Stacey Vanek Smith: Overseas markets are sliding this morning on new worries about Spain.
Joining us now to discuss is our own Stephen Beard in London. He joins us live. Good morning, Stephen.
Steven Beard: Good morning Stacey.
Vanek Smith: Steven, Spain just got a bank bailout on Friday, so what has got the markets upset this morning?
Beard: Well, the Spanish government and the European authority were saying that once the Spanish banks were bailed out that would be it -- the end of the crisis. Well, it isn’t. Investors are now worried that the Spanish central government will need a bailout too because regional governments in Spain are in trouble; Valencia has asked for help, and on Sunday another region said it may need help too.
Vanek Smith: Is the Spanish government expected to ask its European partners or the International Monetary Fund for some financial help?
Beard: Well, Spanish borrowing costs suggest that they will. They hit 7.5 percent this morning the level at which Portugal, Ireland and Greece all had to be bailed out. But Spain probably won’t make the request immediately, after all August is just around the corner of course, as you know Stacy, Europe goes on holiday in August.
Although, as Stephen Lewis of Monument Securities points out the markets won’t be going on vacation.
Stephen Lewis: Well, I think the crisis will rage through August in financial markets but I don’t think the authorities in Europe will be paying much attention to it during that month. Of course, that means by the end of the month we’ll be facing a very serious situation indeed.
Beard: So, September could be a really torrid month for the euro, and this is undermining confidence globally. If it were not for this debt crisis then we probably be getting more of a boost from the better economic picture in the U.S. and the expectation that current U.S. earnings season will turn out quite well but Europe, I’m afraid, once again is dragging us all down.
Vanek Smith: Thank you, Steven.
Beard: Ok, Stacey.