Three headlines in the last 24 hours have renewed focus on the deterioration of the country's fiscal position:
- Downgrades of 11 Spanish banks—and negative ratings watch actions on five more—by ratings agency Standard & Poor's have highlighted connections between the banking sector and the Spanish government (which saw its long-term credit rating slashed last week).
- Further, data published by the Spanish National Statistics Institute today showed that the domestic economy had contracted at a rate of 0.3 percent in the first quarter, or 0.4 percent from a year ago.
- The Financial Times reports that Spanish officials are in talks to funnel banks' toxic assets into a publicly supported "bad bank" in order to avoid the need for external bailout funds. This is the latest in a series of recent reports citing Spanish officials that suggest a bad bank is in the works..."