Harry Dent: Spain Could Be Catalyst to Take U. S. Market Down 20%

By on May 1, 2012

Harry Dent - Great Crash AheadCNBC’s Rick Santelli interviewed Harry Dent yesterday. Dent has been on record predicting a titanic bear market in equities beginning sometime over the next year.

Dent pointed out that Spain has higher unemployment, as well as higher total public and private debt than Greece. Spain also had a bigger housing bubble than the U. S., according to Dent.

Dent said 50% of Spain’s banking system consists of unregulated “cajas” which have a high percentage of sub-prime mortgages. He added that Spain has 13% of their workforce engaged in construction compared to the U. S., which had 6% working in construction at the height of the housing bubble.

Spain, which has one of the highest percentages of debt owed to foreigners, is not coming out of this anytime soon, according to Dent. Spain will default and the market is in total denial and the question is whether it happens sooner or later, he added.

Focusing on a technical indicator, Dent said Spain’s IBEX 35 index broke below its head and shoulders neckline which goes back to 1995 indicating their market could weaken more the coming weeks or months. Dent said this is an obvious catalyst for a 10-20% correction and he can’t believe the market is ignoring it.

Santelli asked if the ECB and European Union could bailout Spain to remedy the situation, to which Dent replied they obviously can. Dent added that they’ve raised a trillion “kind of commitments” euros, but it isn’t as solid as people think. Dent characterized Spain as, “too big to fail, too big to bailout.” At some point Germany and some of the other stronger nations say, “hey wait a minute, where does this end?” They can bail out some of the smaller countries (Ireland, Greece, Portugal), but they can’t bail out Italy, Spain and France.

Dent commented on the importance of housing in Spain and the impact of demographics in Italy and Spain where the number of 30-39 year-olds are on the decline.

Source: CNBC

One Comment

  1. Blaine

    May 3, 2012 at 7:42 pm

    The spaniairds are getting their karma for what they plundered from the incas.

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