The following multiple choice question is submitted to loyal readers to test their attention to detail:
QUESTION: The amount of bad debt on the books of Spanish banks, which has to be bailed out to avoid formal bankruptcy, is:
A) 300 billion euros
B) 375 billion euros
C) 475 billion euros
D) 10 squillion euros
E) All of the above
The correct answer is E) All of the above. Last Friday, Nomura said it was 300 billion; on Saturday, UBS said 375 billion; on Monday, the Financial Times reported 475 billion; and 10 squillion euros is a fair estimate of where this is all heading.
Predictably, rumors are swirling across financial markets Monday about whether or not the Spanish government would be forced by Germany to go to the EFSF for their 10 squillion bailout (and submit to the “Greece treatment”), or if instead Germany’s Merkel would be bludgeoned by Obama, Hollande and Italy’s Monti—who jointly called her on Wednesday on this matter—into finally acquiescing to a direct hyperinflationary bailout of the banks by the EFSF, rather than lending the money to the Spanish government as a pass through.
Either way, the eurozone system is gone.