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Spain Says It Doesn't Need A Bailout: Is It Joking?

Spain must be delusional. I just read that, in a speech at the London School of Economics, Spanish Finance Minister Luis de Guindos said, "Spain doesn't need a bailout at all." (Source: "Spain FinMin's 'No Bailout' Remark Causes Laughter," Yahoo! Finance from CNBC, October 5, 2012.) I'm not sure what de Guindos was thinking, but my first thought was that he must had mixed up his words and actually meant to say "Spain does need a bailout."

If this is the actual thinking of Spain's government, I would be quite concerned. Just last week, Spain presented an aggressive austerity plan that focuses on budget cuts in lieu of tax increases; the country is trying to avoid asking for a bailout and all of the stricter budgetary requirements that are associated with a financial crisis.

The reality is that Spain is critical to the eurozone in terms of its size and importance in the region's economic engine. If Spain's financial crisis worsens, as was the case with Greece, the aftershocks will likely be significant…and not just to the eurozone; they will likely also affect the global economy, including China, which is Spain's sixth-largest trading partner since relations started in 1973. Read More

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