''The Spanish bank bailout: digging a deeper hole''

From Red Pepper

''Put simply, this part of the Spanish banking system risks collapse, which could leave millions of ordinary savers out of pocket and therefore knocking at the door of the Fondos de Garantía de Depósitos (FGD), the fund that guarantees savings up to €100,000. But the Spanish government doesn’t really have the money to underwrite this fund in the case of a run on the banks, which could become a self-fulfilling prophecy if enough savers lose faith that their money is secure and so remove it from the Spanish banking system. That’s already happening, in fact, with about €100 billion withdrawn from Spanish banks already this year. But with total deposits of $1.25 trillion, the situation could get a whole lot worse.''

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