Loans crisis will not hit Spain claims Zapatero

22nd August 2007, Comments 0 comments

22 August 2007, PALMA DE MALLORCA (AFP) - Spanish Prime Minister Jose Luis Rodriguez Zapatero said financial markets turmoil prompted by a US home loans crisis would not affect the real economy.

22 August 2007

PALMA DE MALLORCA (AFP) - Spanish Prime Minister Jose Luis Rodriguez Zapatero said financial markets turmoil prompted by a US home loans crisis would not affect the real economy.

"We believe that these events will not have any significant or important impact on the development of the economy in general, and on the economy of Spain in particular," he said in Palma de Mallorca.

"Our economic fundamentals are solid enough to withstand a situation of this kind," he said.

Zapatero welcomed the decision of the European Central Bank (ECB) on Tuesday to withdraw 35 billion euros (47.2 billion dollars) from the market, its first withdrawal since injecting more than 200 billion euros in the wake of the US credit crisis.

Rising numbers of American households are failing to keep up with payments on home loans in the sector and foreclosures in the United States surged in July, affecting one in 693 households across the nation, a leading foreclosure data firm said Tuesday.

The situation has sparked investor fears over a potentially broader credit squeeze that might lead banks to suspend normal lending practices.

Last week, stock markets across the globe fell sharply on credit fears, prompting large capital injections from central banks and a discount rate cut by the US Federal Reserve bank.

The ECB's actions are being closely watched for any signs that it is also willing to loosen monetary policy.

[Copyright AFP with Expatica]

Subject: Spanish news 

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