Spain- Next Eurozone Domino
The Trader has written extensively on the Spanish collapsing economy over the past year. With investors having shifted focus from the relatively small Greek problems, Spain is the new burning point, but we still feel few understand what is really about to happen in Spain and the domino that is about to hit the rest of Europe. Spain is the 12th largest Economy of the World. Unemployment is huge, growth is negative, the property market is rotten and the banking system is to put it mildly, “unhealthy”. The banking sector is holding black holes in the balance sheets, but few seem to be willing to understand this fact. Let’s see how long before something “big” happens in Spain.
Meanwhile here are some must see charts to enjoy by Scott Barber of Reuters;
As is the case with so many other eurozone countries, Spanish financial institutions are battling an epidemic of bad loans. With the highest rate of unemployment among eurozone nations, active lending by Spanish banks is coming back to haunt them. As this chart shows, the Bank of Spain’s estimate of bad loans as a percentage of total lending now stands at its highest level in 18 years, before the introduction of the Euro.
Spain’s problems are feeding off each other. At one point, the boom in the real estate and construction market meant that a vast majority of the country’s labor force had jobs that were tied to the construction industry. As the rate at which new building permits were sought and obtained fell off a cliff a few years ago, those jobs vanished
All must see charts click here.