Markets have been a brighter in the past week after the European Central Bank announced a plan to keep Spain, Italy and other troubled economies afloat. But the possibility of even more austerity on top of sky-high unemployment has the Spanish worried.
Spain's borrowing costs are up to 7.5 percent — the higest since it joined the euro. As a result of the regional crisis, Moody's announced today that it is poised to lower Germany's credit rating to AA.
New fears of a Spanish recession despite bailout measures are shaking global markets today as the threat of Greece's economic crisis still looms large in the region.
Overseas markets are sliding this morning on new worries about Spain. After last week's bank bailouts, that seemed like an end to the country's crisis, Spain's borrowing costs are up again to 7.5 percent.
In Europe today, the focus has shifted from Spain to Italy, in the ongoing EU debt crisis. Moody's credit rating agency has downgraded Italian debt to just two levels above junk status.
As the first batch of bailout funds arrives at Spain's banks, Prime Minister Mariano Rajoy has announced an austerity plan to slash the public deficit. This includes tax hikes and cuts to unemployment benefits.
In Spain today, the government announced new austerity measures to meet the terms of the bank bailout early this month: $80 billion worth of tax increases and pay and benefit cuts.
Spain's debt costs are rising and some fear the nation may soon need a full-scale bailout. Sr. Producer Paddy Hirsch explains the big problem with Spain, using a housing analogy.
If yesterday was all about Greece, today belongs to Spain. Concern about Spanish banks has pushed the government's borrowing costs over 7 percent. That's a level that pushed other smaller European countries — like Greece — over the edge.
