Spain on verge of bailout that could hit France

Hopes for a quiet summer recess, giving much needed time to Spain to organise its broke banks, are fast receding, with many expecting the country to need a bailout and warnings that France could be dragged into the mire.

The euro crisis is escalating at a faster pace than expected since the EU leaders “grand plan” to break the link between sovereigns and banks was exposed as a plan for the future and not now, at the height of the storm.

Germany, Luxembourg, and the Netherlands got a rude reminder that even though their finances are in relatively good shape, being part of the euro makes them vulnerable. Moody’s put them on “negative” outlook because of the cost of a possible Greek euro exit and the potential cost of rescuing Spain.