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Ratings agency: Spain to ask for more cash, Italy bailout coming

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The European Union did an effective job of kicking the can down the road for a few years but now it appears as though the road is coming to an end. The recent Spanish bailout never sounded like it would be enough considering the depth of the employment and real estate problems in Spain. The poorly implemented Spanish bailout is once again being pinned on Merkel, who has a knack for making a bad situation worse. It's also hardly a surprise that Italy is yet again the topic of bailout rumors but this time, the bailout looks much closer to reality.

CNBC has more on the crisis from Sean Egan of Egan-Jones.

Poor credit quality of banks usually goes hand-in-hand with poor government finances as the two institutions are “joined at the hip”, Egan told CNBC Asia’s “Squawk Box” on Wednesday. That’s the case for most countries such as the U.S., the U.K., Switzerland and Ireland; Spain and Italy are no exceptions, he said.

“It makes little sense to separate the banks’ credit quality from the governments’ credit quality because quite often, they support each other and that’s certainly the case in Italy and Spain,” he said. “We think that Spain will be back at the table, asking for more than the 100 billion euros ($125 billion) that they just asked for, and we think that Italy will also come to the table within the next 6 months.”

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