Catalonia’s Political Crisis Snowballs into an Economic Crisis

Independence would be “horrific” and amount to “financial suicide,” said Spain’s Economy Minister. But financial suicide for whom?

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

It’s not easy being a Catalan bank these days. In the last few weeks the region’s two biggest lenders, Caixabank and Sabadell, have lost €9 billion of deposits as panicked customers in Catalonia have moved their money elsewhere. Many customers in other parts of Spain have also yanked their savings out of Catalan banks, but less out of fear than out of anger at the banks’ Catalan roots.

Moving their official company address to other parts of Spain last week may have helped ease that resentment, allowing the two banks to recoup some €2 billion of deposits. But the move has angered the roughly 2.5 million pro-independence supporters in Catalonia, many of whom have accounts at one of the two banks. Today they expressed that anger by withdrawing cash en masse.

Many protesters made symbolic withdrawals of €155 — a reference to Article 155 of the Spanish constitution, which Madrid activated today to impose direct rule over the semi-autonomous region. Others opted for €1,714 in a nod to the year 1714, when Barcelona was captured by the troops of King Felipe V, who then proceeded to suppress the rights of rebellious regions.

Some bank customers withdrew a lot more than that. The council of Argentona, a small town outside Barcelona, closed its accounts at Caixabank and Sabadell and transferred all €2.25 million of its funds to a branch of the Dutch lender Triodos. If other institutional or business customers follow Argentona’s example, Caixabank and Sabadell could have a big problem on their hands.

The fallout of political instability in Catalonia is being felt across the whole economy. Real estate investment in the region, both domestic and foreign, is drying up. Starwood European Real Estate Finance, the European subsidiary of the U.S. property giant Starwood Capital, has announced that it’s shifting its focus away not only from Catalonia but Spain as a whole, and toward more stable European markets.

It’s not just investments that have been put on hold. People are not spending much either. Important consumer purchases have been put on hold until some semblance of stability returns, and people are not going out as much as before. Based on my own observations, the bars are emptier and the streets are quieter.

Tourism to Catalonia, Spain’s most visited region last year, slumped by 15% in the two weeks following the referendum on independence, according to industry experts. Catalonia received about 18 million visitors last year, and tourism accounts for around 12% of the region’s GDP, with industry and trade as the other main contributors.

Those sectors are feeling the pinch too, partly due to the dark clouds of uncertainty and dread surrounding the region’s short-term future, but also as a result of a gathering boycott against Catalan products in other parts of Spain.

“There is a widespread rejection of Catalan products and more and more restaurants and supermarkets are changing the brands they offer,” says Bartomeu Servera, the president of a food and beverage trade association in the Balearic Islands. “It is especially noticeable in the drinks sector, but it affects all products that are identified with Catalonia.”

It’s not just Catalan companies that are being hurt. Many Catalan products include components and raw materials from other parts of Spain. A case in point is the Catalan ready-made pizza company, Tarradellas, which has been on the sharp end of the boycott for months. The tomato sauce it uses to top its pizzas is provided by Conesa, a tomato-processing company in Extremadura, an impoverished region on the border of Portugal in the South West of Spain.

Speaking to the Extremaduran newspaper Hoy Conesa’s Managing Director, Manuel Vázquez Calleja, warned that “by refusing to buy Catalan products such as those of food company Tarradellas, we could be shooting ourselves in the foot, as their pizzas are covered with our tomatoes… Probably the tuna they use comes from Galicia and the flour from Andalusia.”

This self-defeating pattern is a constant feature of the economic tug of war between Madrid and Catalonia — a war that began when Madrid seized full control of the accounts of Catalonia’s 298 regional public bodies in the wake of the banned referendum on Oct. 1. Shortly after that the Rajoy government passed a law making it much easier for Spanish companies to move their registered address.

The move helped spark a mass exodus as over a thousand Catalan-based businesses, including six of the seven firms listed on Spain’s benchmark index, the IBEX 35, opted to move their registered address outside Catalonia. The extent to which it was a voluntary move is debatable. Some companies, including Spain’s car manufacturer SEAT, have accused the Spanish government and King Felipe VI of pressuring them to leave the region.

On Thursday Spain’s Economy Minister, Luis de Guindos, raised the stakes even further, warning that the independence of Catalonia could spark a bank run in the region. Independence would be “horrific;” it would amount to “financial suicide,” he said.

But financial suicide for whom?

The web of interdependency between Spain and Catalonia is so tightly woven that if one goes down, the other goes with it. Catalonia accounts for 20% of Spain’s GDP, and roughly a quarter of Spanish exports and the government’s tax revenues. Without it, there’s no way the Spanish State would be able to meet its gargantuan financial obligations — not even with Mario Draghi’s help!

This point, despite being glaringly obvious, rarely gets a mention in the Spanish press. It’s one of the reasons why so many Spanish people seem to think that Catalonia’s economy can be severely weakened without there being serious repercussions for the rest of the country. Some even see it as a zero-sum game: what’s bad for Catalonia’s economy must be good for Spain’s.

Another dangerous myth is the absurd notion that Catalonia’s independence movement can be snuffed out with just the right amount of political repression and cultural cleansing. A region where roughly half of the population wants greater autonomy is about to have what little autonomy it still has snatched away from it.

By activating Article 155 today to revoke Catalan autonomy, Madrid has set itself on a risk-strewn path whose final destination is far from clear. What is clear is that from this point on Madrid will have full control of the main organs of institutional power in Catalonia, including the region’s police force, the Mossos d’Esquadra. The Finance Ministry will maintain complete oversight of every cent that is spent or raised by the regional government, at least until new elections are held. It will also take over Catalonia’s public television and radio broadcasters to ensure they are more “neutral.”

Madrid has announced plans to call regional elections within six months. Hard-line elements within the governing People’s Party have proposed banning all pro-independence parties from taking part, but that may be a step too far even for Rajoy’s government, which has still not clarified whether it plans to have Catalonia’s President Carles Puigdemont and other elected leaders arrested.

Naturally, these measures, which are more fitting of a capricious tin-pot dictatorship than a modern, self-respecting democracy, will do nothing to improve relations between Catalonia and the rest of Spain. Moody’s warned this week that activating article 155 may ensure that Catalonia remains a part of Spain in the short term, but over the long haul it will make it even more difficult to resolve the conflict.

If anything, the repression is more likely to strengthen rather than weaken the resolve of Catalonia’s independence movement. As 29 Nobel laureates wrote in a letter urging the Spanish government and the EU for dialogue and mediation in the conflict, a people that feels repressed rarely goes quietly into the night. By Don Quijones.

Fractured communities, splintered families, broken friendships. Read…  Days of Living Dangerously in Catalonia

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  58 comments for “Catalonia’s Political Crisis Snowballs into an Economic Crisis

  1. David says:

    Spain should step back and closely examine the 1980 separatist effort of Quebec to be independent of Canada. Although the Quebec Party wanted to retain a common market relationship all the money left Montreal overnight. Only then did the reality of economic consequences meet the separatist emotion. The separatist referendum was defeated but resulted in a number of national reforms and sensitivity to promote the French identity of the citizens. Spain must be patient and let the economic consequences “hatch-out” and be a reality for Catalonians . Memo to the government of Spain: Pay attention to the lessons of the past or be condemned to repeat them. A quote from a wise Spaniard George Santayana.

    • Paulo says:

      David, you beat me to it with your reference. However, the comparrison does not really fit. In this case the PQ actually did get in power, but lost subsequent referendum votes. Whether these losses were by manipulation, I don’t know and can’t say, but when the percentages are so close it is not enough to go through the upheaval of actual revolt and into Separation.

      Plus, the PQ seemed to become more enamoured with being in power, as well as being an aging movement.

      As a BCer many of us used to say, “By all means separate, just take your portion of the Federal
      debt with you” . Many of us felt that we would have remained friends and trading partners, regardless. In the rest of Canada, at least what I have experienced, there is a long standing frustration with the pandering to Quebec, and the stilted influence Quebec has on the rest of us. Nevertheless, I for one am pleased we stayed together, if not exactly united.

      Can you imagine what would have happened if the War Measures Act had been implemented by a Stephen Harper rather than PE Trudeau…a Quebec son? It did spur independence forces, but if a Anglo had done it the violence of the times would likely have increased exponential.

      Clearly, you hit on the main point, imho. Greivances like all feelings, must be addressed and dealt with or they fester. You cannot threaten or reason away how people feel, or how a region or group reacts. If it is important for Spain to remain a single country, they will need to address Catalonian’s sense of being wronged.

      Canada would have had a real problem with the St. Lawrence Seaway, internationl trade, and defense. Look at how dysfunctional and un-policed the Mohawk reserves are operating these days. It would have been a disaster.

      I had to reread Yeats after this article. It seems to fit, somehow. Plus, I would have withdrawn all of my money too!! My favourite line: (seems to fit the times)

      “The best lack all conviction, while the worst
      Are full of passionate intensity.”


    • Nicko2 says:

      And Montreal has never recovered, all the $$$ flowed to Toronto. Ultimately, the separatist wave will subside. In our post-globalized world (as the Brexiteers are also discovering), there is strength in numbers, small regions must work with central governments to flourish.

      • Thrasymachus says:

        >small reigions must work with central governments to flourish>

        History is cyclical not linear. We are in a *succession cycle* right now all over the world. Even California there’s a succession movement from the rest of the U.S. The EU has been a disaster. The very idea of the federalization of Europe, stitching together a *United States of Europe* in which individual countries must surrender sovereignty to Belgium is the definition of *collectivist hell*.

        Europe suffers from extremely high taxes and social security contributions combined, which accounts for around 50% of the business cost which has produced nothing but higher levels of unemployment. In the US and Asia, the comparative rates are between 30% and 40%. Europe just cannot compete in the world economy and is slowly dying.

        • p1nkfish says:

          It also stifles competition by favouring big business, big banks and larger countries over regions.

          Excess harmonisation will stifle differentiation and diversity.

          Sounds great in theory though but commoditises everything including labour.

        • Bruce Wineman says:

          This may sound superficial but we saw what “punishment” did to Germany with the Treaty or Versailles, it punished all those that participated in WWI. The Founders of the United States carefully crafted the U.S. Constitution to address “Human Nature” and could not deal directly with the issue of the “individual”. That part of the equation had to be left up to those that wanted to be “FREE”. Centralizing control is the road to tyranny so the “KISS” principle needs to be followed. In this case, maintaining Sovereignty of the States is of paramount importance. It would seem the same relates to Canada, Spain, UK, etc. Once the power gets moved further away from those being “governed” it becomes a matter of being “ruled”. Just my thought

    • Nick Kelly says:

      True enough but a key part of the solution is the acceptance by Canada that Quebec could leave if the separatists won the referendum which they didn’t. Similar with Scotland.
      Making it clear that the region was in charge of its fate is more important than finance, as important as that is. If you want to test this, try telling a business partner that they are forbidden from doing something.

      BTW: Montreal is booming right now and Quebec’s finances are arguably in better shape than Ontario’s.

      • Dario T says:

        @ Nick – rightly said. Money looks always for the best option. A low tax catalonian state or autonomous region could recover very quickly the loss of “money” they suffer today.

        @ Don Q. – bravo, bavissimo! Your analysis gets again to the point. For somebody who lives only kms away from your home town, your conclusions are right and logic. Please, keep on with this good work. If the modern press had more of these good analysis, plenty of people would be better informed and goverments wouldn´t have it such easy to influence them.

      • Scott says:

        Montreal also isn’t dependent upon the financial services industries to the same extent as Toronto is. And Hydro-Quebec is still owned by the province, unlike Hydro One.

        • Nick Kelly says:

          True. And Hydro- Quebec’s power comes from ….hydro, (water) not nukes or gas plants.
          Then there’s that deal with poor old Newfoundland …

  2. Antxon says:

    Bravo, Don Q.
    As usual, perceptive and balanced.
    By contrast, look at the moderately successful pacification of the Basque County.
    I guess Madrid can no longer afford to lose Catalan revenues, a la basque.

  3. Thrasymachus says:

    If Rajoy was Putin, the world would be calling for his head, yet the EU has been silent and Trump supports Spanish oppression.

    • N Rogers says:

      Trump doesn’t support Spanish oppression he supports Spanish unity not quite the same thing. Strikes me that if Rajoy had simply ignored the referendum apart from stating its illegality and that the result would not have led to independence then the whole issue would have faded away much like Scottish Independence has with the belief of the majority that independence is not viable. Instead he succumbed to pressure from his EU masters to stamp out any thoughts of independence in a foretaste of the fascism that exists in the EU Commission today and that will have to be fought over once again in the years to come.

      • Thrasymachus says:

        >Trump doesn’t support Spanish oppression he supports Spanish unity not quite the same thing.<

        Right now *unity* and *oppression* is the same thing in Spain. Given the oppressive actions Rajoy has taken against Catalonia, supporting *unity* is supporting *Rajoy* which means supporting *oppression*.

        In 1938, wasn't supporting *German unity*, as it was defined then and enforced violently, the same thing as supporting *German oppression*?

      • d says:

        “Strikes me that if Rajoy had simply ignored the referendum apart from stating its illegality and that the result would not have led to independence then the whole issue would have faded away”

        Exactly all Madrid had to do was state.

        The referendum in Catalonia can not bind Madrid to anything as it is in conflict with Spanish constitutional law. When the peopel administering Catalonia come to their senses our door is open.

        With a response like that Madrid would have had no expenses and probably could have kept for some time everything it stole when it unfairly amended the Autonomy agreements.


        Much has been spent unnecessarily by all. Banks are being placed a further risk by increasing leverage ratios due to deposit withdrawalls which are closs to “Bank Run Status”.The entire Economy of Spain is being negativly effected.

        The boycotted Famous Catalonia Pizza, contains northern milled flour, and southern grown tomatoes Etc, From these Ridiculous boycotts and this entire PP created Mess. Everybody in Spain except the Corrupt PP and its crony’s suffer.

        All so the PP can deflect attention from its Corruption Scandals, and Banking problems.

        All future Spanish Banking problems will now be blamed on Catalonia, by the PP.

  4. RR. says:

    My next vacation in Catalonia will be when Catalonia is for
    the Catalonians. If this is nearly complete Autonomy, or
    Independance is immaterial to me, so long as it is fair.
    I have cancelled plans for touring the South of Spain in the
    coming years.
    Maybe Portugal next year.

    Keep up the good work, Don. Thank You

  5. cliff longlands says:

    No mention of the EU ,in this article then ,i think that it is probably likely they ,the elite in Brussels have had a hand in this ,?its going to make Brexit look like a picnic in the park ,do not you think ! The end of Brussels and all their scheming Wot say you Clifford John

  6. Maximus Minimus says:

    Catalonia would get more attention if it could clarify the next step: what would it do after a successful independence from Madrid. I guess, everybody assumes it would apply for the membership in the EU, and the Euro. And that’s a puzzle many cannot understand, when EU is heading in the direction of more political control.
    On the economic front, I cannot account for one initiative that was dreamed up by these bureaucrat that was successful. And I have counted them because they looked so grand at the time. In the end, just an financial pit.

    • Kraig says:

      Well, if the EU is becoming more federal why do they need two federal governments (Spain and the EU, they prefer Brussels over Madrid) given how Belgium has more autonomous regions (with separate language/culture) the Catalans could get the same result by becoming an extra Belgium (or Dutch) province. They would still have the same currency, no border controls and ease of trade with Spain, stability but none of the bad blood and economic policy risk of independence.

  7. 2banana says:

    Eventually the Catalonians are going to have to arm themselves if they want their freedom.

    EVERY thing else is a song and dance show.

    • Dario T says:

      Unfortunately, your are right. In the history there were only very few peaceful seperations or divisions of coutries. Hence, you can say that you need to “fight for the right to be accepted”. Things from now on can´t go better, they can only get worse. EH Bildu, the party who claims independency for the Basque Country, proposed these days to find a way together (!) with the independency parties in Catalonia how to finish the “Madrid government” and the kingdom. The “virus of change” jumped over the frontiers of Catalonia impulsed by the acts of the PP government and Spain might be closer to the last days of Yugoslavia than most of us think.

      • Gershon says:

        Armed separatism is Catalonia would be a tragedy of epic proportions for all concerned. The events now playing out raise interesting questions for what happens when populations withdraw “the consent of the governed” due to unaddressed grievances and malgovernance. Self-determination is going to be a rising force as formerly sovereign peoples increasingly become alienated from co-opted governments that serve as adjuncts of the globalists and banksters in facilitating the pillaging and economic serfdom of their own people.

    • Thrasymachus says:

      “The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. Blood is the tree of liberty’s best manure.” Thomas Jefferson.

      Unfortunately, Madrid sees Catalonia as the *tyrants*.

      • mitch says:

        yes they do, just like in 1938. if in the USA every nevertrumper and pussyhat had a so-called referendum and voted to secede new york would that be ok??? funny how you have to search far and wide in the media to get the REAL story here. what does the average working class Spaniard think about it. i mean actual people who WORK, not govt employees,not welfare recipients, not immigrants, not the leftist intelligentsia, but people who actually work for a living. try finding their opinion on this matter, it’s practically non-existent. why ???,because they don’t want it!!!

  8. MC says:

    Michael Winch, a well known traveler/writer, described in 1939 the chaotic events in the area around Khust the previous year, where three different factions were vying for supremacy: Ukrainian nationalists (called by Winch “the Sitch”), remnants of the rapidly disintegrating Czechoslovak army and government and ethnic Hungarian militiamen.
    As news of one or another faction gaining the upper handed filtered in the city, comic scenes worth of the Marx Brothers followed: in one case a Jewish shop owner heard from a group of passing Czech soldiers the Sitch were advancing on the city unopposed, so he hurried to paint on oversized yellow/blue flag on his shop window, only to wipe it clean a few hours later when he heard from a lorry driver the Hungarian army was coming.
    A lawyer showed Winch the name plates he had kept handy since the end of WWI: each showed a different ethnic name and all had already been used.

    I cannot but think of the various firms trying to curry favor with the government in Madrid by refusing to deal in Catalan products or moving their street address to Madrid or elsewhere as the modern day equivalent of the citizens of Khust trying to curry favor with any of the factions said to be advancing upon their city.

    • p1nkfish says:

      If a major company came forward advertising it was on the side of people from the peninsula, no matter who they are, it could make hay.

      When division rules those on the side of every individual, irrespective of any other consideration, wins.

      Sowing seeds of discord always loses.

  9. Nick Kelly says:

    Politics affects economics? Who knew?

  10. John k says:

    Draghi said, ‘we will do whatever it takes’ to keep the neolib eu together. Print trillions? Done.
    Need to destroy the Greek and Cypriot economies to save French and German banks? Done and dusted.
    Not just economic, if it takes jettisoning democracy, we’ll do that, too, because TINA.

  11. Wilbur58 says:

    I hate when people confuse business with banking/governments.

    I remember my dad both gloating and asserting, “I’m not buying any more French wine or cheese!”

    I said, “Dad, does your government represent all of your ideals and politics well?”

    Dad (sheepishly), “Uh, no.”

    Me, “So then what makes you think the French government represents the ideals of every single French viticulturist and diary farmer?”

    Dad, “Duh… I guess you have a point” (But internally is still hammering away, “But f those French!”)

    Our global masters- the banking cabal and other monopolies, do such a good job at keeping people away from focusing on the real issue, the FIRE sector, by getting them worried about race, kneeling at football games, and apparently, the tomatoes in their pizza sauce.

    People of Spain, for heaven’s sake, focus on the economics of things and not which village your sangrias are coming from unless it’s a matter of taste preference.

    • Bookdoc says:

      That the governments are responsible for political policy is true but governments need funding that comes from taxes, fees, and tariffs. If people do not buy the products, for whatever reason, the government gets less money-an anathema to civic officials. So, buy not buying French products, he was putting pressure on the government. I know his one bit seems meaningless but think about what percentage of the population feels as he does. Bits add up.

  12. Roger says:

    obedience from medium ranks is needed to have full control. As far as I can see this is far from granted. So further chaos is expected

  13. Doug says:

    As usual, Wolf and Don Q continue to provide clarity and insights not to be found anyplace else. Wolf and Don, congratulations on your success in creating a “must-read” content site. Really fine work!

    And the comment sections are routinely interesting too. What’s not to like about Wolfstreet??

  14. Gershon says:

    Naturally, our rigged and broken markets will see this as bullish: Rajoy asserting firm central control over those uppity Catalonians. Crisis contained – buy moar stawks!

    450,000 Catalonians protesting is a bit underwhelming in terms of mass support for independence. A million pro-independence Catalonians in the streets might’ve given Madrid pause.

  15. Cynic says:

    Rajoy simply has a genius for lacking all genius: no better way to assist his opponents in Catalonia than introduce such broad repressive measures – above all suspension for 6 months!

    One senses Merkel, Juncker, et al ,are somewhat bewildered by this Iberian way of doing things, which just makes it all a lot worse.

  16. Cynic says:

    I had some lovely Catalan craft ale, ‘Almogavar’.

    Perhaps I shall send a case to Rajoy, he can crack open a few and chill out.

  17. Stevedcfc72 says:

    Hi DQ,

    Another great article, please keep them coming as mainstream media doesn’t give you any details of what’s actually happening or how the locals feel about everything which is going on.

    Obviously with the bank runs on Sabadell and Caixabank same question as the other week, why aren’t we seeing big reductions in their share price?

    Caixabank present their Q3 result on 24th October, interesting to see what is said about the bank run on deposits.

  18. Realist says:

    Btw, SEAT is owned by Volkswagen and pressuring Volkswagen might bring Mutti & Co into the game …

    Cudos to DQ for a great article(s) on aspects of the conniption on the Iberian peninsula ignored ( not seen / understood ? ) by msm presstitutes.

  19. Jive Bunny says:

    Financial suicide for both. Catalonia has a lot of regional debt which it would be solely responsible for in the event of a clean break along with an agreement about how much of Spain’s enormous debt it would have to take on, as a significant amount of Spain’s debt may be attributed to Catalonia the resulting debt burden would likely topple the newly emerged independent state despite it providing a large share of Spain’s GDP which would of course then be withdrawn from Spanish GDP figures.

    All your arguments re Spain still rwemain valid.


    In our complicated modern economies, the loss of a common faith is much more disastrous than any other loss.

    • caradoc says:

      Yes, and trust, like confidence, is invisible, fragile. Goes quickly, can take years to form.

  21. dan says:

    the situation in catalonia and the rest of spain is very problematic problematic for the country and the european union.initially it was a small minority making trouble but it,s getting bigger a lot of mistake were made a lot of bad political decisión were made on both side but the politcal parties in catalonia are more to blame for this terrible situation in spain.
    There are several alternatives but the best economically is for the country to unite trought dialogue.polititician in catalonia should spreads a positive message to people.Tourism in Barcelona is already down and it,s going to get worse a lot of people in catalonia depends on tourism.
    others countries would deal with the issue in others ways the priority should be the economy of the región but others are making so much problems to a already struggling economy it,s not something very wise to do because of the risks for catalonia.catalonia and Barcelona is spain people should stop complaining about this issue.catalonia could be a very stable and prosper región in europe they could make a deal with bruxelle and ask for more money if the decide to stay part of the country

  22. DanR says:

    Maybe it is my bias as an American where we have Alabama and Massachusetts in the same union, along with Puerto Rico, but can’t Spain just hold its disparate regions together?

    • d says:

      “but can’t Spain just hold its disparate regions together?”


      Therein lies the crux of this issue.

      Madrid is doing what Brussels wishes to but cant, enforcing its will on unwilling regions.

      Thios is a war as yet without shooting.

      In wars there are no winners, only big and bigger losers. The biggest losers will be the ordinary people of all Spain.

      Simply to feed the greed and egos of the Crony corrupt pp.

      Notice ,much attention on Catalonia no attention on the rotten imploding corrupt spanish banks and the corruption scandals of the PP.

      HOW CONVIENENT for Rajoy and the pp, is that.

      The dipsomaniac EU president is willing to sacrifice the economies of the Eu to have his vengeance on England by forcing Brexit, and Rajoy is wiling to economically destroy Spain, for more decades, as long as he and the Corrupt PP, retain power, along with their ill gotten gains.

      The EU once had potential, it is today, like Spain, being polluted, probably beyond redemption, by the rotten apples it contains.

  23. Stevedcfc72 says:

    Agreed d,

    The EU should have been a great example to everybody else in the world.

    Instead its an example of how not to do things.

    Merkel has now become involved in the Brexit situation because she can see what idiots are running Brussels.

    The shame is she can’t do the same in Spain.

    • d says:

      There is a very nasty man by the name of “George Sorros”.

      Who has made a great deal of money. by abusing the power of money.

      The fact that he is very nasty, does not make him unintelligent, nor does it make everything he advocates, and the reasoning behind it, wrong.”

      Sorros has advocated for some time a split in the Euro zone or German withdrawal from the Euro.

      Should the insanity of Brexit be allowed to continue for much longer.
      A “Gexit (as opposed to “grexit ” of Greece) is on the cards as the whole “financial house of cards” has to go all the way, or fold.

      Going all the way, will be catastrophic for Club-med banking. if done on terms acceptable to the German taxpayer (the only way it can happen due to the German constitution (which was deliberately amended to protect German taxpayers from a predatory Club-med)).

      I am unsure if “Mutti” has the head banging power required to bring the eurocrats in Brussels to heel.

      If brexit is allowed to continue on its current course. What follows will be an Economic contraction in Germany which will feed the AFD and its Austrian Allies.

      AFD Types will not send somebody to Brussels to bang Heads. Much more likely to cut some throats. Which would be followed by “Gexit” as the only way to leave the Euro is to also leave the EU in the current format.

      Which would be doing the world a favour Long Term. Short and medium term a breakup of the Euro and EU involving German withdrawal would be a BIG black swan event, even if well telegraphed.

      In various global centers Diplomatic Competence and Objective cool heads are required, to avert many impending disasters.

      Currently in Brussels, Paris, Washington, and the opposition benches in London, such does not exist.

      “Its hard to Soar like an Eagle when surrounded by Turkeys.”

      Currently to much of the political world, both in office, and opposition, is nothing, but Turkeys.

  24. Thrasymachus says:

    Martin Armstrong post:

    Spain is showing that it truly remains a fascist state in the spirit of Franco and Rajoy plans to just seize Catalonia. Meanwhile, the Catalan citizens’ movement, Assemblea Nacional, is calling on all Catalans to withdraw all their money as much as possible from one of the five largest Spanish banks to increase pressure on Madrid, These include Caixa Bank, Bankia, Sabadell, BBVA and Santander. Americans supporting Catalonia are also urged to withdraw all funds from Santander in the USA.
    Behind closed doors, many are becoming very disturbed by the action of Madrid. They fear this is spilling over as a contagion within Europe for populist movements. The election in the Czech Republic with the overwhelming vote against the EU many fear will be repeated next year in Italy.

    • Cynic says:

      This why Merkel, Tusk and Juncker are probably cursing Rajoy and wondering why on earth he didn’t just do a timely deal with Puigdemont, who is, after all, just after the money (the true Catalan separatists are quite different, but they are in a minority and could have been contained).

      A political solution for a political problem, before it blew up into a real crisis.

      But Rajoy’s party isn’t like that: their instinct is authoritarian, one might almost say absolutist – a Bourbon monarchy, after all, in the 21st century. And they need to get their voters excited about something -it’s working!

      I fear more and more that this will result in serious violence.

      This is just why the Basque National Party (PNV) thankfully does not listen to crazies on the separatist Left calling for unilateral independence come what may- these things can get out of control so easily, especially with the Spanish temperament and historical resentments and grievances.

      • Thrasymachus says:

        Do you believe the majority of Catalonians don’t wish succession?

        • Cynic says:

          It’s a good question,and if a proper referendum had been allowed, as in Scotland, we would know the exact answer.

          I would say that, based on previous opinion polls and votes, a good 45-55% would have voted for unilateral independence. This invalidates the position of the Catalan separatists, that they alone speak for the whole Catalan people, but is of course a very significant bloc of votes.

          This is actually rather different to the Basque Country, where the majority traditional nationalists (PNV) just want a quiet life after all the decades of violence, and a good financial deal from Madrid, which they are getting – they play a long game,and the Left radical nationalists who want independence at any price hate them. But they will have to wait for their Che Guevara utopia…

          However, Spaniards tend think regionally, whatever their politics, and if Article 155 is imposed on Catalans in the extremely repressive form which is being outlined by Madrid, there will be a huge reaction by most Catalans: the beatings by the police shocked them, and A.155 will enrage and insult them.

          There are signs already of the Catalan Socialists fracturing over the issue, not happy with their leader in Madrid giving Rajoy the green light for A.155.

        • Thrasymachus says:

          Interesting. There are of course those in Spain who side against Catalonia. Others write who are in Catalonia yet disagree with the separatists. It appears to me the government of Rajoy is all about protecting Brussels and federalizing Europe behind everyone’s back.

          Rajoy should have allowed a fair referendum and then negotiate if they won. Canada allowed two referendums in Quebec and Britain allowed the Scottish referendum. This nonsense that the Constitution does not allow any democratic process is pure TYRANNY. That was the same argument in America by England and in France that led to revolution.

          Had Rajoy NOT played the hardline tactics, allowed the referendum to take place, then many who voted for independence may have not done so. This is about political power – not the dignity, right, or freedom of the people. This is basically stating the people mean nothing and you will obey or else.

  25. unit472 says:

    Looking at this from the other end, does Madrid have the ability to invoke Article 155. Not the legal authority but the physical ability to administer and run a hostile province.

    Think of this as something like FEMA trying to step in, even with the help of the US military, and run the areas affected by a major hurricane. Here the local authorities are eager for the assistance and willing to help but it is still tough because the outside agencies are unfamiliar with the territory and whom to call to get what done.

    Where local officials are uncooperative and even hostile I have my doubt as to Rajoys ability to smoothly take over the administration of Catalonia.

  26. Gershon says:

    The EU and its globalist puppetmasters must be growing increasingly alarmed to see nationalist and populist movements attracting mass support from an awakened citizenry that does not want to go quietly into that Long Goodnight the oligarchs have in store for them.

  27. yngso says:

    Caluñexit is just as crazy as Brexit. Pizza can be made anywhere. The rat may bite the cat which gets sick, but the rat ends up dead.

    • Stevedcfc72 says:

      Sorry yngso what’s crazy about Brexit?

      Hi DQ,

      Caixabank Q3 result out today, whilst not a bad number in the conference call no mention has been made on the reducing deposits within the bank post Q3.

      Looked at Sabadells accounts and couldn’t believe that as well as borrowing 20 billion off the ECB, the Bank of England has lent 5 billion euro’s to Sabadell, here have some money to buy TSB .

  28. Gershon says:

    Time to nut up or shut up, Puigdemont. Half-measures will no longer suffice.

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