My prediction regarding the breakup of the EU was obviously way early.
However, the fact remains that the EU will break up in time. And it will likely be Spain that brings this about.
The reasons? Among other things:
- Spain’s private Debt to GDP is above 300%.
- 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.
- Spanish banks are drawing over €400 billion from the ECB on a monthly basis (up from €377 in June) to fund their liquidity needs.
- Spanish banks are now net sellers of Spanish sovereign bonds (leaving the ECB as the only buyer in the market)
- Spain’s banking system has lost 18% of its deposits in the last 10 months due to a staggering bank run.
- The economy of Spain is a disaster with total unemployment over 25% and youth unemployment above 50%.
- Spain is now facing a constitutional crisis with various regions looking to secede if they don’t receive bailouts from the Federal Government “without conditions.”
- Spanish banks need to roll over (meaning renew terms on) more than 20% of their bonds this year.
So Spain will suffer a collapse, most likely of its banking system resulting in a sovereign default (barring a bailout). When this happens, some €1 trillion+ worth of collateral (still rated AAA by EU banks) will be sucked out of the system.
This in turn will spur margin and collateral calls on tens of trillions of Euros’ worth of derivative trades.
And the EU Financial System collapses.
This is reality, regardless of who wins the US election. It may take a few months before it hits… but it will hit.
On that note, if you’ve yet to prepare for Europe’s BIG collapse…we’ve recently published a report showing investors how to prepare for this. It’s called What Europe’s Collapse Means For You 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://gainspainscapital.com/eu-report/ [8]
Best Regards,
Graham Summers
We also offer a FREE Special Report detailing the threat of inflation as well as two investments that will explode higher as it seeps throughout the financial system. You can pick up a copy of this report at:
http://gainspainscapital.com/gpc-inflation/ [9]