By Marcus Leach
Markets in Europe have responded in a positive fashion following the bailout of Spain's banks at the weekend.
Eurozone ministers agreed, on Saturday, to lend Spain's banks up to 100bn euros ($125bn; £80bn), which in turn has seen markets rise.
The FTSE 100 in London rose 1.0%, the Dax in Frankfurt was up 1.9% and the Cac 40 in Paris was up 1.6%. Spain's benchmark index, the Ibex, rose 2.6%. All had earlier made bigger gains.
However, Chris Towner, director of FX advisory services at currency specialist HiFX, feels that simply throwing money at the problem isn't the best solution, although it will help to a certain degree.
“Yet again we have seen money thrown at the problem in order to help the bad debt of the Spanish banks, which has caused Spain as a sovereign a huge headache as this has pushed up their cost of borrowing close to unaffordable levels," he said.
"However this time the good news is that the money thrown at the problem is more than double what the IMF estimated the Spanish banks require and therefore we are starting to see the EU leaders trying now to not just catch up with the market, but to try and remain a step ahead of the market.
“Saying that though despite the issues at a sovereign level, this crisis has gone on long enough now for the EU to stop fudging solutions but now start to map out a plan on a union level. Union means being joined together and the EU will continue to have to throw money unless they solve the bigger structural issues of not having harmonised debt and leadership.
“The markets and indeed the Euro have bounced somewhat sceptically to the news. The Euro now at teenager age is somewhat bored bouncing on this trampoline of bail-outs and is looking for clearer direction into her age of adolescence.”
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