Spain Looking For Another Bailout

It seems that Spain (unsurprisingly) is looking for another bailout.

According to Spanish Economy Ministry sources quoted by La Vanguardia, Spain could make a formal request for the early disbursement of €30BN from its bank rescue package this Thursday or Friday.

The money, apparently, will be used to help Bankia and other nationalised savings banks.

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Don't Believe The ECB Hype

The markets and some commentators are trying to delude themselves that the ECB will finally do something tangible to "save" the Euro.

ECB President, Mario Draghi, has managed to con some people who should know better into believing that the ECB will conduct a major bond purchasing campaign. In theory the bond buying campaign will reduce the interest rates of Spain and Italy (note Greece is not included, because it has been thrown to the wolves) and thus save the Euro.

However, people are ignoring the two very large elephants in the room:

1 Any such decision and action to buy bonds will not occur until after 12 September, when Germany’s top court rules on the ratification of the ESM. This being over a month away means that Spain and Italy, because of crippling interest rates, will most likely have imploded by them.

2 Germany’s top court may well not ratify the ESM. Even if it does, all 17 eurozone members would need to agree to it as well. Fat chance!

Therefore, don't believe the ECB hype.

The Euro, in its present form, is finished!

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Spain Appeases The Gods of Austerity

The Spanish prime minister, Mariano Rajoy, has announced more sweeping austerity measures; including a rise in VAT and other taxes, increases to spending cuts and suspending Christmas bonuses for civil servants.

The measures are designed to cut Euro65BN from Spain's budget deficit by 2014.

Among the measures proposed are a 3% rise in VAT, cuts in unemployment benefit and civil service pay and perks. There will also be new indirect taxes on energy, plans to privatise ports, airports and rail assets and a reversal of property tax breaks.

For the moment, it appears that pensions have come out of the cuts unscathed. However, as and when the plans unravel, doubtless pensions will be placed on the altar for sacrifice to the gods of austerity.

Spanish banks will receive up to Euro100BN of aid, whilst the Spanish people pay the price of saving the banks.

Suffice to say, the plan will unravel.

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The Oncoming Storm - Eurogeddon

Europe is poised to bailout Spain and Italy to the tune of £600BN, and the Telegraph reports that a  Bank of England policy maker has told traders to prepare for a devastating market seizure similar to the collapse of Lehman Brothers.

Batten down the hatches!

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Spanish Bank Auditors Go On Summer Holidays

The Wall Street Journal reports that the deadline for auditors from Deloitte, KPMG, PwC and Ernst & Young to present full reports on the capital needs of Spain's financial sector has been delayed from July 31 to September.

For why?

Officially the reason being presented is the need for more time to complete the evaluation, and the fact that most of Spain (especially the government) is on holiday during the summer.

Amazingly enough the auditors, and those organisations that have commissioned the auditors to do the work (ie Spain's government, the International Monetary Fund and the European Central Bank), have agreed to a delay in order to allow people to go on holiday.

There are two possible conclusions to be drawn from this absurd excuse for a delay:

1 There is in fact no urgent need for any reform or further funding of the financial sector or, more likely,

2 There is something that has yet to emerge that people want hidden for the time being.


Draw your own conclusions.

Doubtless the "crisis" will not get any worse during the summer recess!

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Cyprus To Ask For Bailout?

It appears that Cyprus is to ask the EU for a bailout.

The EU has stated that Cyprus hasn't asked for a bailout, but that is what the EU said about Spain last Friday.

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Spanish Bonds Now Junk

Spanish bond yields have hit an unsustainable 7%, ie they have become junk.

It is as though the "bailout" of last Sunday never occurred!

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The Spanish "Bailout" That Dare Not Speak Its Name

The market "relief" at the Euro100BN Spanish "bailout" that dare not speak its name has been somewhat short lived, Spanish 10-year government bond yields are now back above Friday's close.

For why?

Whilst the Spanish banks may have been saved in the sort term, the fundamentals remain unchanged. Spain has the highest unemployment and the third widest fiscal deficit in Europe, and its government is not regarded as being fiscally competent.

Next in line comes Italy, for which there is not enough money in the Eurozone to bail it out.

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Y Viva Espana

Q: When is a bailout not a bailout?

A: When it is a Euro100BN "recapitalisation" of Spanish banks.

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Spanish Bailout Mañana III

Spain will make a formal request for a bailout after the US markets have closed tonight.

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Spanish Bailout Mañana II

The Eurozone has now confirmed that there will be an emergency teleconference tomorrow to discuss the Spanish bailout (which the Spanish still deny).

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Spanish Bailout Mañana

Spain will request a Eurozone bailout tomorrow (Saturday) for its failing banks, this despite the fact that the Spanish government is still denying that they will ask for a bailout and the Eurozone has yet to confirm the emergency teleconference tomorrow.

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EU Admits There Is No Plan

Finally the EU has admitted to what we have known all along, namely that it has no plan.

Specifically, in the case of Spain, there has been no request from the Spanish authorities for a bank rescue and that there is no EU rescue plan for Spanish banks.

I assume that this statement is meant to somehow reassure the markets?

Just remember, and repeat, as I have said many times before:

- There was no plan
- There is no plan
- There never will be a plan

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Spain Haemorrhaging Cash

Data from the Bank of Spain shows that a net of Euro66.2BN was sent abroad last month, the most since records began in 1990.

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Spain Effectively Insolvent

ZeroHedge has quoted Charles Diebel (Lloyds Head of Market Strategy) as saying that Spain is "effectively insolvent".

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Grexit Imminent

The long awaited Grexit is now regarded as imminent, with the likely "planned" departure occurring on 2nd/3rd of June. Given that a Grexit ought to catch the markets and people by "surprise", be prepared for the "planned" departure date to be brought froward to this weekend.

French banks are in panic mode, and are now (somewhat late in the day) drafting plans for the Grexit.

In other news, Bankia has suspended its shares and has asked the Spanish government for a bailout of Euro15BN; to add to the pressure on the beleaguered Spanish government, the autonomous region of Catalonia has also asked to be bailed out to the tune of around Euro13BN.

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EC Fiddles Whilst Europe Burns

Eurozone unemployment has hit a record high of 10.9% (17.3M people are now looking for work), with Greece clocking in at 21.7% and Spain at 24.1%.

The EC claims that it is taking the problem seriously, and will (by the end of May) publish "country specific recommendations".

Given that the rate of unemployment rose by 169K in the last month, this means that even if the recommendations were of any use (which of course they won't be) another 169K people will be out of work by then.

The EC's only real objective is to ensure that it obtains a budget increase of 6.8%, it is fiddling whilst Europe burns!

The EC is not fit for purpose, as the people of Europe are finding out to their cost.

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Spanish Youth Unemployment Soars

As our EU overlords seek to impose further austerity measures on their subjects, whilst at the same time seeking an increase in their own budget for 2013 of 6.8%, it is worthwhile remembering that the EU financial straitjacket is having real consequences for real people.

Spanish unemployment figures have hit a record level of 5,639,500 at the end of March (24.4%), with youth unemployment at a shocking level of 52%.

The EU may care to pause and reflect on those figures for a moment, before it continues with its self destructive quest to fill its bloated coffers with a 6.8% increase in budget.

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Ten Countries Most Likely To Default

Bottom 10 Sovereign CDS ranked by spread at end-March 2012

Name    5Y Spread   Change   % Change   Feb ranking
Cyprus     1183             4              0%             N/A
Portugal   1075          -90            -8%             2 (0)
Ukraine      859         101            13%            4 (+1)
Argentina   809           32             4%             3 (-1)
Venezuela  712          -13            -2%             5 (0)
Ireland       572          -27            -5%             6 (0)
Hungary    546            50           10%             8 (+1)
Egypt        544           -52            -9%              7 (-1)
Lebanon    459          -17            -4%               9 (0)
Spain         428           55            15%             16 (+6)

Source markit

Greece is not on the list, because it has already defaulted.

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Eurozone Unemployment Rises

Unemployment across the Eurozone has increased from 10.7% in January to 10.8% in February, the highest level since the Euro was imposed in 1999.

Spain leads the field, with a stonking 23.6% of its citizens unemployed!

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