Spain Now
Faces a Systemic, Societal, and Sovereign Collapse
http://albertpeia.com/spainssystemicsocietalsovereigncollapse.htm
‘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 million. 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.
If you’re an active
investor looking for investment ideas on how to play this, I’ve recently
unveiled a number of back-door plays designed to produce outsized gains from
Europe’s next leg down. They’re available to all subscribers of my Private
Wealth Advisory newsletter.
To find out more
about Private
Wealth Advisory (a bi-weekly investment advisory that focuses on the global
economy and outlines which investments will do best in various environments)…’
Best Regards
Graham Summers