How much money will spain actually need?

As I write there are suggestions that spain will seek a banking only assistance of some €100b.

Is that going to be enough? Look at the following graphs… Bear in mind

a) Ireland is approx 1/8 the size of spain

b) Ireland has to date spent €63b on its banking bailout.

Spanish Private Sector growth (from the Eurostat macro instability website) . total accumulation is not massively different for the banks.

Second comparative house prices (from Ecowin) , rebased to 2000. Again, note that the trajectories are similar, with however the crucial element that spain has not begun the steep declines that have been the cause of the irish banks going pop.

Will 100b, or some 8% of Spanish GDP be enough given the similar trajectories to a country which has seen some 30%+ of GDP vaporised?

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4 Responses to How much money will spain actually need?

  1. namawinelake says:

    Following the publication of the recent Comptroller and Auditor General report on NAMA, we now know that NAMA has so far paid €4.86bn state aid to the banks in its acquisition of loans. As things stand today, we’re on the hook for this, though NAMA hopes that by 2020 it can break even. So the Irish bailout is presently €68bn.

    Spain needs financing for
    1. Its deficit, €64bn in 2012 and likely to be at least another €50bn in 2013-2014.
    2. Rolling over maturing debt, over €300bn in the next 3 years apparently
    3. Bailing out its banks, €100bn is the current estimate in a country whose residential property is down only 25% from peak. What if the decline grows to match Ireland’s 50%.

    All told, the estimate over at NWL is in the order of €700bn.

    Though the Spanish might decide that paying 6%-plus on the bond markets for long term debt is preferable to the conditionality which will accompany any sovereign bailout.

    • brianmlucey says:

      youll note NWL that I didnt give a figure. I did last week on the twitter machine suggest 400b plus. Lets all agree 100b aint going to even begin to staunch the wound.

  2. identificatory says:

    Looks like the Spanish housing crash wasn’t as severe as the Irish one, and may be easing. Am I reading the chart right? If so, maybe they’re not too bad…

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