Spain succeeds in bond auction despite high borrowing cost
A man walks past a bank window covered with stickers left by protestors on May 15, 2012 in Barcelona.
Jeremy Hobson: We'll start in Spain, which asked investors for about $2 billion this morning in a bond auction. And the country got the money it was looking for, though at a slightly higher interest rate than the last auction. If it were just the government that needed money right now in Spain right now, then siesta could take place as usual in Madrid today. But unfortunately, there's another major sector of the economy there in a desperate search for cash.
Marketplace's Stephen Beard is in Madrid this morning as part of his tour of Europe, and he joins us now. Good morning, Stephen.
Stephen Beard: Good morning, Jeremy.
Hobson: Well, it sounds like you find yourself right in the center of the euro crisis storm today.
Beard: Yes indeed, the Spanish banking system is now drowning in debt, and the worry is that the Spanish government may not have enough money to keep the banking system afloat. What you've got here is a bizarre set up -- the banks and government are propping each other up. The banks are buying the government bonds and the government is pumping the money it's raised into the banks. As somebody said, it's like two drunks propping each other up on a Friday night.
Hobson: Well Stephen, let me ask you, you've been traveling all over Europe on this tour that you're on right now -- have you seen different attitudes about the crisis in different places that you've been?
Beard: Yes, in a sense, it is a pub crawl, Jeremy, let's call a spade a spade, I've been to five different bars in five different eurozone countries to find out how people feel. In the countries that have been the most affected by the economic crisis, such as Ireland and Greece, people really drowning their sorrows. But what I would say overall is there is a kind of calm, people are numb, the crisis has gone on for such a long time there in the background, they're just not focusing on bailouts and bond sales. The big question is: Is this the calm before the storm?
Hobson: Marketplace's Stephen Beard in Madrid, who when we asked him to cover some liquidity troubles in Europe, he seems to have taken us literally. Thank you, Stephen.
Beard: I'll say cheers to that Jeremy.