Spain, Spain Debt | featured news

Ireland was poised to announce a "yes" vote to a European budget discipline treaty on Friday, but the referendum result brings little respite to a euro zone tormented by doubts over Greece's future in the currency bloc and Spain's wobbly banks.

Spanish 10-year borrowing costs neared the 7 percent danger level and Bankia shares hit record lows on Monday after the government, struggling to sort out its finances, proposed putting sovereign debt into the struggling lender.

Spain's government tried to plug a gaping hole in the country's banking system on Friday, but the fourth such attempt to tackle the fallout of a property crash fell short of expectations.

Just when we thought the euro crisis had subsided for a bit, Spain is bursting back up as a trouble spot. On Wednesday, Prime Minister Mariano Rajoy said the country is “facing an economic situation of extreme difficulty.” Spain is struggling to borrow money and can’t hit its deficit targets.

The demonstrations have overshadowed regional and municipal elections that were expected to result in a defeat for the governing Socialist Party.

Fueling the demonstrators’ anger is the perceived failure by politicians to alleviate the hardships imposed on a struggling population by a jobless rate of 21 percent.

Portugal was put on notice on Tuesday that its credit rating could be cut and fellow euro zone debtor Spain had to pay more to issue new debt, suggesting the currency bloc's crisis will rage unabated in 2011.

European Union finance ministers tried to broaden efforts to contain the region's debt crisis on Tuesday and Spanish public sector workers protested over government cutbacks.

Fitch cut Spain’s credit rating, saying that the country’s debt will probably weigh on the country’s growth.