Bove Says Spain in Depression, QE3 Will Do Nothing

Fitch Ratings today announced that they have

three notches to BBB from A, keeping the nation on a negative outlook. Fitch also estimated that the required banking recap is as high as 100 billion euros, or 9% of Spanish GDP. Of the three major rating agencies, only Moody's now rates Spain above A and Egan-Jones has the nation rated at B, which is 6 notches below Fitch. Benzinga spoke to Dick Bove of Rochdale Securities about this, quantitative easing, and more. "Spain is dealing with significant capital outflows and is struggling to raise debt on a regular basis," Bove said. "With 25% unemployment in the country, I believe it is in a depression." There has been much debate on how to fix Europe and the potential risks the continent poses on our own recovery here in the United States. Talks of eurobonds to help the struggling nations have been thrown around, as well as using the EFSF and ESM to directly recapitalize Spanish banks. Bove had a similar idea as well. "They need to guarantee deposits in Spanish banks with a guarantee from the ECB, which would allow Spain to borrow money," Bove stated. "Spain has already taken austerity steps, and has been working hard to stabilize the situation. The rest of Europe needs to support Spain, so immediate actions should be taken." With many worries of contagion spreading around Europe and also hurting the US recovery, Bove stated that a continued Spanish meltdown will only hurt a few banks here in the United States. "Spain poses a risk to the likes of Goldman Sachs

, Morgan Stanley

, and JP Morgan

, where earnings would be negatively affected, but should not be highly disruptive," Bove said. Chairman Ben Bernanke spoke today on Capital Hill about the economic health of the United States and in Europe. Leading into the meeting, the market had high expectations of a new QE program or possible expansion of the Operation Twist program, on the back of weak economic numbers recently, mainly in the May job report last Friday. Dick Bove stated, "I believe the Fed has no further tools to help assist the US economy at this time. The QE programs were not very effective." He went on to say that the private sector has the ability to grow without assistance from the Fed, and that the money from the QE programs is just sitting in the Fed, stating that 92% of the assets currently sitting in the Fed are governmental securities, where it is historically around 88%. His stance continued to be, that further Fed easing, meaning QE3, will do nothing for the US economy.