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“Do not underestimate the power of Spanish democracy.”

With these words, eerily reminiscent of a line once spoken by Star Wars villain Darth Vader, Spain’s Prime Minister Mariano Rajoy brought to a close a week of frenzied drama. It began with a foiled attempt by the Spanish police to close down the official website for the Catalan independence referendum. As often happens with web-based raids, the official site was up and running again within minutes, albeit with a different domain name.

Next, the Public Prosecutor’s office ruled that the referendum is now illegal “beyond all doubt” and instructed the Civil Guard, National Police, Catalan Police (Mossos d’Esquadra) and local police forces to act to stop it. It also launched criminal investigations against the entire Catalan government, the Speaker of the Catalan Parliament, the leaders of two separatist municipal associations and more than 700 Catalan mayors (representing 75% of Catalonia’s municipalities) for agreeing to cooperate with the planned plebiscite.

On Friday, Spain’s Finance Ministry joined the fracas by introducing a motion that would hand Madrid much greater control over how Catalonia spends its money in an effort to block the regional government from using state cash to pay for an illegal independence referendum. It has also frozen Catalonia’s monthly advance of the national liquidity fund (FLA), worth some €1.4 billion a month, and demanded that banks report any transactions related to the referendum vote to the central government.

The ultimate goal is to turn the Catalan regional government into an empty shell of an institution — one that has no autonomy, or for that matter any practical function or purpose.

…click on the above link to read the rest of the article…

“They’ve Lost The Plot” – 700 Catalan Mayors Defy Spanish Government Amid Police Raids

September 16, 2017

“They’ve Lost The Plot” – 700 Catalan Mayors Defy Spanish Government Amid Police Raids

“The only thing I ask of (Catalan) mayors is that they comply with the law, and as such don’t participate in an illegal referendum,” Prime Minister Mariano Rajoy urged this week, calling for a return to “rationality and legality” and promised to block the vote.

However, as Reuters reports, the mayors are not complying…

More than 700 mayors from across Catalonia gathered in Barcelona on Saturday to confirm their support for a planned independence referendum that Madrid has declared illegal.

The mayors met with Catalonia’s regional head Carles Puigdemont in a show of defiance, following Spanish prosecutors warning earlier this week that officials engaging in any preparations for the vote could be charged with civil disobedience, abuse of office and misuse of public funds.

Barcelona mayor Ada Colau, who has reached an agreement with the Catalan regional government to allow voting in the city, criticized Madrid’s response to the crisis in a short speech in the city hall.

“It’s a disgrace that we have a government that is incapable of dialogue and instead dedicates itself to pursuing and intimidating mayors and the media,” Colau said.

So far, 740 of 948 municipal leaders have said they would allow municipal spaces to be used for the referendum, according to the Association for Municipalities for Independence (AMI).

As this was taking place, Reuters reports that Spanish police have raided several print shops and newspaper offices in recent days in a hunt for voting papers, ballot boxes and leaflets to be used for the referendum.

The searches are part of a concerted effort by the government to prevent the ballot from going ahead, amid fears that a vote to break away could trigger a political crisis even if Spain does not recognize the outcome.

…click on the above link to read the rest of the article…

Spanish Government Threatens to Seize Catalan Finances to Stop Referendum: Juncker in Hot Water

September 16, 2017

Spanish Government Threatens to Seize Catalan Finances to Stop Referendum: Juncker in Hot Water

In its latest move to stop an October 1 independence referendum, the Spanish Government is Poised to Seize Catalan Finances.

Finance Minister Cristóbal Montoro said a mechanism had been approved for the state to take control of the autonomous region’s finances. Madrid is seeking to stop the Catalan government spending public money on its planned independence referendum.

If the deadline is not met, the central government will take over the funding of most essential public services in the region, Mr. Montoro said.

Catalan President Carles Puigdemont launched his campaign for a “Yes” vote on Thursday night in the town of Tarragona, telling a rally at a former bullring: “Vote, and in so doing bring light to darkness that has lasted for too many years.” The crowd shouted back, “Independence”, “We will vote” and “We’re not afraid”, AFP news agency reports.

Public finances are a particularly sore point for Catalans who for years have contributed more to the state budget than they get back in spending on public services.

More than 700 Catalan mayors who have agreed to help stage the referendum now face criminal investigation and police have been ordered by Spanish prosecutors to seize ballot boxes, election flyers and any other item that could be used in the referendum.

The separatists have promised to declare independence within days if, as expected, the Yes vote prevails at the referendum.

Spanish Government Rejects Dialog Request

The Telegraph reports Spain threatens to cut funding for Catalonia over the independence referendum.

The Spanish government on Friday dismissed a letter from Catalan leaders offering talks over their looming independence referendum as “a trap”, and announced it would intervene in Catalonia’s finances to ensure that “not one euro” of public money was used to fund the “illegal” vote.

…click on the above link to read the rest of the article…

Spain Passes New Laws To Restrict Catalan Finances Ahead Of Independence Vote

September 15, 2017

Spain Passes New Laws To Restrict Catalan Finances Ahead Of Independence Vote

With just a few weeks left until Catalonia’s proposed independence referendum on October 1st, Madrid has taken new steps this morning to restrict the finances of local governing entities to “guarantee that not one euro will go toward financing illegal acts.” Per Reuters:

The Spanish government said on Friday it had passed measures to increase control over how Catalonia spends its money in an effort to block the regional government from using state cash to pay for an illegal independence referendum.

“These measures are to guarantee that not one euro will go toward financing illegal acts,” Budget Minister Cristobal Montoro said following the weekly cabinet meeting.

Of course, restricting finances is just one of many steps taken by Spain over the past couple of days/weeks to thwart a potential independence vote. While ruling out the use of the military and imposing direct rule from Madrid, as BBCnotes Spain’s government is doing all it can behind the scenes to prevent ballot boxes from being put out for Catalans to vote.

On Wednesday night a judge in Barcelona gave the police authorisation to shut down the Referendum.cat website, created by the government to encourage people to vote on 1 October.

Spain’s attorney general has asked prosecutors in Catalonia to interrogate all mayors whose name is the on the list of more than 700 who have signed up to participate in the referendum.

Those mayors who respond voluntarily to the summons should be arrested, the government-appointed attorney general said.

Catalonia’s top court has called in local police chiefs to remind them that their duty is to report any crime they see being committed and to seize items being used for the purpose of the vote, specifically ballot boxes.

…click on the above link to read the rest of the article…

The Next Spanish Bank Teeters, at Worst Possible Time

September 11, 2017

The Next Spanish Bank Teeters, at Worst Possible Time

The timing could not have been worse: just as Spain faces its biggest constitutional crisis in over 40 years with Catalonia’s independence vote, another bank has begun to wobble.

Liberbank, Spain’s eighth largest lender, was spawned in 2011 from the shotgun marriage of three failed cajas (savings banks), Cajastur, Caja de Extremadura and Caja Cantabria. The new bank’s shares were sold to the public in May 2013 at an IPO price of €0.40. By April 2014, they were trading above €2, a massive 400% gain.

But by April 2015, the stock had started sinking. By May 2017, it was trading at around €1.20. Then came the collapse of Banco Popular in early June, which took many investors (but not WOLF STREET readers) by surprise, triggering a further crash in Liberbank’s stock as shareholders feared they would be next.

Scenting blood, short sellers began piling in, and just as the stock entered free-fall, the government intervened by imposing a temporary ban on short selling. The stock stabilized and even began to recover. By mid-July it had recrossed the psychological €1-threshold. Rumors began circulating that the short-selling ban would soon be lifted.

But in late August, after reaching €1.07, the stock’s progress began to waiver. At the beginning of this week Liberbank’s shares once again became a penny stock. Someone knew something…

Indeed. On Wednesday evening, the bank announced that it would expand its capital by €500 million, and these brave shareholders would be diluted. The response was to sell: shares plunged over 12% on Thursday and a further 5% on Friday.

The fear is understandable. Spanish investors are still smarting from Santander’s hurried takeover and bail-in of Banco Popular. For the first time since the Global Financial Crisis, shareholders and subordinate bondholders of a failing Spanish bank were not bailed out by taxpayers. Speculators were shocked and appalled.

…click on the above link to read the rest of the article…

Showdown in Spain: I Wholeheartedly Endorse the Catalonia Independence Vote

September 7, 2017

Showdown in Spain: I Wholeheartedly Endorse the Catalonia Independence Vote

In a move many people thought would never happen, the Catalan parliament approved a referendum that would allow a vote on the region’s independence from Spain. The central government seeks intervention from the Constitutional Court. But short of invasion who is going to stop the vote?

The Spanish government has accused the Catalan Parliament of committing a “constitutional and democratic atrocity” by approving legislation to allow next month’s bitterly disputed independence referendum to go ahead.

On Wednesday night, the region’s ruling, pro-sovereignty coalition – which has a majority in the Catalan Parliament – managed to get the referendum law passed despite angry objections from opposition MPs, who complained that usual parliamentary procedures had been disregarded.

The legislation passed by 72 votes after 52 opposition MPs walked out of the chamber in Barcelona in protest at the end of an ill-tempered, 11-hour session.

The move was denounced by the Spanish government, which once again said it would do everything in its legal and political power to stop the vote from going ahead on 1 October.

The Spanish prime minister, Mariano Rajoy, ordered government lawyers to file a complaint with the country’s constitutional court so that the vote could be annulled.

The public prosecutor’s office also said it was preparing a case against Catalan parliamentary officials – including the speaker, Carme Forcadell – for disobeying previous court orders forbidding legislative steps towards independence.

Catalan separatists insist the wealthy north-eastern region has a political, economic and cultural right to self-determination.

But Madrid is opposed to independence, arguing that it is a violation of the constitution, and has refused to offer a Scottish-style referendum on the matter.

Three months ago, Puigdemont announced that the referendum would be held on 1 October and that voters would be asked: “Do you want Catalonia to be an independent country in the form of a republic?”

…click on the above link to read the rest of the article…

Catalan Bid for Independence Seen in Broader Context of European Disintegration

August 31, 2017

Catalan Bid for Independence Seen in Broader Context of European Disintegration

Catalonia’s secession movement has been growing in Spain for decades. The region has its own language and culture. On August 28, two pro-independence parties in Catalonia, the Junts Pel Sí («Together For Yes») coalition and the radical-left Popular Unity Candidacy (CUP), submitted a bill to the regional parliament, which outlines the legal framework for the transition to independence. The two parties currently hold the balance of power in the assembly and, therefore, control the regional government.

The bill is set to be passed before the next referendum on secession will take place on October 1, fulfilling a pledge made by a majority of Catalan MPs. According to opinion polls, a majority of Catalans favor holding a referendum on their status.

While Catalonia has been steadfast in its determination to hold a separation vote, the idea of referendum has been firmly opposed by the central government in Madrid. Prime Minister Mariano Rajoy’s conservative government is attempting to use the courts to prevent it from happening. Spain’s Constitutional Court has previously quashed Catalonia’s resolution to hold a referendum.

The court and Spanish government have also warned Catalonian officials that they could face legal repercussions and sanctions if they help organize the vote. The war of words between Catalonia and the central government has escalated recently. The recent terrorist attack in Barcelona has failed to bring unity against a common foe. The Catalans are reluctant to comply with Spanish courts’ rulings and the use of force by the central government is hardly an option.

Catalonia, a prosperous region in northeast Spain, which generates a fifth of Spain’s GDP and already has wide sovereignty, managing its own education system and police forces. But it lacks the privilege the Basque Country enjoys, running its own taxes.

…click on the above link to read the rest of the article…

Spain: Breaking Up is Hard to Do

August 29, 2017

Spain: Breaking Up is Hard to Do

Photo by Rick Ligthelm | CC BY 2.0

When the Catalans goes to the polls Oct. 1, much more than independence for Spain’s restive province will be at stake. In many ways the vote will be a sounding board for Spain’s future, but it is also a test of whether the European Union—divided between north and south, east and west—can long endure.

In some ways, the referendum on Catalan independence is a very Spanish affair, with grievances that run all the way back to Catalonia’s loss of independence in the War of the Spanish Succession (1701-1714). But the Catalans lost more than their political freedom when the combined French and Spanish army took Barcelona, they lost much of their language and culture, particularly during the long and brutal dictatorship of Francisco Franco from 1939 to 1975.

The current independence crisis dates back to 2010, when, at the urging of the rightwing Popular Party, the Spanish Constitutional Court overturned an autonomy agreement that had been endorsed by the Spanish and Catalan parliaments. Since then, the Catalans have elected a pro-independence government and narrowly defeated an initiative in 2014 calling for the creation of a free republic. The Oct. 1 vote will re-visit that vote.

But the backdrop for the upcoming election has much of Europe looking attentively, in part because there are other restive independence movements in places like Scotland, Belgium and Italy, and in part because many of the economic policies of the EU will be on the line, especially austerity, regressive taxation, and privatization of public resources as a strategy for economic recovery.

When the economic meltdown of 2008 struck, there were few countries harder hit than Spain. At the time Spain had a healthy debt burden and a booming economy, but one mainly based on real estate speculation fed by German, Austrian, French, British and U.S. banks.

…click on the above link to read the rest of the article…

Catalonia Threatens Spain with “Financial Bloodbath”

May 25, 2017

Catalonia Threatens Spain with “Financial Bloodbath”

Catalonia’s independence would set off Spain’s debt time-bomb.

On Monday El Pais published leaked excerpts from what it claims to be the Catalonian regional government’s road map to independence. The secret document includes a plan for the region to unilaterally break away from Spain should its citizens be prevented from holding a referendum on independence in the fall.

It provoked a fierce backlash from Madrid. “This proposal is an unacceptable attempt to blackmail the state,” Spain’s Prime Minister Mariano Rajoy said in a hastily convened press conference. Spain’s defense minister María Dolores de Cospedal likened the plot to a coup d’état. In the meantime, Madrid continues to refuse to even entertain the idea of allowing a referendum on Catalan independence, despite the fact that in just about every survey of the last few years 80% of Catalans, including many unionists, have requested one.

It would mean the loss of 25-30% of Spain’s gross domestic product (GDP), says Spain’s Minister of the Economy, Luis de Guindos. And that’s something the government “will never let happen.”

But Catalonia knows it has a card up its sleeves: its tick-tocking debt bomb. Catalonia can no longer issue its own debt and depends on the central government’s national liquidity fund (FLA, for its Spanish acronym) for about 60% of its funds. As ratings agency Fitch warned in April last year when it sent Catalonian debt even deeper into junk territory, the region has grave liquidity problems that will require “proactive management” and “close collaboration with the central state ” — something that’s clearly not on the cards any time soon.

…click on the above link to read the rest of the article…

“Everything Has Come to a Standstill”: Political Fallout Hits Business in Spain

January 17, 2016

“Everything Has Come to a Standstill”: Political Fallout Hits Business in Spain

Things are likely to get a whole lot uglier.

On Friday, Spain’s benchmark stock index, the Ibex 35, plumbed depths it had not seen since the worst days of 2013, the year that the country’s economy began its “miraculous” recovery. Of the 35 companies listed on the index, 15 (or 40%) are – to quote El Economista – “against the ropes,” having lost over a third of their stock value in the last 9 months. Only one of the 35 companies — the technology firm Indra — is still green for 2016.

This doesn’t make Spain much different from other countries right now, what with financial markets sinking in synchronized fashion all over the world. What does make Spain different is that it has no elected government to try to navigate the country though these testing times, or at least take the blame for the pain.

Inevitable comparisons have been drawn with Belgium, which between 2011 and 2012 endured 541 days of government-free living. However, Spain is not Belgium: its democratic system of governance is younger, less firmly rooted, and more fragile, and its civil service is more politically compromised.

To make matters worse, Spain’s richest region, Catalonia, which accounts for 20% of the country’s economy, bucked expectations last week by cobbling together a last-minute coalition government that seems intent on declaring independence within the next 15 months.

Meanwhile, business confidence, the cornerstone of any economic recovery, is beginning to crumble. Spain’s leading index of business confidence, ICEA, just registered a drop of 1.3%, breaking a straight eleven-quarter run of positive results. For the first time in almost three years more business leaders are pessimistic than optimistic about the economy’s outlook.

This should come as little surprise in a country where unemployment is still firmly on the wrong side of the 20% mark, over a quarter of the new jobs created last year had a contract lasting less than one week, and public debt is higher than it’s ever been [read: Six Nagging Facts About Spain’s “Recovery”].

…click on the above link to read the rest of the article…

“Catalonia Needs Its Own Central Bank”: Spain’s Black Swan Lives As New Catalan President Sworn In

January 10, 2016

“Catalonia Needs Its Own Central Bank”: Spain’s Black Swan Lives As New Catalan President Sworn In

When last we checked in on Catalonia, Spain’s black swan was splashing around in a desperate attempt to avoid snap elections just three months after the region’s parliament approved a “democratic disconnection” resolution and just four months after Catalans voted in what amounted to a referendum on secession from Spain.

The problem was that although Junts pel Si and the Popular Unity Candidacy (CUP) parties won a majority of the seats in parliament, and although both parties back a split from Spain, the two groups were unable to agree on who should lead the government. The choice was between then-President Artur Mas (Junts pel Si’s leader) or someone else.

Once CUP made it clear that they would not back Mas for President, the prospect of new elections reared its ugly head and the countdown was on to January 11 – the deadline for forming a government. “Lacking a majority in the 135-seat parliament, Mas had been reliant on the support of the pro-secession, far-left CUP group, which has 10 seats.” WaPo wrote in November. “But the CUP has refused to back Mas as regional president, because of his austerity policies of recent years and his party’s links to corruption scandals.”

When national elections held in December proved largely inconclusive, the stage was set for new elections both in Catalonia and for the country as a whole. Because the various parties vying for seats in the national parliament are divided on the Catalan independence bid, politics in Madrid are inextricably bound up with politics in Barcelona, creating an extraordinarily complex dynamic that admitted of no obvious solution.

Well, with the clock ticking, Catalonia resolved its stalemate on Saturday when Artur Mas agreed to stand aside so that Carles Puigdemont can assume the presidency.

…click on the above link to read the rest of the article…

Catalonia votes to Separate from Spain by 2017

November 10, 2015

Catalonia votes to Separate from Spain by 2017

The regional parliament of Catalonia has now approved a plan to set up road map for independence from Spain by 2017. This is in direct defiance of the central Spanish government. The question will be, does this lead to civil war given the history of Spain. Additionally, this is a rejection of Brussels and the polls indicate that the British people will also make a decision to leave the EU.

Spain Leaps Toward Political Breakdown

October 1, 2015

Spain Leaps Toward Political Breakdown

Desperately needed international investors dread it

The dust is not even close to settling after Catalonia’s latest experimental flirtation with nation building. The pro-independence coalition fell tantalizingly short of gaining a majority of seats (62 out of 135). Now it needs the support of the anti-capitalist separatist party Popular Unity Candidacy (CUP) to secure a pro-independence majority in the regional parliament.

The problem is that CUP, which advocates a Catalonian exit (Cat-exit) from the EU, the Eurozone, and NATO, as well as unilateral default on the region’s debt, seems determined to play hard ball. After picking up 10 seats in the election – a seven-point increase on 2011’s total — its lead candidate Antonio Baños has refused to endorse the reappointment of the region’s pro-business president Artur Mas, who Baños described as “tainted” by corruption and the long shadow of austerity.

Kingmaker or Kingslayer?

In his role as Catalonia’s new kingmaker-turned-kingslayer, Baños also dismissed the possibility of CUP supporting a unilateral declaration of independence from Spain. Before the elections CUP had pledged that it would only support a unilateral declaration of independence if the pro-independence parties received a majority of the vote. It won 47%.

As for Mas, his post-electoral hangover has only just begun. Back in 2012, The Economist’s Giles Tremlett presciently warned that by nailing his colors to Catalonia’s independence movement in a last-ditch effort to salvage his own political career, Mas had jumped on a tiger he could not fully control. Now the tiger, it seems, is in the process of unseating its rider. And the rider could soon find himself barred from public office altogether.

As El País reports, the Catalan premier and two other political officials from his party are an official target in a probe (or in the vernacular of Catalonia’s pro-independence supporters, “political trial”) opened by prosecutors over last year’s symbolic referendum:

…click on the above link to read the rest of the article…

Today’s Turning Point on ECM

October 1, 2015

Today’s Turning Point on ECM

I have been warning that this turning point is not in markets, it is centered in government. The number of issues coming to a head are just mind-blowing from the Catalonia vote to separate from Spain to the resignation of Boehner with non-politicians leading not just in the USA, but everywhere. The elections in Greece was most likely the last vote for any political establishment since the Greeks do not expect any promise to be kept.

Yet today just may mark a very strange event that might be extremely important. Today, Russia gave the US 1 hour notice and began bombing both ISIS and rebels seeking to overthrow the Syrian government. It is extremely curious that this beginning precisely on the day of the ECM. Will this prove to be the start of international war?

Meanwhile, Christine Lagarde of the IMF came out to state today also on the turning point of the ECM that the rate of economic growth this year will probably be weaker than in 2014. I had a meeting in Europe with a former board member of the IMF and we had some very frank discussions. To put it mildly, they are indeed worried. The inflation rate for Euroland just turned NEGATIVE again.

So while cash is now KING, stocks remain vulnerable and commodities have no bid sufficient to change the trend, it appears we are headed into the wonderland of our political-economy.

The ECM Turning Point 2015.75 – The Start of a Trend is Now

September 28, 2015

The ECM Turning Point 2015.75 – The Start of a Trend is Now

I was in Barcelona and was asked by many did I think the pro-independence parties in Spain’s Catalonia region would actually win. I told them it was inevitable for this is the global trend in motion. The vote for Catalonia is in – the separatists have won an absolute majority in regional elections. It looks as though the separatist alliance and a smaller party won 72 seats in the 135-seat regional parliament. They have declared that this will now allow them to declare independence from Spain unilaterally within 18 months.

The Spanish central government in Madrid has pledged to block any unilateral independence moves in court. Why? Politicians are no different than kings, dictators, or emperors. This is not about what the people want, it is all about maintaining power.

This vote is just the BEGINNING of the separatist movement around the world. Centralized government is dying. Society has always swung back and forth between centralized government and regional government. Once a centralized government grabs power, it will always expand until it consumes all power.

This is why I say that TAXES ARE NO LONGER NECESSARY. Money is no longer a commodity and the value of any currency depends entirely upon faith. Even gold has no value unless you believe someone else will accept it from you at some mutual agreed value. This is also why money cannot be a store of value for it requires ending the business cycle and life itself.

…click on the above link to read the rest of the article…

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