Surprise, surprise, the eurozone saga continues to rumble on. Today it emerged that bad debts with Spanish banks came to 9.4% of total lending, which is most indebted the people of Spain have been since records began way back in 1962. The data published by the Bank of Spain showed that bank customers holding €164.4bn worth of debt were more than three months behind on their repayments. The figures mean the rate of bad debt has climbed almost half a percentage point in a single month.
However, the country is not in quite the dire straits it was in last month. In July, the government’s 10-year bond yields hit 7.75% - the highest of any bonds since the inception of the euro – prompting fears that the country would soon be unable to borrow any more money. But the yields have dropped to 6.38%, still alarmingly high, but a marked improvement on the Domesday scenario facing the European economy just a month ago.
But any reassurances from the EU about their ability to save Spain are not enough to keep the Finnish happy. A notoriously pot-stirring member of the European Union, the country’s government has come forward to announce that it is preparing for the imminent breakup of the single currency. And not only did the country’s foreign minister, Erkki Tuomioja tell how his country had made contingency plans, but described he thinks eurozone leaders are trying to ensnare member states with their policies. ‘I don’t trust these people,’ he said.
Meanwhile, Greece has spent some days saying it wants a two-year extension to the period in which it has to implement its austerity cuts. The ECB and IMF originally imposed the conditions, but with most of the money coming from Germany, it is Frau Merkel and her pals who are calling the shots. Just days ago, Germany’s finance minister, Michael Fuchs, said Germany would cut off the cash if Greece failed to comply with the conditions.
So for anyone who thought the various summits and ‘we’ll do whatever it takes’ mantra from eurozone leaders would fix the problems, think again. It looks as though the eurozone remains in intensive care…