Well the European Union came to the rescue of  Spain by allocating $125 billion in funds to refinance Spanish banks.  The funds have to go through the government to the banks but the government insists that they will only be used to refinance the banks and thus allow them to lend to clients.  This presumed pick up in lending will hopefully give a shot in the arm to the Spanish economy similar to what President Obama tried to do with his “Stimulus Program” for ours.

The initial reaction was good but soon faded as questions began coming about the ability of  Spanish banks to repay these funds.  It remains to be seen if the funds will indeed boost the Spanish economy.  And God knows Spain needs it.  With unemployment now at 24% the situation is, to put it mildly, rough.  Reaction to continued distress could generate demonstrations that would make what has happened in Greece seem tame.

My take is that no remedy tried so far, either in the USA or in the EU,  has cured the problem.  We are still limping along hoping that some magic will change the course of events.   The Spanish exercise is more in line with what I keep pleading be done, i.e. flood the market with easy credit,  than the resort to public spending favored by the Obama team.  We will see.