Spain’s Social Security Fund Runs Out of Money; Full Sovereign Bailout Hits €300 Billion; Breathtaking Implosion in Every Way; Five Things Spain Needs to Do

Courtesy of Mish.

The Spanish implosion in breathtaking in every way: Human Flight, Capital Flight, Real Estate, Employment, and Taxes. The cost of a full bailout is now €300 billion, up from a preposterously low €30 billion projection in June.

€300 billion should not be shocking given my statements on June 9th in Bailout Lite? There’s Really No Such Thing; €30 Billion Needed? It’s Now €100 Billion; Contagion of Economic Idiocy.

A few days ago Spain was purportedly going to need another €30 billion to €70 billion to recapitalize Spanish banks. I suggested the amount would be at least triple that…triple the upper end of the reported amount. Bear in mind I am just guessing. However, history shows that I am more likely to be on the low end than the high end.

As with Greece, every economic number from Spain is revised to the downside, month in and month out. For now, the EU economic wizards will likely concoct a number just under that alleged “upper limit”. My best guess is €90 billion. Then within six months, possibly as soon as the money is handed over, more problems will surface, more meetings will take place, and still more money will be stolen from Spanish taxpayers and handed over to the banks and bondholders.

Mish the Optimist

“Within six months” I said. It took three months, proving once again that I tend to be optimistic on such problems.

By the way, with revised sovereign bailout estimates already hitting my €300 billion target, it is best to start thinking in terms of half-a-trillion or more.

Breathtaking Implosion in Every Way

I get links from Bran who lives in Spain nearly every day. I do not have time to translate them all. Here are some links from the past few days with brief comments from Bran.

• Social Security Fund Runs Out of Money: Social Security pulls from its reserve fund for the first time, using it up almost entirely. Article states there is nothing to stop the government from selling the main SS fund investment to meet payments. Article also notes the fund is invested heavily in Spanish sovereign debt, to the tune of €67.948 billion.
• Cost of Unemployment Benefits Soar: Unemployment benefit cost predictions blow out. The government prediction was -5%. Reality was +5.4%
• Price

2012-09-05 18:05:05

Source: http://www.philstockworld.com/2012/09/05/spains-social-security-fund-runs-out-of-money-full-sovereign-bailout-hits-300-billion-breathtaking-implosion-in-every-way-five-things-spain-needs-to-do/