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Forget Today's Bond Auction, Spain is an Absolute Disaster

Phoenix Capital Research's picture




 

 

Well the financial world is awash with reports that the Spanish auctions went well. They did not. And you better believe the ECB and other Central Banks were involved in the buying.

 

Instead, Wall Street is using the auction (and just about every other announcement this morning) to shred and those who sold calls in their usual options expiration games. This has been the norm for years, but the mainstream financial media continues to find “fundamental” excuses for market action that is clearly just manipulation and nothing more.

 

Case in point, if the Spanish auction went so well, why are Spanish Credit Default Swaps widening? Ditto for Spanish yields (the ten year is back closing in on 6%)?

 

However, ultimately this auction means next to nothing. Spain is an absolute disaster on a level that few if any analysts can even grasp.

 

How else do you describe a country for which:

 

  • Total Spanish banking loans are equal to 170% of Spanish GDP.
  • Total Spanish private sector debt is near 300% of GDP.
  • Troubled loans at Spanish Banks just hit an 18-year high of over 8%.
  • Spanish Banks are drawing a record €316.3 billion from the ECB (up from €169.2 billion in February).

 

By the way, Spanish banks need to roll over 20% of their bonds this year too. Good luck with that. I’m sure it will all work out well. After all, the ECB and IMF have the funds to prop up Spain’s €1 trillion economy.

 

Oh wait, they don’t. In fact no one does. The IMF’s requests for more funds have been rejected by both the US and Canada (you really think Obama will fund a European bailout during an election year?). And the ECB has already blown up its balance sheet to the point that Germany and the ECB are growing hostile to each other (I’m sure this will work out well too).

 

Forget today’s auction and the spin being thrown about. Spain is a disaster. Its banking system is a sewer of toxic debts which the Spanish Government has attempted to fix by either merging insolvent banks together or spreading toxic garbage onto the public’s balance sheet.

 

This might fly in the US (or has least has so far) where the economy is more robust and diversified than in Spain. But for a country whose housing bubble dwarfed that of the US and which is already posting unemployment of 24% (the highest in the industrialized world) and youth unemployment of 50%+, it’s a tough sell.

 

Oh, and Spain’s King decided to take time off from hearing about the Crisis to go elephant hunting. That should go over well with the Spanish populace, which is now facing austerity measures when the country is already in a Depression.

 

Just wait, once options expiration ends, we’ll be back to the fireworks. In fact, smart investors should take advantage of this ramp job to prepare for what’s coming.

 

So if you’re not already taking steps to prepare for the coming collapse, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.

 

This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com

 

Best Regards,

 

Graham Summers

 

PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.

 

And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com

 

 

 

 

 

 

 

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Thu, 04/19/2012 - 15:21 | 2359236 NEOSERF
NEOSERF's picture

Honestly, if I am sitting at the Fed looking at Spain and then Italy hitting later this year, I can either manufacture how it is going to go or I can sit and watch the EU dither...my guess is this decline is the start of a Fed "make it fall" stock market plummet which will allow them to quickly go in and offer up the $2-3T that clearly the EU, IMF, ESM, EFSF or Bundesbank doesn't have under the guise of "saving the world again"...waiting for it to happen is making it worse, they now know that hitting things with a pre-emptive bazooka works for a while but they won't be able to do it closer to November...

Thu, 04/19/2012 - 13:27 | 2358833 Liquid Courage
Liquid Courage's picture

Oh, did we say "went well"? No, no you must have mis-heard us, we said "Went to hell!"

Thu, 04/19/2012 - 13:25 | 2358832 Nobody For President
Nobody For President's picture

24% Unemployment. Think about that.

 

That is right there with the depths of the US depression in 1931-33.

Sure glad their bond sales went well...

Thu, 04/19/2012 - 16:31 | 2359470 Zero Govt
Zero Govt's picture

if Spain is in a Great Depression already there's no sign of it in the towns and cities 

this is going to be the Great Unseen Depression i think, and the MSM don't want to show it either, their plastic news presenters are just not suited to feignng sympathy for the poor

Thu, 04/19/2012 - 13:24 | 2358819 skepticCarl
skepticCarl's picture

I can't imagine what subscribers to this guy's newsletter think, when they get the same info and analysis, cut and repasted, day after day, week after week.

Thu, 04/19/2012 - 16:43 | 2359505 derek_vineyard
derek_vineyard's picture

forget everything and believe what i say (over and over)

Thu, 04/19/2012 - 13:05 | 2358749 steve from virginia
steve from virginia's picture

 

All the world's cities will be forlorn ruins ... its farmlands overgrown and its peoples destitute ... begging for food and water ...

And MSNBC and the rest of the busiiness establishment media will be trumpeting the ongoing bull market, the S&P will be 4000 and credit spreads in the (defunct) Eurozone will be tightening!

Barbara Walters once asked Anwar Sadat how he was able to deal with his peoples' suffering ... that could be seen in the slums lining the road leading from the airport into Cairo?

"I don't look out the window," he said ...

Thu, 04/19/2012 - 16:52 | 2359532 Treeplanter
Treeplanter's picture

The US will take a serious beating, but our great crash will be postponed.  Mad Max may visit some dense urban areas. What would old Joe Kennedy do?

Thu, 04/19/2012 - 12:48 | 2358696 undertheradar
undertheradar's picture

All I can say is I made sure I saw a bit of the country over the years. I'd like to see more, but probably not in the near future.

Thu, 04/19/2012 - 11:53 | 2358522 Ghordius
Ghordius's picture

So Spanish yields are up to 6%... don't know, I can't remember, did I not have once some UST at double this yield? Must have been either long ago or in a different dimension...

Thu, 04/19/2012 - 12:02 | 2358500 Ghordius
Ghordius's picture

"How else do you describe a country for which:" total debt is 470% of GDP. (?)

Don't know, half a Britain?

Thu, 04/19/2012 - 11:59 | 2358494 Ghordius
Ghordius's picture

yes, "why are Spanish Credit Default Swaps widening?" After endless articles about how rigged the markets are we are supposed to believe that the CDS market is pure and pristine as 100 years ago?

wait, this market is not that old - we had it banned for good reasons. At least something that can be blamed on Clinton instead of Bush...

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