Spain is Greece… Only Bigger and Worse

Phoenix Capital Research's picture



Swing by for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.


As I’ve outlined in earlier articles, Spain will be the straw that breaks the EU’s back. The country’s private Debt to GDP is above 300%. Spanish banks are loaded with toxic debts courtesy of a housing bubble that makes the US’s look like a small bump in comparison. And the Spanish government is bankrupt as well.


Indeed, in the last month alone we’ve seen:


  1. Spain’s banking system saw a bank run to the tune of €70 billion in August. The market cap for all of Spain’s banks is just €114 billion. So Spanish banks need to raise at least €20+ billion or so per month in the coming months to stay afloat. This is without depositors pulling additional funds in September onwards. That’s really bad news.


  1. Spain’s now nationalized Bankia just took another €5.4 billion from Spain’s in-country rescue fund. This indicates that once nationalized, problem banks DO NOT cease to be problems.


  1. The region of Andalusia is requesting a bailout from the Spanish Federal Government. This comes on the heels of bailout requests from the regions of Valencia, Murcia and Catalonia (none of which want any “conditions” on the funds).


  1. Spain has set aside €18 billion to bailout its regions. The current bailout requests already amount to €10.8 billion. That’s just from this year alone.


If you need more info on Spain, the bullet items from them that you need to know are that:


  1. A huge portion of Spain’s banking system (representing over 50% of mortgage loans AND deposits) was totally unregulated up until just a few years ago.
  2. Spanish banks were drawing €337 billion from the ECB on a monthly basis to fund their liquidity needs.
  3. Every political figure and bank in Spain is HIGHLY incentivized to lie about the true nature of the Spanish banking system (a private text message from the Prime Minister claimed the REAL capital needs were closer to €500 billion… which is assuming he knows what he’s talking about/ the banks were honest with him… which I HIGHLY doubt).


Indeed, the markets are beginning to figure out the Spain is DONE regardless of what the ECB does. The truth is that Spain is in as bad a shape as Greece if not worse. Expect things to get very, very ugly soon.


The reason is two fold:


  1. Spanish banks need to roll over (meaning renew terms on) more than 20% of their bonds this year.
  2. Spanish sovereign bonds are collateral for hundreds of billions of Euros’ worth of trades.


With Spanish banks already under severe funding stress (again, they drew €337 billion from the ECB before the new OMT program… and depositors took €70 billion out of the system last month), they’re in no position to start paying out higher interest payments to bondholders.


And with investors realizing that Spain’s banks are all lying about the state of their balance sheets (remember, Bankia was talking about paying a dividend just one month before it collapsed and revised its €41 million 2011 profit to a €3.3 billion LOSS), we’re going to be seeing plenty of bank failures this year.


Remember, Spain’s initial request was for the EU to bail out its banks NOT the country itself. However, with some six Spanish regions (probably more) looking for bailouts Spain is now facing both a sovereign debt AND a banking crisis.


The timing of this issue will be difficult due to the ECB’s intervention, but at the end of the day, the math doesn’t add up. Spain has big problems and when the market figures out that the ECB cannot solve them… it’s going to be a very difficult time in Europe.


Swing by for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.


Good Investing!


Graham Summers







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cgagw's picture

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MGA_1's picture

Isn't the this same stuff everybody else has been saying for the last year ?

Volaille de Bresse's picture

Spain experiments the "boomerang effect" to the max : I've seen this whole nation believing the capitalist lie/dream and thinking :

1) they had made it. 

2) they would soon become one of if not THE leading power of Europe. 


Of course the fake growth was pumped by low interest rates and idiotic investments (building enough houses for the next two centuries was indeed "brilliant"...). 


Now that the dream is over and reality hits hard it's funny to see the "free market rules" Spanish ppl proclaim themselves sons of the revolutionaries of 1936. Anarchy anarchy, we won't pay! Pathetic...


There's already a lot of sore "culos" in Spain and my guess is there'll be more... until the South-American drug cartels choose to massively invest in this land? Then Spain will become a narco/failed state? Ouch...

common_sense's picture

Investors want a bail out of Spain???  dont!  Only bankers...!!!

There is money for bankers only. A banker without money is so sad!!!

QE3, and QE4 and QE5 and more and more is needed, but just for bankers and for the bonus of the end of the year, of course!!!

Greece, technically already OUT of EURO. Spain next...

monkeyboy's picture

People paid for this shit???

whirlybird rules's picture

The kings and queens of Europe have lost their minds!  They WILL have their Euro and spend every cent they have until the last short has been squeeeeezed.  The currency, stock and bond markets have been manipulated in a manner and for a length of time never seen before. Inflation scenarios over the next 10-15 years will change the capital markets :(((


giovanni_f's picture

Graham Summers insights are indispensable. /sarc

AUD's picture

Am I too late? I was expecting to read many hilarious barbs at Graham Summers, aka Leo Kolivakis & his 'monster' jobs number.

I wonder how Leo is going these days? Has he monetised his website yet?

giovanni_f's picture

I mean, yes, and its free!

Ned Zeppelin's picture

Stay tuned as  a Goldman hand-selected technocrat takes over Spain and the ECB prints like mad to cover all this up. The latest Fed move tells you all you need to know. 

XtraBullish's picture

Graham - the problem with your "Sky is Falling" analogy is that the Fed has a larger amount of net free excess capital than you do. Paint any picture you want but more inflation and higher stock prices are the desired outcome - ergo, you have missed/are missing a massive move in hard assets and stocks as your shrinking subscriber base is the proof. Just BTFD and lose the commentary.

max2205's picture

Hint: he's just here to throw a few of ZH'ers off their game

waterdude's picture

2010's news today! Graham missed the 25% of Spanish GDP already provisioned for the bank rescue , the 400bps decline in 3yr rates & the first 55% of the banks rally.  Whoops

HaroldWang's picture

The doomsday scenario is getting old. We've heard it now going on four years and guess what? They keep pumping the system. And the Fed guaranteed it would go to inifinity. No doomsday, once again - sorry doomsquad - just muddling along.

Ar-Pharazôn's picture

wait til you see the results of pumping&printing.....

AT's picture

I lost $25k following Graham Summers advice!

Should have listened to FOFOA and just put everything into physical gold (rather than just the 50% I did).

GS: You can't trade a dying system where politicians can change any rule at any time!


James's picture

@ at, was that hard money or paper?

AT's picture

@James: Not sure what you mean. I put about $30k into Europe puts and lost most of that (though some of my options don't expire until next year). I'm not rich and that was a BIG trade for me. Everything else (including retirement accounts) is being transitioned into cash and physical bullion in MY hands.

John_Coltrane's picture

The key to trading/gambling is to only commit as much capital as you are willing to lose in the worst case scenario since no one can predict the future.  Plan on the worse case, not the best.  For example, I never risk more than 1-2% of my trading/gambling capital on any one trade no matter how sure I am of it and no more than 10% of my total cash on open positions.  Position sizing and not overleveraging is the key.  Options are excellent in this regard as they define your total loss in the worse case scenario before you even enter the trade-while shorting is very dangerous as very few are willing to take a loss and get out.  Its a survival issue.  (I also lost all my put bets against the EU banks like SAN, BBVA etc as well as American banks like BAC, C, MS)  However, earlier in the year I profited significantly from the same bets.  The key is to keep enough capital to live to trade again ( the gambler's ruin problem).  If 30K was only 10% of your capital then you took an acceptable risk-if it was 50-100% of it you're out of the game.

Peter Pan's picture

Project Europe is a dead horse and with the exception of the saddle and the tail, it should be sent to the glue factory. The jockey in Brussels however is in denial about the death of his horse and has decided that whipping the horse will somehow improve things, rather than whipping himself for having fed his horse too much bullshit and not enough training.



Buck Johnson's picture

Oh I know it's over and I believe the EU knows its over too, but it's not about the EU.  2020 is correct it's about the US.  You see the reason why they are kicking and whipping a dead horse is because the US behind the scenes is doing everything they can to keep them from imploding.  Ask yourself this, our financial institutions are tied to the western and essentially the world economy.  Trillion's daily go in and out, where doesmost of that money go to?  It goes to the EU countries by the trillions by govt. funding and company funding also bond buying.  How much European debt does the banks in the US have, or financial instruments that where used as collateral (and I'm not even talking about the derivatives which are in the hundreds of trillions of dollars).

I bet that the US told the EU that if you go down and take us down we won't be able to back you up or bail you out, pure and simple.

EuroInhabitant's picture

USA is doomed, Europe is saved, according to LEAP/E2020.

jse111's picture

EWP is up a spectacular 50% since 07/24/2012. Never permit reality to interfere with subjective analysis!

Yes, missing a 50% move in 52 days is genuinely a "bitch!" 

Anglo Hondo's picture

That appears to me to be a case of 'going down fighting'.   The Spanish folk are risking a loss in the market, rather than leaving it in savings to be stolen anyways.


Peter Pan's picture

Great gain but I suspect not one based on sustainable fundamentals. For an even better result you could have bought Alpha Bank shares of Greece which went from around 45c to 1.70 euros in just a few weeks some time ago and have since yo-yoed.

Sentiment, volatility and misinformation are great tools if they harnessed for trading profit, but they are hardly what it takes to drive an economy.

But yes, great gains can be made even betting on dogs. As someone once said, "don't tell me what to buy but when to sell."

max2205's picture

Please get a real job

sumo's picture

e.g. on-call "assistant" for the Mad Hedge Fund wanker, when the latter sprains a wrist

Pure Evil's picture


Bitch slappin at its best.

eigenvalue's picture

Graham Summers is Jim Cramer...Only Dumber and Worse

giovanni_f's picture

My dream team, cadidates for the valhalla of comment altogether, would consist of Graham Summers, Jon Nadler, Simon Black. Did I forget a great mind?

benbushiii's picture

Maybe all the MBS buying that Bernanke has promised is not American MBS, but Spanish.  Global TARP?

neidermeyer's picture

With no oversight of mortgage lending and something like 50%+ of all housing built in the last 10 years unoccupied vacation villas and such the MBS/Ponzi scenario is absolutely certain in Spain.

In Europe don't many countries (I know for certain Ireland does) hold the borrower liabel for the unpaid balance after a foreclosure sale?


rufusbird's picture

Getting close here to the real reason for no audit.

bank guy in Brussels's picture

Not bad at all Graham ...

Glad to see your style and approach improving, and including some realistic smart hedging in your conclusions ...

As you say, « The timing of this issue will be difficult ... »

Internally in Spain, a big looming factor is that the crisis is jet-fuelling the separatist movements in the very large Catalan-speaking region and also the significant Basque-speaking region

Spain might blow apart as a nation as well as leaving the euro ... But the timing is not easy to call

And it's not easy to call whether it is Spain, Greece or Italy that will leave the euro first

JOYFUL's picture

Both of the Spanish regions yu mention are legacy industrial zones; capable in their day, of production equal in output and quality to that of the anglo-teutonic sphere. And both had a momentary epiphany in 1936-37 of what it was like to kick out the bosses and run the factories from the floor. Unfortunately, they forgot to kick out the Bolshies as well as the bosses, and the great experiment in european anti-illuminsm died still-born.

Of course, it's much too late to go back to those storied times now...the seduction of the peeple into the values of the rentier\speculator klasses is komplete- the capacity for communal effort towards the greater good of all is zero. Spain may be Greece, but Euro-Merika is uniformly in the same situation...a flotilla of life rafts all slowly sinking as the castaways compete to drown each other with bigger and bigger floods of phony pfenning.

tip e. canoe's picture

joyful, just had a convo with a Catalan friend last week about that brief period, the prelude to a very dark time for both peoples.   not positive it couldn't be tried again with more success, but that's probably my naive optimism and love for both regions overtaking my better judgement.   fwiw, my friend agreed with your assessment.

JOYFUL's picture

My friend, yur 'naive optimism' that something positive could still develop out of this mess is about the only thing Whitey has got goin for him\her at this point...

the rest of the west has sunk into a negativistic nihilism that can only result in the complete success of the sionist scheme to kill off most of us and reduce the rest to slavery...a condition that the antecedents of the Iberian peeples proved in the past to unwilling to accept,..and therefore fought to the death to avoid.


falak pema's picture

wow, the khazarian-sionist takeover of the world will make Alexander look like pale rider. Five million inhabitants of the globe, +/- 30%, are capable of organising a heist on 1 billion first world people and 6 billion third world shills, based on integrated money-hidden agenda ideology networks that beat the achievements of the Ottoman Empire, the Mongols and the Arabs. White man's slavery programmed by the sons of those who wore the yellow cloth and the  distinctive hat in the middle ages of LAtran IV dictat. 

If such be their skills and patience to take over the world; I have only one thing to say to these magnificent sons of Alexander's phalanx, that very seldom have  fired a shot in their collective timeline, other than financially :

you be the people ! 

'Cos we are in life what we do, and you did it! 

What's your problem, Joy, with an elite of this calibre that has shown its resilience since 2000 years? 

I don't have a problem with them, either way,  as I don't believe in your theory, but that's  another story. 

I believe that western decline and maybe restructured pre-eminence tomorrow, like in past; aka renaissance, enlightement the product of its own momentum; Karma! 

Fall, and then rise, is the recurrent pattern. If we haven't blown up the world or destroyed it ecologically in our current folly! 

The 21 st century looks ominously tipping times; irrespective of Khazarian chimes. 

IMO, the current Zionista play is a subplot of Western concoction since Balfour declaration days; but I know we don't agree on who is the prime mover of current world history. For me its Pax Britannica then and Pax Americana now.

JOYFUL's picture

Problema? Que problema Falak?

Alright, if yu insist on talking problems, I'll let yu in on the problem yu continentals have realizing really real stuff as really real...

see, whilst yáll were wasting yur time sopping up silly Satrean existentialist stuff, n watchin haut cinema, we gringos were surfing the toob in search of seers who could both entertain n educate our impressionable minds...

lo n behold, as a result of watching such supremely clairvoyant shows as Leonardo Lion, Felix, Deputy Dawg, n Quikdraw McGraw, I learned everything I really needed to know about evil villains by the age of five...

it's just needed the intervenin 50 years or so to prove out that the HannaBarbera guys were not just geniuses, but the best geopolitical analysts out there....yu guys missed out...sorry, but yur failure of imagination shall be yur undoing!  A la prochaine!

falak pema's picture

well that was crystal clear...

JOYFUL's picture

Yu Tube is yur friend!(sort of!>) fur example.

El Tabasco...Biggy Rat\Itchy Brother....Master Cylinder...Beagle's all there.

These guys always played to script... the same inexplicable urge to evil...pillage n plunder, disturbing the peace, destroying the social equilibrium...mindless malevolence, all based upon a cringing inner sense of inadequacy, masquerading as a hegemonistic fantasy of supremacist forward to.....the present moment in time!

Nothin deeper than that. Just bad guys....khazarian kooks, sio-nazi spooks...kartoon villains what need to be a modern day El Kabong or Odio Kolonie...yu still not gettin it, hey man, that wormwood done done yur head in for good!

tip e. canoe's picture

not to mention GI Joe for the yunger genz:

check out this oldskooler, bimbo's initiation:

"wanna be a member?  wanna be a member?"