Spanish Debt, Bank Borrowings Soar To Highest In Decades As Home Prices Fall By Most Ever While GDP Shrinks

Tyler Durden's picture

If only the Fed or ECB could print another Spain with the same facility that they engage in currency destruction, (and make no mistake: yesterday's "open-ended" Fed easing, is today's ECB "open-ended" intervention, is tomorrow's BOJ, is Sunday's PBOC, etc.), now might be the time. Because things in Spain, no matter what one is told, are getting progressively worse. The reason: on one hand the continuing surge in regions and total debt, both of which jumped in Q2, on the other hand Spanish bank borrowings from the ECB soared to €389 billion in August, a new record, and up from €376 billion, just as TARGET2 liabilities rose to a new record of €429 billion as well, explaining where that surge in German TARGET2 claims went, on the third hand housing prices collapsed by 14.4% in Q2, the most ever, and tying all the hands together was that the Spanish economy contracted. But please ignore the details. Focus on the important things, such as the surge in the Ibex, the S&P, consumer confidence, gold, crude, etc, however long these continue. Because unless there is such a thing as a free lunch, with every incremental injection, all Bernanke proves is that the underlying reality is far worse than what is telegraphed to the people.

Back to Spain, and its soaring debt...

Spanish government debt rose to 75.9 percent of its economy in the second quarter of the year according to figures published by the Bank of Spain.


The figure is up 9.2 percent year-on-year and is the highest ratio in at least 22 years. The total debt ascended to €804 billion ($1.0 trillion), up €99 billion year-on-year, Spain’s central bank said in a statement Friday.


Central government spending increased by 4.4 percent to €617 billion, representing 58.3 percent of GDP.


Regional government spending grew by 2.8 percent to €151 billion, equivalent to 14.2 percent of GDP, also the highest level in at least 22 years.


The most indebted region in the second quarter was Catalonia with €44 billion followed by Valencia.

... and its plunging homes prices:

Spanish home prices fell the most on record in the second quarter as the euro area’s fourth- largest economy shrank and a reduction in mortgage lending crimped demand for property.


The average price of houses and apartments declined 14.4 percent from a year earlier, the most since the measurement began in 2008, the National Statistics Institute in Madrid said today in an e-mailed statement. Prices fell 3.3 percent from the previous quarter.


“The data reflects a significant drop and confirms that prices haven’t bottomed out yet,” said Fernando Encinar, co- founder of, Spain’s largest property website. “Only homes that are heavily discounted will sell as access to credit has completely dried up for potential buyers.”


The number of Spanish homes sold declined in July for a 17th month, dropping 2.5 percent from a year earlier, according to the statistics agency. Mortgage lending fell 20.4 percent in June from the year-ago period, INE data shows.


The government has passed two decrees this year forcing Spanish banks to make deeper provisions for losses linked to real estate in an effort to push down prices and boost sales.


Spain built on average 675,000 homes a year from 1997 to 2006, more than France, Germany and the U.K. combined, according to a report by a unit of Spanish savings bank Cajamar.

... and its insolvent banks:

We used to make fun of Greece all the time. We had obviously not heard of Spain.

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GetZeeGold's picture



Wow.....did NOT see that coming!


samcontrol's picture


What they do not mention in the article is all that bs home buying in

Spain was also made by OTHER europeans. Basically it,s like you guys having a second home in Florida or a third when you don,t fucking need it.
Same shit different continent. I can afoard an island yet i live in a cabin...

HelluvaEngineer's picture

Who cares?  All hail The Bernank!

GetZeeGold's picture's heil actually.


We'll let you off with a warning this time.


Cut Ben a break....he's gotta get his boy re-elected or he's out of a's not political or anything.


Its_the_economy_stupid's picture

Careful or extraordinary rendition is gonna get you.

GetZeeGold's picture



It's not so much careful as it is sheer speed.


q99x2's picture

If Spain would just ask the Germans to come and take them over everything would be fixed.

Robslob's picture

Coming soon to an Amerika near you!

LawsofPhysics's picture

How will shrinking GDP support larger Debt again?  Where is the jubilee?

GetZeeGold's picture



It's in the Bible.....but they haven't done that for thousands of years now.


Come to think of might just be worth a shot.



schatzi's picture

Draghi will take Bernanke's lead and follow up by taking all that toxic housing shit on to his ECB balance sheet. Peripheral MBS purchases Draghi style. I hope the core taxpayer has enough lube, because he's about to be taken up his behind in uncompromising fashion.

buzzsaw99's picture

interesting. i wonder if that wasn't a large part of the fed's motivation for buying usa mbs to begin with.

ziggy59's picture

When nothing else works....

F ool
I diots
A nother
T ime

ThirdWorldDude's picture

"Central government spending increased by 4.4 percent to €617 billion, representing 58.3 percent of GDP.


Regional government spending grew by 2.8 percent to €151 billion, equivalent to 14.2 percent of GDP, also the highest level in at least 22 years."



Hahaha, make it stop, please! I can't stop laughing comparing the above statement with the one below!



"IMF Managing Director Christine Lagarde also said large, debt-strapped euro zone countries Spain and Italy had taken enough action to repair their finances to merit aid from the rest of the European currency union."



Tyler, isn't it a bit early for friday humor?

schatzi's picture

I'm pissing myself. So we have a lawyer telling us all is fine in Spain as they're doing everything possible while government expenditure and deficits explode and the markets believe this shit. Un-fucking-believable. It probably also shows that algos have one serious problem: they cannot detect even the most blatant lie. 

ziggy59's picture

The algos are created to obey their masters words...up when they read up, etc..

Disobedience is not in their programs..

ziggy59's picture

Ooops..too much caffeine Double post

michael_engineer's picture

It's all about making the general public the stuckee everywhere is what I'm figuring out.

Just Ice's picture



Yes, Spain wouldn't need further conditionality for bailout as I recall since it had already undertaken austerity measures, (purportedly).  Indeed, markets do seem to have been dumbed down.

lolmao500's picture

In decades! That means the bottom is here! BUY BUY BUY BUY!

/chanelling Cramer

zorba THE GREEK's picture

As Italy waits patiently in the background for their turn at the trough. 


JohnnyBriefcase's picture

Someone should ask them how wealthy they feel.

strangeglove's picture

Free Lunch for the 1% only, no soup for you!

GetZeeGold's picture



If I hear that one more time.....I'm gonna hurl.



GetZeeGold's picture



Double post......and I hurled......I'll clean it up myself.


I built it.....I hurled.....I cleaned it up.....and that's how you do it.



HD's picture

"Whatever it takes". Mario, then Ben. You don't go nuclear just to keep the S&P from correcting 10% - the shit will soon hit the fan.

Just a tiny bit of trivia from someone cursed with the ability to remember every damn commercial jingle he hears...

The slogan and ad jingle for Montgomery Ward was "Whatever it takes Montgomery Ward!" - it was their last before they went BK.  Just sayin'....

Its_the_economy_stupid's picture

Does the chart above included ECB sovereign bond ourchases on the secondary market?

Meesohaawnee's picture

im sure 100+ crude will help the people of europe. all fixed

michael_engineer's picture

You can't print oil, rare earths, water, phosphorous, or other resources. And those are the things that really form the basis for jobs, food, clothing, and shelter. It's like bringing store coupons to a pot luck dinner and thereby claiming rights to graze the food table.

michael_engineer's picture

Is the FED going to be buying mortgage backed securities to shore up Spain's housing market too?

Sam Clemons's picture

Might as well.  We already have a nice share in Red Roof Inns.  Time for some better properties.  

Do we get a taxpayer discount at Red Roof Inns now? 

THE DORK OF CORK's picture

Spain is being destroyed because it cannot print a domestic must somehow export shit to where the malinvestment is currently occuring to pay the interest on the malinvested debt.

A absurd situation.

National economies rather then market state economies are far less wasteful as the distance of commerce is shrunk.

If the PIigs stop exporting hard currency its the toxic combination of Bankers in league with German BMW merchants  and Arab oil shieks that will be destroyed.

 The Madrid - Barcelona air shuttle still exists and carried 3 + million passengers in 2010 despite the fact there is now a high speed rail line linking these two cities !!!

Withen the Euro these economies cannot use all of their internal capital to the max.

The waste withen the euro system is simply huge.


Ungaro's picture

So Spain is like the US consumer -- spend more than they take in, live off borrowed money and cannot print their own currency. Someone ought to tell them the punchline: you cannot borrow your way out of a debt hole.