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The Motley Fool’s David Kuo on Spain’s banking problems and how it’s impacting European markets.
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In the hour so all of that is ahead but the -- market so far this morning had been down it all started with Asia.
No stimulus out of China Wike kospi South Korea Hang -- Hong Kong.
Shanghai composite all lower European markets this morning -- Spain is still a concern.
Down but not by as much as they were earlier it's been a little bit about up and down session in terms of coming off the lows -- Fading back lower again we'll talk about it all in detail here.
In just the second the first will be show you features in the US still down -- on Dow futures and almost ten on S&P so look cycle opened lower and an hour and a half.
And -- the commodities certain sub ninety dollar oil 8949.
And gold up three -- from mom the close yesterday floor for more on not.
You're -- that David -- joins us say.
Director at the Motley Fool and debt he's with this alive today from London says that kind of a back and forth -- in terms of or we can recapitalize the banks what's gonna happen at Spain Howard the debt auctions going to go but at the end of the day.
And I know it's not over yet it's still a rough seen over their terms especially of the Spanish banks what do you make of all -- David.
-- museum and as far as the Spanish banks are concerned -- is that time.
The Spanish Central Bank thought they had this very clever scheme whereby they would issue bonds.
And then that I'm that was in troubled bank he had an issue shoulders and so they would pay for these bonds which shares and then so these.
Spanish Central Bank would get the bank he sheds and thank you would get the Spanish bonds great stuff and -- -- -- -- -- with -- bonds is to give them to the ECB in exchange for cash.
And they -- right this is a really kind of clever ruse until the ECB -- bit and said.
Now I don't think this is such a good plan after all I'm in Nevada where we're not gonna go down this road and so therefore is back to the drawing boards as far as side of the banks evens out and then trying to find ways in which things they can recapitalize these banks.
Because they know they've had to write off -- to know that that -- because of the out.
The housing crisis that they have in Spain.
Property prices have fallen they've had to write -- a lot of those loans relative a lot of those values and as a result of that they need money and where is is money gonna come from.
But we have that headline earlier that there might be some sort of a recapitalization.
Of the banks has for the markets came well off their lows.
Because about an hour ago.
Is that what will happen and if so -- I mean what's the the mechanism.
For doing that as you said all get together now say hey let's figure this thing out public.
Well I think you know one by the -- that -- they can do it is to try and consolidate the banks in other words.
To have a lot of disparate and -- anybody consolidated -- bank here is actually the result of the formation of a number of troubled banks in Spain.
So what -- gonna -- I think it's a time.
-- more banks to get up and hopefully what they can do is to.
Make the balance sheet look a little bit more healthy debt that is one -- which they can do it.
The other way of course is for the Central Bank in Spain to try and drum up some cash to try and raise some money from the open market.
And then -- that into the the troubled banks has anyway can do it but using.
Over here in in in the UK people are beginning to also very serious questions -- they're saying that there isn't it about time that we had capitulation.
Rather than -- manipulation.
Because you can't keep on manipulating the market like this -- -- -- -- -- -- -- Sergeant -- sudden -- for second ask you what that looks like because capitulation with regard to.
Greece I think I can envision that face today are figure out Greece is gone and they they leave the Euro -- and the whole thing and that's painful but we get -- right.
But capitulation.
With regard to a country as big as Spain.
Is not as easy so what are you referring to there in terms of Hawthorne and tell.
Mommy this serious point is the best thing really -- I -- Spain has to look off that its own.
Problems.
And it can't really sort of do that buses be tethered to to the eurozone.
So -- play and I mean it is completely different kettle of fish to either Greece or Portugal.
Because it -- in the economy.
The Spanish economy actually makes things so -- -- Spain what to say.
We've had enough of the Euro -- we are going to leave.
Then maybe we will reach that point you know whether the eurozone but have to think about capitulation rather -- more procrastination which is what seems be happening now.
-- -- has been going on for about two years and I think people are just fed up to that but -- put it.
How are predicated quote there capitulation -- procrastinate -- Sounding like a British version of Walt Clyde Frazier thank you David we appreciate that enough for.
