The Pain In Spain Is Mainly, Well, Everywhere!

Central bankers respond to every debt crisis as if they were all created equal. As such, they are willing to pile debt and promises upon debt and promises. In cyclical recessions the strategy eventually "works" using the term loosely. In reality, such kick-the-can strategies will eventually blow sky high, which is precisely where we are today, with Bernanke is scratching his ass, wondering why his policies are not working.

Those that regularly follow me know that although I'm quite the mediocre short term trader, I have uncommon strengths that lie in the realm of medium to long term strategy and macro-fundamental valuation.

Peter Tchir submits:It seems like the market is enjoying the "success" of the Italian bond auctions.

Just over two years ago I warned that Spain posed a significant threat to the EU area economies. This was a very popular stance, and since I'm more of a medium to long term strategist and Spain didn't experience any immediate pain, my stance was considered even more morose. Well, luckily, I supplied ample research to paying subscribers who were well prepared for what is now evidently coming down the pike.

Authored by Mint's Bill Blain, European GDP and Spain – where it’s going?

The recovery for most of the euro zone will certainly begin in the second half of 2013 PARIS — The eurozone’s crisis is far from over and its members must consolidate their budgets and forge a banking union to put the bloc on a more stable economic footing, the leaders of the IMF and European Central Bank said on Friday.

Roughly two years ago, I penned a piece called How Greece Killed Its Own Banks! It outlined the end result of Greece attempting to hide sparse demand for its debt by forcing its banks to binge on it using excessive leverage. Of course, once you eat too much garbage, you start to stink, and eventually... Well, let's look at it from a visual perspective:

Explaining the recent selloff in Spanish bonds is easy: The bond market has finally come to grips with the idea there is no solution for Spain's massive structural problems. Here is a trio of articles to show what I mean. Spanish Banks Stuck ‘Unsellable’ Real Estate, 50% of Real Estate Loans are Troubled Bloomberg reports Spanish Banks Have $41B of ‘Unsellable’ Real Estate