In May 41.294 billion euros of capital fled Spain, suggesting that investors don't have a lot of confidence in the country. The outbreak of the Bankia crisis, a surging risk premium, growing doubts about whether Spain needs government needs a bailout and a potential freeze on individual bank accounts to prevent a run on the banks are not good reasons to explain the massive exodus of investment capital. After factoring in the exceptional events that took place this month, this data is still hard to swallow.
The only road to recovery and restoring lost confidence is to increase solvency of the financial system with invaluable help from the ECB. The ECB's meeting tomorrow will decide Spain's near future.
