Spain's Banks Bailed Out


LONDON -- It seems like it was only last Friday that the Spanish government was denying its banks needed a bailout from its eurozone neighbors. Oh, hang on -- that's because it was only last Friday.

Then, in a sudden U-turn, on Saturday we learned that the begging cap is to be filled with up to 100 billion euros. We don't know the exact amount yet, but we do know that some of Spain's banks were saddled with masses of bad debts after the property boom that afflicted the "don't produce, just borrow" economies came crashing down and plunged the country into recession.

Bankia has been one of the hardest hit and has already been bailed out by Spanish taxpayers, but the extent of the damage to the sector was too much for one country to handle without the lame ducks going bust, and over the course of the next few days we should learn who is to get what.

A juicy 17% yield
When whole sectors like this are devastated, the good go down with the bad -- and that includes Banco Santander (NYS: STD) , which is far more international in its operations than some of the worst afflicted.

The dividend yield is currently standing at a whopping 17%, such is the damage done to the share price -- though that payout is, of course, not guaranteed. But is it worth trying to pick the cherries from the rotting fruit pile? I've heard worse ideas.

Meanwhile, back at the crisis
But back to the bailout and the elephantine question that's being evaded while buckets of cash are being handed out: Is the EU's approach of austerity sweetened with euro-bailouts the right approach?

George Soros thinks not, and he's a hard man to argue with. Only last week, he opined that the heads of the eurozone have got it all wrong and, in these debt-laden times, adding austerity to the woes of the hard-pressed people of southern Europe is the wrong approach. According to Mr Soros, focus should be on improving productivity, as economic growth is really the only long-term solution. He reckons there might be as little as three months left to save the euro. We shall see.

It's hurting the U.K.
Meanwhile, as if we hadn't noticed, Chancellor George Osborne has told us the problems in Europe are hurting British business. He's not wrong, but what should we be doing with our cash right now?

Many of Britain's top investors are going for safe defensive shares, and among them is guru Neil Woodford. If you want to know where he's putting his money, all you need is the free Motley Fool report, "8 Shares Held By Britain's Super Investor."

Buy safe shares, take the dividends, and sit out the storm? It sounds like a pretty good strategy to me.

Further investment opportunities:

At the time thisarticle was published Alan does not own any shares mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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