Two topics today: The first is Spain and the second is record high oil prices.
On Spain, I think what we are witnessing is a debt deflation death spiral that will see Spain in Greece's corner soon. Spanish spreads are at a record high and still rising despite the existing bank bailout package. The ECB is not riding to the rescue here. So there are no catalysts which will put the Spain default genie back into a box. That means spreads will continue to widen until Spain collapses in a heap and gets rescued or defaults. Angela Merkel's u-turn on the Spanish bank bailout is the direct cause of this crisis. As I wrote last Wednesday, Rajoy’s humiliating defeat to Merkel narrows options to sovereign bailout, monetisation or default for Spain. A sovereign bailout w...
As this site is now reader-supported via Patreon, the remainder of this article is only available to subscribers at a specific patronage level. Articles at patronage levels BRONZE, SILVER, and GOLD are denoted by the categories in blue capital letters above the post. Posts categorized DAILY are available to both SILVER and GOLD patrons.
Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.