I was doing TV the other night and when I mentioned Spain as being something to watch for this summer, the host shut me down, saying “I’m bored with Spain.”
You don’t have to be interested in Spain, because Spain is now interested in you, Papi. It’s fixing to send a wave of disturbing headlines your way this summer whether you’re bored or not.
How about this one from this morning as a Tapas appetizer…
Spain’s sickly economy faces a “crisis of huge proportions”, a minister said on Friday, as unemployment hit its highest level in two decades and Standard and Poor’s weighed in with a two-notch downgrade of the government’s debt.
Spain’s unemployment rate shot up to 24 percent in the first quarter, the highest level since the early 1990s and one of the worst jobless figures in the world. Retail sales slumped for the twenty-first consecutive month.
“The figures are terrible for everyone and terrible for the government … Spain is in a crisis of huge proportions,” Foreign Minister Jose Manuel Garcia-Margallo said in a radio interview.
Here’s the playbook in case you weren’t paying attention:
1. First something crazy happens there – riots, protests, government shutdowns, whatever. 52% of Spanish youth are unemployed, the only surprising thing is that they haven’t torn the fucking place apart already.
2. Then Germany and France make a big show about how they’re not bailing it out or in or whatever.
3. Then the other ratings agencies downgrade it past the point of usefulness as Spanish sovereign CDS blows out, bond yields climb and European equities are waterboarded. US stocks start to struggle with a rising dollar, Treasurys knock on the door, “Uh, hi, I’m here for the gangbang?”
4. Everyone freaks out and then the IMF starts running their mouths and we play the headline-driven Rick-On, Risk-Off game again for a few weeks.
4a. God, I’m going to make so many sarcastic, quasi-offensive jokes about Spain during this stretch of time. Food references, place name puns, etc. I’m already exhausted just thinking about it…
5. Bailout. US equities go wild to the upside again as people come back to their senses and realize that things ain’t so bad here and stocks are the only game in town in the end. We end up going nowhere but we take the long road to get there.
Is this going to happen for sure? I don’t know, but I’m mentally preparing for it.
Oh and wait til you see these charts: