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Record 2,564 Spanish Firms File For Bankruptcy In Q1, 45% Higher Than Year Ago

Tyler Durden's picture




 

Perhaps the best measure to gauge the European recovery is by the soaring number of companies going bust, because only from this perspective is Europe finally "fixed." As Reuters reports citing a report by Axesor, a record 2,564 companies filed for "insolvency proceedings", a more palatable version of the word bankruptcy, in the first quarter - an increase of 10% from Q4 and up a whopping 45% from Q1 2012. The reasons given: "tight credit conditions and meager demand." Or in other words: no actual cash flow to fund demand for products and services. Obviously it will take some truly phenomenal massaging and manipulation to represent GDP as rising in this environment, but we are confident the Spanish authorities are already on it, and somehow the Spanish pension fund, already 97% filled with Spanish government bonds, will somehow have a finger in yet another completely unbelievable economic print which will fool most of the algos most of the time on flashing red Bloomberg headlines.

Per Reuters:

"Most Spanish businesses did not prepare for a crisis this big or this long, which could be a determining factor," said Javier Ramos-Juste, head of economic studies at Axesor.

 

Spain has been in its second recession in five years for the past 18 months and unemployment is more than 25 percent.

 

A credit freeze, liquidity problems, late payments and poor risk management contributed to the record number of bankruptcies since Spain's insolvency law changed in 2004, Axesor said.

 

Almost 28,000 companies have filed for bankruptcy since Spain's economic crisis set in five years ago, Axesor estimates.

 

Banks have tightened lending after a property boom turned to bust in 2008 and face stricter regulation since Spain received a bailout of about 41 billion euros ($52 billion) from international creditors last year.

Naturally it is the evil banks' fault for not lending out money.

What is not discussed is that with deposits flying out of the door, the local banks simply don't have the cash to make such loans. What is also not discussed is that even in that stalwart of economic growth, the USA, total commercial loans as of last week were virtually unchanged from the date Lehman filed for bankruptcy, at just over $7.2 trillion. But at least the US has a Federal Reserve which does not mind being the bad bank for thousands of businesses that otherwise would have gone insolvent if only it weren't for an abundant source of zero-cost credit.

And with the banks engaged in simply chasing the stock market, while the Fed still has $85 billion/month of liquidity injections and deposit creation to do for at least year longer and possibly, forever, expect the unprecedented misallocation of capital to continue until such time as there is absolutely no more end demand and the Fed is forced to not only fund company balance sheets but to be the last resort buyer of goods and services. Which it will eventually become before it is all over.

 

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Mon, 04/08/2013 - 13:06 | 3422426 prains
prains's picture

does this also include for corporate moral bankruptcy????

Mon, 04/08/2013 - 13:15 | 3422455 LawsofPhysics
LawsofPhysics's picture

Of course not, those guys already bought a politician and have plenty of "no-bid" contracts to keep their "private" businesses going.  Oh wait...    ...nevermind.

Mon, 04/08/2013 - 13:24 | 3422488 Wile-E-Coyote
Wile-E-Coyote's picture

Spain is so fucked

Mon, 04/08/2013 - 13:27 | 3422504 BaBaBouy
BaBaBouy's picture

Yep, Bullish...

Goo Trioka ...

Mon, 04/08/2013 - 14:26 | 3422846 Thomas
Thomas's picture

"But at least the US has a Federal Reserve which does not mind being the bad bank for thousands of businesses that otherwise would have gone insolvent if only it weren't for an abundant source of zero-cost credit."

Not sure I can sign off on that as meritorious.

Mon, 04/08/2013 - 13:46 | 3422595 silverserfer
silverserfer's picture

Goddamn mexicans..

Mon, 04/08/2013 - 14:17 | 3422788 Sudden Debt
Sudden Debt's picture

watch it 4 times...

http://www.youtube.com/watch?v=SxHVhxbtrhY&sns=em

and you'll see in Spain's case that's it's been like this over and over and over and over again...

Mon, 04/08/2013 - 13:30 | 3422517 trollin4sukrz
trollin4sukrz's picture

I think the problem is the structure of the system. One cannot stockpile digits in accounts to save for hard times when the tax system *steals* it from you. This forces liquidity back into the system waiting for the inevitiable down turn and death spiral of the economy and poof goes the liquidity. The game is rigged for a small handful of players and soon all the digits will be in a few accounts and then God only knows wtf is going to happen. I suppose it will be the mark of the beast time or something? 

Mon, 04/08/2013 - 13:35 | 3422533 Debugas
Debugas's picture

the problem is people were living on credit (beyond their means) for several decades. Now it is very hard to scale down and start living within your means (prices are still too high in expectation on higher demand) let alone below your means (repaying your debts)

Mon, 04/08/2013 - 15:36 | 3423269 tango
tango's picture

Be careful.   Any suggestion that the populace had a role in this debacle is not popular here.   Ignore the fact that Europeans not only worked less, screwed less and saved less but also demanded more and more freebies.   Forget that they steadfastly supported the welfare state mirage that permanent borrowing is sustainable and the best path to growth was buying sovereign debt.   Forget that they reelected those who perpetrated this and promised more of the same.

I'm not necessarily blaming Europeans since Japanese and Americans are following the same path.  But at least the American society has not blindly embraced the notion that prosperity is built on spending more, taxing more, getting more and borrowng more. We all follow the path of least resistance  - print money when we should save, negotiate labor contracts in boom years, avoid mathematics with hope and change. All we can do is trudge on(ward).

Mon, 04/08/2013 - 13:46 | 3422604 Saro
Saro's picture

"One cannot stockpile digits in accounts to save for hard times"

Unless you're stockpiling bitcoins.

Mon, 04/08/2013 - 14:00 | 3422680 LawsofPhysics
LawsofPhysics's picture

"stockpiling bitcoins"  - LMFAO!    Yes, right next to my PMs (including the lead and brass.  Halarious.

Mon, 04/08/2013 - 13:06 | 3422433 redpill
redpill's picture

These stupid central planners have poisoned their own credit well.  There's only one direction this can go now.

Mon, 04/08/2013 - 13:15 | 3422454 Abraxas
Abraxas's picture

This is way too stupid to be stupid. I assign it to evil genius. Otherwise, we were screwed just by some clueless schmucks.

Mon, 04/08/2013 - 13:25 | 3422496 redpill
redpill's picture

It would almost be more comforting to think the western world is being destroyed by evil villains intending to do so, because the thought of us spiralling into the abyss thanks to stupidity, incompetance, and myopia is even more depressing.

Mon, 04/08/2013 - 13:41 | 3422558 malikai
malikai's picture

+1000

Sadly.

Mon, 04/08/2013 - 14:22 | 3422823 Bananamerican
Bananamerican's picture

you forgot unbridled, unregulated Greed...that engine of broad-shouldered capitalism

welcome to the human race

Mon, 04/08/2013 - 14:58 | 3423037 alangreedspank
alangreedspank's picture

No, it was left out on purpose. Capitalism can deal efficiently with "unbridled, unregulated greed". It's called "losses" and it balances out the risk taking involved in "unbridled, unregulated greed".

Mon, 04/08/2013 - 15:28 | 3423227 Bananamerican
Bananamerican's picture

you sir, are an idiot

Mon, 04/08/2013 - 15:35 | 3423265 alangreedspank
alangreedspank's picture

You have brilliantly convinced me of my own idiocy. We need more people like you.

Mon, 04/08/2013 - 13:31 | 3422516 timbo_em
timbo_em's picture

One direction? Obama's "forward comrades" comes to mind. 

Mon, 04/08/2013 - 13:07 | 3422434 slackrabbit
slackrabbit's picture

Krugman says this is bullish...

Mon, 04/08/2013 - 13:10 | 3422440 Winston Churchill
Winston Churchill's picture

PK is bullish(shit).

Mon, 04/08/2013 - 13:14 | 3422459 redpill
redpill's picture

New term!  

bullisht - adjective - a voiced optimistic market opinion that is actually completely nonsensical garbage.

Mon, 04/08/2013 - 13:22 | 3422480 localsavage
localsavage's picture

add....the opinion usually goes agianst ones basic knowledge of mathmatics and or common sense

Mon, 04/08/2013 - 13:24 | 3422489 resurger
resurger's picture

Let me get this please, so Krugman is bullisht or bullisht is Krugman.

 okay i get it now

Mon, 04/08/2013 - 14:41 | 3422932 prains
prains's picture

.....and resembles something floating in the Shanghai River

Mon, 04/08/2013 - 14:57 | 3423046 malikai
malikai's picture

I call it bullshi.

Mon, 04/08/2013 - 13:10 | 3422441 Sid James
Sid James's picture

Add to those figures the thousands of small businesses who will just quietly fold and disappear, like the Spanish car hire company who vanished last month taking my deposit with them.

Mon, 04/08/2013 - 13:25 | 3422486 Jam Akin
Jam Akin's picture

Sorry to hear that. Same thing is happening with smaller firms in Italy at present.

Mon, 04/08/2013 - 13:10 | 3422446 surf0766
surf0766's picture

Follow the Spanish lead on green energy.. right into the toilet.

Mon, 04/08/2013 - 23:17 | 3424956 tango
tango's picture

The reason green energy floundered in Spain was not science or energy -- it was decisions by central planners egged on by political loudmouths. When solar, wind or geo matches fossil fuel costs, folks buy.  It's as simple as that. In Spain's case, energy policy was dictated from the top down - from resource and capital allocation to direction to specific projects.  It's what happens in welfare states - decisions inevitably flow from the top.  

It bears repeating because apparently folks can't remember.  There is ALWAYS a disruptive period of technological flux when the same things are said time after time after time.   "Cell phones won't work, are too big, only for the rich, too hard, too small, too expensive - where's my phone?"   "CDs will never replace good old floppy disks"   "The internet is too slow, difficult, expensive...oh, you can get on the web anywhere anytime."  "Solar will never be efficient or cost effective"   The same folks say the same thing until finally they become users of the very technology they denounced. 

 

Mon, 04/08/2013 - 13:15 | 3422456 timbo_em
timbo_em's picture

2564 real companies went bust but they managed to save every single bank!!! EU rocks!!

Mon, 04/08/2013 - 13:17 | 3422464 e-recep
e-recep's picture

apparently spanish entrepreneurs vastly underestimate what the euro means for the europeans, for the euro area.

.

.

.

.

they should have liquidated their businesses long ago and bought gold bars and coins!!

Mon, 04/08/2013 - 13:21 | 3422467 Frank N. Beans
Frank N. Beans's picture

vamanos muchachos

este es muy grande toro-ish

 

Mon, 04/08/2013 - 13:23 | 3422484 cherry picker
cherry picker's picture

This problem is surfacing everywhere.  Too many taxes, too many regulations, too much technology (from groceries to airline tickets to vehicles and more, no middleman needed as it is all Internet) to many overpaid civil servants and not enough work to go around to fuel private business.

We were better off before hi tech took control over our work.  Twenty years ago I was not "connected", yet I met more people in business dealings, receptionists answered telephones, there seemed to be more people working in brick and mortar businesses and so on.

The wealthy need people to siphon off.  When society is broke, the wealthy will end up suffering as well.

Even war is high tech now.  With robots and drones, we don't have to worry about casualties.  Look at the invasion of Iraq.  The numbers of soldiers lost was negligible as compared to losses when men stormed beaches or tried to take over islands.

We are making people obsolete.  Do we want that to happen?

 

Mon, 04/08/2013 - 13:35 | 3422519 dobermangang
dobermangang's picture

"When he was told by government officials that it was better to dig ditches with shovels than bulldozers, because more jobs were created that way, Friedman asked, “Why not use spoons?”  In no corner of the Earth, from alabaster Washington to the filthiest dungeon state, have central planners ever been able to answer that question.  If Friedman had lived long enough to hear Barack Obama blame high unemployment on automated teller machines, he would have recognized a student in dire need of his teachings."

http://www.humanevents.com/2012/07/31/milton-friedman-and-the-economy-of...

http://pjmedia.com/eddriscoll/2011/08/26/why-not-use-spoons-instead-of-s...

Mon, 04/08/2013 - 13:33 | 3422529 walküre
walküre's picture

obsolete until we run out of (cheap) energy to fuel the machines - agri industr

Mon, 04/08/2013 - 14:48 | 3422983 NoDebt
NoDebt's picture

"The wealthy need people to siphon off.  When society is broke, the wealthy will end up suffering as well."

That's the point I liked most.  There is a certain element of "if you burn your own house down, where are you going to live?"  But don't worry, the rich will feed on themselves as surely as anyone else.  Super rich will siphon off the regular rich, etc.

Are we making people obsolete?  Yes.  So much easier to steal from, kill, send to war or IGNORE THE MERE EXISTANCE OF people when they don't matter.

Mon, 04/08/2013 - 13:24 | 3422490 dobermangang
dobermangang's picture

I'm still predicting a civil war in Spain or Greece.  See comment section for more of my 2013 predictions.  I did get 1 right so far.

http://pointsandfigures.com/2012/12/28/predictions-for-2013/

Mon, 04/08/2013 - 15:41 | 3423291 tango
tango's picture

Civil war?   Over what?   Big Majorities in both nations STILL want to stay in the EU even when it is clear that the EU is the problem and not the solution.  Since both governments and majorities of citizens both want a return to borrowing (and taxing) who is going to rise up?  No, I see a slow denouement until Japan falters.  Then, rapidly, crisis will hit the PIGS.  

Mon, 04/08/2013 - 13:25 | 3422491 Monkeyfister
Monkeyfister's picture

OT-- But, usually ALCOA gets its earnings statements out top of the morning-- if they are positive. This late in the day and no ALCOA statement bodes ill. The Markets seem to be already pricing in the losses.

Of course, this is GREAT NEWS for those assholes long on Austerity as the cure for everything.

Mon, 04/08/2013 - 13:28 | 3422497 Anasteus
Anasteus's picture

It’s an intentional effort to disrupt the private commerce, so that only the narrow group of bankers, politicians and crony cartels can grab all the power and the finance. The old communist tactic in the 21st century. The same happened in Cyprus.

Ridiculous and insane at the same time.

Mon, 04/08/2013 - 13:32 | 3422518 Monkeyfister
Monkeyfister's picture

Except that this is a purely Fascist move.

Nothing to do with Communism... unless you are using Communism as a synonym for Totalitarian Power Structures. But, that would be careless, sloppy, and an irresponsible misuse of the language.

Mon, 04/08/2013 - 13:49 | 3422622 Winston Churchill
Winston Churchill's picture

All right :STATIST.

Happy now ?

Mon, 04/08/2013 - 13:27 | 3422498 lotusblue
lotusblue's picture

Bread and Soup to the left.

Mon, 04/08/2013 - 13:30 | 3422513 resurger
resurger's picture

Selling directly the the Fed's is actually a good idea, who needs a fucking market when you can print.

 

Mon, 04/08/2013 - 13:32 | 3422523 Inthemix96
Inthemix96's picture

Aye, once again, this will end well.

Look on the bright side........  Fuck it, burn this fucker down.

Mon, 04/08/2013 - 13:43 | 3422575 q99x2
q99x2's picture

I don't think the Federal Reserve likes being the bad bank. There is a world domination issue here. The military must continue until it can't which takes precedence over the Federal Reserve and member banks. The globalists need to secure the South China Sea at all costs and so you have China prompting chubby boy to increase the costs to the globalists. A big New Madrid earthquake would put the final nail in the coffin of the globalists if it hit at this time.

Mon, 04/08/2013 - 13:51 | 3422624 NEOSERF
NEOSERF's picture

"Brother can you spare a bitcoin?"

Mon, 04/08/2013 - 14:10 | 3422739 css1971
css1971's picture

Naturally it is the evil banks' fault for not lending out money.

Yeah it fucking is too.

The banks have lobbied their rent boy politicians for centuries to build an entire edifice of a monetary system based exclusively on credit. They got their dream, they blew it up for 30 years, everyone a debt slave and now when it's crumbling, the bankers tighten credit and accelerate the collapse.

Yeah it absolutely fucking is their fault.

Mon, 04/08/2013 - 15:54 | 3423342 tango
tango's picture

You sound like those who insist that the idiots who bought homes with zero money down/absurd rates were misinformed.  Warnings of danger came from almost every quarter (NPR, Motley Fool, brokers, financial advisors, newspapers, consumer groups, etc).  Buyers signed documents attesting to the riskiness. Besides, if they could afford a house they wouldn't have gone through this sham.  Banks reflected political thought.  Politicians from Clinton to Bush wanted home ownership regardless of qualifications.   Legislation was passed supporting this and bankers (quote unquote) began a mad rush to take advantage of this foolishness.  When things went bad was when folks began complaining.

As for credit tightening, we recently purchased some condos.   Even with credit ratings in the 800's, huge income, etc the process took almost a month due to new rules and regulations (this was with a small, local bank).  I can't imagine how ordinary income folks would ever get a loan under these conditions.   The last things bankers want is a collapse - what good does that do?   They want a return to the go go years where folks bought regardless of qualification. 

Mon, 04/08/2013 - 19:20 | 3424169 Mototard at Large
Mototard at Large's picture

Let me see if I can recall the situation to date:

Australia is not Cyprus

Spain is not Greece

Greece is not Cyprus

Greece is not Ireland

Uganda is not Spain

Italy is not Spain

Spain is neither Ireland or Portugal

Ireland is not Greek territory

Portugal is not Greece

Neither Spain or Portugal is Ireland

Cyprus is not Cyprus – it got Troiked!

And Iceland is not the EU. It bailed the country and busted the bankers!

Tue, 04/09/2013 - 14:51 | 3427730 papaclop
papaclop's picture

How are you going to access your bitcoins when a large solar flare, EMP, or corrupt government shuts down the Internet?

Do NOT follow this link or you will be banned from the site!