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Goldman Agrees With Zapatero That Spain Needs No Bailout, As Goldman Prop Desk "Does Its Thing"

Tyler Durden's picture




 

Just because Goldman tends to get a pretty good look at all counterparty books, we will surely take their word on this one. Or not-  as we reported recently, DTCC indicated that Spain has seen massive
synthetic derisking over the past 2 weeks. We contend that Goldman's prop desk has been a major participant in the recent derisking action. We would be happy to be proven wrong: if Messrs. van Praag and Canaday would but disclose the firm's prop positions which refute this claim, we will immediately issue a retraction. Also, the latest DTCC data will
be updated when it becomes available tomorrow morning European
Caffeinated Time: we expect Spain to be among the top recipients of market suspicion in the past week. In other news, we expect Spanish CDS spreads to blow out shortly, and the Spanish curve to invert within two weeks, even as Goldman sets everyone at hypnotic ease.

From Goldman:

PM Zapatero's press conference is business as usual

It seems he is answering a question from a journalist regarding this morning’s rumour (of Spain asking €280bn aid): he says that the rumour is complete madness, that Spain has strong solvency and that rumours can hurt  Spain (and are intolerable).

Comment: We agree with him on all three accounts. Still, Spain needs a thorough labour market reform to set the economy on a higher growth trajectory for the next 5 years.

........................

15:21 04May10 RTRS-SPANISH PM ZAPATERO SAYS RUMOUR OF SPAIN ASKING FOR 280 BLN AID FROM EURO ZONE IS COMPLETE MADNESS
15:22 04May10 RTRS-SPANISH PM ZAPATERO SAYS SPAIN HAS STRONG SOLVENCY ON DEBT
15:23 04May10 RTRS-SPANISH PM ZAPATERO SAYS RUMOURS CAN DAMAGE SPAIN'S INTERESTS, THAT'S INTOLERABLE
15:24 04May10 RTRS-SPANISH PM ZAPATERO SAYS LOAN FOR GREECE IS A CONSIDERABLE COMMITMENT FROM SPAIN
15:24 04May10 RTRS-SPANISH PM ZAPATERO SAYS SPAIN HAS TO RESTRUCTURE FINANCIAL SECTOR
15:28 04May10 RTRS-Report Spain wants 280 bln euros aid is madness-PM

 

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Tue, 05/04/2010 - 17:04 | 331521 MilleniumJane
MilleniumJane's picture

"even as Goldman sets everyone at hypnotic ease. "

 

Poetry.  Reminds me of Kaa the python from the Jungle Book.

Tue, 05/04/2010 - 19:04 | 331713 docj
docj's picture

Trussssssst in meeeeee...

Trussssssst in meeeeee...

Sssssshut your eyesssssss...

And trussssssst in meeeeee...

Tue, 05/04/2010 - 17:11 | 331538 101 years and c...
101 years and counting's picture

Time for GS to tell their clients now is a good time to long EUR?

With a stop loss at 1.00?

 

Tue, 05/04/2010 - 17:11 | 331540 4shzl
4shzl's picture

Goldman sets everyone at hypnotic ease.

Apparently not in the FX pits -- the yourowe just cracked 1.2980.


Tue, 05/04/2010 - 17:21 | 331554 daz
daz's picture

no bailout needed today... but what about tomorrow....

 

Tue, 05/04/2010 - 17:34 | 331577 williambanzai7
Tue, 05/04/2010 - 17:32 | 331581 Gordon_Gekko
Gordon_Gekko's picture

The question of Spain needing the bailout is easily resolved - nothing is more sure of happening than when it has been officially denied.

On another note, I wonder why EUR starts collapsing due to a few hundred billions in bailout for one little country (or a few countries) when the United States has been printing trillions with abandon to bail out the ENTIRE world yet nothing is happening to the dollar.

Tue, 05/04/2010 - 17:36 | 331585 carbonmutant
carbonmutant's picture

"I wonder why EUR starts collapsing due to a few hundred billions in bailout for one little country (or a few countries) when the United States has been printing trillions with abandon to bail out the ENTIRE world yet nothing is happening to the dollar."

Because the US controls the Rating Systems...

Tue, 05/04/2010 - 18:08 | 331628 Carl Spackler
Carl Spackler's picture

No, it is actually because you have to have a bigger bankroll than "the house" (in this case, the largest casino or GDP in the world) if you are going to try and push them over the tipping point.

As well, Bernanke can print money in really, really big quantities, making this too difficult to bet against.

Greece, Spain, Portugal...these are all little pipsqueaks in comparison.

Tue, 05/04/2010 - 18:24 | 331653 Rainman
Rainman's picture

The dollar is still the best looking whorehouse in a big neighborhood full of crack houses.

Tue, 05/04/2010 - 20:01 | 331781 Budd Fox
Budd Fox's picture

"The dollar is still the best looking whorehouse in a big neighborhood full of crack houses."

Priceless...I'll share it.

Tue, 05/04/2010 - 18:36 | 331671 Bonesetter Brown
Bonesetter Brown's picture

To name a things the US has that EU/EMU does not:

common fiscal policy

political union

deep, liquid, unified sovereign debt market

ability and willingness to engage in QE

a military

better energy independence, through its own energy resources and control of the Sunni oil fields

better demographics, if only relatively better

more alignment with China and the rest of Asia-Pac, if only relatively better alignment

...i'm not sayin', i'm just sayin'

Tue, 05/04/2010 - 17:47 | 331606 Sudden Debt
Sudden Debt's picture

Funny thing about rumors.... they always tend to have at least some truth in them.

I think the fuse is lit and the candybomb will soon explode. Sweet or bittersweet, that will be the surprise.

Tue, 05/04/2010 - 19:10 | 331718 Hondo
Hondo's picture

And who in the world is going to trust GS.  Not I....

Tue, 05/04/2010 - 20:34 | 331805 Wheatman
Wheatman's picture

Zapatero's denials are just like lehman's before it went down. Ditto Greek denials of need for aid. Ditto GS denies guilt. Ditto Buffet denies GS in trouble. The entire system is about to implode and the sooner the deck of cards collapses the better. Everyting will deflate in terms of wheat. Revelation 6:6

Tue, 05/04/2010 - 20:59 | 331831 Buck Johnson
Buck Johnson's picture

You are right Carl Spackler, we have a bigger bankroll to use.  Also everywhere you go the dollar is used or can be purchased, dollar is the planets reserve currency.  But it is in a small sense happening in the US via the stat govt..  They are all needing money because they had to rosy of a fiscal scenario in thinking that tax revenues will be this or that (sorta like EU countries).  But the US doesn't really want to bailout the states because if they bailout one the rest will follow using their senators and congressmen and women to help.  And then what happens, those billions of dollars that are printed our put back into circulation of our economy alot quicker which will show inflation/hyperinlfation.  When we send the money overseas, it takes awhile to get back and most of the time its being used to buy treasuries or bonds, which the Fed can keep out of the local/US economy.  This won't enable inflation as much as direct money to the people or states who will use it to buy this or fund that etc. etc..

 

We can export our inflation out to the world and soak it up on the way back via treasuries and other paper instruments.   Greece is like a state in a country of 16 states/countries.  They need a bailout and we see the currency of the euro taking a beating because of what that bailout means.  It means that they are debasing the currency in order to prop up a country/state.  Another big thing is that since these countries in this Union compete with one another, it's real hard to get them to do something like monetize their currency (until know).  But since they said they are via the loans, then their currency is taking a beating and will continue to take one.

Wed, 05/05/2010 - 08:31 | 332220 Brett in Manhattan
Brett in Manhattan's picture

This reminds of how all the experts said Lehman was a different story than Bear.

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