Spain - Significance of Apparent Lack of Knowledge?
Why Read: Because no one else seems to be picking up on how quickly information coming out of Spain is changing - and what that may imply for:
- Spain's near-term and longer term economic future;
- the Eurozone; and,
- Pursuant to contagion, the rest of us.
Featured Article: An article published late yesterday afternoon discusses a 'new report' (presumably released yesterday) that Spain may need to inject a further 30 billion euros into its banking system - over and above the 19 billion euros announced last Friday. These further funds are said to be required as to:
- 10 billion euros for bank 'balance sheet clean-up'; and,
- 20 billion euros to increase bank capital levels.
Concurrently, Spain's equity markets fell yesterday, Bankia SA shares fell yesterday, and Spain announced April retail sales were almost 10% less than they had been in April, 2011.
Commentary: This new 'Spanish bank shortfall' news continues to raise a rather dismal specter which no media 'talking heads', reporters, or commentators seem to picking up on in 'the heat of the moment'. Simply put, it seems as if the Spanish Government, regulators, economists, etc. have little idea of what Spain faces in euro quantum terms relative to the Spanish bank capitalizations and working capital requirements - and who knows what else. Consider:
- It has been less than two weeks since the Bankia SA underfunding situation came forefront to the news. Initially said to be a 15 billion euro problem, it rapidly became a 19 billion euro problem - and possibly counting, the way things are going; and,
- it is as if yesterday's further possible negative Spanish bank funding requirement is a new idea; and,
- These announcements come at a time where Spain's retail sales numbers are, not surprisingly given the unemployment levels in Spain, seeing a large latest month drop.
The important question in all of this is: does anyone in Spain have a 'good handle' on what really is going on - and even more importantly what levels of funding, bank and otherwise, will be required in Spain as things continue to become known?
Too much seems to be happening too fast in Spain, as new Spanish financing requirements are announced almost daily. Watch to see if this announcement trend continues. While you do that, remember:
Spain is the 12th largest world economy, the 5th largest European economy, and the 4th largest Eurozone economy;
Spain is too big to fail; and,
negative things seem to be happening too fast - and the main and secondary medias are not picking up on that momentum speed change and what might prove to be:
very negative implications for Spain, and
By inference through contagion, the world economy and financial markets.
Is The Report That Caused Spanish Markets To Collapse Today
Source: Business Insider, Joe Weisenthal, May 28, 2012
Reading time: 2 minutes