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. 


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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