Thursday , 24 August 2017


Spain is an Absolute Disaster! Here's Why

Spain is an absolute disaster on a level that [it seems] few, if any, analysts can even grasp. [Let me try to.] Words: 428

So says Graham Summers (http://gainspainscapital.com/) in edited excerpts from his original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Summers goes on to say, in part:

The financial world is awash with reports that the [recent] Spanish auctions went well – but they did not – and you better believe the ECB and other Central Banks were involved in the buying. Case in point, if the Spanish auction went so well, why are Spanish Credit Default Swaps widening? Ditto for Spanish yields (the ten year is back closing in on 6%).

Spain is an absolute disaster on a level that few, if any, analysts can even grasp. How else do you describe a country for which:

  • Total Spanish banking loans are equal to 170% of Spanish GDP.
  • Total Spanish private sector debt is near 300% of GDP.
  • Troubled loans at Spanish Banks just hit an 18-year high of over 8%.
  • Spanish Banks are drawing a record €316.3 billion from the ECB (up from €169.2 billion in February).

By the way, Spanish banks need to roll over 20% of their bonds this year too. Good luck with that. I’m sure it will all work out well. After all, the ECB and IMF have the funds to prop up Spain’s €1 trillion economy. Oh wait, they don’t. In fact no one does.

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The IMF’s requests for more funds have been rejected by both the U.S. and Canada (you really think Obama will fund a European bailout during an election year?) and the ECB has already blown up its balance sheet to the point that Germany and the ECB are growing hostile to each other (I’m sure this will work out well too).

Spain is a disaster. Its banking system is a sewer of toxic debts which the Spanish Government has attempted to fix by either merging insolvent banks together or spreading toxic garbage onto the public’s balance sheet. This might fly in the U.S. (it has…so far) where the economy is more robust and diversified than in Spain but for a country whose housing bubble dwarfed that of the U.S. and which is already posting unemployment of 24% (the highest in the industrialized world) and youth unemployment of 50%+, it’s a tough sell.

[Incidentally, according to World Consumer Confidence Index Survey – see here – the citizens of Spain believe that the liklihood of their economic circumstances improving over the next 6 months is not that promising scoring a rating of 552 compared to 597 in France, 611 in Portugal and 658 in Italy.] 

[So I repeat,] Spain is an absolute disaster!

*http://www.zerohedge.com/contributed/2012-16-19/forget-todays-bond-auction-spain-absolute-disaster (To access the article please copy the URL and paste it into your browser.)

Editor’s Note: The above article has been has edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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