Spain's Not Getting a Bailout... Neither is Italy... It's the END GAME Folks

Phoenix Capital Research's picture


Spain got a “bailout” or so the media claimed. Because I cannot find any entity in Europe with the funds to actually bailout Spain (the EUFN is tapped out, the ESM has major political issues, and Germany is risking a credit downgrade and insolvency based on its backdoor EU props).


As one would expect in this situation, things are rapidly going into hyper-drive in Spain. The weekend before last the country implemented capital controls including


  • A minimum fine of  €10,000 for taxpayers who do not report their foreign accounts.
  • Secondary fines of  €5,000 for each additional account
  • No cash transactions greater than €2,500
  • Cash transaction restrictions apply to individuals and businesses


Does this sound like the actions of an economy with a sound banking system?


On a related note, Italy is once again back on the brink: in the last 2 weeks Italy’s Prime Minister Mario Monti has said that the country is “flirting with economic disaster… [and] in a crisis.” He, like Spain’s PM Rajoy, has pushed for the ESM to buy sovereign bonds. He’s also asked the ECB to implement a mechanism through which it would buy Italian sovereign bonds whenever the spread between them and German bunds grows too large (a type of bailout).


Indeed, things are so desperate that he invited German Chancellor Angela Merkel, French President Francois Hollande, and Spanish Prime Minister Mariano Rajoy to an emergency meeting in Rome over the weekend. His goal was to convince EU leaders to allow Italy to receive funding directly from the EFSF and ESM.


The ECB and Germany have already rebuked this idea:


ECB Weidmann: Strongly Against Monti's Proposal For Unconditional Funding


European Central Bank Governing Council member Jens Weidmann strongly opposed the proposal of Italian Prime Minister Mario Monti through which Italy could receive billions of euros from the European rescue umbrellas (EFSF and ESM) without meeting the assigned conditions of the aid, Sueddeutsche Zeitung reported.


For Italy, the advantage of Mr. Monti's proposal is simply to avoid meeting the strict saving and reform requirements that are conditional to receive the aid. That in turn would create a unique funding path for Italy unlike what other European countries like Greece and Portugal had to accept to get bailed out.


Mr. Weidmann on the other hand considered that as a "detour" that would result in a state funding which is prohibited by the EU treaties and would undermine the regulatory framework of the monetary union. Besides, Italy already tried a similar method in the 1970s and failed, according to the report.


Eurozone rift deepens over debt crisis


Leaders of the eurozone’s four largest economies pledged on Friday to back a €130bn growth package and defend the common currency but remained divided over the credit crisis as Germany continued to resist proposals to issue common debt and use bailout funds to stabilise financial markets.


The meeting in Rome was intended to demonstrate a coming together ahead of next week’s EU summit, but ended in disagreement over the need for short-term intervention in the markets and how to achieve greater political and financial union.


At a joint press conference Angela Merkel, German chancellor, declined to endorse affirmations by all three of her co-heads of government – Italy’s Mario Monti, François Hollande of France and Spain’s Mariano Rajoy – of the need to use the eurozone’s bailout funds to “stabilise financial markets”…


Instead, Ms Merkel said Europe needed to respect existing rules and had to work towards common structures to regulate the euro rather than have policies emanating from “17 parliaments each with national sovereignty”.


“If I am giving money to Spanish banks … I am the German chancellor but I cannot say what these banks can do,” she said.


Merkel and Weidermann’s points here are crucial. There is no way that either can OK giving German funds (ultimately Germany is the real backstop for the EFSF and ESM) without conditions. Why should Germany risk its AAA status to prop up countries that have proven to be unwilling to implement any meaningful reforms and whom actually lie openly to Germany’s face time and again?


Remember, Italy is meant to contribute 18% of the ESM’s funding… so if Italy needs a bailout…


With that in mind,  if you’re not already taking steps to prepare for the coming collapse, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.


This report is 100% FREE. You can pick up a copy today at:


Good Investing!


Graham Summers


PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.





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mind_imminst's picture

Before the end of the Euro, the ECB and FED will print to save the day. That is the only "solution" that can kick the can any further. Spain and Italy will be "bailed out" with debased fiats. Book it.

The Reich's picture

Graham's wanky wanderings.

Getting Old Sucks's picture

So how many nails does it take to close this coffin? 

Nachdenken's picture

a Trillion or two, lost count.  Lost the hammer as well.

ebworthen's picture

Deutschmarks!  Deutschmarks!  Prost!  Prost!  Prost!

The Alarmist's picture

You call those capital controls? Look at the fines for failing to file or mis-stating the info on a US FBAR. And how about 1099's for all transactions totalling $600 or more with another party. And SAR's from your bank for transactions in any amount that may be legally possible but rises to what some secret manual deems to be suspicious in nature. Plus, you can legally bring up to $10k with you across the border without declaration, but TSA seems to feel it can question you for having lesser amounts they feel are too much (like $4k in one famous case).

TrainWreck1's picture

No cash transactions greater than €2,500

I can see this spreading globally, as the push for cashless continues.

Gotta track & tax everything,

El Oregonian's picture

The more they tax and track the more the economy goes underground. People just have an aversion of their gov't chins placed on their shoulders watching and taxing every aspect of their existence. We're all Greece now.

gorillaonyourback's picture

Yep, I have made the decision to accept cash and pms only. In my bussiness im fortunate that it is easy to do. previouslybi got to the point where I was spending 10k a year on accountants and bookkeepers, 30k or 40k a year in taxes, workmans comp, and the time it takes to do my books was ridiculous. Now I tell my customers it will be 2000 dollars by check or credit card or 1500 dollars cash or pms. Only the rich people pay by check cuz they r to lazy to go down to the bank.

ekm's picture

Many times I do not agree with Mr Summer's conclusions, but as far as DIAGNOSIS is concerned, he is the best, no doubt about.

Mandatory reading. 

Thx a lot sir.

Golden monkey's picture

I forgot to tell them about my foreign underwear Tyler. How bad, you think?

Remington 00 buck shotgun shells : begin frozen meat storage today. Hit a zombie now.

ATM's picture

Better can that meat. When the electricity get's cut you'll have a hell of a time eating it all.

Dead Canary's picture

"His goal was to convince EU leaders to allow Italy to receive funding directly from the EFSF and ESM."

Yes. And I want a pony. Oh, and I would also like it to rain beer please.

The Alarmist's picture

rain beer? How about sangria?

Zero Govt's picture

I'd like it to rain turkeys around Christmas

..but here in Europe it rains turkeys all year round, it's called the EU

Paul Thomason's picture

Its all coming to an end according to the 'stars' this week, read:- The Mars-Uranus Stock Market Crash Cycle!

Rasna's picture

Elliott Wave and Ur-anus in the same link...

Need i say more?

Zero Govt's picture

good point 

Elliott Waves are patterns, they have no timing

which is why Rob Prechter ropes in every other dodgy technique known to man to try to get the timing right (95% of the time, he fails)... so he may as well try using Planet Uranus as well, worth a try

bernorange's picture

Finland is also starting to make a stand against the ESM and mutualization of debts.  Will they be the first to leave the Euro?

Nachdenken's picture

Dr. Hans-Werner Sinn and 160 economists in Gemany, Switzerland and Austria signed a petition against the German policy to support the Euro. 

Recall the 100 NBER economists who wrote to then Pres. Bush arguing against support for ailing US Banks and the Fannies.  They were right, absolutely. 

But we took another course in the USA and now in the Eurozone.  

Finnland will stay in the Eurozone for now -   the Finance Minister who yesterday sharply criticised continued support for (insolvent) nations has her comments already watered down by the ministry spokesperson.  The Scandinavian nations are the only hope, perhaps the Danish example will help.

eddiebe's picture

Here is what I see: Either Germany leaves the Union, or the pigs start coughing up their gold and Germany agrees to more printing. There is no way that the pigs can or will live according to the EU rules,(even Germany can't) but they do hold massive gold reserves. I think Central banks are getting desperate in trying to keep the fiat game going without monetizing the PM's, but the IMF has started to walk in that direction.

Al Gorerhythm's picture

If the PIGS cough up their rehypothetical gold and Germany prints more money in exchange, would that be considered a defacto gold standard or gold backed Euro exchange?

Dead Canary's picture

The proper spelling is PIIGS not Pigs. Calling these pea-brained whiny little douch-bags Pigs is insulting.

Al Gorerhythm's picture

Correction. Leaving out Iceland, the proper spelling is PIIIIIIIGS.

It's a contraction, I know but don't you find it far more descriptive and to the point in that form?

Errol's picture

A man walks into a bar...with a pig under his arm.

The bartender looks up and says "Hey, what are doing here with that jerk?"

The man replies with a flourish "My good man, I'll have you know: this is not a jerk; but rather, a pig."

Bartender replies: "I wasn't talking to you."

LowProfile's picture

Graham needs to study up on the EUR, specifically the function of the first item on it's reserve list.  It will survive, but not with the price of gold staying anywhere near this in EUR.

Not only that, but the EU will survive because the EUR mechanism will force govt's to become competitive again (so much for $ocialism).

Not saying that there may not be some interesting developments, e.g. Germany forces the EU to accept terms, and/or issue the DM in parallel with the EUR, etc. but the system isn't necessarily going to just dry up and blow away...

Al Gorerhythm's picture

Not only that, but the EU will survive because the EUR mechanism will force govt's to become competitive again (so much for $ocialism).

What, like the $us and California, Ney York or ...........?

Then consider minicipal debt. Do you think that the Euro is any different? 

Now, consider Zimbabwe...................

Do you think the Euro will be any different?

ghenny's picture

I agree. Graham makes money catastrophizing to the ignorant or innocent.  The fact is systems always take longer to get things done than anybody expects and they are far more resilient than shorts would like.  The Europeans have a massive incentive to successfuly muddle through.  The rest of the world wants and needs them to succeed.  Does Graham really think these people are so stupid and willing to act against their own interests - like for example Republican working class folks - that they will not find a way through.  Good luck dreaming and investing on that principle.

Al Gorerhythm's picture

Graham, you were on the money a year ago and you are on the money still. There is no hard sell in your offerings and people can take it or leave it. I got your report years ago but didn't take up your offerings. No biggie. I'm out of financials and out of debt. Streets ahead because of yours and other's forewarnings. Many thanks.

Rasna's picture

A broken clock is right twice a day!  QED

vast-dom's picture

graham makes the broken clock look like the finacial guru!

Al Gorerhythm's picture

When you're right, you're right.

What, you would prefer a flip-flopping guru?

Perhaps Jim Cramer as your financial advisor?

Popo's picture

"others" being the key word. Graham isnt much of an original.

Errol's picture

Graham is here to give newbies an overview.  If you're up to speed, skip his articles...

kito's picture

leave graham alone, he is tylers "special" little step brother...........