Europe bailout of Spain could cost $125 billion

By The Associated Press

Spain will ask for a bailout for banks felled by bad real estate loans, in an about-face that European officials welcomed Saturday and said could cost up to €100 billion ($125 billion).  A rescue for Spain will be Europe’s fourth since the single currency bloc’s debt crisis erupted two years ago. While the country’s leaders have long said it would not need help righting its financial sector, markets have been nonetheless concerned about its ability to pay its way. In recent weeks investors have demanded higher and higher costs to lend to Spain, and it became clear it would be just too expensive for the country to borrow the money necessary for a bank rescue from the markets.

Economy Minister Luis de Guindos said Saturday the aid will go to the banking sector only and so would not come with new austerity conditions attached for the economy in general. A statement from the finance ministers of the 17 countries that use the euro explained that the money would be fed directly into a fund Spain set up to recapitalize its banks, but underscored that the Spanish government is ultimately responsible for the loan.  To Read More…..