Anyone with a clue is dumping Spanish bonds, and
the investment community
in Germany, France, and Italy is
doing just that, as Spanish banks foolishly lever up on risk.
Via Google Translate, please consider
Bank of Spain confirmed that foreign capital flees Spanish bonds
The weight of foreign capital in the total of Spanish
government debt has declined considerably in the
first three months of the
year, rising from 50.48% at end-2011 to 37.54%
last March. At the same
time, the Spanish bank increases its exposure to domestic bonds to
record highs of more than
170 billion euros.
62 Billion Euro Leakage in Last 3 Months
In the last three months
the international portfolio in bonds and letters of
the State has suffered a leak
of nearly 62 billion euros from
281.439 billion euros down to 219.601 billion euros at
Spanish banks increased their exposure to a record of 170.611 million euros, 29.16% of
the total compared to 16.93% representing
the end of December.
Specifically, the weight
of the debt portfolio of the state of Spanish banks has six consecutive months of gains, especially since last November with the purchase of more than 100,000
This has been fueled largely
soothing the open bar of liquidity
held by the European
Central Bank (ECB), which granted
a trillion euros of credit
to a 1% interest that has
helped Spanish banks invest in bonds.
Notice that absurd reference to "help" in the last paragraph above. There was "help" alright,
help by ECB president Mario Draghi
to allow German, French,
and Italian banks to dump
Spanish debt hand over fist to fools in Spain.
If one thought bureaucrats
could think, one might think this
was Super Mario's plan from the beginning.
Who should pay for the idiocy of loading up on Spanish debt once it implodes? The answer of course is the banks and the bondholders. But No!
Harvard Economics professor
Martin Feldstein has hatched a certified
crackpot plan to force risk
onto taxpayers. For details,
please see Ludicrous Proposal by Harvard Economics Professor to Force Taxpayers to
Buy Spanish Bonds; Mish's Five-Point Alternative Proposal