Red Warning: Spain at the Mercy of Bond Markets? Systemic Risk

London, UK - 30th May 2012, 10:55 GMT

Dear ATCA Open & Philanthropia Friends

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

Is the bailout of Spain -- like Greece, Ireland and Portugal -- now imminent as 10-year bond yields remain above 6.5% consistently? Spain is the 4th largest economy in the Eurozone facing 1-in-2 youth unemployment and 1-in-3 general unemployment. What are the consequences of a massive international bailout of Spain for the safety and stability of the European single currency and global markets? Contagion: will the crisis-of-confidence spread swiftly to Italy and then France? If France gets enveloped in a resultant flight of capital, similar to the PIIGS, how will the Franco-German alliance at the heart of European integration maintain confidence in the single currency? Is there a threat to the European Union given that exiting the single currency is not permitted but resignation from the EU may be a way out? Is there a cascading systemic risk to the global banking system and capital markets as Spain goes down? How could this be mitigated? Latest: ECB rejects €19bn direct injection of unsold new Spanish sovereign bonds into Bankia as a violation of monetary union rules. Spanish equity market decline is -41% year-on-year. Is this a massive crash (>40% decline) masquerading as a bear market (>20% decline)? What are your thoughts, observations and views? Please join the Socratic dialogue on ATCA 5000 at https://www.yammer.com/atca. We look forward to hearing from you!

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[ENDS]

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