Foreign investors are fleeing, worried about surging inflation, deeply negative real interest rates, and a central bank unwilling to crack down on inflation.
Banks are being pushed to lend with the same reckless abandon.
Sales of homes of all types plunged 31% year-on-year, sales of new homes crashed 39%, and the number of mortgages written collapsed 65%
Spanish banks expanded aggressively into Emerging Markets to flee the consequences of the euro debt crisis.
Shifting bad consumer & business debts from banks to the public, but the way this bank bailout got packaged is pretty nifty.
The economic miracle fueled by foreign-currency debt.
After the euro debt crisis, Spain’s alpha-lender sought greener pastures in the Emerging Markets. That bet is coming home to roost.
“Substantial Increase in the Risk of a Downside Scenario”: Moody’s
Emerging Markets turmoil: The price of cheap debt & misallocation of capital.
A vicious cycle, kicked off by cheap debt that’s suddenly not cheap, after 8 years of experimental monetary policies.