Financial storm clouds gather over Europe - MoneySense

Financial storm clouds gather over Europe

Markets watch as Europe tries to hold it together.


Days after Ireland finally broke down and admitted it needed help with its disastrous banking sector, other areas of Europe are looking wobbly and the markets are taking notice.

Portugal looks set to follow the path to a bailout set by Greece and Ireland, which would be a significant—but not fatal—blow to the Euro.

However, the threat of watching Spain’s economy tumble down the rabbit hole is what really has the markets spooked. While Portugal makes up 6.1% of the Euro area economy, Spain accounts for 11.6%—a number analysts figure is too large for the limited available bailout funds.

Despite Spain’s relative good standing in terms of public finances and its banking sector, the country’s unemployment rate stands at a crippling 20%. Further, its housing bubble recently burst—leaving huge numbers of houses unoccupied—but real estate prices have yet to fall significantly, leaving the market in limbo.