As We Have Warned, the Fissures Are Widening in the Spanish Banking System
As of 6:40 am, US futures are down 15 points, with the MSM blaming the nationalization of the Spanish bank CajaSur.
The Bank of Spain seized troubled CajaSur with 500 million euro ($624 million) in funding to keep it solvent. The move pushed the Euro lower and left investors concerned about the country's fiscal health.
The nationalization comes at a time of rising concerns over Spanish credit-worthiness, despite the European Union's decision earlier this month to put together a safety net for distressed European economies.
On Sunday, Spanish Prime Minister Jose Luis Rodriquez Zapatero told a group of socialist mayors, "No one can doubt at any time that Spain is a strong country and an economic power that will meet its obligations and pay debts." CajaSur's failure is the second in Spain since the start of the global financial crisis.
The bank -- based in the southern city of Cordoba -- has 13 billion euros ($16.35 billion) in loans and holds 0.6 percent of the total assets in the Spanish financial system.
I have made our position on Spain clear through a complete forensic review of the state's finances for subscribers:
Spain
public finances projections_033010. An excerpt from this subscription
document (subscribers, reference page 2) shows the euphoric, yet
highly unrealistic optimism upon which Spain has built its fiscal austerity
projections.
As suggested in the document, if one refers to the blog post Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!, you will find that not only has Spain apparently fabricated a fairy tale of potential prosperity based upon the projections of the IMF and EC, but the IMF and EC have been nothing but fairy tale projections themselves.
I have been bearish on the Spanish banking system since January of 2009 (reference Reggie Middleton on the New Global Macro - the Forensic Analysis of a Spanish Bank ), and after a trip to the Costa del Sol by way of Málaga during the boom times are shortly thereafter, the reasons should be most obvious.
We now have a rash of new Spanish bank and sovereign research which has returned between 300% and 400% over the last few months.
Needless to say, as the situation in the EU deteriorates upon the widespread dissemination of the knowledge that BoomBustBloggers have been trading off of for quarters now, I feel the options will spike in value significantly!
I invite those who don't subscribe to BoomBustBlog to please be sure to peruse our entire collection of free analysis on the Pan-European Sovereign Debt Crisis.
Subscribers should review the ample Spanish research we have amassed on the crisis, its origins and opportunities avaiable:
- Sovereign
Debt Exposure of European Insurers and Reinsurers
- Euro
Bank Soveregn Debt Exposure Final - Pro & Institutional
- Euro
Bank Soveregn Debt Exposure Final -Retail
- Sovereign
Contagion Model - Pro & Institutional (1003.48 kB 2010-05-04 12:30:48) -
this is an original tour-de-force, a proprietary model incorporating social
unrest/socio-economic stratification, cross border economic contagion,
financial contagion transmitted through the banking system, and foreign
claims of the myriad players in question in order to ascertain who is at
most risk and what order said players may fall, if they will at all.
- Sovereign
Contagion Model - Retail (961.43 kB 2010-05-04 12:32:46)
- A
Review of the Spanish Banks from a Sovereign Risk Perspective - professional
(450.33 kB 2010-04-27 11:30:43)
- A
Review of the Spanish Banks from a Sovereign Risk Perspective - retail.pdf
(283.24 kB 2010-04-27 11:32:48)
- Banco
Bilbao Vizcaya Argentaria SA (BBVA) Addendum - Pro (569.55 kB 2010-01-27
16:52:36)
- Banco
Bilbao Vizcaya Argentaria SA (BBVA) Professional Forensic Analysis (439.8
kB 2010-01-27 16:52:17)
- Euro
Bank Soveregn Debt Exposure Final - Pro & Institutional (934.65 kB
2010-05-13 00:11:32)
- Euro
Bank Soveregn Debt Exposure Final -Retail (641.14 kB 2010-05-13 00:10:33)
- Spanish
Banking Macro Discussion Note (519.4 kB 2010-02-09 02:48:06)
Please be sure to peruse our entire collection of free analysis on the Pan-European Sovereign Debt Crisis.
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Author: Reggie Middleton
Reggie
Middleton
Reggie Middleton, LLC
Perpetual Interests, LLCTM
http://boombustblog.com/
Who am I?
Well, I fancy myself the personification of the free thinking maverick, the ultimate non-conformist as it applies to investment and analysis. I am definitively outside the box - not your typical or stereotypical Wall Street investor. I work out of my home, not a Manhattan office. I build my own technology and perform my own research - in lieu of buying it or following the crowd. I create and follow my own macro strategies and am by definition, a contrarian to the nth degree.
Since I use my research as a tool for my own investing to actually put food on my table, I can stand behind it as doing what it is supposed too - educate, illustrate and elucidate. I do not sell advice, I am not a reporter hence do not sell stories, and I do not sell research. I am an entrepreneur who exists just outside of mainstream corporate America and Wall Street. This allows me freedom to do things that many can not. For instance, I pride myself on developing some of the highest quality research available, regardless of price. No conflicts of interest, no corporate politics, no special favors. Just the hard truth as I have found it - and believe me, my team and I do find it! I welcome any and all to peruse my blog, use my custom hacked collaborative social tools, read the articles, download the files, and make a critical comparison of the opinion referencing the situation at hand and the time stamp on the blog post to the reality both at the time of the post and the present. Hopefully, you will be as impressed with the Boom Bust as I am and our constituency.
I pay for significant information and data, and am well aware of the value of quality research. I find most currently available research lacking, in both quality and quantity. The reason why I had to create my own research staff was due to my dissatisfaction with what was currently available - to both individuals and institutions.
So here I am, creating my own research for my own investment activity. What really sets my actions apart is that I offer much of what I produce to the public without charge - free to distribute and redistribute, as long as it is left unaltered and full attribution is given to the author and owner. Why would I do such a thing when others easily charge 5 and 6 digits annually for what some may consider a lesser product? It is akin to open source analysis! My ideas and implementations are actually improved and fine tuned when bounced off of the collective intellect of the many, in lieu of that of the few - no matter how smart those few may believe themselves to be.
Very recently, I have started charging for the forensics portion of my work, which has freed up the resources to develop the site to deliver even more research for free, particularly on the global macro and opinion front. This move has allowed me to serve an more diverse constituency, which now includes the institutional consumer (ie., investment turned consumer banks, hedge funds, pensions, etc,) as well as the newbie individual investor who is just getting started - basically the two polar opposites of the investing spectrum. I am proud to announce major banks as paying clients, and brand new investors who take my book recommendations and opinions on true wealth and success to heart.
So, this is how I use my background and knowledge in new media, distributed computing, risk management, insurance, financial engineering, real estate, corporate valuation and financial analysis to pursue, analyze and capitalize on global macroeconomic opportunities. I have included a more in depth bio at the bottom of the page for those who really, really need to know more about me.
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