Spanish Banks Account for 47% of ECB Credit in February; Spain’s Real Debt to GDP Ratio is 110% Not Reported 68%

Spain's weight in the eurozone economy is roughly 14%. Yet Spanish Banks Account for Nearly Half of ECB Credit in February. Vial Google translate …

Spanish banks in February captured almost half of the credit granted by the European Central Bank (ECB), before the drought through the wholesale market funding. As reported on Wednesday the Bank of Spain, the use of the entities to the extraordinary liquidity window of the body that presides Mario Draghi reached half the 152,400 million euros, equivalent to 47% of total outstanding debt to return to ECB for all banks in the Eurosystem.

Both the percentage and the total volume of borrowed money account for two-time highs, exceeding by far the weight of Spain in the European sector, 14%. 

Furthermore, for the future, the figure will rise, as these data do not reflect the impact of the second extraordinary auction to three years of the ECB, on February 29 which dealt with 529,000 billion from 800 banks. 

Public debt has grown by 21% on bank balance sheets in December 2011 compared to 2010, "which shows that liquidity in the ECB does not reach the economy."

Juan Luis Garcia Alejo, Inversis Management director, said "There is no doubt that institutions take advantage of LTRO money to earn net interest income by investing in debt."

Spain's Real Debt to GDP Ratio is 110% Not Reported 68%

While noting that Spanish banks are betting heavily on the success of the LTRO, please note strong evidence that Spain's debt-to-GDP ratio is wildly understated because it does not include regional debt, nor does it include government guaranteed bank debt and other miscellaneous items. 

Please consider these snips from The Fool's Game: Unraveling Europe's Epic Ponzi Pyramid of Lies by Zero Hedge.

If we just take the newest figures for Spain, which were released this morning, we find an admitted sovereign debt of $732Bn and a touted debt to GDP ratio of 68.5% which is up 10.7% from last year.

In a report issued on 2/29/12 and apparently ignored by everyone including the ratings agencies, Eurostat reports that Spain has total sovereign guarantees of “other debt” which is 7.5% of their total GDP which would total around another $72.2 billion in uncounted debt. Then if we consider [all] the “known” debt we find:

• Admitted Sovereign Debt …………….. $732 Billion
• Admitted Regional Debt ………………. $183 Billion
• Admitted Bank Guaranteed Debt ….. $103 Billion
• Admitted Other Guaranteed Debt …. $72 Billion
• Total Admitted Debt ……………………. $1.09 Trillion
• A More Accurate Debt to GDP Ratio ……. 113.2%

In the same Eurostat report, by the way, of 2/29/12 we also find that Belgium’s sovereign guarantee of “other debt” is 21.3% of their GDP, for Italy it is 3.6% of their GDP and for Portugal the number is 7.7% of their GDP. This does not include any guarantees of bank debt which would also have to be added in to the totals to reflect some sort of accurate fiscal picture. Consequently, as investors, we are not in some murky place but smack dab in a carefully engineered plan of outright Fraud where we are given manipulated and inaccurate numbers in the hopes that we will fund based upon them.

Spain Will Implode

Not only are published GDP figures a lie, so are published debt figures. The result is a complete farce in debt-to-GDP accounting.

Meanwhile Spanish banks continue to plow into leveraged debt on their own bonds, with Spanish unemployment over 23%, with youth unemployment of 49%, with widening regional debt problems, with massive unrecognized housing sector losses, and with more austerity measures coming that will exacerbate all of the previously mentioned problems!

This Ponzi scheme cannot last, which means it won't. Spain will implode. Indeed, it's a wonder it hasn't already.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com