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The Spanish Financial System Completely Collapses And Spain Is About To Reboot With A 100 Percent Decline In GDP And 100 Percent Unemployment. It’s Absolutely Terrifying!!!


The Horrific, Worst-Case Scenario For Spain

Spain is in trouble.

The macroeconomic outlook continues to deteriorate as unemployment rises. Angry citizens are protesting austerity in the streets.

At the same time, Spain has just unveiled its 2013 austerity budget, but the overly-optimistic macroeconomic assumptions underlying the plan foreshadow missed deficit targets in the coming quarters, which will likely force a new round of austerity measures, further worsening the economic contraction.

Meanwhile, the Spanish region of Catalonia is threatening to secede.

Technically, the “worst-case scenario” for Spain would be something along the lines of a 100 percent decline in GDP and 100 percent unemployment. No one is calling for that.

Presented here are all of the things that could go wrong, though. The recent work of Citi economists and strategists is heavily cited because they seem to be consistently more bearish on the Spanish situation than other shops

 

The Spanish Financial System Completely Collapses

…By itself, Spain is the 12th largest economy in the world, and right now it is a complete and total mess with no hope of recovery in sight.

The national government is broke, the regional governments are broke, the banking system is insolvent and Spain is in the midst of the worst housing crash that it has ever seen.

On top of everything else, the unemployment rate in Spain is now over 25 percent and the unemployment rate for those under the age of 25 is now well above 50 percent.

An astounding 9.86 percent of all loans that Spanish banks are holding are considered to be bad loans which will probably never be collected.  Before it is all said and done, probably ever major Spanish bank will need to be bailed out at least once.

Manufacturing activity in Spain has contracted for 17 months in a row, and the number of corporate bankruptcies in Spain is rising at a stunning rate.

Five different Spanish regions have formally requested bailouts from the national government, and the national government is drowning in an ocean of red ink.

Meanwhile, panic has set in and there has been a run on the banks in Spain.  The following is from a recentBloomberg article….

Banco Santander SA (SAN), Spain’s largest bank, lost 6.3 percent of its domestic deposits in July, according to data published by the nation’s banking association. Savings at Banco Popular Espanol SA, the sixth-biggest, fell 9.5 percent the same month.

Eurobank Ergasias SA, Greece’s second-largest lender, lost 22 percent of its customer deposits in the 12 months ended March 31, according to the latest data available from the firm. Alpha Bank SA (ALPHA), the country’s third-biggest, lost 26 percent of client savings during that period.

Overall, the equivalent of 7 percent of GDP was withdrawn from the Spanish banking system in the month of July alone.

Thousands of Spaniards have become so desperate that they have resorted to digging around in supermarket trash bins for food.  In response, locks are being put on supermarket trash bins in some areas.

 

JUST-IN:S&P DOWNGRADES SPAIN TO BBB-

Rating agency Standard & Poors just downgraded Spain’s sovereign debt rating to BBB- from BBB+, outlook negative.

 

Some highlights – S&P is concerned about:

  • Intensifying social discontent in Spain
  • An unpredictable situation at the supranational policy level
  • Domestic politics in Spain ahead of elections
  • A severe and deepening recession in Spain
  • Shortage of credit in Spain

Here is the full release:

 

Nouriel Roubini Foresees Spain’s Doom despite Bankia Nationalization

“Nouriel Roubini, aka Dr. Doom, agrees and believes that Spain will lose market access by the year’s end and would need a huge troika-approved bailout that would still only buy them time. Eventually, Spain might find itself alongside Greece – outside of the Eurozone.”

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  • amicusbriefs

    Por favor, mis hermanos y hermanas de Espana, sus problemas viene desde sus ‘lideres’ y sus amigos de los bancos. Su pais tiene una historia y cultura rica. Su gente en las calles yora con la voc de ona. Ten accion contra los banceros de Nueva York. Ellos son diablitos sin espiritus. Esperamos para los tiempos mejores para todos de ustedes. Son soledades de libertad y justicia ahorra. Vaya con Dios.

  • U.S. Citizen

    Very sad! We are praying for Spain. May God have mercy on Spain.

    • RioSam

      This is what happens when you vote in, which they did, a socialist regime! So, frankly, I don’t feel sorry for them at all. Furthermore, if the people of this country are stupid enough to vote in Obama the socialist, they deserve the same as the Spaniards.

  • http://www.none thomas jefferson

    SPAIN,could fix all their problems if they just understoud the problem,YOUR POLICE WERE HIRED TO PROTECT THE POLITICANS ROBBING SPAIN,SOLUTION:FIRE ALL THE POLICE and then hang all the crooks and get out of the QUEENS UNION……PROBLEM SOLVED…………

  • Mark

    Dear AmicusBriefs: A noble effort

  • Falesteeni

    @ U.S Citizen, Praying for Spain!!! pray for America while you at it & pray HARD!

  • http://sirus1.com angel

    Divine law is above manmade laws

  • Frank

    You better pray hard for the USA is right. Its going to be MUCH worse than Spain.

    • Don_in_Odessa

      Even so, let it come quickly. The time has long past for us to rebuild on our Constitutional foundation. Back to basics is a good thing here.

  • Saveme

    When US dollar collapse the whole world collapse. Keep stacking.

  • ZX

    one hundred percent unemployment in Spain? Really?
    I bet politicians and judges will hang on their jobs.
    Funny piece of “news” as utter absurd it is.

  • skip

    Only Ron Paul can help the U.S.

  • bill

    get rid of your 3 million islamics that have flooded your nation and sucking the system dry and your problem will be halfway solved.

  • scott

    Burn baby burn! Just waiting for real estate to completely bottom out, and will scoop up some real Andalucian bargains :)

  • http://facebook.com/nomoremoneyforwar facebook.com/jcgreene

    HERE IS THE EXPLANATION FOR THE MANUFACTURED WORLDWIDE FINANCIAL CRISIS.. If everyone in the world understood the following information.. we could and would PERMANENTLY SOLVE this problem and would never again fall victim to it..

    It;s really this simple.. Money, our “wealth”, and that which we work for, is being printed as DEBT with COMPOUNDING INTEREST.

    Regardless of which country we live in at this point, every “dollar” printed in our current system adds to the PRINCIPLE on the debt which we owe to the privately owned, central banks. However, the money to pay the interest was never printed and does not exist, and so it is a mathematical certainty from the onset, that it can not possibly ever be repaid, and yet, as the amount of money that’s been printed grows, the interest owed is compounded exponentially.

    Further, any money from the economy that is used to pay the interest is removed from the economy, and so, the money to pay back the PRINCIPLE no longer exists either, thereby, once again, making it mathematically impossible to pay back the principle let alone the interest that’s been added to the debt!

    In other words, we, as nations, owe an exponentially increasing amount of interest that cannot possibly be paid, because the money to pay the interest does not exist and as we try to pay the interest, we remove money from the economy, making it so that we can no longer repay the original debt, regardless of interest because THAT money no longer exists either!

    And so, as interest payments are made from the money supply that DOES exist and that’s in circulation, the principle owed does not shrink, but the amount of money that’s in circulation shrinks and the economy necessarily experiences constriction until austerity measures are necessary just to afford to pay the interest payments on the national debt. And once again, every “dollar” that’s paid towards the interest on the loan is taken out of the economy making it impossible to pay the principle back because the money no longer exists.

    In such a system, it is an absolute mathematical certainty that, eventually, any country that’s economically dependent upon such a system will inevitably go bankrupt, and when they do, the private, central banks that instituted this criminally corrupt, usurious SCAM of a system will collect their debt in REAL WORLD PROPERTY AND RESOURCES.. At which point, the international bankers will come in and offer a “solution” to the problem that they intentionally created that will amount to a rebooting of the SAME system, however, in the “new system” the banks will be supranational and therefor COMPLETELY outside of the jurisdiction and control of the nations that are dependent upon them for money.

    • Pseudo Nym

      That’s the shrill song of the shill bird. Do you enjoy the role of the screaming Cassandra? Shilling for the bankers? You WANT to see American assets in banker pockets?

      There is a way out. The us Congress can phase in the power to make money back to the Treasuy. Money created by the US treasury doesn’t have interest. As Treasury dollars are phased in, Federal Reserve notes are phased out. Properly managed, the difference in interest owed can paid back from economic gains driven by interest free loans.

      The Fed won’t like it and the US Congress is not trustworthy enough, but it can work.

      And we don’t need to screaming Cassandras around here..

  • asdrubalico

    hahahahahahah… meteorites always fall in New York, never in Spain