Spain is Spiralling into The Vortex of Debt-Deflation! The Country’s Collapse is The Mathematically Certain!

• Europe’s Maquina Infernal has crippled Spain! 
  By Ambrose Evans-Pritchard, http://www.telegraph.co.uk/ 
  Spain is spiralling into the vortex of debt-deflation. This has nothing to do with Greece. It is not the result of fiscal extravagance over the past decade, or other such Wagnerian myths.
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  The country’s collapse is the mathematically certain – and widely predicted – result of ferocious monetary and fiscal contraction on an economy struggling to deal with a housing bust. Monetary tightening by the European Central Bank caused Spanish real M1 deposits to fall at an 8pc rate in mid-to-late 2011, guaranteeing the crash into double-dip recession that we now see. 
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  Indeed, the ECB even let the broader M3 money supply contract for the whole eurozone late last year, badly breaching its own 4.5pc growth target. This was not purist hard-money discipline. Let us not dress it up with the bunting of ideology, or false authority. It was incompetence, on a par with the errors of 1931.
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  Spain’s Bankia fiasco has merely brought matters to head, though the details are shocking enough. A €4bn bail-out in mid-May. A €23bn bail-out two weeks later. You couldn’t make it up.
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  Investors have noticed that Deloitte exposed the rot, not the regulators. Bankia is the creation of the ruling Partido Popular, thrown together from regional cajas under its control. It was a sink for €30bn of bad debts from property developers, an instrument to “extend and pretend”, to cover up the systemic awfulness of the housing crash.
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