Spain Now Faces a Systemic, Societal, and Sovereign Collapse
29 November, 2012
Spain’s financial system is at truly apocalyptic levels.
If you’ve been reading me for some time, you know that Spain has already experienced a bank run equal to 18% of total deposits this year alone (another story the mainstream media is avoiding). However, what you likely don’t know is that an on annualized basis, Spain has experienced portfolio and investment outflows GREATER THAN 50% OF ITS GDP.
To give this number some context, Indonesia only saw outflows equal to 23% of its GDP during the Asian Financial Crisis. Spain is experiencing more than DOUBLE this.
I’ve long averred that Spain will be the straw to break the EU’s back. By the look of things this is not far off. The country’s regional bailout fund has only less than €1 billion in funding left. As the below chart shows, this will barely make a dent in the regions’ debt problems:
Indeed, things are far far worse than is commonly know. Valencia for instance owes its pharmacies over €500 billion. In some areas there is no longer insulin.
In the region of Andalusia some government workers haven’t been paid in eight months and are working for free while begging for food.
And Catalonia is pushing to secede from Spain entirely. Indeed, its pro-secessionist leader, President Artur Mas, just won the most recent election. And over 1.5 million of Catalonia’s 7.5 million inhabitants turned out for an independence rally in September.
Again, Spain as a country is finished. Things are so bad that British Airways (many wealthy Brits vacation in Spain) is putting a contingency plan for SPAIN to leave the Euro.
Worst of all, it is clear EU and Spanish leaders have no clue how to deal with any of this. Their latest plan is for the country to cut the balance sheets of three nationalized banks by 50% sometime in the next five years. How will they do this? By dumping their toxic property assets into a “bad bank.”
The idea here is that somehow someone will want to buy this stuff. Spain already had to postpone the launch of the bad bank by a month because no one wanted to participate in it (despite the mainstream media claiming that the idea was popular which is untrue).
So, here we have Spain proposing that it can somehow unload a ton of garbage debts onto “someone” even though there is no “someone” to buy them. And the whole point of this exercise is to meet conditions so that Spain would qualify for another €40 billion in aid.
€40 billion in aid... when Spain has experienced portfolio and investment outflows of more than €700 billion.
Indeed, things are so bad that the ECB has put the entire Spanish banking system on life support to the tune of over €400 billion Euros. To put this number into perspective, the entire equity base for every bank in Spain is only a little over €100 billion.
Oh, and the country needs to issue over €200 billion in debt next year.
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This report features ten pages of material outlining our independent analysis real debt situation in Europe (numbers far worse than is publicly admitted), the true nature of the EU banking system, and the systemic risks Europe poses to investors around the world.
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Bankia Details Deep Cuts, Sees EUR19 Bln Loss This Year
29 November, 2012
MADRID--Bankia SA (BKIA.MC) said Wednesday it will cut its staff numbers by more than 6,000 and close more than 1,000 branches, as well as shed 50 billion euros ($64.8 billion) worth of assets as it downsizes and refocuses on retail banking.
The Madrid bank, Spain's fourth-largest in terms of assets and the largest of bailed-out lenders in the crisis-hit country, also estimated that it would report a loss of EUR19 billion this year, by far the biggest loss in the history of Spanish banking. However, it expects to swing back to a profit from next year.
Bankia outlined its restructuring plan shortly after European Union regulators had given the green light to it and the restructuring plans of three other Spanish lenders.
The four banks together will receive a total capital injection of EUR37 billion, of which Bankia will get EUR17.94 billion.
The number of staff will be reduced by 28%, to 14,500 workers, while the retail branch network will be cut by 39% to between 1,900-2,000 branches, Bankia said.
The bank will withdraw from lending to real-estate development and limit its presence in wholesale banking, focusing only on retail and small- and medium-sized business lending. It will also halt dividend payments until 2014 as it rebuilds capital....
For rest of article GO HERE
EU to bail out four Spanish
29 November, 2012
The European Commission said it would loan $48 billion to four banks in Spain provided they follow restructuring recommendations.
To receive the funding, the banks will have to lay off thousands of workers, The New York Times reported Wednesday.
The move to rescue BFA/Bankia, NCG, Catalunya Banc and Banco de Valencia was "a milestone," said European Union antitrust commissioner Joaquin Almunia.
In prior bailouts set up by the European Union, funds have gone to governments, not private firms.
The bailout will make use of European Stability Mechanism funds and is part of a $130 billion program set up for Spanish banks.
So far, Spain continues to claim that not all of the $130 billion will be necessary to rescue its banking sector, which got into trouble as loans defaulted with global economic downturn coming on the heels of a building boom in Spain.
An audit conducted by consulting firm Oliver Wyman said Spanish banks would require $76.7 billion to return to stability.