The Spanish real estate bubble was much more pronounced than here and hasn’t fully deflated yet. Their banks make ours look like models of stability. Currently the ECB is loaning money to these banks which the banks in turn use to buy government bonds. This doesn’t help real estate values, the solvency of the banks, or the public at large. It only staves off trouble for a bit and sends more money to the banksters.
But the clock is running out on their desperate and cynical ploy.
“Weaker lenders are merely parking the ECB’s ultra-cheap funds in [Spanish government] bonds until they need the money to roll over their own debts,” writes Ambrose Evans-Pritchard in his latest Telegraph column. “That [moment is fast approaching] since European banks have â‚¬600 billion in redemptions over the rest of the year.”
Considering the turmoil we’ll surely see in the Spanish economy, â‚¬600 billion in maturing debt is going to be a huge challenge for the banks.
The bottom line is that the speech is getting praised and passed around and going viral in a way that most speeches about the Eurozone don’t.
What’s special about the speech is his characterization of the Euro as being itself being a “bubble.”