Frequent readers of The Trader know we have been “warning” of the Spanish situation fo rover a year. With the economy still staring into the abyss, other media have now discovered the Spanish mess. The Spanish economy will be very hard to turn around, but beware of shorting the rather oversold IBEX market, as now pretty much everybody is joining the Spanish bear camp. From the Independent.
Spain’s national football team’s players have been told that they are not to use Twitter for the next few weeks. The assumption is that this is about Euro 2012. But it could be another desperate attempt by the Spanish authorities to avoid inflaming the financial markets. Alvaro Arbeloa on austerity might prove too provocative.
Spain is in its worst financial crisis for a century. The gallows-humour gagsters who brought you Grexit or Grout as terms for a possible disorderly exit by Greece from the euro have two more bits of japery on offer. “Spanic” is meant to encompass the markets’ alarm over Spain’s twin financial and economic crises. More portentously, “Squit” vulgarly raises the prospect of Spain quitting the euro too.
We have to admit, all the Greek news are exhausting us. While reading all the flashes, sometimes one tends to forget what is actually at stake. That brings us to CDS issue. The 32 trillion Credit Default Swaps market is a beast. From Common Dreams;
In an article titled “Still No End to ‘Too Big to Fail,’” William Greider wrote in The Nation on February 15th:
Financial market cynics have assumed all along that Dodd-Frank did not end “too big to fail” but instead created a charmed circle of protected banks labeled “systemically important” that will not be allowed to fail, no matter how badly they behave.