Tuesday, July 24, 2012

Spain Close to Collapse

Ever been in an argument you know you should have backed out on minutes ago because you knew you were losing. The hole you dug got bigger the more you said.

Well, let's pretend this is how Spain feels.

Prime Minister Rajoy came to power a mere few months ago amidst high expectations. Here he is now wondering if he should have taken that job as a caddy in Madrid. Spain is on the brink of total disaster. The more the EU and Spain try to dig their way out of this morrass, the more the situation gets worse.

Last Friday, the IBEX in Spain, plummeted nerely 6% and the euro went out in sympathy. Now down to 1.21 to the US dollar. There have been many attempted confidence boosters for Spain. The €100bn bail-out fund has not calmed the markets. In fact, the opposite. Bond holders saw the writing on the wall; with this deal, they would become subservient in rank to the new government bondholders. As private creditors, they baulked and sent Spanish bond interest rates up well above the 7% critical line.

So nobody is wanting to buy Spanish bonds. With no money from the private sector forthcoming, Spain is now dependant on the EU powers. Funds like the EFSF and the ESM and whatever new acronym can be dreamed up to redefine 'money printing'. Some say as much as €500bn will be needed for a full sovereign bail-out. But remember, that only keeps the debt-ponzi scheme going for another wee while until others feel the pinch.

And those 'others' are likely to be Italy and then France. Both are huge clouds on the horizon. Already, there are 10 cities in Italy at risk of bankruptcy.

Are you protected?

Remember the Anglo Far-East experts Duncan Cameron and Alex Stanczyk are here in Auckland on August 20 to talk about this and more. This event is FREE.

Event Information:

Monday, 20 August 2012 AUCKLAND : REGISTER FOR EVENT
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22-26 Albert Street
Auckland, 1001
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Telephone:  +64-9 309 8888
Toll free NZ:  0508 658 888
Facsimile: +64-9 379 6445
Email: reservations@spak.stamford.com.au

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Silver in New Zealand dollars: $34.35 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
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