 162pc, compared to “only” 65pc now. Interestingly, in America, the equivalent figure was 14pc. It did not reach 50pc until the war.
Then the effectiveness of monetary policy was hampered by the fact that one of the world’s two major central banks, the Federal Reserve, was young and inexperienced, which led it into some unforced errors. You cannot say that about the Fed now. But step forward the European Central Bank (ECB), which presides over an economic area roughly as large as the US. It has been nobbled by a combination of inexperience and the impossible political pressures created by the euro.
As recently as July of last year, the ECB was raising interest rates to head off a supposed inflationary danger. Interestingly, it also raised rates in July 2008, just as the world was heading into recession. It is still refraining from cutting rates all the way to zero, as the situation surely demands.
In the early 1930s, the world also suffered from weak political leadership. In Germany, Weimar governments bumbled on ineffectively; in France there was a rapid succession of weak leaders; in the UK, this was the era of Stanley Baldwin and Ramsay Macdonald; in the US, President Hoover famously built a dam, but not much else.
There were great leaders around from the past – Lloyd George in the UK – and those yet to come to power – Winston Churchill and Franklin Roosevelt. But by comparison, the current incumbents were pygmies. Surely I do not need to rehearse the parallels now.
So what is to be done? Next week, I will give my views on how we can get out of this mess.
Spain's grinding economic misery will get worse this year despite the country's request for a European financial lifeline of up to €100 billion ($125 billion) to save its banks, Prime Minister Mariano Rajoy said Sunday.
A day after the country conceded it needed outside help following months of denying it would seek assistance, Rajoy said more Spaniards will lose their jobs in a country where one out of every four are already unemployed.
"This year is going to be a bad one," Rajoy said Sunday in his first comments about the rescue since it was announced the previous evening by his economy minister.
The conservative Prime Minister added that the economy, stuck in its second recession in three years, will still contract the previously predicted 1.7 percent even with the help. Small businesses and families starving for credit will eventually get relief as the funding props up banks and they increase lending, but Rajoy didn't offer guidance on when.
Spain on Saturday became the fourth — and largest — of the 17 countries that use Europe's common currency to request a bailout — a big blow to a nation that a few years ago took pride as the continent's economic superstar only to see it become the hot spot in the eurozone debt crisis. Its economy is the eurozone's fourth largest after Germany, France and Italy.
Although Spain has not yet said how much money it would seek, the eurogroup — finance ministers of the 17-country eurozone, of which Spain is a member — said in a statement Saturday that it was prepared to lend up to €100 billion. The funds will be sent to the Spanish government's Fund for Orderly Bank Restructuring (FROB), which would then use the money to strengthen the country's teetering banks.
Across the country, Spaniards reacted with a mixture of anger and relief to the news. The full amount of the eurogroup's lifeline amounts to €21,000 of new debt for each person — almost equal to the average salary in a country of 47 million where the unemployment rate for those under age 25 is 52 percent.
The country is already reeling from deep austerity cuts Rajoy has imposed over the last six months that have raised taxes, made it easier to hire and fire workers, and cut deep into cherished government programs including education and national health care.
"It's obviously a shame," said civil servant Luisa Saraguren, 44, as she strolled on a sunny Sunday morning with her young daughter. "But this bailout was fully predictable, and the consequences of this help are going to be a lot bigger compared to the cuts we've been living with already."
Rajoy took pains to avoid the word bailout Sunday, saying Spain's rescue package is a line of credit that its most troubled banks will be able to tap. The assistance will not come with the outside control over government macroeconomic policy like that imposed Greece, Ireland and Portugal when their public finances were bailed out.
He said interest rates on the loans will be considerably lower than the rate near 7 percent that Spain has been forced to pay recently on the international debt markets, a level that forced the other countries to seek bailouts.
Spain will regain the economic credibility it has lost by shoring up its banks, which will result in credit being restored so businesses and individuals shut off from loans can start borrowing and the economy will grow again, Rajoy insisted, again without saying when.
Europe's widening recession and financial crisis has hurt companies and investors around the world. Providing a financial lifeline to Spanish banks is likely to relieve anxiety on the Spanish economy — which is five times larger than Greece's — and on markets concerned about the country's ability to pay its way.
Spain's government will make a formal approach for aid once independent audits of the country's banking industry have been carried out.
It is not yet clear whether the money will come from Europe's current €440 billion rescue fund, the European Financial Stability Facility, or the new €500 billion European Stability Mechanism.
The deal is to be underwritten by the Spanish state, which will use the FROB as its mechanism to funnel the loan to banks in need. Opposition leader Alfredo Perez Rubalcaba said he had discussed the loan with Rajoy and added that for it not to increase the national deficit the entire amount borrowed will have to be paid back to the treasury by the banks "including the corresponding interests."
Economy minister Luis de Guindos said 30 percent of the banking system needed recapitalization. The IMF in its financial stability assessment report said, without listing names, that Spain's two large internationally active banks "are well diversified." It is understood that these are Banco Santander and BBVA.
It said seven former savings banks that have received state support "rely significantly on FROB for capital and liquidity support" and that other medium and small private sector banks which account for approximately 11 percent of domestic banking were also exposed to the real estate and construction sector.
Spain's financial problems are not due to Greek-style government over-spending. The country's banks, particularly its savings banks or "cajas," got caught up in the collapse of a real estate bubble in 2008 that got worse over the past four years. However, as Spain's leaders have struggled for a solution to their banking crisis, the country's borrowing costs have soared close to the level that forced the governments of Greece, Portugal and Ireland to seek rescues.
Some of Spain's banks are struggling with toxic real estate loans and assets amid fears the problem will get worse as more jobless people can't pay their mortgages. The Bank of Spain says the toxic loans and assets total around €180 billion. Nationalized lender Bankia SA, which has requested €19 billion in aid, has €32 billion in toxic assets. Around four other banks serving the domestic market were assessed by the IMF report to have large exposure to corporate and retail real estate lending.
"I could never get my mind round the scale of consumption in Spain over the past 20 years, having known it in the 1960s when it was still extremely poor," said Paul Preston, a history professor and expert on Spain with the London School of Economics. "Lots of people enjoyed the consumer boom, but not everybody. Now everybody's having to pay for it."
Rajoy blamed Spain's woes on the previous Socialist administration of Jose Luis Rodriguez Zapatero without mentioning him or his government by name. Zapatero was ousted by Rajoy in a landslide last November by voters outraged over the Socialist handling of the economy.
"Last year Spain's public administration spent €90 billion more than it took in, this can't be maintained, we can't live like that," Rajoy said.
But Socialist Party leader Alfredo Perez Rubalcaba said Rajoy should acknowledge that Spain is now in bailout territory.
"The government is trying to make us believe that we've won the lottery, that the Three Kings of Orient have arrived, and that isn't so," Rubalcaba said.
After his press conference, Rajoy defended his decision to jet off an hour later to Poland to see Spain's famed national football team take on Italy in the Euro 2012 competition. He said he would be on the ground in Gdansk only for the game before flying back to Madrid Sunday night.
"I'll be there two and a half hours and then I'll leave," Rajoy said. "I think the national team deserves it."
Read more: http://www.foxnews.com/world/2012/06/10/spain-economic-pain-to-deepen-despite-bank-rescue/#ixzz1xPwXXxq6