2012-06-02 — prudentbear.com
If things went from "bad to worse" two weeks ago, they took a major "turn for the worse" this past week... Alarmingly, fears of a disorderly Greek exit have seemingly been overtaken by a rapidly deteriorating situation in Spain. At about $1.5 TN, Spain's economy is generally ranked the 12th largest globally. The country's GDP is about double the size of Greece, Ireland and Portugal combined. It is a "core" European economy -- and the harsh reality is that this cancerous debt crisis at Europe's periphery has now afflicted the system's weakened core.Â
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It's now abundantly clear that Spain is facing much worse than liquidity issues; questions of solvency abound -- the banks, the regional governments, and a sovereign trying desperately to hold things together. So the ECB will resist monetizing additional Spanish borrowings.
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