Spain is insolvent. Although the mainstream media reports that the country has completed 95% of its financing needs for 2012, my calculations show that it has about €54bn left out of €188bn assuming a budget deficit of 8.1% and maturing debt of €98bn.
Just because the country is insolvent does not mean the ballgame is over. Spain cannot be allowed to fail, because that will throw world markets into a panic. Draghi will not allow this to happen on his watch, so the ECB is using every trick in the book to prop Spain up.
The two articles above reveal that Spanish T-Bills are being overrated as investment grade so that the Spanish banking system gets the maximum bang for it euro when it posts the bills as collateral.
While the ECB wishes that Spain would sign up for its OMT program, it cannot force Spain to do so and must perversely keep Spain afloat while it dithers.
An0ther way it supports Spain is by staying silent as the country’s finance ministry issues fictitious numbers. The country is still claiming that it will meet its 6.3% budget deficit target while its economy implodes and employment reaches dizzying highs.
These tactics can prolong the status quo for only a limited amount of time. Just like every other financial fraud, the lies used to prolong the scheme are the seeds of its destruction. Remember Greece, Madoff and Enron? Spain is no different.