Spain’s Banks Need 40 Billion Euros

    A Spanish flag flies in front on Bankia's headquerters in Madrid, Wednesday, June 6, 2012. The Spanish economy is in recession for the second time in three years as the damage from a housing bust persists. Foreclosures are rising, Spain's banks are in worse financial shape and the government's deficit is hitting worrisome levels. The impact of the budget cuts has been brutal and unemployment has swelled to nearly 25 percent. Among people under age 25 it is a staggering 52 percent (AP Photo/Daniel Ochoa de Olza)

    Daniel Ochoa de Olza / AP Photo

    Act now, leaders in Europe told Spain this week. The country is expected to ask for help recapitalizing its banks Saturday, and a Eurogroup conference call that lasted two and a half hours on Saturday ended with officials saying that a statement would come after the Spanish government had time to talk. Politicians and market watchers are afraid of what may happen if the debt-laden country delays, as elections in Greece scheduled to June 17 add to political and economic uncertainty in the euro zone. “There is a need to ensure that the euro area is properly ringfenced and protected from possible Greek fallout, and that means strengthening Spain’s banks,” one EU official told reporters.

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