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Here Goes The Municipalities...

|Includes: EUO, iShares MSCI Spain Capped ETF (EWP), FXE

First the banking sector, now local and regional governments. Many Spanish municipalities have long been struggling financially, but they recently seem to have hit a breaking point. According to Zero Hedge and Cinco Dias, the government of Catalonia, a major region of Spain, has emphatically asked for a 5 billion euro bailout from the Spanish Government Autonomous Liquidity Fund with no strings attached. Spain's 3rd largest city, Valencia, has also requested a similar bailout, except for approximately 3.5B euros, and Murcia, another Spanish region, has followed suit with a 700m euro bailout.

The greatest irony of these municipalities asking for/demanding funds from the national Spanish government (which operates the Spanish Government Autonomous Liquidity Fund) is that the national government itself is likely to be bailed out by the Eurozone.

In other Spanish economic news recent data has come out showing that Spain's GDP for the second quarter decreased 0.4% compared to the previous quarter and decreased 1.3% Y/Y. Although this figure is in line with estimates from the Spanish statistic institute INE, it is a clear signal of a worsening recession for Spain.