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
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.
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.
Tags: $16 trillion, bailout, California, deadbeat state, euro. collapse, Europe, financial crisis, financial system, Forward, France, GDP, Greece, Illinois, Marxism, pensions, socialist, Spain, unfunded pension liabilities