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The Embarrassingly Ugly Truth About Spain: The IMF, EC and ALL Major Rating Agencies Are LYING!!!
Bloomberg reports S&P Downgrades Spain, Citing Region Backtracking on Bank:
Spain’s debt rating was cut to one level above junk by Standard & Poor’s, which cited euro-region peers’ backtracking on a pledge to severe the link between the sovereign and its banks as it considers a second bailout. The country was lowered two levels to BBB- from BBB+, New York-based S&P said in a statement yesterday. S&P assigned a negative outlook to the nation’s long-term rating and lowered the short-term sovereign level to A-3 from A-2.
The downgrade comes after Spain announced a fifth austerity package in less than a year and published details about stress tests of its banks. Creditworthiness concerns have grown since the government requested as much as 100 billion euros ($129 billion) in European Union aid in June to shore up its lenders and amid signals that the deficit target is in jeopardy.
CNBC adds:
Spain’s credit rating downgrade was necessary because of a deepening recession and the uphill battle the country faces in pushing through an unpopular reform program, Moritz Kraemar, managing director for European Sovereign Ratings at Standard & Poor’s told CNBC Thursday. S&P cut Spain’s credit rating to just one notch above junk late or BBB-minus on Wednesday with a negative outlook — the third cut this year — as the embattled country tries to fight off growing calls for a bailout. Spain expressed surprise at the downgrade claiming it was “unhelpful.”“Politically and socially the reform agenda is very difficult. This recession could keepunemployment up and intensify the social discontent and friction between Madrid and the regional governments,” he said.
Query: Why has this taken so long?
Let's do this by the numbers...
Monday, 08 February 2010: I warned of the undeniable storm that was the Pan-European Sovereign Debt Crisis, with a specific note on Spain simply being a bigger Greece!!! This was TWO AND A HALF YEARS AGO!
spain_vs_greece.png
March 30th, 2010: I forensically explained that Spain was essentially a default waiting to happen, in explicit detail via a report for paying subscribers - 
Spain public finances projections_033010
April 27th, 2010: I explicitly warned on Spanish bank sovereign exposure for paying subscribers: A Review of the Spanish Banks from a Sovereign Risk Perspective – retail.pdf and A Review of the Spanish Banks from a Sovereign Risk Perspective – professional
Fast forward roughly TWO YEARS and the rating agencies jump into the mix - yes, all after the fact... I penned S&P Downgrades Spain (After I Did) Two Notches ... as a response:
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. You can see the full video here, but only about half of it is in English. I appear in the following spots: 22:30 and 40:00... You really need to see this video if you haven't for nothing like this will ever get aired in the states, particularly right before presidential elections!!!
Reggie_VPRO_Ratings_agencies
CNBC then asks the assbackwards question, " "So Why Are Spanish Bond Yields So High, I Ask 'How Is It Spain Can Sell Bonds At All'"...
I then made clear that You Have Not Known Pain Until You've Seen The True Borrowing Costs Of Spain... -
Yes, I got carried away with this one... The Economic Bloodstain From Spain's Pain Will Cause European Tears To Rain...
Let's peruse the first four pages of the report from issued to BoomBustBlog subscribers two years ago to see if this last minute downgrade to effectively junk could have been expedited or foreseen...
To begin with, the Spanish Government BS numbers have simply been TOO OPTIMISTIC!!!
Spain public finances projections 033010 Page 01The IMF, EU and the rating agencies forecasts have simply been Bullshit, from beginning to end!!!
Spain public finances projections 033010 Page 02
Spain public finances projections 033010 Page 03
More BS!
Spain public finances projections 033010 Page 04
To prevent this post from getting too long, I will post the rest of this nearly three year report in my next rant on this topic. Note how this aged document has been more accurate than the rating agencies reports of today... Hmmm!!!!!
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I like these posts a lot better than the GOOG/AAPL ones. Nice work Reggie!
@Reggie
The true role of the PIigs is to buy time for the core.
It will not be enough time for the core - but thats the plan.
The French & Germans must keep them holding euros so that they can continue to buy their products and stuff.......not until the very last drop of blood but until the last BMW is bought.
Its sick but thats the way it works.
vimeo.com/31197882
fr.wikipedia.org/wiki/Tramway_de_Besançon
Notice the “Spanish” CAF trams are being assembled north of the Pyrennes.
http://en.wikipedia.org/wiki/Bagnères-de-Bigorre
...and when you consider that the Dr's association of America has been promoting an Apple a day for years and that Tapas bars are springing up everywhere... you have to believe that there is collusion between Apple - the Dr's association and Spain...
On another note - would someone pleaseeeeeeeeeeeee toot Reggies horn for him so he can get on to something else....
Ya did good Reggie ......... next.
Nails in the coffin
Well, I don't care how, but we better think of something. We better think of a way. - Ripley
Think of what? We're fucked!- Hudson
Credit where it's due Reggie, you were amongst the 1st to state what a basket case Spain and other parts of Europe are
but now everyone and their cat, even the dragging their feet uber-conservatives at Credit Rating Agencies, are calling for an impending trainwreck the only way you can stand-out on this topic is predicting the trigger event and/or the date Spain goes 'bang'
repeating your calls and how right you were is not news or worthy of more articles about how right you were
next article nail your flag to the mast, as Mr Summers did, and give us a date if you'd be so kind. Cheers
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Reggie doesn't get it; in the vocabulary of CB manipulated markets, debt and credit, asset and liability, now mean the same thing; as printing is a way of expressing a new power model.
We can print and turn a JPM borrowing at Zirp and lending @ 5% to government sectors; aka to those whose livelyhood depends on tax revenues, for 30 years, into a perpetual cash cow! WOw!
Jamie Dimon runs the world with his financial weapons of mass destruction hanging over our heads.
The US financial Oligarchy have replaced the USSR of old; or rather we have morphed to allowing Oligarchs now tell us what is right and wrong.
Just keeping moving, nothing there to see or to say. Unless you want to buck new Pax Americana and then there will be war.
Maths and economics made very simple...
Yes, Reggie is a super-heavyweight on analysis, but unfortunately a flyweight on outcomes and timelines. Reminds me of the chief economist of Casey Research who was predicting interest rate increases since 2008, but got his ass handed to him by the Central Wanksters.
Adios Europe Bitchez
Not only is the Emperor not wearing any clothes, he cheated on all his finals in college!
IMF Suddenly Decides It Might be OK to Loosen Austerity Tourniquets Now that Gangrene is Setting InWhile deathbed conversions might earn you a spot in heaven in some religions, they don’t carry you very far here on Planet Earth.
Christine Lagrade has taken too small a step in the right direction far too late to do much good. At the current IMF annual meeting in Tokyo, she’s made dramatic-sounding pronouncements consistent with the rather embarrassing admission in the Fund’s latest quarterly report that austerity is working less well than voodoo (I’ve never tried it myself, but some correspondents give it high marks).
As we stressed, the IMF has admitted what observers have already reported on, at some length, by looking at economic outcomes in Latvia, Greece, Ireland, Portugal, and Spain: its tender ministrations are leaving its patient worse off. Cuts in fiscal deficits (ex in special circumstances, such as being able to trash your currency at a time when your trade partners have good levels of growth) lead to even greater falls in GDP levels, resulting in higher debt to GDP ratios, the exact opposite of what this exercise was intended to accomplish. The bureaucratese is “fiscal multipliers.” When fiscal multipliers are greater than 1 deficit cutting makes matters worse. The IMF’s ‘fessing up to a problem without releasing country by country data suggests it is showing fiscal multiplies greater than 1 in pretty much all of the countries now wearing the austerity hairshirt.
And don’t try arguing that the IMF was blindsided. Numerous observers have railed against the all too obvious failure of “destroy the village to save it” posture of the Eurocrats. Paul Krugman points out even if you start with theory rather than practice, it was similarly not reasonable to expect small fiscal multipliers in the wake of a financial crisis.
While Lagarde’s willingness to buck her fellow Troika members a tad is a welcome development, it is too little, too late. It looks more like an effort to assuage guilt and burnish her record for posterity than do the right thing and seek to break with the IMF’s sorry history of breaking countries on the rack out of fealty to bankster-friendly but otherwise fundamentally wrongheaded policies. As we indicated, the Fund is late to recognize the failure of these
Read more at http://www.nakedcapitalism.com/2012/10/imf-suddenly-decides-it-might-be-ok-to-loosen-austerity-tourniquets-now-that-gangrene-is-setting-in.html#RDsdIDA0PxkDKckM.99
Query: Why has this taken so long?
How long will it take to say the ugly truth that USA is worse than Spain - just 10 times bigger.
How long?
It could be quite a while as the dollar still holds reserve currency honors. When a country's citizenry gets concerned about their own sovereign's currency, they rush into the dollar as a safe haven. If you want to buy oil you have to have dollars. If you want a bauble in Bosnia a dollar will do.
This will not change until the oil producers accept other currencies for their products. Geopolitically this is an impossibility since the US protects Saudi Arabia, the UAE, Bahrain, and Qatar. Everyone need oil and the Middle East needs the US.
Should we ever lose our will to protect these nations via a weak president and congress or a poorly administered foreign policy, this could transpire (x10 Spain) and the calamity that would result cannot be estimated.
Now is the time to credit the late, great Marvin Gaye for best asking-
What's goin' on?
http://www.youtube.com/watch?v=f39Zs0gB87c&feature=related
the most interesting aspect to this post is that one can be correct and have the data to even back it up, but with central planning gaming markets there is no way to prove anything; to wit: the rating agencies have not rated Spain correctly for years and this last BBB- is much too generous more at nonsense. So reality is unreal until the great unwind, which may take god knows how long.
i asked a diplomat friend in Spain about the latest riots and the response was very much in line with the official spin -- he is not a liar nor does he need to sugarcoat the truth, at least not to me. he really isn't bothered by any of it, but then again he does draw a government funded salary.
you'd think your diplomat friend would be wetting his pants drawing a Govt salary, not complacent! Did he give you good reason for his (over)confidence?
I live in Spain much of the year and i've not seen a single outward sign of recession except for off-prime area shops closed and the only massing of people was to celebrate Spains magnificent Euro Cup Win
but there's no doubt the tale of the tape (the maths of Govt and banking debt plus flight of customer deposits) tells a markedly more serious story than i or your friend sees
Reggie-what about "PEI"?
The stock continues higher.....
Is it still a short in your opinion?
Thanks
"That's totally inappropriate. It's lewd, lacivious,salacious...outrageous!" Jackie Chiles
By the time the actual truth is printed for the muppets its too late...back of the bread line you go bitchez. The inevitebilty of the complete disintegration of the financial system as we know it just hit odds of 100%.
And this is a surprise to whom, exactly?
Government is the most organized form of crime. If they started telling the truth, well, then we should be surprised.