Panic cash withdrawals in Spain drain banks; Greece-style economic implosion now imminent
by: Ethan A. Huff
Monday, September 24, 2012
Spain appears poised to become the next Greece in the ongoing European Union (EU) implosion, as Spaniards are withdrawing record amounts of funds from Spanish banks to avoid a potential insolvency situation. According to the New York Times (NYT), the equivalent of $94 billion was withdrawn from Spanish banks in July, an amount that equals seven percent of the country’s overall economic output.
Though stronger overall compared to Greece in terms of economic diversity and debt levels, Spain is undeniably on a downward economic spiral that is sending many of its people and their money to other countries like England, Germany, and Singapore, where economic conditions are much more favorable. Just like in Greece, there is a growing fear among Spaniards that their nation could revert from the euro to its former currency, pesetas, which would greatly devalue their personal wealth.
“The macro situation in Spain is getting worse and worse,” said Julio Vildosola to the NYT. Vildosola, a former senior executive at a large multinational company, recently moved all his money — and is now in the process of moving his entire family — to a small village near Cambridge, England. “There is just too much risk. Spain is going to be next after Greece, and I just don’t want to end up holding devalued pesetas.”
Spaniards pulling out their cash en masse