Spanish bank trot continues

The NYT has a very vivid piece on deepeing anxiety in Spain. Spaniards continue to pull their cash out of banks at a "trot", even if it is not a full bank run for now. Deposits equivalent to 7% of GDP were withdrawn in July. And the educated classes are starting to look abroad. They are opening accounts in London and even moving there.

According to official statistics, 30,000 Spaniards registered to work in Britain in the last year, and analysts say that this figure would be many multiples higher if workers without documents were counted. That is a 25 percent increase from a year earlier.

One fascinating reason is there is a fear of what happened in Argentina:

The corralito, or corral, as the Argentine action is known, has become part of the public conversation in Spain. The million-plus Argentines who have since immigrated to Spain have provided ample and gory stories of desperate legal battles and wiped-out savings.

That's remarkable. Many people will personally know someone who lost everything in a currency crisis.

Even ECB bond purchases may now only buy time. They would not solve the growth problem, and after the initial relief wore off problems of inflation fears and fiscal resistance would be much worse. And if Germany does get more EU control over member budgets , what happens when Paris is blocked by strike action or roads get blocked in Italy? Local sovereignty, accountability and legitimacy will be gone. If you think the EU s unpopular now, just wait.

The European elites so desperately need something this September I suspect they'll get another deal whih will rally markets. For a while. But there is no obvious way out.