Despite the euro zone’s offer of $125 billion to bail out Spanish banks over the weekend being hailed by finance ministers and officials across Europe as a step in the right direction and the only assistance that would be necessary for Spain, they were terribly wrong.
As highlighted by the New York Times, The 10-year Spanish bond — one of the greatest indicators of confidence, or in this case a lack of confidence — jumped to about 6.5 percent, demonstrating that investors are more anxious about the country’s ability to pay back its debts than they were the day before the bailout was announced.
To put things in perspective, 7 percent was the level that preceded the government bailouts for Greece, Ireland and Portugal in 2010 and 2011. It appears now that the bailout could make things in Spain worse and indicators point to Italy as being the next domino in line for a bailout.
“Spain’s problems are far worse than what happened in Greece,” said economist Harry Dent to CNBC. “Spain has higher unemployment than Greece, higher total public and private debt than Greece,” as well as a bigger housing bubble, a higher percentage of subprime mortgages, and the country has “one of the highest percentages of debt owed to foreigners.”
So what does this mean to you and your finances? Struggling countries like Greece, Portugal, Ireland, Spain and Italy have trapped Europe in a vicious circle that will inevitably lead to a collapse of the euro all together.
A shock to the U.S. economy like a collapse of the euro would be devastating because if the Eurozone economy collapses, the US government is likely to face a very grim economic situation of soaring unemployment, a failing economy, and a bankrupt financial system.
Be proactive rather than reactive when it comes to the protection of your long-term funds and diversify your portfolio with physical gold today!