Why Spanish banks are dragging down Europe

It seems like deja vu all over again, as nasty headlines out of Europe bonk stocks around the world. Last year, it was all about Greece. At least there's a new culprit this time, whose name is Spain.

Why? Well, one of the main problems in the constitutional monarchy is that its banks never wrote down all of their bad real estate loans after the region's big housing bust a few years back.

Now the bad loans are finally flowing through the Spanish banking system and putting the institutions on rocky footing. Depositors are fleeing, forcing the banks to rely on the wholesale market (i.e., other banks) and the European Central Bank for funding.

Read Full Article from MarketWatch

- Posted: 2012-04-23 10:34:15

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