The euro endgame is coming closer. The exit of Greece is nothing compared to what will happen if/when Spain is forced to leave the common currency:
Spain is in the gravest danger since the end of the Franco dictatorship as it is frozen out of capital markets and slides towards a showdown with Europe.
"We're in a situation of total emergency, the worst crisis we have ever lived through" said ex-premier Felipe Gonzalez, the country's elder statesman.
The warning came as yields on Spanish 10-year bonds spiked to 6.7%, pushing the "risk premium" over German Bunds to a post-euro high of 540 basis points.
The IBEX index of stocks in Madrid fell 2.6%, the lowest level since the dotcom bust in 2003.
Chaos over the euros 23.5bn (£18.8bn) rescue of crippled lender Bankia led to the abrupt resignation of central bank governor Miguel Angel Fernandez Ordonez, who testified to the senate that he had been muzzled to avoid enflaming events as confidence in the country drains away.
Roberts said the collapse in Spanish tax revenues is replicating the pattern in Greece. Fiscal revenues have fallen 4.85 over the past year and VAT returns have slumped 14.6%. Debt service costs have risen by 18%.
The country is caught in a classic deflationary vice: a rising debt burden on a shrinking economic base.
"Once you get into such a negative feedback loop, you can move beyond the point of no return quickly," Roberts said.
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