What Happens When The Markets Call The Collective Bluffs Of The IMF, EC & ALL Major Rating Agencies' Spanish LIES?

Reggie Middleton's picture

Throughout the last two quarters I have bandied about corny, colloquial, yet highly descriptive articles describing the factual representation of Spain's outlook, such as The Economic Bloodstain From Spain's Pain Will Cause European Tears To Rain or You Have Not Known Pain Until You've Tried To Limit The Borrowing Costs of Spain!!! Well, as humorous as my nascent stand-up routine may appear to be, the facts of the matter should have market participates on edge. 

Fact 1: As revealed in the post, The Embarrassingly Ugly Truth About Spain: The IMF, EC and ALL Major Rating Agencies Are LYING!!! Spain has serious asset/liablity mismatch and extreme issues with NPAs in its banking system. It will NOT be able to grow out of this situation in the near term and this was apparent 3 years ago! 

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:


Fact 2: These NPAs will get much worse before they get better, detailed in As The Truth Catches Up With Spain, Will Banks Finally Be Forced To Mark To Market? You don't need my analysis to see the light. Spain currently sports more than  than 50% youth unemployment. Greater than 50% - and it's major grading partners are not far behind, or even far ahead!

See this chart from  ZeroHedge:

Data: Bloomberg and Greek Statistics Office

Fact 3: Spain is already on FIRE, yet so few refuse to smell the fumes.

What is FIRE? See Reggie Middleton Sets CNBC on F.I.R.E.!!! and First I set CNBC on F.I.R.E., Now It Appears I've Set... For more on this, see The F.I.R.E. Is Set To Blaze! Focus On Banks, part 1. A lot of people, even professionals, truly believed that the FIRE malaise would not be European in nature. Whaattt????!!!

Here are some more anecdotal facts fanning the FIRE...

Egypt Pays Less Than Spain for Euros as IMF Talks Persist

Businessweek- Egypt locked in lower borrowing costs than higher-rated Spain in selling a more-than-planned 640.2 million euros ($817 million) of debt, 

Spain's bad loan ratio hits new record of 10.7%: central bank

MADRID -- Spanish banks' bad loans surged to a new record level in September with more than one in ten classed as high risk, the central ...

Spain Sells 4.94 Billion Euros of Debt, Exceeding Maximum Target

Spain exceeded its maximum target at an auction of bills and its borrowing costs were little changed from a month ago as euro region finance ..

To bad the Spanish aren't Egyptians, though... Egypt Pays Less Than Spain for Euros as IMF Talks Persist

Egypt locked in lower borrowing costs than higher-rated Spain in selling a more-than-planned 640.2 million euros ($817 million) of debt, ..

The Spanish heat is not just in real estate and banking, either. Reference this European Insurer That Needs Insurance As $6B Of Its Bonds Are Instantly Subordinated Due To "Spain's Pain". Insurers are very heavy investors in European sovereign debt AND the debt of financial institutions. This is a wonderful place to be when you are recovering from the most expensive natural disaster that hit the US eastern seaboard, eh? But hey, weren't the European financial institutions getting killed by choking on Sovereign debt (reference Dead Bank Deja Vu? How The Sovereigns Killed Their Banks & Why Nobody Realizes They're Dead)? You know the saying, "You can run but you can't hide?" Well, banking officials have been doing a lot of hiding (of NPAs), and soon its going to be time for the running to come into play. In case you missed the pun, European Bank Run Watch: Spaniard Edition

It would be interesting to see who will be in the condition to feast at the Spanish barbecue...


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Jack Sheet's picture

Apart from attempting to scare everyone shitless, what is exactly the point of this article? Buy dollars? Where is the bottom line ?

OneTinSoldier66's picture

"What Happens When The Markets Call The Collective Bluffs Of The IMF, EC & ALL Major Rating Agencies' Spanish LIES?"


They get bonuses and a pat on the back? And don't have to pay any taxes(e.g. Christine Legarde)?

e2thex's picture

We need a committee to study the initiatives put forth by the EU to facilitate the implementations of the sovereign collectives who painstakingly promulgated conditions and additions that would hasten dreams and fruitions for all collective decisions.


Brought to you by the We of

We, the people.

Ghordius's picture

nope, this does not apply to us in the EU. Here it's "We the Peoples". Plural. Very important, this plural.

Zero Govt's picture

you'll get no change/sense out of any committee... there's 600 in Washington and it's one endless sack of garbage, hundreds in Brussels and Westminster too and that's another sewer system of human ignorance with the i's dotted and t's crossed by €£billions spent on management consultants

how about we leave it to a free (from Govt) society t resolve issues rather than this bunch of stupid clowns ...hard to do any worse yes?

LawsofPhysics's picture

Please Reggie, now you are just being stupid.  History shows you what "happens" every time.  War and social unrest.

bank guy in Brussels's picture

This is Europe, and we have indeed made a mess of things with our policies connected to the euro, and yes, lots of debt and over-levered banks

Worst of all, we have violated our social contract and ideals with the brutal 'austerity' against the common people in the Club Med countries ...

But we are still the richest place on earth

And we owe our debt to ourselves, not outside the EU

We have a positive current account and trade balance

We have 3x the bank deposits of the US for the same size economy

We grow our own food, we kept our farming and industry, and between nuclear in France and Russia as partner we even have energy covered

So in the end we can re-organise ourselves, write down the bad debt, and re-set the European banking system

And wipe all the sh*t away in a grand jubilee ... technical bond defaults that are coerced re-structurings ... along with splitting up the eurozone into two or likely more pieces ... with a full end to the 'austerity' crimes against common people

We will be fine in Europe after some more months (maybe many months) of euro-farce

And we don't need no stinkin' rating agencies

Eye's picture

The banks and the sovereigns are the biggest debtors by far.  You wipe away their bad debt and all you do is increase the moral hazard and the same sheet will happen again.  The same politicians and the same leaders in finance stay in power and the working class and the tax payers get raped again.  Have you learned nothing from Argentina?


Zero Govt's picture

Bank Guy "...we have violated our social contract and ideals with the brutal 'austerity' against the common people.."

Er, what austerity?

It's a word not an action.. politicians have cut nothing, they'r debt-spending at old levels.

And, er, what "common" people do you refer to?

Are you talking the commoners that work and are taxed and pay for Govt? Or the commoners in the public sector who get paid 50% more on average, have twice the pension and are doing worthless Govt jobs??

There's a difference, a BIG one. One set are expected to pay more taxes to support the other set (of parasites) who arte in fact wrecking the economy by diversion of wealth into that unproductive human sewer, Govt

Ghordius's picture

"what austerity"? haven't you noticed that millions of our continental european socialists went to the streets to protest against the various budget cuts affecting them?

and aren't public sector employees humans, too? I sometimes wonder about your remarks and I'm not sure you understand how much they do produce in services, here

no, nobody can accuse them of being supehumanly productive, yes, but they do something

like all anarchics, your point needs still some historic proof of validity - including the proof that nobody takes government-free zones over as soon as established

Zero Govt's picture

Ghodius  -  what are you not understanding about the Greek situation/crisis that you could ask such silly questions?

To answer what i think is your main point, that public sector work does some good, yes I'd agree, such as road building. But the motorist as in the UK is paying 8 times more in taxes than is re-invested in the roads. Plus the Govt never gets a good price. So the motorist is paying probably 12 maybe 20 times more for the good it provides

You claim i am an "anarchist". How is Govt doing at providing peace and prosperity in Greece or Argentina? It's wrecking the countries as Govt does to EVERY country. That my friend is anarchy, not the nonsense discription the dictionary deliberatly gives you to send you off the scent of the truth just as State history books never describes the real truth Govt (and Bankers) wreck country after country

We do not need Govt (a bunch of self-serving parasites living off our backs). You do not need Govt, you manage your own life cradle to grave. The sooner we rid ourselves of this sewer of humanity the sooner the wars stop, the shit goeas to the wall and the green shoots of recovery/prosperity begins anew

Govt is total crap from any angle. Game Over.

Winston Churchill's picture

Bank Guy In Sproutland.

If I was a business with Europes balance sheet(GAAP) and income


Would you lend your PERSONAL money to me ?

Ghordius's picture

what is your collateral, milord? Blenheim Palace? ;-)

Boxed Merlot's picture

a grand jubilee ...

We will be fine in Europe after some more months (maybe many months) of euro-farce...



Sounds like a plan. Good luck with that. The US could do the same if our federal reserve were ended too.

I enjoyed the 60 minutes portrayal of the "ah shucks" humble beginnings of Mr. Ben Shalom Bernanke as an out of place number crunching youth from the thriving metropolis that is Dillon, South Carolina.

Personally, I don't think the Basel folks will relinquish control of their constructs of tier valuing for the US until and unless the Union itself is fractured and dissolved.

I suspect Mr. Spielberg’s new Lincoln film to reignite smoldering passions that will result in the over running of “foreign” embassies ya know.


LawsofPhysics's picture

"The US could do the same if our federal reserve were ended too."


The Federal Reserve is not yours.  They are a private bank and you are a tenant in one of their properties.  Their response will be the same as any other owner when you can't pay your rent.

Wake the fuck up, you cannot end "them" without a revolution.  better get some of your obese fellow tenants on board quick.

Boxed Merlot's picture

The term "our" is used in reference to it being in the US as I was responding to Bank guy in Brussels.  I realize it's foreign nature to the government of the US and view it as a scourge on USG and personal sovreignty.


I do not look forward with any amount of glee to a possible "revolution" as a simple "jubilee" could accomplish the same without the need of bloodshed. 

As for the history of "our" Union, it's quite evident it was only possible after the northern bankers were well stocked on California / Nevada PMs from the mother lode and Comstock during the decade prior to the civil war which enabled it to overcome the south's, paultry in comparison, 15M in specie.  Now, for the first time since 1974, Basel will be classifying gold as a tier I deposit beginning 1/1/2013.

Why now?

falak pema's picture

'cos the Friedman pump initiated in 1971 is offcially over; are u surprised that even the bankers realise that? Even the banks can be lucid when they are not hi!

The banks KNOW they have to deleverage bigtime. But they need to get off the cocaine addiction to derivatives, WHICH THEY CAN'T.

This IS Jekyll n Hyde land in WS! 

Whence why we head to the wall! Those who drive this gravy train are totally hi on steroids. 

Mr Hide has nowhere to hide, except in criminal shadow banking, and Dr Jekyll is only lucid when he is in Basel!

Terrible place Basel...

Boxed Merlot's picture

are u surprised...


What is the future of a seed if it's never fertilized?

What is the nature of the sacrament of communion?  Can a pinch of cracker / bread and a sip of grape juice / wine really prove a transition of an individual from the physical realm to the realm of the fed? 

Personally, I give more credence to the sacrament in the value of the body of the Christ through the administration of the sacraments of the communion than to Ben’s creation of wealth in the production of frns.


But, that’s just me.   


Ghordius's picture

yes, terrible place, Basle, but the American banks have said "ain't Kansas" to Basle, as far as I understood

BAN derivatives back to the 60's, the banks themselves would trip over themselves in agreement if someone would just propose it