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European Bailout Rumor Du Jour Comes In Early

Tyler Durden's picture




 

At least it is not the China bails out Europe one: thankfully that one is now finished. Instead it is something almost as stupid -i.e., something that was floated, then denied, then floated again, then redenied, from Reuters:

  • EURO ZONE CONSIDERING FIRST LOSS INSURANCE FOR SPANISH BONDS UNDER ASISSTANCE PROGRAMME - EU SOURCES
  • SCHEME COULD COST EU RESCUE FUND ABOUT 50 BLN EUROS FOR ONE YEAR, ENABLE SPAIN TO MEET FULL BORROWING NEEDS -SOURCES
  • NO DECISION TAKEN YET ON BOND INSURANCE SCHEME, MAY BE SEVERAL WEEKS AWAY -SOURCES

Considering the source, Reuters, was pretty much 100% wrong on Monday when it said the Spanish bailout was imminent and Germany contingent, something Germany refuted shortly thereafter, we give this rumor about the same "likelihood" of being credible as every other one that Europe is fixed. But at least it managed to get the EURUSD higher by 20 pips.

More from Reuters Julian Toyer, the same guy who penned the Reuters exclusive "Spain ready for bailout, Germany signals "wait"- sources" which was, er, wrong.

The euro zone is considering aiding Spain by providing insurance for investors who buy government bonds in a move designed to maintain Spanish access to capital markets and minimize the cost to European taxpayers, European sources said.

 

One senior European source said the plan could cost about 50 billion euros ($64.5 billion) for a year. It would enable Spain to cover its full funding needs and trigger European Central bank buying of Spanish bonds in the secondary market.

 

If the gamble succeeds, it would achieve two important aims. Spain would be rescued without draining Europe's entire bailout fund and there would be no contagion to Italy.

 

Under the scheme, which officials say is under consideration in Madrid, Paris, Berlin and Rome, the euro zone's new permanent rescue fund (ESM) would guarantee the first 20 to 30 percent of each new bond issued by Spain.

 

Finnish Prime Minister Jyrki Katainen aired the idea after meeting French President Francois Hollande on Tuesday: "To safeguard our public money, we could study the possibility of the ESM intervening on the primary market with a leverage effect which guarantees just a part of the debt issued by Spain."

 

It would be the first time the euro zone had used this first loss insurance scheme, created last year to support vulnerable countries before they lose market access, unlike the full bailouts granted to Greece, Ireland and Portugal.

 

Another option would be for the ESM to buy Spanish bonds outright at auction, but that might be more expensive and not achieve the same degree of leverage. The rescue fund's rules allow it to buy up to half of any bond emission as part of an assistance programme.

...

 

The sources spoke on condition of anonymity because they were not authorised to talk about the discussions.

... but were certainly authorized to make stuff up and test market responses to half-backed schemes. Anyone remember the EFSF/ESM 3-4x leverage plan? Whatever happened there?

 

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Thu, 10/04/2012 - 07:53 | 2855228 jover
jover's picture

I dont understand what they are saying

Thu, 10/04/2012 - 07:59 | 2855236 Urban Redneck
Urban Redneck's picture

Eurozone subprime slime derivatives, perhaps it can do for Allianz, what US subprime slime did for AIG...

Thu, 10/04/2012 - 08:20 | 2855286 aint no fortuna...
aint no fortunate son's picture

"Something almost as stupid" and "from Reuters" seems to be pretty much the norm these days.

Thu, 10/04/2012 - 07:54 | 2855230 Abraxas
Abraxas's picture

This could be why gold spiked this morning. It feels good to be back in "two-steps-forward-one-step-back" mode again. Going almost solely  backwards for almost a year sucked.

Thu, 10/04/2012 - 08:00 | 2855241 timbo_em
timbo_em's picture

Even if Reuters were right and this approach is examined, would you as an investor believe those Eurocrats in the first place?

If/when the SHTF they move themselves form first loss tranche into a preferred creditor status within milliseconds, believe me.

Thu, 10/04/2012 - 08:02 | 2855246 q99x2
q99x2's picture

Spain won't be rescued until they have a revolution and throw the banksters into prison.

Thu, 10/04/2012 - 08:06 | 2855253 Acet
Acet's picture

It seems pretty obvious by now that the only rescue for most people in any Western nation will be the rescue that they do themselves and will most likelly involve slimeball politicians and bankers hanging by their necks ...

Thu, 10/04/2012 - 08:02 | 2855247 Acet
Acet's picture

I'm sure it's one of those reliable sources on the style:

Somebody knows somebody whose cousin's wife works in a catering company and she heard that one of the guys serving drinks at a meeting the other day had overheard something about bonds and insurance.

Thu, 10/04/2012 - 08:08 | 2855262 j0nx
j0nx's picture

Who's bailing out whom and with what money? Theatre of the absurd.

Thu, 10/04/2012 - 08:13 | 2855270 LULZBank
LULZBank's picture

Sweet but whos paying? Wheres this money coming from?

If its printed than *Yawn*

Thu, 10/04/2012 - 08:19 | 2855284 SAME AS IT EVER WAS
SAME AS IT EVER WAS's picture

This is O/T, but Google Reuters acquires Markmonitor. Markmonitor is responsible for tracking IP addresses of torrent users and then making the internet service providers bend over and get prison-bitched, like the cunts they are. Fuck Roiders and their rat bastard spy bussiness. If given the opportunity, I would hang every one of the rat fucks.

Thu, 10/04/2012 - 08:32 | 2855327 tip e. canoe
tip e. canoe's picture

do you have a link for that?

google reuters or thomson reuters?

Thu, 10/04/2012 - 08:45 | 2855356 SAME AS IT EVER WAS
SAME AS IT EVER WAS's picture

http://thomsonreuters.com/content/press_room/legal/696696

If this link does not work, type "reuter acquires Markmonitor" in a Google search.

Fri, 10/05/2012 - 11:01 | 2859713 tip e. canoe
tip e. canoe's picture

thanks, i misinterpreted what you wrote.

MarkMonitor
As a global leader in online brand protection, MarkMonitor uses a SaaS delivery model to provide advanced technology and expertise that protects the revenues and reputations of the world's leading brands. In the digital world, brands face new risks due to the web's anonymity, global reach and shifting consumption patterns for digital content, goods and services. Customers choose MarkMonitor for its unique combination of industry-leading expertise, advanced technology and extensive industry relationships to preserve their marketing investments, revenues and customer trust.

sounds dreamy

Thu, 10/04/2012 - 08:56 | 2855393 Stuck on Zero
Stuck on Zero's picture

Anyone ever tally up the number of terms that have been coined to mean "counterfeiting?"  LTRO, bailout, Eurobond, ZIRP, Quantitative Easing, ...

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