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I got some smirk
comments to my tweet the other day about being short the Euro.
I don’t mind the comments. I’m used to them by now. It does feel good to be on the right side of something though, notwithstanding the fear associated with being short something that is currently being held record short by
traders. There is a reason
for such an interest in being short the
Euro however and it’s
simple. There is simply a deteriorating situation in
Europe that we must all be cognizant of because it will
change the financial and economic
landscape for years to
come.
There is a debt crisis
in Spain. To that, there can be no argument. Ex-premier Felipe
Gonzalez, the country’s elder
statesman even warned “We’re
in a situation of total emergency, the worst crisis we have ever lived through”
which underscores the severity of the problems facing Spaniards.
Even European
Central Bank Chief Mario Draghi
has warned that Europe isn’t moving fast enough to clarify their vision for the
Euro.
Spaniards are moving
money out of their nation's
banks faster than at any
point since records began
and Fitch Ratings has downgraded
eight regions.
It’s bad
enough that Spanish banks are running out
of cash and are finding it
hard to recapitalize (recently
Bankia had to be taken over by the government) but even the locals don’t trust their own banks
with bank runs occurring all over Spain
as its citizens look to get their money out before they can’t.
There has been a sharp decline in tax revenues which is starting to resemble the situation in Greece
when that country started to really feel the impact from the credit markets. It’s simple. If people feel
that a collapse is inevitable and if they don’t trust how their money is going to be used
by the government, they
are going to try to keep most of it to themselves. This is why they
aren’t paying the taxman and why they chose take their money out of Spanish financial institutions.
Bank of
Spain data shows that a net of €66.2bn was sent abroad last month, the most since
records began in 1990. The figure compares to a
€5.4bn net entry of funds during
the same month a year ago
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