Readers know I have been extremely skeptical of reports that Spain is in some sort of economic recovery.

For example, on September 18th I commented Spain on Track to Meet Budget Targets Says Economy Minister; Data Strongly Suggests Otherwise

Recovery Nonsense

Today, more evidence is in that recovery talk is pure nonsense. Via translation from El Economista, please consider Questions Regarding the Banking Improvement

The widespread expectations that the Spanish banking has begun its recovery were seriously questioned on Wednesday with July arrears data. The overall delinquency rate hit a new record high in 12% (and clearly exceed 14% if you include the credit transferred to the bad bank ), with the rate reaching for promoters a terrible 31%.

But more worrying is the escalation in mortgage delinquencies which reached 5% for the first time. This is a very strong acceleration, since a year ago this rate was at 3.23%.

“The Spanish stop eating before you stop paying the mortgage” is a well known topic. Well now this argument is floundering on the evidence.

The builder default rate has reached 29% in the amount of 18.624 billion euros. Growth in builder defaults has a lot to do to reclassify restrictions imposed by the Bank of Spain. This phenomenon will continue in the coming months, because until September 30 banks do not have to start formally adopt reclassification measures.

Well fancy that. Delinquencies have been understated and the lies are just now admitted.

Actually, that’s progress. But let me ask: How much more “progress” is coming?

Mike “Mish” Shedlock