Spanish banking woes.

The Spanish banking crisis is getting worse by the day. As a result the euro hit a new 2 year low with the U.S. dollar trading at €1 to $1.23. Major Stock Markets around the world fell by about 3% on average. Concerns in Spain seems to have been presipitated by the forced bailout to the tune of €19 billion of Spanish bank Bankia by the Spanish government. Bankia which is Spain's fourth largest bank has suffered mainly because of exposure to bad loans from the country's failed real estate market. A report from the Financial Times implying that the ECB had refused the Spanish government's request to finance the bailout using government bonds would have been 'great' for Spain because at the end of the day Spain would borrow from the market cheaply via such a move. But both the ECB and thet Spanish government have refused such an engagement took place. Bankia's woes also forced the resignation of executive chairman Rodrigo Rato who happens to be a former I.M.F. managing director and finance minister.

The Eurozone's woes are putting the Euro project under renewed attack as to whether it actually is a failed project. Such a discussion is quite delicate and one shouldn't rush to premature conclusions. In another part of Europe Moody has downgraded 9 Danish banks from reasons ranging from low profitability to difficult operating environment. It never rains but pours for Europe.