Posts Tagged ‘Spain’

If Spain Collapses, Europe Collapses. And If Europe Collapses, America Collapses. And Terrified Spaniards Are Bailing Out Of Spain As I Write This.

September 5, 2012

Be afraid.  Be very, very afraid.  Because to paraphrase Obama’s demonic reverend for 25 years, the chickens of socialism have come home to roost:

Fears Rising, Spaniards Pull Out Their Cash and Get Out of Spain
Published in the New York Times: Monday, 3 Sep 2012 | 9:22 PM ET By: Landon Thomas Jr.

After working six years as a senior executive for a multinational payroll-processing company in Barcelona, Spain, Mr. Vildosola is cutting his professional and financial ties with his troubled homeland. He has moved his family to a village near Cambridge, England, where he will take the reins at a small software company, and he has transferred his savings from Spanish banks to British banks.

“The macro situation in Spain is getting worse and worse,” Mr. Vildosola, 38, said last week just hours before boarding a plane to London with his wife and two small children. “There is just too much risk. Spain is going to be next after Greece, and I just don’t want to end up holding devalued pesetas.”

Mr. Vildosola is among many who worry that Spain’s economic tailspin could eventually force the country’s withdrawal from the euro and a return to its former currency, the peseta. That dire outcome is still considered a long shot, even if Spain might eventually require a Greek-style bailout. But there is no doubt that many of those in a position to do so are taking their money — and in some cases themselves — out of Spain.

In July, Spaniards withdrew a record 75 billion euros, or $94 billion, from their banks — an amount equal to 7 percent of the country’s overall economic output — as doubts grew about the durability of Spain’s financial system.

The withdrawals accelerated a trend that began in the middle of last year, and came despite a European commitment to pump up to 100 billion euros into the Spanish banking system. Analysts will be watching to see whether the August data, when available, shows an even faster rate of capital flight.

More disturbing for Spain is that the flight is starting to include members of its educated and entrepreneurial elite who are fed up with the lack of job opportunities in a country where the unemployment rate touches 25 percent.

According to official statistics, 30,000 Spaniards registered to work in Britain in the last year, and analysts say that this figure would be many multiples higher if workers without documents were counted. That is a 25 percent increase from a year earlier.

“No doubt there is a little bit of panic,” said José García Montalvo, an economist at Pompeu Fabra University in Barcelona. “The wealthy people have already taken their money out. Now it’s the professionals and midrange people who are moving their money to Germany and London. The mood is very, very bad.”

It is possible that the outlook could improve if the European Central Bank’s governing council, which meets Thursday, signals a plan to help shore up the finances of Spain and other euro zone laggards by intervening in the bond markets.

But right now, if anything, Spain’s picture is growing dimmer.

On Friday, the government’s bank rescue fund said it would need to pump up to 5 billion euros into the failed mortgage-lending giant Bankia, which the state seized in May. And on Monday, Andalusia became the latest of Spain’s semiautonomous regions to ask the central government for rescue money.

The wider prospects for the euro zone are also still bleak. Moody’s [MCO 39.72 0.12 (+0.3%) ] Investors Service said on Monday that it had changed its outlook on the AAA rating of the European Union to negative, and that it might downgrade the rating if it decides to cut the ratings on the union’s four largest budget contributors.

Spain’s gathering gloom comes despite a gradual return of capital to banks in Greece and the relative stability of deposits in those other euro zone trouble spots, Italy, Ireland and Portugal.

The continued exodus of money and people from Spain could be a warning to European policy makers that bailing out the country — a step now widely expected — may not stem the panic as long as the Spanish economy remains in a funk.

It was a lesson learned in Greece, where despite successive European bailouts, about a third of deposits have been withdrawn from its banks since 2009, as the public worried that Athens might have to return to the drachma.

Spain is still a far cry from a nearly bankrupt Greece: it has a much larger and more diverse economy, lower levels of debt and a bond market that is still functioning.

It might be more accurate to say that money is leaving Spanish banks at more of a jog than anything close to a sprint.

Although retail and corporate deposits are down 10 percent compared with those of July 2011, the country remains relatively rich in savings, with 2.3 trillion euros in overall deposits, according to data from Morgan Stanley.

But once under way, the flight of bank deposits can easily overwhelm rational facts and analysis.

Setting off the flight was the failure of Bankia, which came as a shock to Spanish savers who had been assured by government officials that the bank was in good shape.

Instead of calming fears, the state takeover prompted comparisons to Argentina in 2001, when peso bank accounts denominated in dollars were frozen in order to stem the flight of deposits.

The corralito, or corral, as the Argentine action is known, has become part of the public conversation in Spain. The million-plus Argentines who have since immigrated to Spain have provided ample and gory stories of desperate legal battles and wiped-out savings.

Eduardo Pérez, a Spaniard who was working in Argentina during that period, remembers the events all too well. He said he lost four-fifths of the money he had kept in an Argentine savings account, though he declined to say how much money was involved.

“Some of my friends lost everything,” Mr. Pérez said. “So yes, everyone in Spain knows about the corralito.”

Recently, Mr. Pérez, who lives in the northern city of Bilbao, removed about a third of his euros from his Spanish savings account and sent them to Singapore, converting them to Singapore dollars.

Having lost his job at a multinational company a few months ago, Mr. Pérez, 48, is trying to make ends meet by focusing on his travel Web site and blog, which aggregate Spanish-language travel videos.

But as the job outlook worsens, he is contemplating following in the path of his savings and starting a new life in Singapore with his wife.

“Two years ago, we never would have thought of this, but now I have real fears that there will be a breakup with the euro,” he said. “And when you keep hearing people saying, ‘Don’t worry, it’s not going to happen’ — well, that is when you have to start worrying.”

Analysts said that the record-high outflow from Spain in July was probably spurred in part by July’s being a taxpaying month for many corporations, which prompted them to withdraw cash from deposit accounts.

Also playing a role were investment funds that moved cash reserves to foreign banks in light of the credit downgrades at Spanish banks.

Still, as the examples of Mr. Vildosola and Mr. Pérez show, individual deposit flight is becoming more pronounced.

Some people are willing to fly to London for the day just to open an account there, as most banks in the city require such transactions to be made in person.

Spanish bankers working for British financial institutions say they have been hit with a barrage of questions about how to open savings accounts in London.

“It seems as if everyone I know in Spain is getting on an easyJet to come to London and open a bank account,” said one such banker, who spoke on condition of anonymity, citing his company’s policy.

That is what Mr. Vildosola did before he took the more drastic step of moving his family to England.

“It’s sad,” he said. “But I just don’t think there is a future for me in Spain right now.”

This story originally appeared in The New York Times

You want scary?  CNBC reported that the withdrawal rate is equal to 52% of the entire GDP of Spain:

The flight of capital from Spain is now worse than what Indonesia, one of the hardest hit countries during the Asian financial crisis, experienced in the late 1990s, according to analysis by Nomura.

On a three-month rolling basis, portfolio and investment outflows from Spain totaled 52.3 percent of the country’s gross domestic product (GDP), (that’s) more than double the outflows from Indonesia, which reached 23 percent of GDP at the time of the Asian crisis, Jens Nordvig, global head of G10 FX strategy at Nomura wrote in a note to clients on Tuesday.

Spaniards and foreign investors have been pulling money out of Spanish banks as the economy has worsened in recent months, and Nordvig said without the single currency and the flows from the ECB, Spain would already be going through a major currency crisis. (Read More: Depression, Suicides Rise as Euro Debt Crisis Intensifies)

We would stress that the broad-based nature of the capital flight, which involves both banking claims and securities and flows from both residents and non-residents, makes for a rather extreme overall outflow, and one that raises serious concerns about the implications for banking sector stability and economic growth,” Nordvig wrote.

For the record, the French are fleeing France and they are making it very clear that they are fleeing France because of the socialism that France just chose for itself:

Indigestion for ‘les Riches’ in a Plan for Higher Taxes
By LIZ ALDERMAN
Published: August 7, 2012 763 Comments

PARIS — The call to Vincent Grandil’s Paris law firm began like many others that have rolled in recently. On the line was the well-paid chief executive of one of France’s most profitable companies, and he was feeling nervous.

President François Hollande is vowing to impose a 75 percent tax on the portion of anyone’s income above a million euros ($1.24 million) a year. “Should I be preparing to leave the country?” the executive asked Mr. Grandil.

The lawyer’s counsel: Wait and see. For now, at least.

“We’re getting a lot of calls from high earners who are asking whether they should get out of France,” said Mr. Grandil, a partner at Altexis, which specializes in tax matters for corporations and the wealthy. “Even young, dynamic people pulling in 200,000 euros are wondering whether to remain in a country where making money is not considered a good thing.”

A chill is wafting over France’s business class as Mr. Hollande, the country’s first Socialist president since François Mitterrand in the 1980s, presses a manifesto of patriotism to “pay extra tax to get the country back on its feet again.” The 75 percent tax proposal, which Parliament plans to take up in September, is ostensibly aimed at bolstering French finances as Europe’s long-running debt crisis intensifies.

Europe is imploding.  Spain is one of the PIIGS (the ‘S’ in PIIGS, in fact) who are leading that collapse.  And Obama is pushing for an economic and environmentalist model that most copies collapsing Spain.

And liberals are DETERMINED to do the same thing here.  Go to Illinois, the king of the deadbeat states.  You watch a 60 Minute Story and you will be PISSED at what slimebag Democrat cockroaches have done.  Go to California, where Democrats have created a $500 BILLION unfunded pension black hole of doom.  Look at America under Obama and take note that America just passed the $16 trillion mark that was $10 trillion when Bush left office.  Barack Obama DEMONIZED George Bush for increasing the debt by $4 trillion over eight years - look what that Marxist weasel has done in HALF the time by piling on $6 trillion in debt in only FOUR years!!!  Oh, and America’s REAL debt isn’t a paltry $16 trillion; it’s actually a supermassive $222 trillion.  And all that debt was created by Democrat boondoggle-takeovers of what should have been privatized.

Democrats have murdered America.  And we are merely waiting for our turn to completely implode before the Antichrist comes and the Book of Revelation prophecy becomes the news story account of the end of human history.  You can hear the hoofbeats of the four horsemen of the Apocalypse riding hard toward us even now.

The last couple of years, as Europe has slowly imploded, the dollar has been given a boost as terrorized Europeans seek some haven from their weakening Euro.  But if Europe goes – and it WILL go – America will fall right afterward because Europe is our largest trading partner and there won’t be anybody to buy our stuff from us.  And because Obama has spent the last four years racing us toward that same direction and that same catastrophic collapse.  And when America goes the dollar will flush down the toilet right down with it.  And you better take a look at the terror on the faces of Spaniards; because YOU will have that same look on YOUR face soon thanks to your vote for Obama and Democrats in 2008.

In 1980, the last year of Jimmy Carter’s failed presidency, 300,000 businesses filed for bankruptcy.  In this last failed year of Obama’s failed presidency, 1.4 million – very nearly FIVE TIMES as many – businesses have filed for bankruptcy.  If we vote for Obama, we vote to die as a nation just as Spain previously voted to die and just as Europe previously voted to die.

Everything about this failed president is Marxist - including his damn Marxist slogans:

New Obama slogan has long ties to Marxism, socialism
By Victor Morton – The Washington Times
April 30, 2012, 06:56PM

The Obama campaign apparently didn’t look backwards into history when selecting its new campaign slogan, “Forward” — a word with a long and rich association with European Marxism.

Many Communist and radical publications and entities throughout the 19th and 20th centuries had the name “Forward!” or its foreign cognates. Wikipedia has an entire section called “Forward (generic name of socialist publications).”

“The name Forward carries a special meaning in socialist political terminology. It has been frequently used as a name for socialist, communist and other left-wing newspapers and publications,” the online encyclopedia explains.

The slogan “Forward!” reflected the conviction of European Marxists and radicals that their movements reflected the march of history, which would move forward past capitalism and into socialism and communism.

The Obama campaign released its new campaign slogan Monday in a 7-minute video. The title card has simply the word “Forward” with the “O” having the familiar Obama logo from 2008. It will be played at rallies this weekend that mark the Obama re-election campaign’s official beginning.

Vote for Obama.  March “forward” right into hell, you fools.  Because that’s what you’ve got to look “forward” to under your demonic false messiah Obama.

You just watch what will happen to the DOW the day Spain goes the way of the Dodo bird.  And you realize that we’re going down hard in our own day of reckoning because we chose the same stupid and immoral course that Spain chose.

What’s Obama’s “strategy” to deal with this crisis???  To try to call on Europe to not collapse until after he’s reelected so he won’t have to face the voters’ wrath over what hell has befallen America under his failed leadership.

The collapse is coming.  Democrats gave us that when they voted for Obama and let him kill America with his socialism.  The Antichrist is coming.  He’ll be riding in on his white horse to save the day from the disaster and collapse caused by the previous false messiah Obama.  And Democrats will welcome the beast even more enthusiastically than they welcomed Obama and they will worship him and they will take his mark.

Get ready for hell on earth.  And then get ready for hell itself.  Because the beast is coming.

Obama Energy Solution: We Can Eat America’s Dogs And Then Drive Windmill Cars Powered By Our Flatulence

August 15, 2012

Obama decided to make his attack on Mitt Romney’s wind energy policy personal:

Obama Brings Back Dog-on-Roof Issue When Criticizing Romney
By Fred Lucas
August 14, 2012

(CNSNews.com) – While expressing his support for the wind industry, President Barack Obama took a veiled shot at his Republican opponent Mitt Romney for transporting his dog on the roof of his car almost 30 years ago in 1983, saying, “I know he’s had other things on his car.”

“During a speech a few months ago, Governor Romney even described his energy policy this way, I’m quoting here, ‘You can’t drive a car with a windmill on it.’ That’s what he said about wind power. ‘You can’t drive a car with a windmill on it,’” Obama told an audience in Oskaloosa, Iowa at the Nelson Pioneer Farm & Museum.

Obama went on to make an apparent reference to news stories concerning the widely reported 1983 vacation by the Romney family in which the family’s Irish sitter Seamus was placed in a carrier mounted to the rooftop for a 12-hour trip, with three stops. The Boston Globe first reported the matter in 2007.

“Now I don’t know if he’s actually tried that,” Obama said of Romney attaching a windmill to the car. “I know he’s had other things on his car. But, if he wants to learn something about wind, all he’s got to do is pay attention to what you’ve been doing here in Iowa.”

Obama also said, “The wind industry now supports 7,000 jobs here in Iowa, 75,000 jobs across the country. These jobs aren’t a fad. These are good jobs and they’re a source of pride we need to fight for.”

At a Romney campaign rally in Zanesville, Ohio on March 5, Romney criticized Obama on energy.

“What is his energy policy? It’s apparently to make it hard to get coal out of the ground with more regulations, makes it harder to get the gas out of the ground,” Romney said. “And as a result, while he’s happy with wind and solar – we all like wind and solar – but you can’t drive a car with a windmill on it. My plan is that we’re finally going to get America energy secure by taking advantage of our coal, our oil, our gas, and bringing in that Keystone pipeline from Canada.”

In April, dogs became more of an issue when additional news stories pointed out that in Obama’s autobiography, Dreams of My Father: A Story of Race and Inheritance, Obama discloses that he once ate dog meat as a child in Indonesia. Obama even joked about it at the White House Correspondents Association Dinner.

It’s frankly amazing that this cheap-shot artist Chicago thug is actually our president.

What’s good for the dog-eater ought to be good for the guy who once put his doggy carrier on the roof of his car, however.

You want to bring up Romney’s dog (who LIVED, by the way) in your attack on his energy policy?

Well, America, EAT your damn dog like Barry Hussein did and stick a propeller out of your butt to take advantage of your “natural gas.”

For the record, my own dog has repeatedly testified that she would rather be on Mitt Romney’s roof than digesting inside Barack Obama’s gut.  My dog also says that she would cause as much gastrointestinal distress to our first dog-eating president in history if he ate her – such that he’d get arrested for uncontrollable speeding in his windmill fartmobile.  And my dog says to vote for the guy who DIDN’T eat a dog.

And for the record, the green energy boondoggle that Obama keeps demanding for America hasn’t worked particularly well for Spain - a country that now “enjoys” 25% unemployment with young adults “enjoying” 53% unemployment.  The thing is, of course, that stupid rots the brain and goes into the bones.  And so this election is the harbinger for whether America wants to “enjoy” a Spain-style economy – and remember, Spain was once the mightiest nation on the planet, too – or whether we want to actually quit digging our hole deeper and start climbing out of it with Mitt Romney.

One way or another, if Obama gets re-elected, we’ll be doing something crazy to live in a world where Obama criminalized oil.  Will it be Obama’s windmill fartmobile or a Fred Flintstone car, I don’t know.  But it won’t be much longer before whatever it is – joke though it may be – won’t be funny.

Nancy Pelosi has some exciting models out.

Coming To America (Thanks, Obama!): Spain On Verge Of Collapse While Liberals Turn Violent In Streets

June 23, 2012

The OWS (“Occupy”) Movement pretty much proves it: this is liberalism on failure:

Spain’s economy on the edge of collapse as protests turn violent
By Hugo Duncan
PUBLISHED: 19:38 EST, 19 June 2012 | UPDATED: 01:49 EST, 20 June 2012

Europe plunged deeper into crisis last night as Spain lurched closer to needing a full-blown bailout to save it from collapse.

The government in Madrid was forced to pay prohibitively high interest rates to borrow money on another bruising day for the single currency bloc.

It raised fears that Spain is on the verge of becoming the biggest victim of the euro crisis so far – following the bailouts of Greece, Ireland and Portugal.

 

A coal miner sets fire to a barricade made of tires during a protest against government cuts in Villafranca del Bierzo, Leon, North-eastern SpainA coal miner sets fire to a barricade made of tires during a protest against government cuts in Villafranca del Bierzo, Leon, North-eastern Spain

The country – the fourth biggest economy in the eurozone – is back in recession and unemployment is at 25 per cent with half of young workers unable to find a job.

And the problems on the stock markets were matched on the streets.

Striking Spanish coal miners armed with homemade rockets, slingshots and rocks clashed with police firing rubber bullets yesterday.

They drove officers out of the town of Cirena in northern Spain in protest at government mining subsidy cuts that could devastate their industry.

Analysts warned that the situation was ‘critical’ for both Madrid and the eurozone despite the £80 billion lifeline thrown to the Spanish banking system last week.

Nicolas Spiro, a government debt expert at Spiro Sovereign Strategy, said: ‘We are in a critical situation now. This is the Rubicon that should have never been crossed.

‘It should have never come to this. We are dealing with a broken government bond market in Spain and quite possibly in Italy. This is exactly where you did not want the cancer to spread.’

 

Striking Spanish miners fire homemade rockets towards Spanish Civil Guards in Cinera, near Oviedo, northern Spain, during a mass strike against subsidy cuts that they claim threaten tens of thousands of jobsStriking Spanish miners fire homemade rockets towards Spanish Civil Guards in Cinera, near Oviedo, northern Spain, during a mass strike against subsidy cuts that they claim threaten tens of thousands of jobs

Spain had to pay an interest rate of 5.07 per cent to sell 12-month debt yesterday – up from 2.99 per cent a month ago and the highest level since the euro was launched in 1999.

The crucial 10-year bond yield was also above 7 per cent – a psychologically important level which proved to be the point of no return for Greece, Ireland and Portugal.

Marc Otswald, an analyst at City firm Monument Securities, said Spanish borrowing costs could lead to a full-blown bailout worth around £250 billion.

‘It is becoming very difficult to see how it can manage without that beyond the end of September unless yields fall dramatically,’ he said.

Ishaq Siddiqi, a market strategist at trading firm ETX Capital, said: ‘The sustained high yields on Spanish bonds remain a considerable concern for markets.

If the Spanish government fails to address the country’s economic crisis, like Greece, sky high borrowing rates could eventually force Spain into a full sovereign bailout.

A Spanish bailout would mark a disastrous escalation of the euro crisis, threatening Italy and core eurozone nations such as France and even powerhouse Germany.’

Obama is trying to make America more and more like Spain even as Spain is beyond obviously going to collapse into ruins.

Kind of makes you wonder what kind of demon-possessed people voted for this turd.

The same people – LEFTISTS (AKA “liberals”) – who are rioting in Europe are rioting in America as the Occupy fascists show us that violence invariably comes from the left.

Obama and the Democrat Party want for America EXACTLY what liberals in Spain created there.

Get Ready For Europe To Get Real Sucky Again (Socialism Failed There Something Fierce, But Hey, Obama Wants To Repeat Their Failure Here Anyway)

April 19, 2012

Let’s consider the recent happenings in Spain:

Spanish banks’ bad loans hits 18-year high
Published 11:58 PM, 18 Apr 2012 Last update 5:06 AM, 19 Apr 2012

AAP
The ratio of bad loans at Spanish banks shot to an 18-year high in February, official figures showed Wednesday, as the banks struggled with a mass of deteriorating property-related loans.

Spanish banks are a key concern on financial markets because of the declining value of the huge loans they allowed to build up during a property bubble that collapsed in 2008.

Doubtful loans in February amounted to €143.8 billion ($188 billion), rising to 8.15 per cent of total credits – the highest ratio since 1994 – from 7.91 per cent in January, the Bank of Spain said.

A loan is categorised as doubtful when the borrower has not made a payment for at least three months.

Prime Minister Mariano Rajoy’s conservative government has made cleaning up the banks a priority and is requiring them to set aside more than €50 billion to boost their balance sheets.

The Bank of Spain approved the plan Tuesday, obliging banks to allocate 29 billion euros to bad loan provisions and €15.6 billion to raise the proportion of rock-solid core capital.

Those sums are in addition to €9.2 billion in provisions already set aside by the banks last year, bringing the total in extra capital to €53.8 billion.

Banks are being told to find the money for the new provisions from their own profits or by issuing new shares, although the central bank has not ruled out state intervention.

The new, tougher balance sheet requirements must be met within one year, or two years for banks undergoing mergers.

Many analysts doubt, however, that the new rules will be enough, warning that the real bad loan figures may be far worse because banks are reluctant to fully realise the declining value of their loans.

As banks stagger under the bad loans, businesses widely report that new credit is hard to come by.

Spain’s banks turned in huge numbers to the European Central Bank, which has offered more than one trillion euros in cheap three-year loans to eurozone banks.

Borrowing by Spanish banks from the ECB hit a new record in March at €227.6 billion, up from €152.4 billion euros in February and €133.2 billion in January.

Much of that money, however, has been invested in Spanish government bonds instead of loans to business.

The Bank of Spain estimated that the total value of banks’ problematic loans, the value of which is uncertain, amounted to €176 billion in June 2011, the latest date for which those figures are available.

And that’s bad news for the ten-year bond sale in Spain tomorrow:

Investors fret ahead of key Spanish bond auction
By David Williams | AFP – 2 hrs 33 mins ago.

Investors showed deep concern ahead of a Spanish government bond auction due Thursday, fearing Madrid could be thrown back into the centre of the eurozone debt crisis.

Markets have punished Spain sharply since an April 4 government bond auction drew only feeble interest, with the state barely raising the minimum amount targetted.

That weak sale, coming shortly after the government unveiled an austerity budget with spending cuts and tax increases of 27 billion euros ($35 billion), reawakened doubts over the sustainability of Spain’s financing.

A similar result Thursday, when the Treasury aims to raise 1.5-2.5 billion euros, could compound concerns that Spain might end up needing the kind of a debt bailout already afforded to fellow eurozone strugglers Greece, Ireland and neighbouring Portugal.

“Investors remain nervous ahead of tomorrow’s 10-year Spanish bond auction,” said equities analyst David Morrison at trading group GFT in London.

“If yields jump back over 6.0 percent, then the European debt crisis will return centre stage, with Spain the leading lady.”

Spain’s bad debt is actually higher than it’s good debt.  And this in the fourth largest economy in Europe and the twelfth largest economy on the planet.

And then there’s the rather bad predictions – especially given the fact that a Spanish bailout will massively dwarf the pain and fear created by the Greek collapse:

“Not if, but when” for Spanish bailout, experts believe
By Luke Baker
BRUSSELS | Wed Apr 18, 2012 5:54am EDT

BRUSSELS (Reuters) - Economic experts watching Spain don’t know how much money will be needed or precisely when, but some are near certain that Madrid will eventually seek a multi-billion euro bailout for its banks, and perhaps even for the state itself.

Prime Minister Mariano Rajoy has repeatedly said Spain doesn’t need or want an international bailout, and the European Union, which along with the IMF has already rescued Greece, Ireland and Portugal, also dismisses such talk.

But economists believe that Spanish banks will have to turn to the euro zone’s rescue fund, the European Financial Stability Facility (EFSF), for help in covering losses caused by a property market crash which has yet to end.

Likewise, investors are fretting about how Rajoy’s centre-right government can enforce deep austerity while reviving a recession-bound economy at the same time.

“They’re going to need EFSF money to recapitalize the banking sector,” said Carsten Brzeski, a senior economist at ING in Brussels. “I think we’ll only see a real end to the Spanish misery if the real estate market stabilizes.”

Madrid is likely to hold out for some time. “The underlying picture in Spain is dramatic, but is it dramatic in the way that it needs a bailout package tomorrow? No,” Brzeski said. “But if you look ahead, let’s say the next six months, I would not be surprised if they (the banks) have to get some kind of European support.”

Market concerns about the euro zone’s fourth largest economy have deepened in the past week. Yields on the government’s 10-year bonds, which reflect the risk investors attach to owning Spanish debt, have risen above 6 percent, a level that has proved a trigger point for other troubled euro zone countries.

At the moment the EU is backing Madrid. Jean-Claude Juncker, who chairs the Eurogroup of euro zone finance ministers, said Spain was taking the necessary steps to get its economy back on track, despite a recession and unemployment at 24 percent.

“I don’t think Spain will need any kind of external support,” Juncker said. “I would like to invite financial markets to behave in a rational way. Spain is on track.”

German Finance Minister Wolfgang Schaeuble also rejected comparisons with countries which are already on bailout programs. “The fundamental data in Spain is not comparable to those in the countries that are under a program,” he told Reuters. “Spain needs to work to win confidence, however, if the positive developments are to continue.”

SUSTAINABLE SPAIN?

Markets took fright earlier in the year when Rajoy relaxed his government’s targets for cutting the budget deficit.

However, not all economists are so pessimistic and some say the four-month-old government is starting to knuckle down to meeting the new targets, which still demand deeply unpopular austerity, and tackling the economy’s structural problems.

“We’ve seen more progress in a few days than in four months,” said Gilles Moec, a Deutsche Bank economist. “It’s a country that’s intrinsically sustainable, but it’s a country that needs to make decisions.”

Others beg to differ and fear Spain will drag in Italy, which has suffered similar problems with rising borrowing costs.

“As I look at my screen and Spain 10-year yields are up at 6 percent – things are starting to get worrying again,” said Peter Westaway, chief economist for Europe at Vanguard, an investment management firm overseeing $1.8 trillion in assets.

“If they go up to 6.5 to 7 percent, that could become very problematic, and if Italy started to go back above Spain again, then that would be really serious.”

Spain has one thing on its side. It has already raised nearly half the 86 billion euros it needs to borrow from financial markets this year, sucking up some of the 1 trillion euros of cheap three-year loans that the European Central Bank has pumped into the euro zone banking sector.

This means the government could hang on for months before having to turn to the EU for help with its own funding needs.

A 380 BILLION EURO PROBLEM

However, that still leaves the banks. One of the critical “unknowables’ for Spain is just how bad a situation its banks are in. The Spanish housing market, once a driver of the economy, has been in turmoil for more than four years, but prices still haven’t fallen as much as economists think is needed to squeeze the air out of the bubble.

Only when prices have bottomed will assessors be able to calculate how just much bad mortgage debt is sitting on the banks’ balance sheets, and therefore how much extra capital the sector requires to return it to health.

“Prices have dropped by about 15-20 percent from peak to now and they will probably have to drop another 15-20 percent before they reach bottom,” said Brzeski. He estimates Spanish banks may need as much as 80 billion euros of extra capital once all bad mortgage debt is accounted for.

In a paper published this week, Daniel Gros and Cinzia Alcidi of the Centre for European Policy Studies estimated that the total accumulated overhang in the Spanish property and construction sector is more than 380 billion euros – equivalent to 37 percent of GDP. (here)

“A housing overhang per se does not have to lead to an acute financial crisis if it was financed by domestic savings,” they write. “Unfortunately this is not the case in Spain.”

As a result, economists expect Spain’s banking sector will have no choice but to recapitalize.

The government is unlikely to fund such an operation while it is trying to slash the budget deficit, and private investors are reluctant to invest in such a troubled sector.

That leaves the European Financial Stability Facility as the most likely option for the banks – and possibly also for the government eventually.

“Spain is not going to run out of cash (yet) and it’s pre-funded its borrowing requirement,” said Megan Greene, a senior economist and euro zone specialist at Roubini Global Economics. But she added: “There’s a chance that the banking bailout could come sooner, but I really think it’s going to be next year.”

Even if it does hang on until 2013, Greene still expects Spain to need both a banking and a sovereign bailout – a program similar to that provided to Ireland or Greece.

“The banking sector is only one piece of the puzzle in Spain,” she said. “A banking bailout could deal with one part of the problem, but eventually the sovereign is going to need a bailout too.”

WHAT TO DO WITH ITALY

Doubts persist that the euro zone is any better placed to handle a rescue of Spain than it was two years ago, despite having already bailed out the three other countries and having set up an 800 billion euro fund to tackle the problems ravaging the region’s economy.

“When it comes to deciding how to deal with Spain, I really think they are back to the drawing board,” said Greene. “They basically haven’t learnt anything from the first three bailouts.”

Then the problem for euro zone policymakers will be what to do about Italy, the eighth largest economy in the world, with GDP 50 percent larger than Spain’s.

For months, Spanish government bond yields and those in Italy have moved in near lock-step, reflecting the twinned risk investors see in both southern European states.

“Spain and Italy are inextricably tied,” said Greene. “If Spain gets a bailout then the EU needs to be ready to provide support to Italy too.”

Did somebody say Italy?  Italy is the 8th largest economy on the planet and is half again bigger than Spain – and an Italian debt failure would be economic Armageddon.

Italy to miss budget aims, says IMF
Tuesday 17th April 2012, 8:00PM BST.

The International Monetary Fund is predicting that Italy will miss its budget deficit targets this year and next and will not balance its budget until at least 2018 – some five years later than government estimates.
 
In a report, the IMF said Italy would trim its budget deficit only to 1.5% of its output next year. Premier Mario Monti has promised to balance the budget by 2013, a centrepiece of his efforts to steer Italy out of its debt crisis.
 
The IMF however predicted that Italy would still carry a 1.1% deficit in 2017, the last year for which it made estimates.
 
Italy is due to publish its own revised economic figures on Wednesday.

Meanwhile, following Greece’s recent second bailout (because the first one ended in colossal failure with the Greek debt being like a black hole), things aren’t so rosy already:

March 16th, 2012
Oh no…the Greek bail-out is still not enough?
Posted by: CNN Anchor and Correspondent, Richard Quest

London (CNN) – The bail-out is a done deal, the International Monetary Fund has agreed its share and the Europeans have started to hand over the money. One of the ratings agencies has even upgraded the new Greek bonds.
 
So it is incredibly dispiriting to be reading more and more notes from economists and analysts suggesting that this is not over yet.
 
Paul Donovan, in his note from UBS, noted that the markets were not that impressed by the state of play. The markets, he said, were pricing in “the debate about when the next restructuring will take place.”

According to Societe Generale, it is “only a matter of time before Greece will need an additional package.” Citigroup reflects the same view, noting: “In our view, Greece requires further official funding beyond at least 2014, and we also see the need of further debt restructuring in order to get the country back on a sustainable fiscal path.”
 
It gets worse with the prognosis “the risk of Greece exiting the euro area remains elevated (around 50%).”
 
Hang on. “Next restructuring?” and “further debt restructuring?” What on earth have we been going through for the past three months if this isn’t going to solve the Greece problem once and for all?
 
You would be forgiven for a certain incredulity, given that no sooner is the ink dry on the checks being sent to Athens than the economists who know about these things say it’s not enough.
 
This is made all the more likely by European politicians who continue to call for even more austerity in Greece. This lemon is just about squeezed out, and if they don’t want to be facing riot and mayhem they would do well to recognize this.
 
This comes as Iceland announced it is paying back 20% of its IMF loans early. Yes….I said early. Iceland. Which also introduced austerity and borrowed money but – notably – let the banks go bust.
 
No one ever said going bankrupt was easy, but it still may have been the best solution for Greece rather than this messy, half-baked solution we are now witnessing.

If you do an internet search for “Greek bailout,” you’ll get a sea of optimistic-toned stories saying everything will be wonderful and then suddenly nothing.  And “nothing” means that things are starting to suck and liberals don’t want to talk about it.

At this point, Europe is so broken that nothing will do any good.  You hear all the whining about austerity cuts and how it will impact growth; but if they don’t do the austerity cuts absolute implosion and Great Depression is a 100 percent guarantee.

And we’ll be there real soon thanks to hopey-changey Barry Obamy.

Obama’s ‘Green Jobs’ Promise Fundamentally Transforms Into Economy-Eating Fungus

September 2, 2011

“Green” is becoming a very ugly color if you want a job:

A solar energy company President Obama once touted as an example of American ingenuity is filing for bankruptcy.

California-based Solyndra which received a $535 million loan guarantee from the federal government in 2009, says it can no longer compete with the lower costs of its rivals overseas.

More than 1,100 workers at Solyndra are expected to lose their jobs.

Since almost all of the government loan has already been given to Solyndra, it’s possible taxpayers will be left to foot the bill.

This is the third major American solar company to shut down in the last month.

A little more on this latest catastrophe for Obama’s entire bogus economic agenda:

Solyndra’s bankruptcy: ‘Political catastrophe’ for Obama?
Obama nurtured the solar-panel maker with $535 million in his push to create green jobs. Now it’s kaput and its 1,100 employees are out of luck
posted on September 1, 2011, at 1:22 PM

President Obama toured the Solyndra solar-panel plant in May, 2010, after extending a $535 million federal loan to the company, which is now filing for bankruptcy.

President Obama toured the Solyndra solar-panel plant in May, 2010, after extending a $535 million federal loan to the company, which is now filing for bankruptcy. Photo: Pool/Getty ImagesSEE ALL 61 PHOTOS

Best Opinion: Hot Air, Green for All, Moderate Voice

Solar-power startup Solyndra — one of the flagships of President Obama’s efforts to create green-energy jobs — has shut down, and plans to file for bankruptcy. Solyndra received $535 million in federally guaranteed loans to expand, and Obama once visited the company’s Silicon Valley factory to congratulate its workers on their bright future. But Solyndra says it just can’t compete with cheaper solar panels from China, and now its 1,100 employees are out of work. Is this a “political catastrophe” for Obama, or just a painful setback in the transition to clean energy?

Solyndra’s collapse proves Obamanomics has failed: This company was supposed to be part of Obama’s “green-jobs explosion,” says Ed Morrissey at Hot Air. Now it’s “a poster child for the failure of his stimulus, his green-jobs push, and social engineering in general.” Obama said Solyndra would demonstrate the effectiveness of his economic policies, and it did — the company never made a profit, and instead of creating jobs, it sent 1,100 people into the unemployment line.
“Solyndra shuts its doors”

This is not Obama’s fault: “The investment our government made in Solyndra wasn’t a hand-out,” says Green for All. It was an attempt to “level the playing field” so Solyndra could compete with Chinese companies that receive up to 20 times more help from the state than U.S. firms do. This setback proves we need to invest more in “the inevitable green economy” — not less — unless we want to import our solar panels, batteries, and everything else from overseas.
“Statement on the announced closure of Solyndra”

Clearly, there were better ways to spend the stimulus: If Obama really wanted to create jobs, says Logan Penza at The Moderate Voice, he should have targeted companies based on their “ability to compete.” But he didn’t want to anger Democrats, so he saddled taxpayers with debt to help green companies that liberals can love. Obviously, the economy would have been better off if he had spent the money in ways that were “cost-effective instead of merely politically convenient.”
“The cost of politicized stimulus”

My little voice: this is a catastrophe and it is ALL Obama’s fault.

When Obama was promising that green jobs would save the U.S. economy, the verdict was already in that no they wouldn’t.  Take Spain, where we learned way, WAY back when Obama was ramping up his ruinous green job program that 2.2 ordinary jobs were destroyed for every one green job created.  Conservatives have been saying forever that the very thing that happen would happen.  And the man who couldn’t have been more wrong is to blame.

And it is PARTICULARLY Obama’s fault, given the fact that now-bankrupt Solyndra was a boondoggle with all kinds of cozy ties to Obama.

Green jobs are an utter farce on top of a total boondoggle.  And anybody who thinks otherwise is an utter moron.

Here’s an interesting quote from ABC:

The deal later came under scrutiny from independent government watch dogs and members of Congress, which said the administration had bypassed key taxpayer protections in a rush to approve the funds — claims the administration has denied.

Solyndra and the White House initially estimated that government financing for Solyndra would help create 4,000 jobs.

The company had received at least $475 million and created just 585 jobs, according to the most recent figures posted on Recovery.gov, which tracks Recovery Act projects.

This certainly isn’t the only company that Obama touted as shining examples and handed out millions in stimulus funds to that subsequently went belly up.

It’s probably not even the first solar companygiven the case of also now-bankrupt Evergreen Solar:

The White House sent out an April 22, 2009, communication claiming the Recovery Act had success in creating jobs.  The White House stated that because of the stimulus bill and new contracts, green energy companies were looking to hire. The White House then cited Evergreen Solar hoping to hire as many as 100 people.

The state of Massachusetts put out a press release citing Evergreen Solar’s involvement with a project funded by the stimulus.

Evergreen Solar put out its own press release in October 2010 that their panels were all compliant with the ARRA and could be used by projects funded by the stimulus

This agenda is a cancer on the nation.  It is a cancer on the economy.  It is a cancer on jobs.

Just like the demonstably failed Obama presidency.

Entire Failed Obama Agenda Summed Up In One Brilliant Cartoon

February 2, 2011

Here it is, from the pen of Michael Ramirez at Investor’s Business Daily:

That about covers everything Obama’s trying to do.  Let’s ruin America with one ruinous policy after another.  And the fact that everything he’s doing has already been tried before and completely failed before shouldn’t have anything to do with anything.

My Big Fat Greek Bailout – And What It Means For America

February 10, 2010

So Greece is going to get its big fat bailout.

The “Too big to fail” mindset wins yet again.  First it was big union-dominated automakers and high-risk lending institutions.  And now it’s entire countries, starting with Greece.  And after Greece comes Spain and Portugal, and then will come California and a bunch of other mostly decades-long liberal-progressive states like New York and New Jersey.  High taxation and out-of-control spending equal fiscal disaster as states and countries rack up enormous debts that they can never hope to repay.

Here are a couple of headlines for you:

California will go bankrupt

Is California Too Big To Fail?

And you know damn well it is.  California all by itself is the sixth largest economy on the planet.  And the inescapable logic of redistributionism means that the other 49 states are going to have to redistribute their wealth to bail out the People’s Republic of Pelosistan.

Beware Greeks bearing IOUs.  Hell, beware ANYBODY bearing IOUs.

In contrast to everything liberals believe, the higher the tax rates, the lower the revenues that are being collected as businesses relocate to states that DON’T hate them.  This has been proven throughout American economic history, and it is certainly being proven now: the states with the highest taxes are facing the largest revenue shortfalls.

Their understanding of free market capitalist economics comes primarily through the straw man created by Karl Marx, and so they fundamentally misunderstand and distrust the economic system that made America the greatest nation on earth.  They want redistributionism, and someone has to pay for my right to be a nonproductive bon-bon-eating couch potato.  That “someone” ends up being the only people with the resources to invest and create jobs.  But the rich aren’t stupid, and so they shelter their money to avoid the higher taxes.

I mean, even Oprah Winfrey does everything she can to avoid high taxes.  Even MICHAEL MOORE does everything he can to avoid paying more taxes.

And what do we do when the disaster these people created finally comes home to roost?  We bail them out, so they can do it all over again.  It’s called “moral hazard.”  Somebody in power should look it up and then quit doing it.

We keep making this giant ball of stink bigger and bigger and bigger, and we’re all wading through it now, and everything is going to sh*t all around us because our leaders don’t have the courage to simply let losers lose.  We’ve become bailout nation, where the people who had discipline and did things right prop up the reckless so they can continue being reckless until the system crashes.  Or to put it more precisely, until the system crashes bigger and badder the next time around.

Times are going to get harder.  China is announcing that they are dumping US securities in what appears to be an economic war declared against us.  That’s going to make it a lot more expensive for us to keep borrowing.  But the only way we can continue these insane liberal-progressive policies is to keep borrowing and borrowing.

There’s no question that we need to collect more taxes.  But raising rates isn’t the way to collect more taxes.  The Bush tax cuts stimulated an unprecedented 52-consecutive months of economic growth even as it generated MORE tax revenue.  Obama’s going back to “the failed policies of the past” from the Jimmy Carter era are going to create a lot of damage as Democrats refuse to learn the lesson of the luxury tax again and again and again.

There’s also no question we need to dramatically decrease our spending.  And along with that, we need to phase down the boondoggles we’ve created via Social Security (which is now in the red, paying out more than it collects) and Medicare/Medicaid (how does a ONE HUNDRED TRILLION DOLLAR unfunded liability strike you?).

The problem is that the federal government has expanded so far beyond its constitutional limitations that its not even funny – with the lion’s share coming from progressive-Democrat social programs.  The government which was supposed to be limited to defending the country and creating infrastructure is now involved in absolutely everything under the sun.

And Democrats will fight to the death for every single one of these programs.

There’s also the now-typical Democrat demand from the government:

Pay my mortgage.  Fill my gas tank. Buy my car.  Give me free health care.  Feed me.  Change my diapers.

Which means we can’t control our black hole-spending.  Which means we can’t reduce our never-before-seen-in-human-history debts.  Which means that we’re on the same road that Greece is on.  Only no one will be there to bail us out when we collapse.

The only question is how long it takes for us to get there.

Blaming Bush Lacks Virtue Of Being True

May 19, 2009

The following article comes from the American Thinker:

How Did Bush Do This?

Randall Hoven

Europe is in its deepest recession since World War II, so reports the UK’s Telegraph .
“German economic policy is ‘bankrupt,’ economists have said.  The declaration was made as it emerged that Europe’s biggest economy has now suffered a worse ‘lost decade’ than Japan and is deeper in recession than any other major economy.  On a day of dismal news for the European economy, official figures also showed that Italy, Austria, Spain and the Netherlands are facing their biggest combined slump in post-war history.”

Eurostat provides the raw data.  Here are real GDP growth numbers for some selected countries and averages for the latest quarter (1st quarter of 2009, or January through March).
From Previous Quarter From Previous Year

Austria                                                 -2.8%                                     -2.9%
Belgium                                                -1.6                                          -3.0
France                                                  -1.2                                          -3.2
Germany                                              -3.8                                          -6.9
Italy                                                     -2.4                                          -5.9
Netherlands                                         -2.8                                          -4.5
Portugal                                               -1.5                                          -3.7
Spain                                                   -1.8                                          -2.9
UK                                                      -1.9                                          -4.1
Europe (EU27)                                    -2.5                                          -4.4
US                                                       -1.6                                          -2.6

Do you notice anything funny about these numbers?  Here is what I notice: the recession in the US is milder than that of Europe.  Every country on this list had more economic shrinkage from 2008 to 2009 (Q1 to Q1) than did the US.

How could this be?  Did they all have George Bush for President?  Did they all succumb to free market ideology in the last eight years?  Did they all repeal part of Glass-Steagall?  Did they all spend wildly on an unnecessary war in Iraq?  Did they all bankrupt themselves with out-of-control defense spending?

Perhaps we need to look deeper, into the last eight years, in order to discover how bad President Bush was.  Here are the average GDP growth rates over the last eight full years.

Ave. GDP Growth, 2001-2008
Austria                                                 1.5%
Belgium                                                1.3
France                                                  1.1
Germany                                              0.4
Italy                                                     0.1
Netherlands                                         1.3
Portugal                                               0.3
Spain                                                   2.3
UK                                                      1.6
Europe (EU27)                                     1.2
Japan                                                   0.6
US                                                       1.7

Well I’ll be darned.  With the minor exception of Spain, the US did better than all these countries over the last eight years as well.

What could it be?  Could it be possible that Bush was not the cause of our global economic meltdown?  Could it be possible that the economic illness spread from Europe to the US, rather than vice versa?

Could we have the whole thing wrong?

Whatever it is, I’m sure if our government does what it did in the 1930’s — raises taxes, spends more, regulates more, restricts trade, and “fine tunes” monetary policy — we will get through this just fine.  Just like we did then.  I think we’re seeing the results already.


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