Spanish Banks’ Burden May Push Nation to Lost Decade

One of the primary lessons from the European sovereign debt crisis is that a lack of transparency makes a bad situation worse. Two and a half years into the continent’s debacle, investors continue to lack a clear estimate of the recapitalization needs of the Spanish banking system.

The worst-case scenario makes Spain’s projected debt burden look larger than that of Italy. The best-case scenario still suggests the country is heading toward insolvency. A lost decade appears unavoidable.

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