Running a close second to the many voices on CNBC over recent weeks claiming, "stocks are cheap" have been Spanish authorities from both the private and public sectors assuring investors that, whatever financial difficulties the nation's banks are facing in no way should be thought problematic.
Oh yeah? Tell it to Alan Schwartz. Better yet, make it Dick Fuld because money appears to be voting that, Spain is setting up for a Lehman Brothers rerun...
Make no mistake: the technical configuration highlighted above has a September 18-19, 2008 look of panic on the horizon, much as was seen in the U.S. following Lehman Brothers' September 15, 2008 bankruptcy. Apparently, there is similar conviction today (at least momentarily) in the likelihood that, a formidable backstop for Spain's banking system will materialize before the eurozone vaporizes.
Yet this far down the line in what increasingly is being acknowledged a solvency crisis, the odds of some "rescue" stabilizing the Euro seem a long shot at best. Resistance toward the need to throw good money after bad has solidified among the eurozone's key players, much as it had here in the U.S. during the March - September 2008 period following the Bear Stearns take down. So, looming chaos appears a probability whose likelihood might be presumed increasing judging by trading this week in Spain iShares.
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