Provisions for loan losses in Spain continue to rise deepening the financial problems in the European economy. Unlike in the United States many of these banks haven’t raised the necessary capital but instead merged with other larger banks. The EU needs to have mechanisms in place to recapitalize the banks and stimulate growth. If banks can’t access the required capital their should be a TARP like program that has specific terms for raising the required money. This would reduce a major overhang for the EU and a stronger financial system should result in increased lending promoting growth.
INVESTING IN THE FINANCIAL MARKETS INVOLVES RISKS. OPTIONS ARE NOT SUITABLE FOR ALL INVESTORS.