Spain hanging by a thread: Moody's just made 16 more huge downgrades

While riots in Greece are holding everyone's attention, Spain is now clearly dangling over the abyss:

Moody's Investors Service downgraded nine Spanish regions, two Basque provinces, and five government-related entities, a day after it downgraded Spanish sovereign debt. [Link to yesterday's news]

That included demoting one region — Castilla-La Mancha — by five notches, from A3 to Ba2. It also remains on downgrade review.

This newest report confirms that the gravity of the debt crisis is deepening in Spain, one of the countries most vulnerable to banking contagion.

Source

Check out the article for the full headache.

If bailing out Greece has brought the entire Eurozone to the brink, can you imagine what happens when Spain comes begging? (And Italy. And Portugal. And Ireland.)

This may well get buried by major MSM outlets. But it's happening. Now.

a controlled demolition is what this is.

I hope people stay safe, my mom is living in rome, obviously she is not out protesting but after seeing the insanity....

It's not just the national and regional governments that have been downgraded:

BBVA, Spain Banks Cut by Moody’s After Sovereign Downgrade

Oct. 20 (Bloomberg) -- Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA and CaixaBank SA were downgraded by Moody’s Investors Service a day after the ratings company cut the nation’s grade for the third time in 13 months...

Spanish banks are under pressure as the country’s economy struggles to restore growth after a property crash triggered the worst recession in 60 years. Moody’s on Oct. 18 cut Spain’s credit rating two levels to A1, citing concerns about a “fragile” banking industry whose asset quality is being harmed by difficult funding and economic conditions.

“A few months ago some banks were starting to say they were seeing the light at the end of the tunnel, but they were wrong,” said Jose Ochoa, senior director in Spain at financial industry consulting firm Alvarez & Marsal Inc. “The outlook for Spain is getting worse every day and so logically the banks are suffering with these downgrades.”

Santander, BBVA and CaixaBank had their ratings cut to Aa3 from Aa2, Moody’s said. Moody’s also cut the debt ratings of savings bank group La Caixa, which controls CaixaBank, and the Spanish savings bank association, known as CECA.

Source

Spain is in real trouble. The evidence is mounting daily. (Santander and BBVA are Spain's largest banks, and Santander is a major European player.)

If you wish to understand how wide the implications are, check out this brief article:

Spain's downgrade is forcing EU leaders to solve debt crisis

Excerpt:

A DOUBLE-NOTCH downgrade to Spain’s credit ratings has piled more pressure on European leaders to make rapid progress on solving the region’s debt crisis or face unbearable borrowing costs...

...“If the euro zone can’t figure a way to handle the situation, you are going to see Spanish yields continue to go up, and they are going to have a problem to funding themselves,” said Jessica Hoversen, currency and fixed income analyst at MF Global in New York...

...Moody’s reasoning made worrying reading for those hoping for a speedy resolution to country’s troubles.

“Since placing the ratings under review in late July 2011, no credible resolution of the current sovereign debt crisis has emerged and it will in any event take time for confidence in the area’s political cohesion and growth prospects to be fully restored,” the agency said.

In the meantime, Spain’s large sovereign borrowing needs, heavily indebted banking system and challenging growth outlook left it vulnerable to further downgrades, a judgment that would encompass all too many of EU members.

In particular, Moody’s said it continues to have serious concerns regarding the funding situation of the regional governments...

The question is, why does the author kid himself Europe's leaders can 'solve the region's debt crisis'?

The staggering level of pan-European debt and de facto insolvency (-not to mention contagion-) is simply beyond the means of any institution to resolve. Any 'solution' will just bide a little time.

The Euro is sunk.