Spain’s banks are struggling with €182 billion ($232 billion) of bad debts, some 10.7% of their loan books. Until these debts are restructured and the Spanish banking sector’s bondholders are forced to eat their losses — including the sovereign and the various multi-national agencies like the European Central Bank, which holds considerable amounts of Spanish collateral — not much is going to be resolved. But Spain is merely a microcosm of the widespread problem of too much debt having been accumulated in the good times, now unable to be paid back. So far, massive infusions of central bank liquidity have helped to ... (full story)