April 23rd, 2012
(HigginsBlog) – Economic data and technical data coming out of Spain is telling us point blank that disaster is looming and will trigger the dominos to fall across Europe.
The perfect storm of an economic collapse fueled by an all out housing and mortgage crash, a sovereign debt crisis, and a run on the over-leveraged unregulated Spanish banks is hammering Spain right now.
The IMF and the ECB knows that Spain is too big to bail out which is really bad news considering the economic data and technical indicators show irrefutable evidence that Spain is about to enter a full-scale collapse which will in turn send the dominoes falling across Europe.
Last year we were repeatedly warned that if Greece defaulted the result would be Financial Armageddon and even warned America could lose its financial sovereignty.
The when Greece finally defaulted, the media downplayed the ramifications and claimed the debt contagion wouldn’t spread.
They lied and there is a reason that Spain has banned all cash transactions over 2,500 Euros and the IMF is raising the alarm that the debt crisis will persist throughout all of 2012.
There is a reason that the IMF is warning of a collapse of the Euro and full-blown financial panic.
Plain and simple, whether the media will admit it or not, Spain is next.
Brace yourself because doomsday is rapidly approaching for the entire global economic system.
Via Zero Hedge, Graham Summers reports:
Spain is About to Enter a Full-Scale Collapse.
A few facts about Spain:
• Total Spanish banking loans are equal to 170% of Spanish GDP.
• Troubled loans at Spanish Banks just hit an 18-year high.
• Spanish Banks are drawing a record €316.3 billion from the ECB
(up from €169.2 billion in February).
Things have gotten so bad that Spanish citizens are pulling their money out of Spain en masse: €65 billion left the Spanish banking system in March 2012 alone.
As bad as they are, even these data points don’t do justice to the toxic sewer that is the Spanish banking system.
Case in point, over HALF of all Spanish mortgages are owned by Spanish cajas.
If you’re unfamiliar with the caja banking system, let me give you a little background…
Until recently, the caja banking system was virtually unregulated. Yes, you read that correctly, until about 2010-2011 there were next no regulations for these banks (which account for 50% of all Spanish deposits). They didn’t have to reveal their loan to value ratios, the quality of collateral they took for making loans… or anything for that matter.
So, with Spain today, we have a totally unregulated banking system sitting atop HALF of ALL Spanish mortgages after a housing bubble that makes the one that happened in the US look like a small bump.
Spain’s housing bubble is the dark blue line below. The US is the gray one.
Oh, I forgot to mention, the cajas primary lending market during Spain’s housing boom were subprime and sub-sub prime borrowers.
Put another way, today the entire Spanish banking system is saturated with toxic mortgage debt on a level that makes the US in 2008 LOOK GREAT.
If you don’t want to take my word for it, have a look at the Spanish stock market. It’s been in a free fall for over a month as Spain’s banking system teeters on the brink of collapse (remember they’re drawing over €300 BILLION in emergency loans from the ECB.
If you think that chart looks bad, take a look at Spain’s LONG-TERM chart where the market has just broken a 15-YEAR TRENDLINE signaling that the bully market is OVER and setting the stage for a horrific Crash.
This is hands down the ugliest chart out there today. Spain is telling us point blank that disaster is looming.
With that in mind, I believe we have at most a month before Spain drags down the entire EU. The Spanish economy and banking system are too large to be bailed out. The IMF and ECB know this.
Moreover, worldwide banking exposure to Spain is well over €1 TRILLION. What impact do you think that might have on the EU which has an entire banking system that is leveraged at 26 to 1 (Lehman Brothers was leveraged at 30 to 1 when it collapsed)?
Heck even Ben Bernanke and others have issued warnings that Europe could drag down the US banking system if it crumbles.
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.
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Source: Alexander Higgins
April 21, 2012