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Bad loans held by Spanish banks hit an 18-year high in April, data from the Bank of Spain shows,...
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Monday, June 18, 2012, 6:29 AM ETBad loans held by Spanish banks hit an 18-year high in April, data from the Bank of Spain shows, with 8.72% of loans over three months in arrears. The total number of nonperforming loans is 10 times the level of 2007, the peak of the property boom. The data explains why 10-year yields are surging.
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This news story has 8 comments:
The implosion consumes all equity and turns debt into bad debt which consumes the equity of the lender....After the borrower goes bankrupt, the lender follows.
Once the lender goes bankrupt Big Govt. assumes the bad debt and then it too either goes bankrupt or via massive inflation destroys the wealth and purchasing power of the frugal and prudent and bankrupts the middle class.
The banks are carrying amounts way over the USbank portfolios had % wise..I don't think they can actually value there holding for a long while ! Years !. Spain needs at least a trillion,but, like Mervin King said yesterday and I've been saying for years on SA... Can't make insolvent banks solvent. Maybe you can keep poring liquidity there,but, solvency needs a TARP....... A trillion easy and then hope banks can get free money an buy soveriegns and follow Ben's plan. Then add oodles of hope !
Talk about throwing good money after bad, rubbing salt into the wounds. Sounds like the banks just need a "Holiday" take their losses and bull doze all the homes sitting vacant and then hit the reset button. As it stands right now Spain is drowning in debt and the to throw a life preserver of more debt doesn't seem like the right answer but its the solution it wants. A natural response considering with a condition that if you give the funds needed now it will enact all the required reforms "TOMORROW" but tomorrow never comes
Actually that is untrue. Spain has enacted all the austerity reforms. That's what drove unemployment through the roof -- Rajoy's conservative gov't enacting all those austerity measures. Where Spain needs additional reform is in its banking sector which is underregulated and has therefore become exceedingly corrupt. But that would be financial reform, not austerity.
I dont recall discussing austerity, only the building and banking sector and so I do not disagree with calling for banking reforms which was why I pointed out they are "throwing good money after bad" offering 100% financing to a sector already 10x worse then in 07 as it relates to bad loans. Spains banking sector decline was primarily a result of over lending as was and is the case just about everywhere else.