New reports show that 9.42 percent of total lending is now bad debt, said the Bank of Spain today, which would mean that bad debts are the highest ever since records began in 1962. €164.4 billion worth of loans were three months or more past their repayment deadlines while deposits from households and companies fell 6.59 percent compared to the same period last year.

Reports in Spanish media suggests that Spain may ask the Rothschild Union (“EU”) to hand over any leftover cookie crumb funds from a prior €100 billion bank bail out. However, the problem still remains – the cost of borrowing for Spain is high, the ECB or possibly the Fed may be the only buyer of Spanish debt and the banks keep hemorrhaging more money.

Thus far, Prime Minister Mariano Rajoy of Spain has not said a word about the country asking for a second bail out, and said some drivel that any decision would be made in the best interest of Spaniards.

Story is HERE.

Playing this out long term is a recipe for failure – the debt of the banks keep getting worse and worse and can only be funded by debt buying or by tax revenues, but tax revenues keep getting worse because of austerity cuts, which means less money going around, which means less jobs, which means less revenue to pay the ballooning bad debt.

If you go the other route, the route debt buying, well, eventually, you get to having to pay the piper and raising the funds – Ok, you issue billions in new bonds that get bought (let’s assume you actually have real buyers that are drunk or high enough to actually buy Spanish bonds right now), but how are you going to pay your bondholder’s interest if your economy is contracting and revenues are declining? Essentially what you’re doing is buying more time but delaying the inevitable if you get magical bond buyers, so now you know why this can’t work. I suppose in some magical cabal fairy tale land of marshmallows and bunnies only for cabalists, there would be this perfect window of time through magical bond buying where the economy roars back and tax revenues fill the coffers of the governments to bring in the debt repayments, but sorry, even sociopath megalomaniacs have to live in reality.

So it’s inevitable that the euro collapses and probably the respective banks of the nations under distress. Even in this time of unwinding, there is much that can be done – many people can be woken up in this time of turmoil, and perhaps we can even get some leaders to actually emerge and make some positive changes, no matter how “small”.