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Creating a firewall in the Iberian Peninsula will, however, require Madrid to recapitalize its weak savings banks.
The caveat is that the big banks the natural buyers of the large, weak savings banks, or cajas are already short of capital.
Such deposit migration is now happening in Spain as people move money from weak savings banks, called cajas, to stronger institutions with international reach, like Santander.
MADRID — A planned merger has stalled between two weak savings banks in Galicia, in northwestern Spain, illustrating the reluctance of the Spanish government to take a firmer hand to its financial problems.
The next-highest amount—over €500 billion—would come from Germany, whose fiscal standing is not in doubt (unless sapped by having to finance too many bail-outs).The plan would need to be tweaked to help countries such as Spain, whose public debt is not far above the 60% limit but is rising sharply and may surge even more if its weak savings banks need extra help.
With real disposable income weak, savings fell to an annual rate of $519.3 billion, the smallest since December 2009, from $550.5 billion in July.
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Some analysts suggested that might imperil a handful of the weaker savings banks, unless they merged with stronger rivals soon.
And it announced plans for new stress tests to show investors that financial institutions, particularly weaker savings banks, could absorb a "problematic exposure" of 180 billion euros ($238 billion) to the country's collapsed construction and real estate sectors.
MADRID — The Spanish authorities are ready to inject more rescue money into some of the country's weakest savings banks, but they expect that forthcoming disclosures about the banks' real estate exposure will not reveal a gaping hole in their balance sheets.
That course of action would worsen, not improve, the already weak national savings rate in the U.S., which is at the root of the ongoing tribulations.
Fewer than one-third of Americans report being better off financially than they were five years ago, with weak household savings and hefty debt burdens holding back large segments of the economy, according to a new Federal Reserve survey.
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