Posted at 9:38 PM (CST) by & filed under General Editorial.

Dear Extended Family,

You know that I practice what is written. As an example of that, please see the December 2001 career review about me that was carried in Forbes.

I live in a totally rural area of North Western Connecticut. I firmly believe that utilities are not one of your civil rights.

There are 14,000 gallons of buried fuel made up of heating oil, diesel and gasoline. The entire property can be run by my 2x 20,000 KW marine diesel engine electric generators without any need for conservation. There are four drilled wells that feed into an underground holding tanks room in which there are two 4500 gallon tanks with only their face showing on one wall.

The 9000 gallons of fresh water goes from the underground room into a 500 gallon holding tank in the house. I have three distillers that make water as Connecticut water is always hard. There are intruder lights at all entrances to the property. All driveways have metal detectors.

There is a 16 camera 24 hour security system that plays on any computer I use. The security system not only shows the office entry but also scans the property and inside the barns. They can be downloaded onto a hard drive and take recorded pictures, time dated, triggered by motion.

I have a 65 foot indoor pistol range capable of taking .50 caliber rounds into a Detroit bullet trap underground in a field. The range takes 800 cubic feet of air down range and exhausts into a field so you do not die from inhaling your hobby.

We do farm equipment and auto repair, painting, carpentry and masonry (with the exception of chimneys) ourselves.

We have a heavily populated 90,000 gallon fish pond. My root cellar is 16 by 16 by 10. My long dormant hen house is being resuscitated.

We are over ridden by deer and in need would have no problem laying up meat.

The equipment required for all tasks from farming to all kinds of hunting is in over supply. I am trained in all the talents of taking care of myself.

Having spent many years living in developing nations in Asia and Africa, this is simply how I have lived.

Why you ask, in North America? The answer is simple.

It follows directly on Bill’s question today concerning the proverbial but purely semantical argument of inflation vs. deflation. Hyperinflation, a currency event which is certain to occur, will disrupt for economic reasons the distribution of food, bottled water, medicine and utilities.

The currency event will be that of the entire Western world, not simply the dollar. It is not the lack of these items as much as it is the disruption economically of the means of distribution that require us all to think beyond gold.

Vacation homes in rural settings are smashed price wise. Owning such a residence might enhance normal family life, and become an island for those few months when distribution collapses due to hyperinflation.

Don’t laugh, it is going to happen to some degree.

The most fun is my garden pictured below. A garden plus a root cellar means storage over the winter months for important natural food items. Our apple crop, that which is not made into sauce or cider, goes into a walk in frost room for preservation.


Posted at 9:22 PM (CST) by & filed under In The News.

"Freedom is not an entitlement, it is a responsibility, that must be guarded at all costs from all those that desire to strip it from you."
–Ayn Rand

Dear CIGAs,

People have given up their lives, their fortunes and future for our freedom. Honor their sacrifice by taking a stand, please. I have.


Jim Sinclair’s Commentary

Since the latter is totally impossible politically, the former must be a statement of prediction concerning the future of the Western world.

Bernanke: ‘Things Will Come Apart’ If Entitlements Are Not Reformed and Spending Controlled
Thursday, June 10, 2010
By Matt Cover, Staff Writer

( – Federal Reserve Chairman Ben Bernanke delivered a frank assessment to Congress on the fate of the economy if entitlement programs are not restructured. On Wednesday, Bernanke warned that “things will come apart” if Congress allows the federal entitlement programs and the deficit spending they cause to continue on their unsustainable path.

Speaking at a hearing of the House Budget Committee, Bernanke offered his dire prediction after being asked what would happen if Congress did not take action to head off the impending crisis brought on by unsustainable entitlement spending, led primarily by Medicare.

“The entitlement programs are not self-funded,” Bernanke said, “they are unfunded liabilities. They are the single biggest component of spending going forward.”

Bernanke said that there were several ways Congress could fix these problems, which amount to approximately $53 trillion in unfunded liabilities, but that eventually Congress must address the issue.

“There are various ways you could address this – you can restructure entitlement programs [or] you can cut other things – but at some point you need to address the overall budgetary situation. If you don’t, you’ll get a picture like this one [pointing to a graph showing a steep rise in interest rates and debt] where interest rates are rising and debt outstanding is growing exponentially.


Jim Sinclair’s Commentary

Russia could have saved themselves billions by simply reading a free community service,

The Canadian dollar has always been our choice of North American fiat currencies and the Swiss for Europe’s paper. We have been consistent and not tried to catch every move in currency as some broke nitwits did.

To be consistent and correct is one hell of a challenge.

Russia Prepares to Buy Canada, Australia Dollars for First Time
By Paul Abelsky and Maria Levitov

June 16 (Bloomberg) — Russia may add the Australian and Canadian dollars to its international reserves for the first time after fluctuations in the U.S. dollar and euro.

“Adding the Australian dollar is being discussed,” Alexei Ulyukayev, the central bank’s first deputy chairman, said in an interview at an event hosted by Bloomberg in Moscow. “There are pros and cons. We have added the Canadian dollar but haven’t yet begun operations” with the currency.

Russia’s reserves are made up of 47 percent U.S. dollars, 41 percent euros, 10 percent British pounds and 2 percent Japanese yen, Ulyukyaev said in November. That’s a shift from 2006, when the central bank said it held 50 percent of its reserves in dollars, 40 percent in euros and the remaining 10 percent in yen and pounds. Russia’s international reserves, the world’s third biggest, reached $458.2 billion on May 14.

President Dmitry Medvedev last year suggested Russia would reduce its use of the U.S. dollar as a reserve currency after the greenback lost 34 percent of its value against the euro in 2 ½ years. The euro fell to a four-year low of $1.1877 on June 7 and has dropped 22 percent since Nov. 25 on investor concern policy makers may fail to contain Europe’s debt crisis.

The Canadian and Australian dollars have been among the best performers in the past 12 months as investors speculated a recovering global economy would increase demand for the countries’ raw materials. The Canadian dollar has gained 10 percent against the U.S. currency and 23 percent versus the euro during that period. The Australian dollar is up 8.6 percent and 21 percent, respectively.


Jim Sinclair’s Commentary

Meanwhile Financial TV blares out the crap concerning the economic recovery.

Now all the trouble is in the EU and everything is just dandy here albeit a few hiccups.

Economy may never recover from banking crisis, warns OBR
Francis Elliott, Gráinne Gilmore

The economy, more damaged by the banking crisis than previously admitted, will grow more weakly and may never fully recover, the new Office for Budget Responsibility (OBR) said yesterday.

The conclusion adds billions of pounds to the total that George Osborne must find if he is to restore the public finances to health.

Public sector workers were warned yesterday that taxpayers could no longer afford their “unreformed, gold-plated pension pots” as the Lib-Con coalition Government used the first OBR forecasts to step up efforts to prepare voters for next week’s Budget.

Growth is forecast at 2.6 per cent next year and 2.8 per cent in 2012, far below Alistair Darling’s predictions for 3.25 and 3.5 per cent respectively. This leaves Britain’s structural deficit — which is impervious to the economic cycle — bigger than feared over the next five years. It will hit 8.8 per cent of GDP, or £123.7 billion this year, compared with Mr Darling’s forecast of 8.4 per cent of GDP. By 2014-15 it will have fallen only to 2.8 per cent of GDP, the budget office said, rather than the 2.5 per cent anticipated by Labour.


Jim Sinclair’s Commentary

It would be much easier if the international investment bank that sold all this fraudulent "Reduce the budget OTC derivatives" just gave us a list of their clients.

EU investigates Greek-style budget fraud in Bulgaria
Published: 10 June 2010 | Updated: 14 June 2010

New Greek-style budgetary fraud is possibly looming in Europe, as the European Commission announced it was sending an exploratory mission to Bulgaria to assess the reliability of the country’s statistics, which were significantly revised in a short period of time "from a balanced budget to a deficit".

Economic and Financial Affairs Commissioner Olli Rehn announced on Tuesday (8 June) at a press conference following the Ecofin Council in Luxembourg that the Commission has "doubts" about the Bulgarian budgetary statistics and that a "methodological mission" will be sent to Sofia shortly to assess the situation.

The Commission’s concerns are related to two aspects. First, Brussels regrets having "only belatedly been informed by the Bulgarian authorities about sizeable revisions in the budgetary outlook," Rehn’s spokesperson told journalists in Brussels yesterday (9 June).

This already "constitutes a violation of treaty obligations". Second, "the Commission (still) lacks information on why Bulgaria has revised its planned 2010 budget from a balanced budget to a deficit estimated at 3.8% of GDP within just a few weeks, even though the macro-economic scenario remained unchanged, or was even improved during that time," explained Rehn’s spokesperson, Amadeu Altafaj Tardio.


Jim Sinclair’s Commentary

The downward spiral will continue in the financial and business world as a direct effect of the failure to intervene at the cause of the problem.

Intervention was directed by the Western world at financial entity bailouts and not points of improvement for Main Street. China focused on business and not assistance only to the fat cats.

As a result, this business recovery will turn out to be a present of FASB and not in any way a true economic phenomena.

Banks get derivatives reprieve.
Sen. Blanche Lincoln offered to modify her plan to limit swap trading by banks in return for assurances that at least some parts of her proposal will be included in the final financial reform bill. The new proposal would allow banks to trade and deal derivatives through separately capitalized affiliates, rather than spin off their derivatives businesses entirely. The proposal isn’t entirely bank-friendly, however, as banks would still have to set aside billions of dollars to protect against losses in these affiliates.


Jim Sinclair’s Commentary

The Spanish statement does not matter at all.

If OTC credit default derivatives continue to pressure Spanish debt it will collapse.

The future of Spain lies with CDSs, the IMF and rating agencies.

Credit crisis hits Spain.
Spain admitted that its banks are struggling as a result of Europe’s financial crisis, with foreign banks unwilling to lend to some Spanish ones. Germany said the EU is ready to step in if Spain needs a Greece-style rescue but Spain denied the need for additional financing and said it’s not on the brink of crisis.


Jim Sinclair’s Commentary

To explore or attempt to mine here you need to take lithium.

U.S. Identifies Vast Mineral Riches in Afghanistan
A bleak Ghazni Province seems to offer little, but a Pentagon study says it may have among the world’s largest deposits of lithium.
Published: June 13, 2010

WASHINGTON — The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials


Posted at 9:13 PM (CST) by & filed under Jim's Mailbox.

Hi Jim,

I just read your reply to Bill’s question/statement regarding deflation vs. Inflation.

Good answer. People just don’t get the currency event. It is because:

1. They are too young.
2. They have not studied history.
3. They are overwhelmed with propaganda.
4. They observe M3 contracting and finally.
5. They just don’t get the currency event.

I think Harry Schultz put it best when he said some things will skyrocket (like oil) and other things will deflate (like real estate). Sometimes people see things in one dimension and can’t see past their noses.

Big love,
CIGA Selim


Hi Jim,

The current monetary system looks like it will fail. There is way too much debt across the board across all levels. Add to that $1,300T in derivatives and $150T in US government unfunded liabilities. That’s $500k in US government unfunded liabilities per US person.

When people realize that they must purchase gold to retain what purchasing power they have left, they will form a herd like mentality and the gold stocks will explode upward in price. It is only a matter of time.

Gold is the ultimate fiat currency lie detector. Wall Street now owns Washington and Main Street is left to fend for themselves and piss in the wind.

This is an American tragedy. Our County’s founding fathers surely are quite disappointed.

I believe that Main Street with eventually rebel and the 2nd American revolution will take hold.

All the best,


Dear Fred,

There are tons of conflicting opinions concerning negative lease rates recorded on the internet. I assume the confusion has lead to your question.

The answer is simple. Central Banks are paid lease rates for lending gold yet assume the full risk of non-return of the asset which is not an attractive proposition when sovereign credit is sundering.

To be paid nothing for taking the risk of non-return of the asset is not attractive to any sane person.

The gold price is moving up. It simply says no interest on the part of central banks in lending gold to questionable credit, and even other central banks as questionable credits.

The desire to short gold is dropping daily. The bearish opinion that it indicates central bank’s over-much selling pressure is denied by the appreciation of the price of gold.

It is fact that central banks have been buyers and even on balance buyers It is that simple.

The confusion is that the bears are giving academic answers to a practical situation.




You will recall my observation that the top nuclear scientist in America had been sent by the Administration to the BP war room as advisors.

Don’t rule out anything as the greatest ecological disaster in the history of man continues.


Nuclear Option on Gulf Oil Spill? No Way, US Says

I do not advocate any particular "solution" but rather point out how quickly consensus opinion can go from "No Way" to "Let’s Think about it". A week ago, consensus opinion feared lower stock and gold prices, but that will change with every up tick. There are reports that suggest that the infrastructure of the well has been damaged. If this is correct, plugging the well through traditional measures could prove very difficult. Watch consensus opinion evolve as the size of the spill continues to increase.

“Probably the only thing we can do is create a weapon system and send it down 18,000 feet and detonate it, hopefully encasing the oil,” Matt Simmons, a Houston energy expert and investment banker, told Bloomberg News on Friday, attributing the nuclear idea to “all the best scientists.”



Hi Jim,

You predict hyperinflation. I can only see that happening if people have the money to spend. If their IRA is toast because the stock market has melted down, they will have no cash to spend. They have already lost the equity in their homes and most are under water. Jobs are in jeopardy, everyone is cutting back, no one is going on a spending spree. If the Administration was to eliminate the income tax and sent $10,000 checks to everyone, then prices will rise like you predict… but they won’t give up taxes that easily. Ben will have to use a B-52 money drop.

Deflation can occur if no one has any extra money to spend. Most businesses finance their inventory and pay interest on their loans. If their products are not moving, they will not raise prices, hell, they may take a loss so they can clean out the back room and make this months payment.

Sooner or later the Government will default on its promises, it is just a matter of time. Then, interest rates will skyrocket. I just can’t see how prices can rise when everyone is out of work or broke. I think they are deliberately trying to destroy America so they can give us a solution to the problem: the new world order – a one world government with the bankers in charge and our Constitution, will be history.

All the new money that has to be created out of thin air has gone to the bankers, not the people. How can prices rise if the common man is destitute?


Dear Bill

Hyperinflation is a currency, not an economic, event. That is not factored into your set of parameters leading to your conclusion.

Governments do not default, they reschedule and print more money. QE can provide pieces of paper, but not buying power.

All your points below that you offer to sustain deflation is the meat from which hyperinflation occurs. Governments of the Western world will provide all the fiat money to bail out everything but Main Street, but there will be no increase in buying power.

I have written on this subject at least 200 times, and seem not yet been able to communicate what is an economic/political axiom. This currency event, not an economic event, has happened before and will again.

Did the same conditions and formulas you put forward to sustain deflation not exist in Weimar, Zimbabwe and 34 other examples? Is not what the Western world is doing now EXACTLY what was done in Weimar, Zimbabwe and 34 other examples?

Respectfully yours,


Jim Sinclair’s Commentary

And so it will be provided. Another event answer to Bill’s question.

EU chief says eurozone bailout could be increased

BRUSSELS – The European Union president says EU governments will increase a massive euro750 billion ($1 trillion) bailout package if it isn’t enough.

EU President Herman Van Rompuy told Belgian magazine Trends Tendances on Thursday that "if the plan isn’t enough, my answer is simple: in this case, we will do more."

He says he doesn’t think that’s likely because the size of the financial rescue on offer for eurozone countries who can’t repay their debts already "stunned the world."

Germany is providing the largest chunk of the debt guarantees that back the fund.


Posted at 2:12 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

There has once again been another “flip” in the psychology of the gold pit. Over the years we have seen gold trading inversely to the US Dollar, get jettisoned along with a host of other commodities during the Yen carry trade unwind of late 2008, be considered a “risky” asset and get sold off when investors were nervous about the global economy, swing back to being a “risk averse”, safe haven asset during the sovereign debt crisis that began with Greece, and today we are now back to gold trading as the “anti-Dollar” instead of the “anti-Euro”. In other words, we have come full circle with gold now moving higher as the Dollar moves lower.

Throughout the entire gamut of swings in investor psychology, gold has moved from $250 to over $1,250 in spite of the Priesthood of Prechterite’s Prognostications Pronouncing its demise. The reason is really not complicated – it has entered into the minds of many that it is something tangible, that has value, that cannot be corrupted by monetary authorities or their willing accomplices in the political realm and that has stood the test of time weathering every economic storm in history. In other words, it is now clearly seen as the prime currency. Try as they will, Western monetary elites and their accomplices in economic circles, cannot scrub this out of the minds of the citizenry or nervous investors who watch in dismay at the ridiculous, mindless, irrational and inexplicable wild price swings in the equity markets. Although they may not be able to explain it, they instinctively understand that something is terribly wrong with a stock market that adds and then erases billions of dollars in market capitalization in a 24 hour period and a foreign exchange market that sees movements in currencies that at times past would have taken months to occur.

This is the single biggest reason that gold continues to shine – it gives its buyers and owners peace of mind and an anchor of some sort in the midst of the roaring waves of turmoil, instability and unpredictability that surround them.

To the price charts – gold is attracting buying on dips in price but still attracting sellers on moves toward the $1,240 region. Until that changes, gold will remain range-bound. It will take a closing push through $1,245 to run out the new shorts who have come in. See the chart for the levels of resistance and support. I might add here that this is not unusual for gold. It runs higher, then tracks sideways for a period of time consolidating its gains giving end users and buyers time to become acclimated to the new and higher price level building a base of support before it then breaks into a new leg higher as conditions deteriorate and another rush to its safety kicks in. We have seen this pattern again and again and again since 2001 and therefore see no reason for anything to be different.

Contrary to some of the insipid comments I have seen, gold is nowhere near a “bubble” or craze. When we see anything with the word “gold” in it moving higher in price, whether it is a bakery, a headhunter service or a computer service, then we can safely say that gold has entered a parabolic phase. Even at that, who can really say how high a market can go when fear is driving it? Personally I feel it will continue moving higher until it is brought back into the monetary system in some form or fashion as the current monetary system is now in its death throes, having been abused to death by its keepers.

The HUI chart looks a bit better as it has moved back up into a zone of congestion between 465 and 445. It too is trading sideways and will need a closing push through the 470 region to change the current dynamic.

Crude oil has broken out of its recent malaise and is threatening to push up into the 50 day moving average near $78. If speculative money can take that out, many of the shorts in the market are going to cover. I would look for resistance there but first it needs to close above $76.50.

The S&P is at a crucial juncture. Technicians are watching the 1106 – 1108 price level to see how it fares there. Bulls will be giddy if it can close through that region. Failure there will embolden the shorts who have been waiting for a higher level from which to enter after having given up on expecting downside momentum to continue on days of sharp weakness.

Bonds failed at 125^00 and are now attempting to find buyers as they work lower. They are in a consolidation pattern much like gold is and need an upside push through that level to kick off another move higher or a close below 121^17 to spark a round of long liquidation.

The Dollar needs to hold 86 to keep the speculative long side happy and worry-free. While the net speculative long position is not as large as it has been at times past, there are enough of them that a technical wash out could take it down to 84.50 – 84.00 rather quickly. We’ll see how things shake out in the next couple of sessions.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini


Posted at 12:37 PM (CST) by & filed under General Editorial.

My Dear Friends,

The observation that I called to your attention two days ago concerning a shift in the relationship between the euro and gold was in the marketplace the next day until the COMEX knee jerk reaction early in their gold trading session.

It is clearly there today.

It is the relationship that matters in terms of price regardless of the reasons created by the marketplace commentators.

At this moment the euro is at 1.2340 while gold is plus $11.40. We live in a currency world which is purely a mirror image of traders positions lacking fundamental reason for dollar appreciation.

$1.17 was a point of no return for the euro. Repeated intervention at 1.19 has caused the short covering which is now taking place.

There is however another possibilities that must be considered. India’s clear return to inflation has caught the attention of major money. The volatility of currencies cannot be overcome by creating an index of every currency in the world.

The volatility of currencies has enhanced the attraction of gold. Please note that China always talks its case and is quite gold positive commercially and in a government sense.

So the combination of inflation returning to any significant country anywhere improves gold’s price in that country’s perception, increasing demand in a long established bull market.

The mirror image trading of the euro and the dollar means that the two could, without fundamental reasons, fluctuate against each other VIOLENTLY up and down.

This is Gold’s move to $1650 amid its normal drama.

When the talking heads focus on inflation they focus only on the US like the US was the center of all world economics. Since the creation of the global economy and prevalence of OTC derivatives in the Western world, the US no longer commands center stage.

Do not fear gold falling on a stronger euro for the reasons given above.


Posted at 10:46 PM (CST) by & filed under General Editorial.

Dear CIGAs,

We would like to clarify our recent announcement about the proposed investment trip to Tanzania. Because of the upcoming election in Tanzania this particular trip has been delayed until the New Year. However, the separate corporate trip will run as scheduled between September 20th and October 2nd 2010. Details for this trip are available on the corporate homepage.

Dan Duval
JSMineset Editor

Posted at 2:45 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

When an OTC derivative trades anywhere in the world, the effect is as if it trades EVERYWHERE.

Merkel’s ban means nothing whatsoever.

Emergency Bans on Naked CDS Trades Considered by EU (Update3)
By Ben Moshinsky

June 14 (Bloomberg) — National regulators may be given “emergency powers” to “prohibit or restrict” naked credit- default swaps trades, under proposals being considered by the European Union in the wake of the region’s debt crisis.

The measures would be “temporary in nature and subject to coordination” by the European Securities and Markets Authority, the European Commission said in a statement. The European Parliament is also scheduled to vote tomorrow on separate proposals to restrict trading in credit-default swaps.

French President Nicolas Sarkozy and German Chancellor Angela Merkel called on the commission last week to speed up curbs on financial speculation, saying some bets against stocks and government bonds should be banned as markets suffer a resurgence of “strong volatility.” Germany banned some naked short-selling last month.

“I would hope that the political pressure on sovereign CDS doesn’t obscure the problems in naked CDS on the financial sector,” Richard Portes, professor of economics at London Business School, said in a telephone interview. “Financial firms and some sovereigns are dependent on market



Jim Sinclair’s Commentary

Think for a moment what something like this means.

Gold may look back at $1650 from much greater heights.

Fannie And Freddie Money Pit May Suck Down $1 Trillion Of Taxpayer Cash
Posted Jun 14, 2010 12:06pm EDT by Henry Blodget

Bloomberg checked in on the state of Fannie Mae and Freddie Mac, the two once-quasi-private mortgage subsidy companies that are now almost wholly owned by taxpayers.  Bloomberg found that Fannie and Freddie have already drawn down $145 billion in their unlimited line of taxpayer credit, and that their losses could ultimately be as high as $1 trillion.

To put that in context, Fannie and Freddie alone may consume more than the entire TARP Wall Street bailout, which was in the neighborhood of $800 billion.  Fannie and Freddie’s taxpayer-money-vaporization will likely dwarf even that of AIG, which most people still consider the most appalling bailout beneficiary of all.

Just as bad, Congress isn’t even pretending that it has a plan to stop the losses at Fannie and Freddie. Reducing the Fannie and Freddie losses would mean reducing a huge housing-market subsidy–and that’s the last thing Congress wants in an election year.

Also, the Fannie and Freddie losses are functioning as a back-door Wall Street bailout: Fannie and Freddie are using the taxpayer cash to buy mortgages from Wall Street, and they are paying prices so high that they’re taking a loss.


Posted at 2:41 PM (CST) by & filed under Jim's Mailbox.

"Throughout history, it has been the inaction of those who could have acted; the indifference of those who should have known better; the silence of the voice of justice when it mattered most; that has made it possible for evil to triumph"
–Haile Selassie

Indexes trim gains after Greece downgrade

Stocks trimmed some of their gains in early afternoon trading on Monday as Moody’s downgraded Greece.

The equity markets already "know" about Greece. Stocks are struggling (off their highs) because the energy required to clear the 5/20 and 6/4 gaps is high. These gaps have created a resistance zone that sits over price like anvil.

S&P 500 ETF with exchange volume:



Dear Jim,

Another one down in flames. Spain will head to general strike soon.

Yet another bailout in the works. The boom is lowered on Britain.

These bailouts do not exist for people, but for the faux attempt at solvency for an insolvent system. Anyone with faith in this fiat system is going to have a rude awakening. May I thank you for your prescient observation, oh so many years ago now, that Gold is the only thing that can protect us from this madness. The deflationist Prechterites are going to receive the shock of their lives.

CIGA Pedro

EU leaders to thrash out multi-billion pound rescue package for Spain as it faces bankruptcy
By Allan Hall
Last updated at 3:26 PM on 14th June 2010

EU leaders are meeting this week to thrash out a rescue package for Spain as its economy teeters on the brink.

News of the behind-the-scenes scramble in Brussels spells bad news for the British economy as many of our major banks have loaned Spain vast sums of money in recent years.

Germany’s authoritative Frankfurter Allgemeine Newspaper reported that Spain is poised to ask for multi-billion pound credits.

It said Manuel Barroso of the EU Commission and Jean-Claude Trichet of the European Central Bank are united on the need for a rescue plan.

The looming bankruptcy of Spain, one of the foremost economies in Europe, poses far more of a threat to European unity and the euro project than Greece.

Greece contributes 2.5 per cent of GDP to Europe, Spain nearly 12 per cent.

The FAZ reported German government insiders telling it: ‘We will lead discussions this week in Brussels concerning the crisis.