If you're looking for a macro idea to short when this bear market bounce fizzles out - try Spain.
Spain, in short, is screwed.
If you think the housing market is bad in America, take a look at Spain. Its housing market is facing a crisis that is much worse than exists in the U.S.
David Owen, Europe of Dresdner Kleinwort, said Spain could face serious difficulties this year as the excesses of a decade-long boom finally catch up with the country.
"The size of the Spanish corporate sectors financial deficit is truly is really scary. It rose to 14.5pc of GDP in the third quarter of 2007 from 10pc in the first quarter. This must be a record for a relatively large economy. Clearly this is not sustainable. Cost imbalances have a nasty habit of unwinding, quickly and very painfully," he said.
Mr Owen said Spain was acutely vulnerable since it cannot cut interest rates or let the currency slide to cushion the downturn. "Several years of no growth could now beckon. It will be very difficult for the economy to pick itself up again inside EMU," he said.
Spanish corporate debt is now 112pc of GDP. The current account deficit is 10pc of GDP. These are both flashing red warning signs.
Spanish direct expenditures in residential construction (which includes only the activity directly associated with residential construction and excludes ancillary businesses such as mortgages and other tertiary effects) is 18% of the economy compared to 6% in America.
We discussed the Spanish housing market in a post a few months ago. When an adviser to the Prime Minister of Spain says that a drop in housing prices is unthinkable, its only a matter of time.