Spain nationalizing banks, but can’t: Meltdown coming
The extremely informative Global Economic Trend Analysis blog, authored by Mike Shedlock, reported this morning that Spain’s banking sector is imploding:
On Wednesday, Spain nationalized bfa, the eighth nationalization since the start of the crisis.
After sinking 3 billion into CatalunyaCaixa, Spain tried to privatize the mess but there were no offers at zero euros. Clearly CatalunyaCaixa bank is worth less than zero. Meanwhile, Der Spiegel reports, “Bundesbank has no idea of what is happening in Spanish banks.” Mish readers do. The Spanish banking system is without a doubt bankrupt.
According to Shedlock, the eurozone is on the verge of breakup.
Spain, like Greece before it, is indeed a bottomless pit.
This is not a problem any amount of austerity or reforms can fix. Is Spain going to come up with €200 billion to support a trillion in bad loans? Here is the answer: Not now, not ever, never. The sooner Europe faces that simple fact the better. Instead, ecb president “Super” Mario Draghi spawned off the ltro (long-term refinance operation) that was supposed to have solved everything. That ltro actually made matters worse. Spanish banks levered up on their own debt, and now yields are back above 6 percent and the banks are underwater on those bond purchases.
Europe appears to be destined for a massive revamp. Germany must make some radical decisions soon if it is to save the eurozone. Alternatively, if the eurozone breaks up, watch for a core Europe to attach itself to the economic stability of Germany. A crisis is coming, and opportunities to revamp Europe will abound. See: “This Is Germany’s Moment!”
