Capital Flees Spain
There is still plenty of negative news out of Europe. Recent data about the PMI of most nations showed their economies continue to slow or even contract. And unemployment in the eurozone has reached an all-time high in the decade-long history of the region. News came out today that the rate at which people in Spain are moving money out of the nation has hit a critical level. A similar problem crippled Greece's banks. According to some experts, the problem has reached extraordinary levels. CNBC reports:
The flight of capital from Spain is now worse than what Indonesia, one of the hardest hit countries during the Asian financial crisis, experienced in the late 1990s, according to analysis by Nomura.
On a three-month rolling basis, portfolio and investment outflows from Spain totaled 52.3 percent of the country's gross domestic product (GDP), (that's) more than double the outflows from Indonesia, which reached 23 percent of GDP at the time of the Asian crisis, Jens Nordvig, global head of G10 FX strategy at Nomura wrote in a note to clients on Tuesday.
Even a bailout of Spain will not bring back most of that money. It has reached safe harbors where yields are low, but principal is safe.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Banking & Finance, Economy, International Markets