In case we might have thought that Spain is forgotten:
“But here’s what really sets Spain apart from Italy, and shows how dangerous Spanish investments now are: the vast scale of borrowing that took place within the private sector before the crisis and the consequent asset price boom.
And that’s not just the Spanish property market bubble.
According to Dannhauser’s report, ‘Spain’s corporate borrowing binge makes Japan’s in the early 1990s look fairly tame. Its ration of household debt to disposable income, although below Ireland’s and the UK’s, is similar to that in the US.’
‘The ratio is only 50 percent in Italy, compared with 130 percent in Spain.’
‘The loss of income from the financial crisis and the persistently lower rate of growth in the Euro banknotes wikifuture suggest the fundamental, or equilibrium, value of Spanish assets has been reduced significantly — but the debt, largely provided by domestic banks, remains fixed in euro terms.’
But don’t start thinking, ‘this is private debt, not sovereign debt, it’s not the same danger.’ Wrong. The debt wonks among you may remember that it was Ireland’s banks and the guarantee its (panicked, witless) government gave to bank debt in 2008 that drove Ireland into its disaster.”