The Ticking Time Bomb That Are The Spanish Cajas

Tyler Durden's picture

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Cheeky Bastard's picture

Beautiful piece; completely agree.

Re: ESP and ESP related CDS; it would be a good buy [if you can afford it] since the CSAs for ESP debt are probably a bit more stricter than for other "core" EUR countries, and even if ESP debt is d-graded by only one notch; under the current ISDA/CSA structure it would provide a reasonable "event[not CE just E]" in which CC could be deployed.

That or you just trade the spread; whatever; 264 is too tight for Spain. I have no idea if swaptions are available for single name sovereign, but OOM put with a strike price of above 400 [say for Sep/Oct] could net a significant gain. Well, hedging that OOM put with buying at 264 now would be smart.


Careless Whisper's picture

I wish I could understand what you just said, cause it's probably very insightful.

RockyRacoon's picture

Ummmm.   Me too.

Well, hedging that OOM put with buying at 264 now would be smart.

Count me out of the "smart" camp.  Sure would be better to be able to trade all this funny paper than lug all this silver and gold around.   I'm just working harder, not "smarter".

Paladin en passant's picture

ESP="Spain" in Spanish

OOM= Out Of the Money [puts]

The CDS lingo I could dangerously guess at, but I don't swim in that pond.

Hdawg's picture

Little point, before you can book the end game profit they will have outlawed all profitable shorting derivatives and you could actually lose money on the forced unwinds.

Stick to the basic's the only way to play until we reset.

Cheeky Bastard's picture

Thank you for your "informed" advice.

But, as with everything else; I will do it my way.

And no; absolutely not one single thing you wrote in your comment will happen. Not one.

Gully Foyle's picture

Spain, fuck em.
I've watched Benidorm.

Oh regional Indian's picture

I like how short our attention spans have become. Scroll down and see how Greece has practically disappeared. Now it's Spain, Spain, Spain. Soon, Italy, Italy, Spain's implosion a foregone conclusion?

Then the UK, then the final frontier. You Yes Yay!

But timelines are really tight now.


King_of_simpletons's picture

Greece apparently has come out of the other end of the wormhole.

Good things are happening in the world of magic.

Oh regional Indian's picture

Laughed when I read the piece you linked.

Magic indeed. With a furious greek pop standing between reality and the gobbermint fantasy.


Carl Marks's picture

In Spain, the dead are more alive than the dead of any other country in the world. 
Federico Garcia Lorca 

Atomizer's picture

CDS is a tear drop away

Top 10 CDS Positions


The Chameleons-- 'P.S. Goodbye'



Another distraction in the works. Bigger players are going to try to fuck you over. Be careful.

Muir's picture

Thanks TD.

Read the whole piece, a surprisingly easy informative read.

Misean's picture

It's a good thing Spanish banks are more betterer solvent than German banks....

papaswamp's picture

So what you are trying to say is the Sanish banks are more betterer?

LeBalance's picture

but not 3x, please. /meow!/

Miss Expectations's picture

I think we've identified the fat finger everyone talks about.

buzzsaw99's picture

Benron and Fannie will buy them!

Careless Whisper's picture

unfortunately spain drank the green kool-aid. they have since admitted that the green economy has put them in ruins.

anywho, let's not get all negative, so props to an original spanish talent and an honorable mention to a hot italian:



VK's picture

Blatant Market Manipulation on Display, interesting, though nothing new but more blatantish apparently. (Karl Denninger)

RobotTrader's picture






Mr Lennon Hendrix's picture

Let me take you down, cuz I'm going to Capitulation Land

Nothing is real, and nothing to get hung about!

Capitulation Land forever!

Muir's picture

This week should be very interesting.

ratava's picture


Arius's picture

we are in this together....there is one worldwide interconnected financial system.

watching the House of Cards the other day on CNBC; there is an interesting episode with the small town in Norway who bought worthless CDS from New York...They thought by investing they could have money to open a new school, build a new fire department etc.  however, they lost all their money (not sure but millions)... the main question is what do you do now?  The town major replied that after losing all that money it was simple they closed the school, fired half of fire department and cut their budget....they did not go the government with their hands out and expect them to pay for their mistakes or because were taken by the big banks in new dont see this in America...i wonder why?

somehow, people blame someone else and none even imagine paying the price...its always fuck Spain or Greece until it hits home and then all of a sudden you will see another side....yeah well hopefully it never does...lets hope or even better lets just stuck our head on the sand at least we will not see it and in our mind we are okay...i think this is the main thing some people dont want to see the whole truth...anyway happy fourth!

Pensatulla's picture

The green-economic model is not going to work because it's attempting to replicate the oil-fired economic model. That's like having an oil-fired economy attempt to replicate a feudal economy, which is happening in much of the 3rd World.

The green-economy is probably only suitable in outer-space; NASA uses solar panels on orbitting spacecraft succesfully and the Mars rovers outperformed every expectation.   

brushfire's picture

so because solar power is used with success by NASA in space, it's not suitable for earth? not sure about that one. at IBM in the 70's the top brass thought that computers would have no role in the lives of everyday people. even very smart people get it very wrong sometimes. saying a solar or green economy cannot work is a pretty arrogant statement that belies a lack of imagination.

Pensatulla's picture

I'm talking about attempting to replicate the oil economy with solar power. We live to drive cars, consume, build suburbs. Oil has many advantages in this: cars start when it's cold, it's transportable, high btus's, immense capital formation. When we try and replicate this model with solar power and wind turbines we come up short every time. The green technologies can't compete in energy output, they have to be subsidized, they end up causing massive environmental damage. Green technologies are not meant to function according to the dictates of an oil economy. They need a different economic paradyme. One example is in outer-space. Another might be in self-contained high-tech communities (universities, perhaps). Islands are also ideal.

Manipulism's picture

because you have to end this growth-thinking(interest-thinking)

New_Meat's picture


"The green-economic model is not going to work because it's..."

you meant to say "thermodynamically inefficient and doesn't pay for itself in almost all circumstances".

Run the numbers, even with Gov't subsidy.  Better yet, look at sunk costs examples like Spain and Denmark.  Consider cost of keeping the grid alive.  Consider the "greenhouse gas" and pollution inherent in cycling coal units.

for example, but there are many others.

- Ned

declineNfall's picture

am surprise you havnt taken a more in depth look at the the german sparkasse (local credit unions).

implied govt garantees, lots of non performing loans, major conflicts of interest and local govt intervention and encouragement on lending practices, no profit on lending.

far more exciting than the (relatively) solid cajas


hellboy's picture

Brilliant, thanks for the write-up!!!

herry's picture

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