Spain Bails Out CajaSur Savings Bank: More Trouble Coming for Euro?

The trouble of European countries dont seem to go away so soon. Till recently it was Greece, which had Economical Problems and today, the its the time for Spain.
As per the news, the Spanish Central bank is on its way to save the regional Spanish Bank named CajaSur with a big amount - 500 million Euros, so that it keeps itself afloat.

Now although it is just the second such instance in Spain where a kind of bailout is witnessed (first one was the House Market Bubble Burst two years back). But the fact is that problem exists and that's why the bailout has to happen.

We cannot keep our eyes closed to such incidents, as a major currency EURO is going to get impacted because of these developments on the European Economic Front. It was just a few years back when everyone was going great guns citing examples of European countries, mentioning how smart move is the formation of EU, with one single currency. The benefits time seems to have gone away, its time for some setbacks.
ALready we are seeing a lot of turmoiol in the Forex Markets with respect to Euro going down against the dollar. All courtesy of Greece, a country which now the so called experts believe that shouldn't have been part of EU, given its past record. As the dominion effect comes in, the Euro currency is set to take a hit severely.

Let's not forget that the House market bubble burst started from US two years back. It went on to move to Europe. At that time, Europe appeared to be stable and infact, the Euro started gaining solid grounds compared to the USD. People even started mentioning that Euro will soon outperform USD in big magnitude. Exporters and economies of scale started hedgin themselves by getting into Euro specific contracts rather then USD contracts. They even bought gold for the same reason. However, today things are looking different.

The Dollar is back on track, the Euro is taking a hit. What appaered to be the benefits of the combined currency of European region, are now appearning to be problems. Just one single country within the 25 member strong EU region can spark a big problem and that problem is spreading fast. It has global impact.

Atleast the Spanish Central Bank should be given full credit for being on top of things by taking preventive measures. It is suspeted that the Spain banks are having big trouble ahead, as the estimated amount of mortgage losses are around 300 billion Euros. That's not a small no. of a country like Spain. Overall, it appears that US is a still a better destination for investment than Europe

The Greek Tragedy and its Impact on the world: Problems with Greece

The news has been making rounds across the globe - Greece is in major financial trouble. It is a well known fact now. However, there are certain questions which often keep wondering in the minds of common people. Let's analyse those questions in this article:

Problems with Greece Economy and what it means for the rest of the world

A look at Greece - its a small country, both in terms of population and area. It has a small economy and a history of bad debt. Its a part of the European Union. So, why is everyone in the world, including US as well as the entire European Union or EU, is doing all they can to prevent Greece from getting into this kind of trouble? What is the interest that these big countries like US and UK and the big unions like EU have, in small countries like Greece?
The answer to this question is interesting:
1) Impact on Currency: The problem of this is because of the common Euro currency. Anything happens to Greece economy, it will impact the Euro severly, since Euro is the common currency of EU which includes Greece.

2) Market Impact:Anything that goes wrong with one currency member, will impact the overall market. By overall market it means that all the regions & countries of the EU, which includes more than 25 countries, which all trade in Euros. It will send a negative signal about the overall European economy.

3) Dominion Effect: In case Greece economy goes down, there will be problems with other countries as well - Italy, Portugal, Spain, Ireland, are next in the list. Its the same case which happened last year with Lehman Brothers. After the collpase of financial giant, many other financial institutes which were counterparties for Lehman collpased. Imagine what can happen with an entire country's economy collapsing. To the worst case, how much impact will it have on the overall Euro currency which will impact the entire EU region.
The simplest way to explain this is with an example - If I offer you bonds by Greece Government now, will you buy them? Proabably not. Then, if you know that there are similar problems with anything issued in Euros, that too from countries like Spain, Italy, Ireland, etc., will you but the bonds issued by those countries, No. So the chain reaction will continue, leading to further collapse.

How are other countries impacted?
If you are thinking that problem lies only within Greece and the Euorpean Union, its wrong. When the world is becoing a global village, nothing can be spared or remain secluded. Imagine a countru like India, China, Brazil or so called emerging nations. If the investors from EU region see a problem in their homeland, they will start pulling out their invested funds from these emerging economies for their own use in their countries. That will mean more selling pressure, so more collapse in these emerging markets.
Then, dont forget that all the economic conditions impact the consumer behaviour. If a person in Greece or UK is not feeling financially secure, he will not spend lavishly. This will lead to reduction in demand, which might have a severe impact on the exports made to the EU region countries from markets like India and China.
So, overall, everything will get impacted across the globe