The Rout In Spain

Tyler Durden's picture

From Mark Grant, author of Out Of The Box

There Are Those Weeks

The Rout in Spain
Overnight the shares of Bankia plunged 51.4%. This, by any definition, is a rout. The citizens of Spain had bought preferred shares, hybrid bonds on the basis of an "implied guarantee" from the sovereign. No such luck. It had been a tout sold by the bank and guaranteed by no one. Now the owners are suffering the disastrous consequences.
Many European analysts had suggested that the swap out of these instruments into equity would drop the price of the stock to about 1.35 Euros but reality emerged today as the equity price plunged to 0.68 Euros. The shares traded today were forty-two times the normal average trading volume and indicated the size of the problem. The stock has lost 90% of its value since May 6.
In the meantime the central bank of Spain has said that the Spanish banks might have to reserve 5-10 billion Euros in more provisioning. This number is a joke and one more IMF/EU/ECB projection with all of the merits of two sparrows lifting a 747 for take-off. The number is more like 50 billion Euros and possibly twice that much the way things are going in Spain.
Spain has already gone bankrupt. It is not spoken of in this fashion, no one mentions it in public but that is the truth of it. The money, some $172 billion, was funneled to the banks and not to the sovereign in one more European ruse to distract everyone but the results are the same. Now it is becoming apparent that even this amount of money was not enough so more will have to be given. The money will go to the Spanish banks, the debt will be guaranteed by Spain, the contingent liability will not be counted as part of Spain's debt to GDP ratio but we will know the truth of it. Whatever direct money from Spain that goes into their banks will be called an "investment" and put on the left side of their balance sheet as an asset and the mockery will continue but I can still read a ledger; thank you very much.
This path then leads to our own Federal Reserve Bank. They have lent more than one trillion dollars now to foreign banks. Now many people nod and go to sleep as this number floats past. "Not so fast," I say, "Not so fast."
The Fed is lending about $700 billion to American banks and $1.03 trillion to foreign banks. Two issues are raised here in my opinion. Why is America lending all of this money to foreign institutions and I would hope that Congress will begin an inquiry into this question. The second issue is that since we are engaged in this lending why is it? One assumes that it is not for nothing and so it raises the question of the health of the European banks that must be so serious that the Fed is forced to come to their rescue. I repeat, the financial health of the European banks must be so impaired that the Fed has been forced to lend them ever increasing amounts of money.
Our world is like a Dali painting; distorted, out of balance and disjointed. The central banks pump in the money, the governments distort the data and lie, the markets head every higher and Puff the Magic Dragon flies on unencumbered.
In fact, according to the most recent data, the Fed now owns 30.32% of all ten year equivalent government debt. At the current trajectory the Fed will own all of the government's debt by 2018. The value of the Dollar may be three Nigerian bananas by then but not to worry because the Euro will only fetch two bananas and the Yen only one. It is indeed hard to see where we are going here. Deception and monetary creation have gotten us where we are but how long until someone actually climbs up Mt. Olympus and discovers that there are no gods is anyone's guess.

“There are decades where nothing happens; and there are weeks where decades happen.”

                     -Vladimir Ilyich Lenin

Watch out for those weeks!

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
CH1's picture

And the sheep will look for more reasons to avoid the subject.

toys for tits's picture

It was delayed 70 years but it looks like the all Spaniards need to learn German


... or Chinese.

Element's picture




... sorry .. it was just hangin there ...

BoNeSxxx's picture

Spain was once a great empire,... Britain was once a great empire... The USSA was once a great empire.

Rustysilver's picture


By my definition there is no such thing as a great empire. Big maybe but not great.  Empires by definition subjugate people and eventual get so corrupted that they collapse.

OneTinSoldier66's picture

Ohhhh, a Great Warrior... heh heh. Wars not make one great!

kridkrid's picture

One part normalcy bias, one part defer to experts, one part mindless distraction, one part mental retardation... for those who are capable of overcoming those elements, mix in just enough cognitive dissonance to render the mind useless.

Sandmann's picture

You give sheep too much credit. The fact is the Judas Goats have control and have led the sheep to slaughter. You keep blaming the victim because it makes you feel smug and superior. The simple truth is that Westerners have accepted The Dictatorship of the Oligarchs far more easily than they would the Dictatorship of the Proletariat because their blessed "private property" was not overtly confiscated by the Oligarchs - simply borrowed on an infinite basis with an Irredeemable Zero Coupon Bond

Oldwood's picture

CAVEAT EMPTOR? Is there anything else? Sheep stay in the flock because they see safety in numbers, even on the way to the slaughterhouse. Sheep will be sheep and wolves will be wolves. As humans, to some degree we do have a choice, unless you believe the sheep are as many see homosexuals and genetically predispositioned to their tendencies. There is plenty of blame to go around, unfortunately most will not look in the mirror.

samcontrol's picture

jeez least put a Spanish player on the pic.

Bankrupt from Belgium's picture

may be it is that his name is so close in pronounciation to "messy" - which politely sums up the situation described in the article.

GetZeeGold's picture



Our top story tonight....Generalissimo Francisco Franco is still dead.

Dan The Man's picture

...but i really like bananas...they're all my GOLD !!!  BAHAHAHA

cowdiddly's picture

That what I was thinking. The dollar won't buy three bananas now. 3 weigh about 2 pounds. At 59 cents a pound thats $ 1.18. But, it dollar in 2018 might be worth a discarded banana peel in 2018

thelibcentury's picture

I'll take the peel over the dollar today! I can cook a fish in it...


I tried the dollar bill, it didn't work quite as well. I think the ink made me sick.

Midas's picture

But can you dig an ounce of silver out of the ground with five banana peels?

overmedicatedundersexed's picture

one or two less bulls at the running this year will save alot, there is lots of fat to cut, just not pols fat in the fire -they get to keep their healthcare, pensions, gov expense accounts, but of course will feel the peoples pain, oh yah. they feel it.

ebworthen's picture

Good stuff, thanks.

Remind me what a ledger is again and who in Washington or Wall Street uses one anymore?

"Puff! the magic dragon...lived by the sea..."

Element's picture

Some damn excellent (and obvious) questions there.

horot's picture

"Spain has already gone bankrupt."


Then how come real madrid and Barcelona can still signing big names to their club?

samcontrol's picture

Obviously , you don,t know how these Clubs or "football" work.

eg. Catalans sleep in Barca bed sheets, there sons are " socios " at birth.
They have 4 times the amount of members than can actually fit in Europe's biggest stadium.
They have secret laundered money donations. They sell 80 euro t shirts by the second around the world. UEFA dishes out $ to these star teams in many way...always a helping hand to reach semis....worth tens of millions.

It is the world's national pass time,,, it can go bankrupt like it has here in Argentina for eg ,,but it can't go away.. The "spanish ".lol. Barca player , was formed as a star at the age of 13, that was how he was promising him proper health care for his hormone problem.

samcontrol's picture

messi, puyol, busquets, xavi, iniesta, and Sharira's hubby all from the "cantera" (youth league) from within the club.

the new contracts are paid by team shirts $ alone.

Barca uses UNICEF as a main no €.

Fake_nation's picture

The sports and celebrity salaries will keep going up till the new Dark Ages really arrive. They aren't just distraction, but also a kind of faux motivation for all the talentless youth out there dreaming of becoming some kind of celebrity to save them from their shitty retail jobs. All the girls working at McDonalds in these urban hellholes really think they have a shot of becoming some kind of performer. Fake dreams keep the economy afloat, for now.

Same thing with sport aimed at teen guys. He may just be a normal guy that can throw a ball, but look, he makes over 100 million! Better go to practice and not worry about that whole real job thing till I hit 25 and it's too late...

insanelysane's picture

The Fed is lending to foreign banks because the foreign banks with branches in the US are FDIC insured.  The good old "optics" will not look good if for example Santander fails in Spain and sucks all US deposits back to Spain in a Corzinian vaporization.  The FDIC would be on the hook and every country in Europe would have their banks do the same.  Instead it is much more stealthy to have the Fed prop up these banks.  Of course the thirst can never be quenched and at some point it all gets sucked out.

Element's picture

Perhaps it's due to guilt for all those crappy US originated MBS sold to EU banksters for 10 years prior to subprime's projectile vomit.

shovelhead's picture

The White Man's Burden is to lift up those poor unfortunates by offering them a higher civilizations benefits.

It's a dirty job but somebody has to do it.

Sandmann's picture

Nothing to do with FDIC and EVERYTHING to do with CDS and Derivatives Exposure

SamAdams's picture

if any euro state goes bankrupt, then the dominos begin to fall.  exporting inflation to prop derivative fraud is not sustainable.  30% FED owned market now, 100% by 2018.  the implosion takes place 2017 or earlier.  this will be the fleecing that removes any resemblence of a constitutional republic in such a way, that no one having heard of the constitution will mistake the situation.

OneTinSoldier66's picture



But what is a Constitution? What is limited Gov't? How do you get it, and how do you keep it?


Would individuals have different definitions of the above? If yes, can limited Gov't actually be defined then?

newworldorder's picture

How about we pull the charter to operate in the US if a foreign institution does not have sufficient equity funding? Or, would that not suit the international bankster cartel?

falak pema's picture

public accounting like shadow banking have one thing in common : we sup with the devil and we don't have a long spoon.

When debts and assets, when consumption and investment, when crime and punishment become confused.

No wonder the people can be bemused in dark pools of high frequency abuse.

Dan Brown has written a new book; its called Inferno and its Dantesque; like Helicopter Ben circling in his skyfall.

mammoth mo's picture

Anybody else smell that?


Smell's like Cyprus.

Sandmann's picture

This is Bin Laden's Victory. He attacked New York and the Fed panicked flooding the system with liquidity in 2001 and Bush blew the cap of Arms Spending so the Bin Laden Boom started and in the UK Gordon Brown let Public Spending rip on a sea of easy credit. The two countries with the biggest trade deficits went for broke and blew out the Budget Deficit as they started New Century Warfare in Iraq, Afghan.

That is what took place. The Euro was a backdrop in 1999 with the EFT Currency coming on stream, the Physical Currency not arriving until 2002. It caught the Fed Blowout and floated on easy credit which boosted the PIIGS.

So it was Bin Laden that succeeded in destroying the Western Financial System and he never gets credit.

the not so mighty maximiza's picture

he was a rather resourceful CIA contractor no doubt.

SamAdams's picture

"I will bankrupt the United States.  Allahu Akbar!"  Amazing how Muslims have such tight control over our Jewish Federal Reserve System....

falak pema's picture

Ben Laden like the Taliban created in Afghanistan, let out of the bottle like the Djinns of the East, enticingly Roxaned or Scherezaded, where all western myths come to die; Alexander, then the Great Game of Lion vs Bear now the US crusade on terrorism.

Some countries play like Troy, get destroyed, but bring down the house of Atreus as well. West's recurrent nightmarish wet dream fed on hubris.

Its called Kismet its soaked in the blood of dead Khwarezmians and Mongols alike. The great castles of Tartary now beckon once again, fatal trap for gold diggers, silk n spice n ruby lovers and oil barons. 

When you create a Frankenstein monster in the sands of time, don't go chasing it as its land of moving sands and hidden serpents.

"El sueno de la razon produce monstruos" (the sleep of reason produces monsters) says Goya in one of his surrealist paintings.

See the red hand now coming to London town. Its the price of droning. When ideals become sham the sham become idealists.


kridkrid's picture

that's bullshit. The system was designed to fail from the very beginning. Credit/debt money loaned into existence with interest attached. Debt, by definition within this system, must continue to expand until such a point is reached when the cost to maintain the debt overwhelms the productive economy that resides within it. Whether you believe Bin Laden was legit or a CIA plant, or any other theory you wish to attribute to him, all he really created (or our gov't through him) was the pretense to position our military in spots to theoretically control our access to key resources when this whole things comes crashing down, which has always been inevitable.

shovelhead's picture


I've been waiting a long time for that $25/barrel Iraqi oil to show up.

boatman's picture

it was coming anyway, bin laden or no bin laden.............barry soretoro or none.

but its not planned.............its just the nature of homo sapiens.

wash, rinse, dry....................repeat.

quikwit's picture

GAAP dude...dunt have ta be right, jus' generilly accepted.

Jack Burton's picture

I watch Max Keiser on RT, he has been calling this state of affairs day after day for years. Still people call him a crank! How do the FEW who proclaim the truth of World Banker Terrorism and Central Bank Foolishness always end up being called Cranks by the Main Stream Fiancial Press? 

Spain is so bankrupt it isn't even funny. There are many more to follow. France and the Great Money Printer, The United Kingdom. Both are in reality bankrupt states. And fucking big one's too, in the European context.

kridkrid's picture

A great topic, worthy of its own engaged thread/discussion. There are been a few articles in rapid succession, most recently in the NY Times, on the topic of Conspiracy Theories and people who 'believe in them'. It is such a transparent attempt to keep people corralled... though it works. I have a group of friends who I consider to be extremely intelligent, published authors, experts in their fields, and knowledgable on all sorts of subjects kind of guys. We had a long conversation/debate on this very topic... and in general, they feel comfortable grouping all thought that lies outside some particular band as "conspiratorial". It's so clear to me that their minds, while incredibly capable, are also partially controlled. They think the same of me. I think I'm right.... they think they are.

OneTinSoldier66's picture

I believe that if you can think for yourself and you see enough anecdotal/circumstantial evidence that you should at least give consideration to there being a "possibility".


I love facts. But in today’s world, I question everything!

Debugas's picture

the root cause of the problems is TAXATION. We need a new system based on DONATIONS