Italy could be the next weak link in EU

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http://www.todayonline.com/World/EDC120611-0000056/Full-rescue-avoided--Spanish-PM

Spanish Prime Minister Mariano Rajoy avoided calling Saturday's euro zone decision to lend Spain up to €100 billion (S$160 billion) for shoring up its troubled banks "a rescue", referring repeatedly only to "what happened yesterday".

Analysts say Mr Rajoy is avoiding the term "rescue" because it implies the kind of humiliating conditions and surveillance by European officials that Ireland, Greece and Portugal have endured in their bailouts.

He insists that Spain, the fourth country and the biggest economy that needs a bailout, asked for the credit line for the banks, which are in deep trouble due to a burst property bubble and recession, adding that it has very limited conditions and is all part of his grand plan for reviving the economy.

The Spanish rescue package was also intended to relieve pressure on Italy, the No 3 euro zone economy.

Some market participants see Rome, which has Europe's highest debt ratio after Greece but a low budget deficit, as potentially next in line for a bailout which the euro zone could ill afford.