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You Have Not Known Pain Until You've Tried To Limit The Borrowing Costs of Spain!!!

Reggie Middleton's picture




 

 

 The MSM reports Spanish Short-Term Debt Costs Reach Alarm Levels:

Spain paid a euro era record price to sell short-term debt on Tuesday, pushing it closer to becoming the biggest euro zone country to be shut out of credit markets. The soaring borrowing costs highlight the shortcomings of a June 9 euro zone deal to lend Spain up to 100 billion euros ($126 billion) for its banks.

Last week CNBC Asked, "So Why Are Spanish Bond Yields Falling?". I Asked The Better Question, "Why Are Spanish Banks Considered Solvent?" That's because by now everybody knows that the bank's problems are the sovereign's problems and vice versa. Reference Dead Bank Deja Vu? How The Sovereigns Killed Their Banks & Why Nobody Realizes They're Dead..

They also illustrate how Europe's problems run much deeper than Greece, brought back from the brink of default in Sunday's parliamentary election. 

Spain, the euro zone's fourth largest economy, had to pay 5.07 percent to sell 12-month Treasury bills and 5.11 percent to sell 18-month paper - an increase of about 200 basis points on the last auction for the same maturities a month ago.

And this was AFTER the bailout! With friends like those, who needs enemies, eh?

While Spain's 10-year bond yields eased slightly to around seven percent after the sale, the auction underscored the government's increasingly shrill pleas for help from the European Central Bank, two days before Madrid tries to sell three-to-five year bonds.

If you remember, I warned that Spain was effectively ignoring some very large, bank related and budgetary problems as far back as 2009/10.... Reference The Spain Pain Will Not Wane: Continuing the Contagion Saga:

In the general our analysis Spain public finances projections_033010, the first four (of 12) pages basically outline the gist of the Spanish problem today, to wit here are the first two: 

Spain_public_finances_projections_033010_Page_02   

Over the last two months, as the MSM and sell sides have underplayed the importance of Spain's problems, I have repeatedly underscored the threat that Spain actually presents to the EU and the world economy...

About those rating agencies... Of course, we all know how reliable and timely the rating agencies are, right? See Rating Agencies vs Reggie Middleton, Part 3 and the Interesting Documentary on the Power of Rating Agencies, with Reggie Middleton Excerpts

Reggie_VPRO_Ratings_agencies

The only rating agency that even remotely mirrors my realistic perpsective on financial risk is Egan Jones, and you can just imagine what they sound like...

Hey, I've heard some smart guys say something along those lines... Bank Run Italiano Style!!!

And for those that don't believe the Spanish malaise can touch you, European Insurer Needs Insurance As $6B Of Its Bonds Are Instantly Subordinated Due To "Spain's Pain".

 

 

 

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Wed, 06/20/2012 - 09:57 | 2543028 nah
nah's picture

well if all this money bullshit is about who is going to run the world

.

i vote for spain

Wed, 06/20/2012 - 08:39 | 2542588 blueridgeviews
blueridgeviews's picture

And no one saw any of this coming 10 years ago.  Hmmmm.

 

Reminds me of Neville Chamberlain "Peace in our day" the day before the Nazis invaded Poland.

Tue, 06/19/2012 - 19:04 | 2541135 Boilermaker
Boilermaker's picture

Why are there not more links in this contribution?

I'm very dissapointed and unfulfilled.

Tue, 06/19/2012 - 18:38 | 2541065 newworldorder
newworldorder's picture

I have made the point a few days ago,and its going according to their mass communication plans. All eyes are on the European Football tournament 2012. Till that is over, the people will not worry about banks, finances and euro solvency.

Tue, 06/19/2012 - 18:34 | 2541058 groundedkiwi
groundedkiwi's picture

An example of the people taxpayers are bailing out. http://www.golemxiv.co.uk/2012/06/the-eurofiscal-corruption-contest-the-...

Tue, 06/19/2012 - 18:03 | 2540999 ableman28
ableman28's picture

One of the interesting things about the current situation is that all sovereign bonds being issued by Euro members are in fact denominated in Euro's, whether they are issued by Spain, Greece, Italy, France, or Germany.  German bonds yield a fraction over nothing while Spanish bonds yield north of 600% of that for the same duration.  But they are all paying off in the same currency.

Without any doubt the obvious risk in default is a total or near total wipeout of capital possible combined with a discount to the original issue rate or duration is arbitrarily extended. 

Even prior to that there is the risk of progressive erosion of par value as the market becomes more worried about default and buyers of issue bonds will only due so if there is a significant discount to face to make the risk worth it.

But, and here is the point, once the discount to original issue par settles, and prior to the outright default of the issuer or a nasty haircut, prior to that the yield on these wounded sovereign issuers is pretty good.  A lot better even though quite a bit less safe than buying German paper.  The approach then is to purchase secondary issues with good yield after par has been hammered as far as it looks like it will for the time being.  Then, on really short paper, you stand to make some pretty good money.  Of course this is essentially gambling rather than investing and real investors don't gamble...............

Tue, 06/19/2012 - 17:56 | 2540974 diogeneslaertius
diogeneslaertius's picture

cold hard reality

Tue, 06/19/2012 - 17:43 | 2540951 Herdee
Herdee's picture

Anyone who's smart and has read history will know how foolish it is to leave gold or any precious medal in a bank safety deposit box.Why?Do you want it confiscated by governments who want it?And corrupt,war mongering politicians will do anything to keep their big fat pensions will pass the laws during the night while you sleep.It'll come again,don't kid yourself.Commies are no different than the asses that run Washington and London.They're basturds.

Tue, 06/19/2012 - 17:30 | 2540915 Bastiat
Bastiat's picture

The pain in Spain falls mainly on the sane.

Tue, 06/19/2012 - 15:45 | 2540575 Snakeeyes
Snakeeyes's picture

The alarms are going off and no one wants to do anything execept ... monetary easing. Won't work, of course. 

http://confoundedinterest.wordpress.com/2012/06/19/wake-of-the-flood-investors-anticipate-central-bank-intervention-flooding-get-a-life-jacket/

Tue, 06/19/2012 - 18:21 | 2541030 Simon Endean
Simon Endean's picture

Of course no one wants to do anything, my good man.  We've already struck the iceberg and left it in our wake.  The danger is now behind us, and there's nothing but smooth seas between our fine vessel and our berth in New York.  This ship is unsinkable, you know!

Tue, 06/19/2012 - 14:12 | 2540225 whoisjohngalt11
whoisjohngalt11's picture

As Hancock(Will Smith) said, "Good Job" :-)

Tue, 06/19/2012 - 14:24 | 2540273 smb12321
smb12321's picture

Reggie for King of the Universe.  The MSM "spokes people" go ape when yet another of Reggie's not so unpredictable forecasts occurs.  They act as if it's a mystical experience instead of simple extrapolation of current forces.   Go Reggie!

Tue, 06/19/2012 - 13:44 | 2540122 Race Car Driver
Race Car Driver's picture

Other words that rhyme with Spain (besides the over-used Pain and Rain - mix it up!), (511 results):


1 syllable:
aine, ane, ayn, bain, baine, bane, bayne, blain, blaine, blane, blayne, brain, cain, caine, cane, cayne, chain, cheyne, crain, craine, crane, crayne, dain, dane, dayne, deign, drain, draine, drane, duan, duane, dwayne, fain, fane, fayne, feign, fein, frain, fraine, frane, frayn, frayne, frein, freyne, gain, grain, grein, hahne, hain, hane, hayn, hayne, heyn, heyne, jain, jane, jayne, kain, kaine, kane, kayne, krain, krane, krein, lain, laine, lane, layne, ln, main, maine, mane, mayne, meyn, paign, paine, pane, payne, plain, plane, quain, rain, raine, rayne, reign, rein, reine, sain, saine, sane, shain, shaine, shane, shayne, skein, slain, slaine, slane, spain, splain, splaine, sprain, stain, strain, swain, swaine, swayne, thain, thaine, thane, thayne, train, trane, twain, vain, vane, vein, veyne, vrain, wain, wane, wayne, zane

2 syllables:
abstain, abstain, again, ahlen, air lane, alain, alaine, alane, alayne, allain, arcane, arraign, attain, aven, bahrain, bahrain, beauchaine, beauchene, biscayne, block plane, boat train, brain drain, branched chain, brattain, buntain, butane, calf's brain, campaign, car train, catain, champagne, champaign, champlain, charlayne, charmain, charmaine, chastain, chow mein, closed chain, cocaine, complain, constrain, contain, costain, courchaine, dahrain, decrane, defrain, delaine, demain, deschaine, despain, detain, devane, dewayne, dewayne, disdain, domain, domaine, draw rein, duchaine, dufrane, dumaine, dumb cane, duquesne, dushane, duwayne, elaine, elaine, elaine, elane, elayne, explain, fast lane, feed grain, fontaine, food chain, food grain, fore plane, fort wayne, fountaine, free rein, freight train, galane, gas main, germain, germaine, germane, great dane, helane, horse grain, hossain, humane, hussain, hussein, iain, inane, insane, in vain, jack plane, jermaine, jet plane, jyishane, laraine, left brain, lehane, lennane, long plane, lorain, loraine, lorraine, maclaine, maclean, mail train, maintain, match plane, mcbain, mcbane, mccain, mccane, mcclain, mcclaine, mcclane, mcgrain, mcgrane, mcguane, mckain, mckane, mclain, mclane, mclean, mcquain, mcshane, mcswain, mcwain, morain, moraine, mud stain, mundane, mustain, obtain, oil stain, okane, o'kane, ordain, partain, pertain, petain, profane, pull chain, refrain, regain, remain, remain, restrain, retain, retain, retrain, right brain, rogaine, romain, romaine, rowaine, ruane, sartain, scrub plane, sea lane, seed grain, serbaine, slow lane, small cane, smooth plane, spokane, straight chain, sustain, switch cane, sword cane, sylvain, terrain, tirane, torain, tremaine, tulane, ukraine, uptain, urbain, urbane, watch chain, wave train, wind vane, wolf's bane, yeargain

3 syllables:
acid rain, ad campaign, anchor chain, aquitaine, ascertain, ball and chain, basal vein, bearing rein, candy cane, charles's wain, coastal plain, compass plane, cotton strain, coup de main, cystic vein, dado plane, daisy chain, discount chain, dovetail plane, entertain, entertain, express train, facet plane, facial vein, flower chain, gastric vein, giant cane, golden chain, golden rain, gravy train, inclined plane, inhumane, in the main, kahane, lafountain, lafountaine, lamontagne, lawyer cane, leading rein, liner train, london plane, lumbar vein, mark of cain, mary jane, mental strain, metric grain, mountain chain, nervous strain, noble cane, open chain, overtrain, picture plane, pontoon plane, portal vein, power train, preordain, quiche lorraine, railroad train, rattan cane, rectal vein, renal vein, retail chain, sales campaign, sewer main, smoothing plane, spinal vein, splenic vein, st germain, st germain, st germaine, st germaine, st germaine, st germaine, subway train, sugar cane, take in vain, tangent plane, thyroid vein, traffic lane, vortex vein, wagon train, water main, weather vane, whooping crane

4 syllables:
angular vein, apparel chain, bronchial vein, capital gain, cardinal vein, carpenter's plane, castle in spain, cerebral vein, cervical vein, chemical chain, circular plane, commuter train, cross of lorraine, digital vein, electric main, engineer's chain, femoral vein, financial gain, hepatic vein, hospital train, jugular vein, knowledge domain, left gastric vein, legerdemain, malacca cane, mineral vein, nautical chain, naval campaign, ophthalmic vein, orbital plane, palatine vein, passenger train, pectoral vein, propeller plane, public domain, radial vein, restaurant chain, right gastric vein, senate campaign, temporal vein, thoracic vein, tracheal vein, tympanic vein, uterine vein, vertebral vein, visceral brain, woodworking plane

5 syllables:
alpine golden chain, american plane, capillary vein, capital of maine, capital of spain, combination plane, common facial vein, deep cervical vein, deep temporal vein, eminent domain, emissary vein, frankfurt on the main, great cerebral vein, innominate vein, labyrinthine vein, laryngeal vein, mesenteric vein, metacarpal vein, middle thyroid vein, occipital vein, oriental plane, ovarian vein, pancreatic vein, petersburg campaign, poinsettia strain, pulmonary vein, testicular vein, umbilical vein, whispering campaign, wilderness campaign

6 syllables:
accompanying vein, advertising campaign, capital of bahrain, common cardinal vein, external nasal vein, hepatic portal vein, middle cerebral vein, middle temporal vein, military campaign, okinawa campaign, political campaign

7 syllables:
anterior facial vein, capital of the ukraine, deep middle cerebral vein, external jugular vein, inferior thyroid vein, internal cerebral vein, internal jugular vein, posterior facial vein, superior thyroid vein

8 syllables:
accessory vertebral vein, anterior cardinal vein, anterior cerebral vein, anterior jugular vein, anterior vertebral vein, inferior cerebral vein, inferior ophthalmic vein, internal auditory vein, posterior cardinal vein, superficial temporal vein, superior cerebral vein, superior ophthalmic vein

9 syllables:
inferior pulmonary vein, superior pulmonary vein

10 syllables:
superficial middle cerebral vein

Tue, 06/19/2012 - 15:26 | 2540501 Jack Sheet
Jack Sheet's picture

Very amusing. Undeserved downvotes. I'll put in Michael Caine for good measure.

Tue, 06/19/2012 - 18:24 | 2541035 Simon Endean
Simon Endean's picture

His brother, Coe, is by far the more talented.

Tue, 06/19/2012 - 13:21 | 2540019 SmoothCoolSmoke
SmoothCoolSmoke's picture

Yeah it's a mess.  But TPTB want the DOW to go up..............  and guess what IT IS!  900 pts in the last 17 (!) calendar days.  TPTB are laughing at us.

Tue, 06/19/2012 - 13:11 | 2539974 Joebloinvestor
Joebloinvestor's picture

They put off the audit results as it is all bad news.

I expect the Spanish bank bailout to be more then $350 billion euros.

 

Tue, 06/19/2012 - 12:41 | 2539877 Winston of Oceania
Winston of Oceania's picture

Better empty your bank deposit boxes before the G-20 meeting is over and the tax authorities want to be present when you access them. Better a safe than sorry...

Tue, 06/19/2012 - 17:44 | 2540953 HomeBrewPrepper
HomeBrewPrepper's picture

It all got lost in the boating accident. Haven't you received the memo??

Tue, 06/19/2012 - 12:11 | 2539782 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

 

 

FIFA ........................ kick the ball

ECB ......................... kick the can

ZIRP ........................ kick our asses

 

Tue, 06/19/2012 - 17:27 | 2540903 sessinpo
sessinpo's picture

ZIRP ...... kick our cans and our balls

Tue, 06/19/2012 - 12:03 | 2539748 Jack Sheet
Jack Sheet's picture

Yeah, Reggie mah man too....

F**k, average German Bund interest rates were above 5% for most of the 90s and no-one raised an eyebrow.

Tue, 06/19/2012 - 11:53 | 2539697 stocktivity
stocktivity's picture

You worry too much. More Spanish bailouts to come with money printed out of thin air.   It's all Bullshit!

Tue, 06/19/2012 - 12:04 | 2539754 Jack Sheet
Jack Sheet's picture

They'll have to accept used bullfighter underwear as collateral though.

Tue, 06/19/2012 - 11:40 | 2539638 celticgold
celticgold's picture

reggie ....u da man ...AGAIN !!

 

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