Global Economy, Spain Debt | featured news

Local governments across Spain have been paying their suppliers' bills months behind schedule, forcing companies to help shoulder the financial woes of the Spanish government.

Spain, deflecting pressure to spell out whether it needs more European financial support, told euro zone finance ministers on Friday it will set clear deadlines for structural economic reforms by the end of the month.

The Spanish economy is falling deeper into recession and depositors are pulling their money out of the banks, figures published on Tuesday showed, while the country's most economically important region, Catalonia, said it needed a major rescue from Madrid.

Corporate storm clouds gathered over Spain again as two major European companies joined the ranks of those saying they were taking steps to reduce exposure to the recession-hit country.

Ten-year bond yields rose above 7 percent and shorter-term issues also sold at higher cost, raising fears that recent European accords were not enough to stem the debt crisis.

Irene Fernandez lost her job with Spain's postal service five months ago, a victim of government spending cuts. Since then, she's been getting by on spending money from her mother and the $530 a month she earns grooming dogs for neighbors.

Spain could ask for a rescue of its struggling banks this weekend when European finance ministers hold an emergency conference call Saturday to discuss the country's financial problems, a move that would make it the fourth member of the 17-nation eurozone to seek outside help since the continent's debt crisis erupted two years ago.

German, US and UK yields fell to all-time lows after Spanish Economy Minister Luis de Guindos said the future of the euro is at stake, driving demand for the safest government securities.

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.

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.