As fear that the euro will unravel rises, Spaniards are pulling their cash out of banks and leaving the country, according to The New York Times.
One of the most worrisome trends is that the educated and entrepreneurial professionals have started withdrawing their money.
“No doubt there is a little bit of panic,” Jose Garcia Montalvo, an economist in Barcelona told The Times. “The wealthy people have already taken their money out. Now it’s the professionals and midrange people who are moving their money to Germany and London. The mood is very, very bad.”
Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.
Spaniards withdrew a record 75 billion euros ($94 billion) from banks in July, even though eurozone leaders agreed to help Spain's ailing banks, The Times noted.
Withdrawals picked up in the middle of last year and accelerated in July.
"There is just too much risk. Spain is going to be next after Greece, and I just don't want to end up holding devalued pesetas," one Spaniard, Julio Vildosola, told The Times.
With unemployment near 25 percent, more Spaniards are leaving the country in search of jobs. For instance, Vildosola relocated to London — along with his family and bank accounts — to lead a small software company.
Spain's situation could improve if the European Central Bank decides to purchase its government bonds. Markets will be watching the bank's governing council's meeting on Thursday for indications.
But Spain's outlook seems to be worsening, according to The Times. Banks, burdened by huge amounts of bad real estate loans, continue to flounder and its regional governments are requesting emergency aide.
The Spanish government is injecting another 6 billion euros into its bank rescue fund, most of which will be used to buy shares of Bankia SA, The Associated Press reported. The bank, which has been nationalized, had requested a total of 19 billion euros.
Spain has asked other European countries for 100 billion euros to save its financial sector.
Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.
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