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By Jason Stipp and Jeremy Glaser | 10-04-2012 04:00 PM

Will They or Won't They?

Policymakers and corporate leaders arrived at decision points this week.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to The Friday Five.

Will they or won't they?

Policymakers and corporate leaders are at decision points this week. Here to offer some insights on whether they will go ahead with plans or maybe hold back is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: Jason, glad to be here.

Stipp: So, what do you have for The Friday Five for this week?

Glaser: Today, we are going to talk about Spain, the fiscal cliff, HP, T-Mobile and PCS, and finally, Best Buy.

Stipp: So, Jeremy, the big question in international news this week was over Spain and some of the questions were, will they or won’t they need a bailout. But I think the real question is probably when they will need that bailout. What’s your take on the latest there?

Glaser: I think it’s absolutely the right question. Spain is going to need a bailout. Their financing problems right now with their yields being so high on their debt and with their budget deficit, although they are trying to get it smaller, still existing, it’s not going to be that easy for them to turn around without the help of the rest of the European community.

But the question is, when are they going to do it? Right now, it seems like Spain is playing a bit of a dangerous game in trying to delay taking the bailout funds as long as possible. So, even though there were some rumors this week that they were going to ask for those funds this weekend, very quickly both the prime minister and the finance minister of Spain came out and said, there is no imminent need to ask for the bailout money, they might not need the bailout money at all, and were very forceful in their statements about this.

It’s a big question about why they are putting this off so much. It could they are trying to appease some domestic political actors, and make it seem like they have exhausted every possible option before taking the harsh conditions of the European money--obviously, [a bailout] comes with strings attached. Maybe they really think that they can turn it around, and they want to just give themselves the space to do that before signing on the dotted line for getting the cash.

But either way, the truth is that they are going to need this money, particularly because getting this money is the condition that they need to satisfy for the European Central Bank to start buying the unlimited quantities of Spanish bonds to bring those financing costs down. And if their financing costs don’t come down … from that range a little bit below 6% where they have been at recently, it’s going to be too expensive for them to refinance, and they are going to find themselves in a pretty tricky situation. So, certainly they are going to need to do that sooner rather later, and it’s a big question as to why they haven't yet.

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