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".