Well, Variant Perception’s Jonathan Tepper certainly doesn’t think so, and since his latest report on the Spanish banking sector cites me extensively and explicitly, I guess I don’t either.

Spain had the mother of all housing bubbles. To put things in perspective, Spain now has as many unsold homes as the US, even though the US is about six times bigger. Spain is roughly 10% of the EU GDP, yet it accounted for 30% of all new homes built since 2000 in the EU. Most of the new homes were financed with capital from abroad, so Spain’s housing crisis is closely tied in with a financing crisis.

The impact on the banking sector will be severe. Consider this: the value of outstanding loans to Spanish developers has gone from just €33.5 billion in 2000 to €318 billion in 2008, a rise of 850% in 8 years. If you add in construction sector debts, the overall value of outstanding loans to developers and construction companies rises to €470 billion. That’s almost 50% of Spanish GDP. Most of these loans will go bad.

Spanish banks, in our view, are now facing a very bleak outlook. Spain’s unemployment rate reached over 17%; there are now four million unemployed Spaniards and over one million families with not a single person employed in the family.

We argue and will document anecdotally in this report that:

• The real estate crash in Spain is worse than is widely believed, much as the subprime problem was much worse than people believed
• Spanish banks are hiding their losses and rolling over debt to zombie companies, much as Japan did in the last decade
• Investors are deluding themselves if they believe that Spanish banks are among the strongest in the world. (This is a new theme. See Forbes’s latest “Spanish Banks In Top Form” for an example of the new fawning articles on Spanish banks.)

If we are right, Spain will soon have zombie banks like Japan and it will face a prolonged period of deflation. However, Spain will be much worse.

The report is getting extensive coverage in the UK and Spanish press:

Financial Times – Are Spanish banks hiding their losses?

Expansión – El informe más catastrófico: “España sufre la madre de todas las burbujas inmobiliarias y su banca será zombie”

Cinco Dias – Una casa de análisis predice que España se enfrentará a una tasa de paro superior al 25%

Cotizalia – ¿Están los bancos españoles escondiendo sus pérdidas?

For those of you whose first language is Catalan I’ve organised a translation on my Catalan blog here.