Spain Default Probability at 100% — To Take the Whole European Financial System Down

Graham Summers from Phoenix Capital provides the nice summary of how deep in trouble Spain is, and how the default of Spain — a 100% probable event — will bring the whole Europe and its banking system to its long overdue collapse:

The fact remains that the EU will break up in time. And it will likely be Spain that brings this about.
The reasons? Among other things:

1. Spain's private Debt to GDP is above 300%.
2. A huge portion of Spain's banking system (representing over 50% of mortgage loans AND deposits) was totally unregulated up until just a few years ago.
3. Spanish banks are drawing over €400 billion from the ECB on a monthly basis (up from €377 in June) to fund their liquidity needs.
4. Spanish banks are now net sellers of Spanish sovereign bonds (leaving the ECB as the only buyer in the market)
5. Spain's banking system has lost 18% of its deposits in the last 10 months due to a staggering bank run.
6. The economy of Spain is a disaster with total unemployment over 25% and youth unemployment above 50%.
7. Spain is now facing a constitutional crisis with various regions looking to secede if they don't receive bailouts from the Federal Government "without conditions."
8. Spanish banks need to roll over (meaning renew terms on) more than 20% of their bonds this year.

So Spain will suffer a collapse, most likely of its banking system resulting in a sovereign default (barring a bailout). When this happens, some €1 trillion+ worth of collateral (still rated AAA by EU banks) will be sucked out of the system.