White House welcomes Spain bailout but says crisis continues

11 June 2012 23:08  [Source: ICIS news]

WASHINGTON (ICIS)--The White House on Monday welcomed the move by European leaders to bail out Spain’s troubled banking sector, but a spokesman cautioned that the eurozone crisis continues to pose a headwind threat to the US recovery.

White House spokesman Jay Carney said that the Obama administration “welcomes Spain’s action to recapitalise its banking system, and the commitment by its European partners to provide support”.

Over the weekend Spain announced that it had accepted a deal to access some $125bn (€100bn) in emergency funding from other eurozone nations to shore up its wobbly banking sector.

Worries that Spanish banks could topple under the weight of toxic European sovereign debt bonds and devalued real estate loans was the latest in an ongoing series of break points in the three-year-old European financial crisis.

Repeating comments made over the weekend by US Treasury Secretary Tim Geithner, Carney said that the bailout deal for Spain would help support “concrete steps on the path to financial union, which is vital to the resilience of the eurozone”.

However, Carney cautioned that “the eurozone crisis remains a headwind to the US recovery”.

“Our economic stake in Europe is immense,” he said, noting that “Europe is our largest economic relationship and our financial systems are deeply connected.”

News of the euro zone bailout plan for Spain at first spurred a small rally on Wall Street on Monday morning.

But US stock markets later turned sharply down as uncertainty emerged about terms of the bailout and whether Madrid’s government would submit to European supervision of its operations as a condition of the funding rescue package.

The Dow Jones Industrial Average (DJIA) closed down by nearly 143 points on Monday.

Markets also appear rattled in advance of Greek national elections on Sunday, 17 June, and whether political parties who oppose terms of Greece’s own EU bailout package would be governing Athens next week and posing a new threat to the euro.

($1 = €0.80)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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