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Another Spanish Bailout Plan Taking Shape As Germany Folds

Tyler Durden's picture


With all proposed Spanish bank bailout plans so far either shot down, or found to be inadequate, the question always has boiled down to whether Germany, which as we have noted in the past is the true lender of last resort in Europe, not the ECB, will agree to the trade off of preserving the Eurozone, i.e. temporarily ending the latest Spanish risk flare out, in exchange for the risk of political disgrace domestically, where more and more people are against sweeping European bail outs, due to soaring "contingent liabilities" which increasingly more people on the street are realizing are all too real (see: TARGET2). On the other hand, a direct bank bailout request for Spain using traditional European channels, which would fund the government, would result in a deterioration in the Spanish sovereign leverage, and make the country even riskier, thereby putting more pressure on the banks, and so in a toxic loop. It now seems that this dilemma may have been resolved, at least on paper. As Reuters reports, "A deal is in the works that would allow Spain to recapitalize its stricken banks with aid from its European partners but avoid the embarrassment of having to adopt new economic reforms imposed from the outside, German officials say. While Berlin remains firm in its rejection of Spain's calls for Europe's rescue funds to lend directly to its banks, the officials said that if Madrid put in a formal aid request, funds could flow without it submitting to the kind of strict reform program agreed for Greece, Portugal and Ireland."

Whether this is merely more posturing out of Germany to telegraph it is willing to step in, without actually doing it will likely soon be tested. When that happens, expect a backlash: "Merkel has also sent the message that she is open to Europe-wide supervision of the banking sector, albeit as a "medium-term" goal, one element of a proposed "banking union" to break the vicious circle of interdependence between Europe's financial institutions and its sovereigns. But she must tread carefully. Some of her political allies and leading conservative newspapers have come out strongly against other aspects of a banking reform, including the idea of a Europe-wide deposit guarantee scheme." Yet as we showed yesterday, Germany may not have an option: the cost of a Eurozone collapse, at least in the short term, will surely be greater than kicking the can one incremental time. Which is why sovereign spreads in Europe have tightened substantially on this latest news. That, and of course, the latest Hilsenrath rumor that the Fed is about to CTRL-P, has sent risk soaring despite the latest ECB disappointment from this morning.

More from Reuters:

Spain would only have to agree to new conditions tied to the reform of its banking sector. Berlin is also exploring the possibility of funneling aid to Spain's bank rescue fund FROB to reinforce the message that it is the country's banks and not its public finances which are at the root of its problems.


The evolving German stance on aid for Spain is the latest evidence that Chancellor Angela Merkel is adopting a more flexible approach to solving the euro zone's deepening debt crisis.


With an IMF report on Spain's banks looming next week, officials say all the pieces are in place to move within days on an aid deal for Madrid. A package is expected by early next month at the latest, after an external audit of the banking system.


"One could imagine that conditionality would be focused mainly on the banks, because Spain has already tackled the other reforms," a senior German government official said on condition of anonymity because of the sensitivity of the situation.


"These packages are not aimed to punish, just to ensure that the necessary reforms are being implemented."


Spain's Economy Minister Luis de Guindos reiterated on Wednesday that his country had no immediate plans to request a bailout and was awaiting the external audit in late June.


Berlin is certainly shifting positions. Last week, it signaled it supported granting Spain an extra year to cut its deficit to the EU's 3 percent of gross domestic product threshold, having previously held fast to the notion that austerity drives should not be diluted.

In other words, Germany is about to onboard even more contingent liabilities, in the form of directly subsidizing the Spanish bailout fund, in what amounts to the latest stealth bailout of an insolvent banking sector. And at this point why not: the sunk costs are so huge that a EMU collapse would disintegrate Germany - may as well perpetuate the illusion that somehow any of this debt will be paid back.

Multiple sources said the German finance ministry was exploring the possibility of channeling EU aid directly to Spain's Fund for Orderly Bank Restructuring (FROB), but that this would only work under the ESM, which is due to come into force next month.


"Nobody wants the EFSF for Spain. It's too restrictive," a second senior official said, pointing to the added flexibility contained in Article 19 of the bloc's permanent rescue mechanism.


That article states explicitly that the board of governors of the ESM are allowed to make changes to the financial assistance instruments laid out in the facility's statutes.


A senior French official who has been in contact with the Germans said negotiations were heating up and that there was a broad consensus now among member states on using the EFSF or ESM to help Spanish banks.


"The Europeans want to cut the link between the banks and the sovereign. That's what is being discussed. There are plans to do that in the long run (through a banking union) but the idea is also to apply that to Spain," the official said.

So for the time being, this is the latest page in the neverending European script of infinite bailout permutations. We expect some informal refutation, which will make things worse, which will merely press the inevitable bailout outcome even more, until one day there is simply no more German money lying around available to preserve the broken European dream, and the illusion that "Europe is fine."


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Wed, 06/06/2012 - 11:18 | 2499390 LULZBank
LULZBank's picture

The last one really helped.

Wed, 06/06/2012 - 11:19 | 2499394 NotApplicable
NotApplicable's picture

Wait, isn't it Italy's turn?

Wed, 06/06/2012 - 11:29 | 2499466 The Big Ching-aso
The Big Ching-aso's picture



I predict CTRL-S will be loose and smelly after they CTRL-P.

Wed, 06/06/2012 - 11:38 | 2499510 jus_lite_reading
jus_lite_reading's picture

Well well well... WHO could have foreseen THIS bailout? I mean, Germany was playing such a good game!! LMAO!!

100% GUARANTEE they will bailout every failed country and bank and pass the burden of inflation on to the "little people"...


Wed, 06/06/2012 - 11:51 | 2499587 The Monkey
The Monkey's picture

With the 10 & 30 year auctions coming right up, treasuries fixing to tumble..!

Wed, 06/06/2012 - 12:16 | 2499710 Ahmeexnal
Ahmeexnal's picture

In a nutshell, Spain wanted the eurozone to bail out its banks. Merkel said "NEIN!". But Spain, following an ancient adage, took things up directly with the circus owner (Van Rumpoy) instead of wasting time with the clown (Merkel).

Wed, 06/06/2012 - 13:37 | 2500048 Chris Jusset
Chris Jusset's picture

Wow, free money for Spain without any conditions or sacrifices.  Merkel is really desperate to keep the Ponzi running ... I'm sure the German taxpayers won't mind. 


Next up: Italy.  There is absolutely no end in sight ... eventually every country will have its hand out demanding free money without any strings attached ... or else the entire Ponzi will collapse.


Fucking amazing.

Wed, 06/06/2012 - 14:26 | 2500332 Assetman
Assetman's picture

It's free money for Spain's BANKS, not Spain... but your main point is spot on: the Ponzi must continue.

Greece should threaten total default every other week, as the ripple effects from the consequences of doing so just get greater and greater.  Seeing the Syriza leader get elected could make things very entertaining...

But don't you worry-- if Europe is close having their Ponzi collapse, Steve Lies-man will be there ready to shovel U.S. Fed money out of Ben's shiny new helicopter.

Wed, 06/06/2012 - 12:16 | 2499712 aheady
aheady's picture

¡Ándele! ¡Ándele! ¡Arriba! ¡Arriba! ¡Epa! ¡Epa!

Wed, 06/06/2012 - 12:16 | 2499717 trebuchet
trebuchet's picture

"And at this point why not: the sunk costs are so huge that a EMU collapse would disintegrate Germany - may as well perpetuate the illusion that somehow any of this debt will be paid back."


The above stament from the article sums up the next 3 months neatly.


Wed, 06/06/2012 - 13:40 | 2500082 Chris Jusset
Chris Jusset's picture

Yep, Germany has NO CHOICE but to cave to every country that threatens collapse.  This will continue into perpetuity, or until Germany finally says "NO MORE" (or goes bankrupt).

Wed, 06/06/2012 - 11:31 | 2499481 The Monkey
The Monkey's picture

Tell you what. $3,000 thiingamagigs + QE3 + Europe solved for the moment = big ass treasury short.

Treasuries are like spicy baked beans, hard to move. But once they move they run like fire!

Wed, 06/06/2012 - 16:00 | 2500699 JeffB
JeffB's picture

Timing is the tricky part.


Wed, 06/06/2012 - 11:28 | 2499458 MillionDollarBonus_
MillionDollarBonus_'s picture

Zerohedgers are so tough on Spain's banks. Spanish banks are actually being forced to take bailout money against their will. But doomer libertarians will never admit this, because it simply does not fit the narative of evil bankers "taking" tax payer's money.

Wed, 06/06/2012 - 11:34 | 2499492 Comay Mierda
Comay Mierda's picture

your employment offer dilemma is solved. go work for a spanish bank. they are about to get million dollar german taxpayer funded bonuses.

Wed, 06/06/2012 - 11:35 | 2499497 Spastica Rex
Spastica Rex's picture

Performance art or pure dreck - the reader has to decide.

Wed, 06/06/2012 - 11:35 | 2499502 LULZBank
LULZBank's picture

Being forced to take bailouts by their scams and greed.

Wed, 06/06/2012 - 11:44 | 2499532 TWSceptic
TWSceptic's picture

You could even go as far as stating the tax payers are the true source of evil. They have elected their government and so they are forcing the banks to take their money. Those poor banks have no choice but to take the money and impoverish the evil voters.


Wait wut?

Wed, 06/06/2012 - 11:46 | 2499545 BeetleBailey
BeetleBailey's picture

CERTAIN Zerohedgers are so IDIOTIC  on UNDERSTANDING banks.

Especially those that supposedly have job offers from the same bandit banks

Spanish banks are NOT actually being forced to take bailout money against their will.

They HAVE no will.

But DOUCHEY LIBERAL IDIOTS will never admit this, because it simply does not fit the narative of GREAT, HONEST bankers NOT "taking" FREE money, THEN BETTING ON RISKY -ASSED SHIT WITH THAT MONEY

There, fixed your fucked up post for ya...


Shit in, shit out...

Wed, 06/06/2012 - 12:18 | 2499721 Ahmeexnal
Ahmeexnal's picture

It's clear to all that you don't know shit from shinola.

Wed, 06/06/2012 - 12:49 | 2499859 ITrustMyGut
ITrustMyGut's picture

the true idiots are the fools that betray their faux listening habits by using terms like "liberals" in their blame paradigm

the system owns the "liberals vs. conservatives" circus paradigm.. and its effectiveness is evident in you, young skywalker

Wed, 06/06/2012 - 12:09 | 2499683 eclectic syncretist
eclectic syncretist's picture

this will continue until Spain realizes it is in their best interest to stop it.

Wed, 06/06/2012 - 13:10 | 2499933 samwell
samwell's picture

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved ludwig von misses.


these beurocratic trash will never learn until it is too late.  they are absolutely barking insane and desperate to preserve their artificial union.  it will all end badly as usual with these criminal slime balls and their ilk probably with a huge conflagaration called WW3

Wed, 06/06/2012 - 11:18 | 2499391 SilverTree
SilverTree's picture

It won't work.

Wed, 06/06/2012 - 11:30 | 2499476 The Big Ching-aso
The Big Ching-aso's picture



Y not?  It's working so far in their figments of imagination.

Wed, 06/06/2012 - 11:32 | 2499484 t_kAyk
t_kAyk's picture

Well, not with that attitude... 

Wed, 06/06/2012 - 11:52 | 2499595 Zero Debt
Zero Debt's picture

I miss those summits

Wed, 06/06/2012 - 11:42 | 2499535 CrashisOptimistic
CrashisOptimistic's picture

Examine this rumor.

What exactly is being said?  Money is not being GIVEN to the Spain banks.  The mechanism is that money is to be LOANED to Spain banks.  

How do they then satisfy their reserves requirement?  They have to raise capital, not debt.  Not even in the figments of European rumor imagination can they suggest Germany is going to GIVE this money to banks.

Wed, 06/06/2012 - 12:13 | 2499700 Rip van Wrinkle
Rip van Wrinkle's picture

You think Germany is going to get these 'loans' repaid?? Course they will. Sure.

Wed, 06/06/2012 - 12:41 | 2499798 Rynak
Rynak's picture

"Your debt for my debt" can be a more "friendly" version of defaulting.

In fact, i wonder why german policymakers haven't played this hardball strategy: You want us to take up their debt? Well, lets see, we also owe you this and that..... so how about we call it zero? But oh wait, i know why not..... a giant shitstorm would break lose, compared to yesterday's action would look harmless.

Wed, 06/06/2012 - 13:54 | 2499797 Commander Cody
Commander Cody's picture

So, do we really believe that money actually flows from the sovereign to the other sovereign and then to the banks?  What flows is BS in the form of a promise to support capital needs so the banks can pretend they're more solvent and the band plays on.

Wed, 06/06/2012 - 11:20 | 2499396 Global Hunter
Global Hunter's picture

"avoid the embarrassment of having to adopt new economic reforms imposed from the outside"

Embarrassment?  So they are governed by the same concerns and motivations that 14 year old girls have?

Wed, 06/06/2012 - 11:20 | 2499398 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

What is this word "jubilee" I keep hearing about?

Wed, 06/06/2012 - 12:28 | 2499758 slewie the pi-rat
slewie the pi-rat's picture

new look is noted;  slight improvement, imo

the jubilee is part of mosaic/jewish orthodox law;  no goobermints have it on their books at the present time

pay attention;  there might be a quiz...

this is a good piece, describing the psychodynamics of risk0n and how they are controlled by the MSM as is so much of tyler's excellent work about QE and other shenanigans and MSM buzz words

tyler and slewie were discussing just exactly this very scenario last friday, me, myself... trolling away with others on his market-close piece, as those who may have not been happy enuf to be paying attention might not realize

the political ideas are slowly changing, but not enuf to matter, perhaps

johnnySilverBear, in addition to giving tyler's bests works more attention, has started a 4-part series of which all BiCheZ should take note, if you would pardon my rare attempt to try to waken anyone The Federal Reserve Cartel: The Eight Families

4 parts? probably a lost cause for attention-spammers like million$cunt and the asswipes who gleefully feed him with our preciousJuice

you will enjoy it, i hope, and hopefully send it to those who get their all from the MSM, where these ideasRnot considered at all important, it seems...  kinda like the biblical jubilee;  ya hafta blow the shophar first, right?  not just blow juscticeScalia and the bigChiefJustice with whom bush saddled us while the geeBee was gettingGonzo so much MSM faceFuk time b/c torture and guantanimo and torture are necessary to preserve ourFreedom, you see, and good thing prez0 was against it b4 he was for it it, too, or he probably wouldn't have been "elected" and we coulda had jMcCain running the extreme renditions, the camps, the torture, the assassinations, and the joy-stcking of everyone w/ drones...

Wed, 06/06/2012 - 12:35 | 2499789 Ahmeexnal
Ahmeexnal's picture

There is no chinese word for jubilee. As the ultimate bag holder, China will not allow lazy europeons to leave the table without paying.

China will however, gladly accept europe's gold as payment.

Wed, 06/06/2012 - 11:20 | 2499401 Comay Mierda
Comay Mierda's picture

everything is saved. again. btfd.

Wed, 06/06/2012 - 11:20 | 2499402 Conman
Conman's picture

So we are almost back to pre NFP, so markets are essentially saying hey we dont care about no stinkin jobs and no new stimulus out of ECB - no problem! All's well.

Wed, 06/06/2012 - 11:21 | 2499406 RobotTrader
RobotTrader's picture

Back up over the 200-day.


Another classic "PigMen Shank and Crank" job on the SPY.

BBVA and STD on fire.

Same with HSBC.

Wed, 06/06/2012 - 11:30 | 2499473 junkyardjack
junkyardjack's picture

Ignore the news, trade the price.  This is likely a short term bottom for the next few weeks then we'll roll again

Wed, 06/06/2012 - 11:33 | 2499488 WineSorbet
WineSorbet's picture

You used to annoy me Robo but now I see the light.  Pigmen will always win. 

Wed, 06/06/2012 - 11:35 | 2499501 Spastica Rex
Spastica Rex's picture

Isn't Europe supposed to be out of the news?

Wed, 06/06/2012 - 11:21 | 2499409 Calidreaming
Calidreaming's picture

As Modern English said:   "Ill stop the world and melt with you"   markets on their slow melt up due to nothing.   One day soon though the melt up will have a complete late day reversal.  I cant wait for that day to happen

Wed, 06/06/2012 - 11:22 | 2499412 hedgeless_horseman
hedgeless_horseman's picture



Got free money?


Wed, 06/06/2012 - 11:22 | 2499425 BlueStreet
BlueStreet's picture

Anything that causes a bigger rip that can be sold is a good thing, keep the news coming. 

Wed, 06/06/2012 - 11:23 | 2499428 GolfHatesMe
GolfHatesMe's picture

Spiderman Towels made it out of customs!

Wed, 06/06/2012 - 19:43 | 2501478 StychoKiller
StychoKiller's picture

Stan Lee is turning over in his grave...oh wait!  He's still alive -- probably lawyerin' up as we speak!

Wed, 06/06/2012 - 11:23 | 2499432 LongSoupLine
LongSoupLine's picture

well SPX is up 22 fucking bullshit points on bad news today, this should be worth another 50-80.  Fuck this market and all the assholes ramping it. 

Wed, 06/06/2012 - 11:32 | 2499483 junkyardjack
junkyardjack's picture

It started showing a bottom two days ago and yesterday commodities started going up oddly as well. Namely sugar, wish I threw a position on it but oh well.  The news will be the news but prices have been saying bottom for a little while.  We'll get this bounce back up and just stay on your toes for a roll back

Wed, 06/06/2012 - 11:23 | 2499435 Dr. Engali
Dr. Engali's picture

These people are nucking futs. Either shit or get off the pot. They either need to restructure the Euro agreement so they can issue Euro bonds or they need to dissolve it. Either way they need to put an end to this madness.

Wed, 06/06/2012 - 11:27 | 2499461 CvlDobd
CvlDobd's picture

Mark my words! I will cry if they issue Eurobonds.

That will put so much lipstick on this fucking pig, us bears will have all died off from suicide before we get the chance to be right!

Just today a co worker told me then the government isnt really that bad. I'm fucking losing it here!

Wed, 06/06/2012 - 11:44 | 2499547 Dr. Engali
Dr. Engali's picture

I hear you there. People are just friggen stupid. It just amazes me how they shrug off each new intrusion in their lives like it's nothing. Some times it makes me feel like I'm the crazy one.

Wed, 06/06/2012 - 12:01 | 2499645 CvlDobd
CvlDobd's picture

I will put together a list of some of the more idiotic pro government statements I have heard recently and will respond to you later. I think the best statement recently was "taxes are the price we pay to be free. "

Wed, 06/06/2012 - 19:45 | 2501482 StychoKiller
StychoKiller's picture

"Taxes are the price we pay for being STUPID!"

Wed, 06/06/2012 - 11:24 | 2499436 CvlDobd
CvlDobd's picture

Is this why BAC is up 8 fucking percent?

So tired of the shit!

Wed, 06/06/2012 - 11:25 | 2499441 midgetrannyporn
midgetrannyporn's picture

If the money were to recapitalize banks that wouldn't be as bad but instead the money will be poured into the black hole balance sheets never to be seen again. Receivership should have been the way it went for the usa and europe's banks but oh well, better to steal trillions without purpose whatsoever except to guarantee banksta bonuses.

Wed, 06/06/2012 - 13:08 | 2499927 reload
reload's picture

I think there is a significant segment of German society who believe that getting the Mediteranian European states to become fiscaly Germanic will only be `a bit` more of a challenge than it was for West Germany to re unify with East Germany.

They are going to be very bloody dissapointed. Once Germany is on the hook how many black holes of dire quality ponzi securitisations and ballance sheet mishaps will there be? The final bill is going to be more massive than anybody dares tell them.

There is no way the bankrupt Euro Banks and states can clear their debts inside the Euro. There is no way Germany can pay the tab either.

All they can do is put off the day that the tab falls due. This was on the cards since Ackerman spoke last week, another expensive can kick in progress.



Wed, 06/06/2012 - 11:25 | 2499445 fonzannoon
fonzannoon's picture

the key word here is "neverending"

Wed, 06/06/2012 - 11:25 | 2499450 EvlTheCat
EvlTheCat's picture

"A deal is in the works that would allow Spain to recapitalize its stricken banks with aid from its European partners but avoid the embarrassment of having to adopt new economic reforms imposed from the outside, German officials say."

Here Spain let me get you the link to your bailout:

Sell My Soul to the Devil -

Wed, 06/06/2012 - 11:25 | 2499452 misterc
misterc's picture

I'm acutally in favor of every bailout scheme possible, since it gives me more time to setup for the great reset.
Go, bailout, go!

Wed, 06/06/2012 - 11:26 | 2499454 ArrestBobRubin
ArrestBobRubin's picture

Fiat critics Mr. Silver and Mr. Gold give 2 BIG Thumbs Up to this latest sure to work bankster brainstorm.

Their exact words: Bring It On!

Wed, 06/06/2012 - 11:28 | 2499459 taraxias
taraxias's picture

What a fucking joke.

Another day, another "kick-the-can" scheme.

And the sheeple continue to be blissfully asleep, as they have been since the day they turned over power to a handfull of criminals to conjure money out of thin air and steal their hard eaned wealth.

This ONLY ends when people are finally hungry in the streets and even then I have my doubts.........look at Greece.



Wed, 06/06/2012 - 12:09 | 2499682 Calmyourself
Calmyourself's picture

Correct, swollen bellies in Europe proper will mark the reset and accompanying civil disturbances.

Wed, 06/06/2012 - 11:28 | 2499463 Village Smithy
Village Smithy's picture

I am only now beginning to appreciate just how long this game can go on. It will only end when the standard of living in these countries becomes bad enough that the people act en masse. 2-5 years. 

Wed, 06/06/2012 - 11:34 | 2499494 junkyardjack
junkyardjack's picture

Most people still don't even care.  The average person has no idea what is going on so it makes it very easy to manipulate markets.  Unless everyone pulls their money out of their 401K the system will just continue on.  Its not like these funds are using their own money, they are using the money of the citizens that are asleep.  

Wed, 06/06/2012 - 11:28 | 2499465 RobotTrader
RobotTrader's picture

The time to go long was when King World News was headlining all kinds of stories that the "Financial System is on the Verge of Total Collapse"

At least General Jim was smart enough to know that a bailout/rescue was forthcoming, and that the system would be stick saved.

Wed, 06/06/2012 - 11:42 | 2499536 walküre
walküre's picture

The rumors are feeding on itself!

The FED is doing ...

The ECB is doing ...

Germany is doing ...

When in reality, nobody is doing anything.

Let the dust settle a bit when it's abundantly clear that there is no more magic and the emperor has no clothes. Right now there is desperation that someone, somewhere has got to do something and therefore someone, somewhere is rumored to be doing something.

Nothing is being done. ECB isn't even lowering rates. FED is in a corner.

The only ones doing something are the holders of bank accounts in Greece, Spain and soon Germany. They're taking their money out.

Wed, 06/06/2012 - 11:54 | 2499604 CrashisOptimistic
CrashisOptimistic's picture

You are largely correct.  It's self generating, because you see, the futures were up almost 1% last night before Europe even woke up.

This is a rumor manufactured to fit futures data, not vice versa.

These are PRIVATE banks.  You can't flow money to them in the form of a gift.  You have to LOAN them money and if you do that, their reserves requirements are blown up.  It is capital they must have, not more debt.

This rumor is bogus.  To get capital injected, Spain has to nationalize them.  Then the loan is to Spain and the core of the rumor is destroyed.

Wed, 06/06/2012 - 11:58 | 2499633 Dumpster Fire
Dumpster Fire's picture

Right now there is desperation that someone, somewhere has got to do something


Bloomberg banned the Big Gulp now that's something.

Wed, 06/06/2012 - 11:29 | 2499468 rubearish10
rubearish10's picture

Yeah and so the greeks will be happy to conform to existing bailout terms, NOT!

Wed, 06/06/2012 - 11:33 | 2499489 Calmyourself
Calmyourself's picture

Just give an estimate of the halflife of this latest bailout, timing of the bailout exhaustion phase is all that really matters.

Wed, 06/06/2012 - 11:34 | 2499491 Mark123
Mark123's picture

People should stop shorting stocks....unless they intend to stick with it.  By shorting and then covering you only feed the system.  Today is classic...wall street is just skimming cash from the shorts who get scared.


BAC up by 7%????  Really, how pathetic.  And all of this is pegged on the Fed maybe doing more magic stuff to allow the govt to continue running a massive deficit.  Ya, that will help us.

Wed, 06/06/2012 - 11:49 | 2499580 Dumpster Fire
Dumpster Fire's picture

BAC up by 7%????  Really, how pathetic. 


I deposited an insurance check yesterday to fix my leaky roof.  Mystery solved.

Wed, 06/06/2012 - 11:36 | 2499504 walküre
walküre's picture

Check the frontpage of this morning.

German money for Spanish banks. There's a rumor and discussions that Germans and their savings in bank accounts would guarantee for Spanish bank accounts.

Cue BANK RUN in Germany.

Slowly but surely even the dumbest bank clients are getting it. Their money is not safe anymore. The money they thought was deposited in their accounts to their name is being collateralized to fund Spanish banks.

This is huge. When Germans "get it" they're going to "do it". Either this shit show EU and ECB and Eurozone ENDS RIGHT NOW or all banks will bleed and then there will be blood in the streets.

Wed, 06/06/2012 - 11:36 | 2499505 Umh
Umh's picture

How much sovereign Spanish debt is held by the Spanish banks?


Berlin is also exploring the possibility of funneling aid to Spain's bank rescue fund FROB to reinforce the message that it is the country's banks and not its public finances which are at the root of its problems.

Wed, 06/06/2012 - 11:50 | 2499584 CrashisOptimistic
CrashisOptimistic's picture

That's a legit question, but it's not the best one.

This is a rumor based on comments by some flunkies who don't understand anything.

Any such flow of money would not be gifts to banks, it would be LOANS to banks.  The banks can't then hit their reserves requirements.  They have to raise CAPITAL, not borrow money.

This rumor sounds bogus.

Wed, 06/06/2012 - 11:38 | 2499513 SmoothCoolSmoke
SmoothCoolSmoke's picture

Been adding puts all the way up this morning.  5 pt SPY drop and I'll be in the $$$$$!   Don't even want to think about 5 points higher from right here!!!!

Wed, 06/06/2012 - 11:39 | 2499520 MFL8240
MFL8240's picture

Germany will be next on the bailout list, this fuckin game has got to end.

Wed, 06/06/2012 - 11:39 | 2499521 theTribster
theTribster's picture

Glad I added to my silver and gold stacks last week. Plan on adding a little more before the whole things implodes later this year which will take the PMs to all time highs using any measurement. Let's see what Benny says tomorrow, he needs to hurt the dollar and help stocks so I'm guessing a strong hint of QE if not outright implementation of it. This is what the markets want and if they don't get it we'll have a major drop across the board - they are painted into a corner basically.

The ECB are more incompetent than the Fed, Super Mario is a dried out stem but then so are the rest of the technocrats. Listening to the hearing today reminds me once again of how terrible our lawmakers are, especially the chairmen (Johnson) and ranking member (Shelby). The hearing itself is nothing more than theater that will produce ways to further benefit the banks and financial institutions, who the fuck are they kidding?

The regulators are even more stupid and clearly criminals, its hard to listen to them knowing that basically everything they say is a lie, a blatent outright lie. The regulators were one of the biggest parts of the problem, and based on their responsibilities maybe the biggest part of the problem. The fucking lies are incredible, one after another after another...

Put the whole bunch in prison, both the committee members and the regulators! Throw the keys away and forget they ever existed, makes my heart palpitate. Even Toomey is in the game, what a total farce! BTW, everyone of these pieces of shit has become a multi-millionaire, Shelby has done especially well for himself. He uses that southern, hillbilly draw to play stupid whenever its convenient as he continues to make huge deposits into his hidden accounts.

All money lost was because of lending! That's right, the whole financial crises was based exclusively on loans! 100% of the failures are based on bad loans! Wow, this is just totally outrageous but I knew once Toomey started toalking the bullshit would get real thick real fast. Fucking criminals, everyone of them.

Wed, 06/06/2012 - 12:28 | 2499759 mayhem_korner
mayhem_korner's picture

 he needs to hurt the dollar and help stocks so I'm guessing a strong hint of QE if not outright implementation of it.


If hinting at it gets the markets to rise, no need to follow through.  Kinda like a hot chick holding out.

Wed, 06/06/2012 - 11:42 | 2499538 seamus3500
seamus3500's picture

has ron insana said spain is irrelevant yet?

Wed, 06/06/2012 - 11:43 | 2499546 The Vizier
The Vizier's picture

Guess who has the most extensive foreign branch network in Spain. If you guessed Deutsche you win. Now guess how many unsecured property loans Deutsche has in Spain. If you guessed a lot you win again. Now guess what happens to Deutsche if these unsecured loans get worse or if Spain is forced out and all these unmatched loans in € get revalued in new pesetas. If you guessed something not good you win again and have hit the trifecta !!!!!!!

Wed, 06/06/2012 - 11:45 | 2499553 nobusiness
nobusiness's picture

The system does not have to actually be saved.  The jerks that manage other peoples money take massive risk just on the attempt at another fix.  They have No risk of loss (in fact they get paid 2% just to hold the money) and then they get 20% of the gain if there is any.  best business model on earth.

As an accountant I am jealous

Wed, 06/06/2012 - 11:45 | 2499555 GMadScientist
GMadScientist's picture

Frau Merkel, when will you finally understand?

You do nothing: the EZ ends. -- You bail out Spain: the EZ ends. -- Your political career: kaput, either way.

Wed, 06/06/2012 - 12:13 | 2499701 mayhem_korner
mayhem_korner's picture



I'd check the TSA security image before I'd go with "Frau".  Maybe just me, tho...

Wed, 06/06/2012 - 11:49 | 2499581 Rip van Wrinkle
Rip van Wrinkle's picture

How long before Greece, Ireland, Portugal, name it.....joiins the queue for German taxpayers money. Why the f**k should Spanish taxpayers get a free ride whilst Greeks et all pay throught he nose? One day,,,,that can is coming straight back off a brick wall and bringing the whole f**ing lot down in a heap.

Wed, 06/06/2012 - 11:54 | 2499605 skepticCarl
skepticCarl's picture

The German bankers and politicians are experiencing their Greenspan moment, when he offered unlimited liquidity after the 1987 market meltdown.  The bankers and pols will now be European rock stars, and the toast of every party thrown by members of TPTB.  How easy it is to popular.

Wed, 06/06/2012 - 11:54 | 2499607 Mark123
Mark123's picture

So, all these brainiacs have had over 3 years of unlimited money-printing and government guarantees, accounting rules thrown out the window, and still the real economy is falling apart or at best just clinging on to life.


Really, all we have to show for it is a mountain of debt that cannot ever be repaid unless there is hyper inflation.  Either way is ugly.


Today's short squeeze, HFT driven "rally" is supposedly based on some sort of deal to prop up Spanish Banks.  Or said another way....ponzi 1 will prop up ponzi 2.


Rogoff says that banking crisis is followed about 3 years later by sovereign crisis.  We are just about done I'd say.


Facebook is back over $26!  Hooray!!!


Wed, 06/06/2012 - 11:57 | 2499630 VonSalza
VonSalza's picture

"without it submitting to the kind of strict reform program agreed for Greece, Portugal and Ireland."

This will surely strenghten European solidarity between the states.

Alle Menschen werden Brüder

Wed, 06/06/2012 - 12:09 | 2499679 JR
JR's picture

This Spanish bailout story is a banker spin on something that may or may not happen. The cartel just continually buys time.

But why ignore (except in Frontrunning) the coming impact of the major economic stories of the day.

Walker’s retention of his office has implications for the presidential election but far more significant at this point is that it's the starting pistol for states to begin deep cuts in their public union pension budgets. And this will have substantial influence on economic health of states in a period of severe financial pressure.

Without this Walker victory in Wisconsin, a huge catastrophe awaited state governments.

Meanwhile, the huge victories of pension reform in two California cities, San Diego and San Jose, add to the strength of this citizen movement against the rising danger from public sector unions and their leverage against the people given them by purchased politicians.

Wed, 06/06/2012 - 12:10 | 2499687 ebworthen
ebworthen's picture

More cotton candy for the financial circus.

Send in the clowns.


Wed, 06/06/2012 - 12:16 | 2499703 slackrabbit
slackrabbit's picture

In my mind this is a 'yes but no'

Merkyl : 'Yes we will help you' - turning to aide '(short-term)'

after meeting

Merkyl 'We are leaving. First propose a plan for a Euro exit for in case "someone" gets in trouble. Next call the printers...and keep it quiet'...

Wed, 06/06/2012 - 12:17 | 2499720 ArrestBobRubin
ArrestBobRubin's picture

Greece, Portugal and Ireland are asking for a do-over.

The Italians just learned how to win at Bridge vs. the Germans: the Spanish Gambit

Wed, 06/06/2012 - 12:20 | 2499731 piliage
piliage's picture

This is all a big time ruse to make sure the Spanish auction tomorrow drops well below 6%. And looking at the rally, the stoopid idiots are drinking the kool-aid like they are in Jonestown.

If the Germans were to actually agree to this with Spain then Portugal, Ireland, and Greece will scream bloody murder.

That said, all bets are off until the Greek election. All of this is simply smoke and mirrors til the fat lady sings next week. And she is warming up in the wings.

Wed, 06/06/2012 - 12:40 | 2499814 i_call_you_my_base
i_call_you_my_base's picture

"This is all a big time ruse to make sure the Spanish auction tomorrow drops well below 6%."

My thoughts exactly.

Wed, 06/06/2012 - 15:39 | 2500625 Txo
Txo's picture

Exactly. what a freaking farce

Wed, 06/06/2012 - 12:23 | 2499740 mayhem_korner
mayhem_korner's picture



In the spirit of "simplify."...

Every four year old on the planet understands that the phrase "the banks need money" is problematic.  It's on par with "we've taken the dog away and he won't be coming back."

Wed, 06/06/2012 - 12:36 | 2499790 EaglesandCranes
EaglesandCranes's picture

LOL @ "the banks need money"

Wed, 06/06/2012 - 12:23 | 2499741 earleflorida
earleflorida's picture

' "Beggar thy Neighbor" is the tread that sews a seemingly innocent garment into ones own straight-jacket?'

Wed, 06/06/2012 - 12:24 | 2499742 wally_12
wally_12's picture

I don't think Germany folded.

I think the federal reserve will be backing this bailout. That is U.S. Tax payers!

Wed, 06/06/2012 - 12:24 | 2499744 Hondo
Hondo's picture

Germany most certainly would have to be douwngraded....

Wed, 06/06/2012 - 12:26 | 2499752 sbenard
sbenard's picture

The term "kicking the can" has become so cliche, but here we go again!

We can not defy the laws of sound economics forever! When the reckoning comes, life will change forever as we have known it! Sad days for America and freedom!

Wed, 06/06/2012 - 12:31 | 2499777 crawldaddy
crawldaddy's picture

there is a hole in the bucket, the world's continued solution,  keep adding water.

Wed, 06/06/2012 - 12:56 | 2499885 Vince Clortho
Vince Clortho's picture

Thank Heaven there are PHDs and Nobel Prize winners manning the water bucket brigade.  Who would have dreamed Economics is so simple?

Wed, 06/06/2012 - 12:37 | 2499793 shovelhead
shovelhead's picture

Silver up 4.5%.

Where's the hammer down? Time to add when the goon squad hits.

C'mon JPM ...get to work.

Wed, 06/06/2012 - 12:43 | 2499828 boiltherich
boiltherich's picture

So um, governments are broke from bailing out banks, and banks are broke because citizens can't or won't pay bubble bloated house payments on mortgages the banks wrote. So, when the banks go bust or are about to our governments borrow trillions to bail them out and then tax the poor slobs whose only real mistake was to buy a house, sometimes for profit but mostly for shelter, as well as people like me that waited till after the bubble popped to buy.

And I wonder why the banks were not just allowed to close their doors and go bankrupt taking all the bad debt with them. No doubt many of you wonder as well, because after all if dead in the water zombie banks just die taking their bad debts to the grave with them other banks will remain or will spring up to replace them.

And here is one possibility that comes from freshman econ, money is not created when you flip a switch on the printing presses, it is created when it is borrowed/lent. To allow all or most of the bad debts in our economy post RE bubble to just die with shitty banks would kill trillions in money that had been previously created, it would be monumentally deflationary with a major depression that makes the current world as it is look healthy and fit.

Immediately you ask then why does the government not just send us all a check or credit for something close to the amount that will die with the banks in order to prevent the destruction of so much money which would result in a deadly deflation? After all it is just an accounting entry that is in effect a dollar devaluation that has already happened. And I say it is because the government has two choices, send the people's money to the people and save them as well as the dickheaded bankers at the same time, or cut us out of the loop and give our money directly to the bankers so they can stay in control, even if it costs taxpayers their freedom, savings, equity, and shelter. This way we still owe our mortgages to the banksters AND we owe the same to the government, there, fixed it, doubled our indebtedness in the stroke of a presidential order and a Fed bailout.

The real answer is that the housing bubble was just the tip of the iceberg, the amount of money created (borrowed/lent) in that bubble was truly mind numbing for certain, but the amounts in ForEx, derivatives, bond and equity markets, is hundreds of times that piddling RE bubble. We would need to use scientific notation to buy a loaf of bread if they were to allow all the bad debt to be wrung out of the system. It would be the reset you all have talked/hoped for, and they will never do that because it puts the power and wealth back in our hands not theirs and the banksters.

As to Germany funding the ECB, or any of the euro acronyms like ESFS, ERM, or bailing out Greece, Ireland, Spain, Italy, they cannot, all they will do is buy the weaker ClubMed nations a little more time while committing fiscal and financial suicide themselves and they know it. If they seem to be buckling to pressures to bail, fiscal pooling, eurobonds and the like, it is because they know it is suicide but I think they now understand that it is too late, nothing they could do will in the end resolve any of the problems, and buying time can be done but only at even greater costs in the future.

Wed, 06/06/2012 - 13:03 | 2499911 walküre
walküre's picture

Good reading and nice handle.

Wed, 06/06/2012 - 12:46 | 2499844 fuu
fuu's picture

Surprisingly not priced in.

Wed, 06/06/2012 - 13:34 | 2500017 jmc8888
jmc8888's picture

What's really got them going is Banco Santander is toast.  When this puppy goes, there is your Lehman.  Santander has about 800 billion in bad debts alone.  Germany couldn't bail out Santander, let alone the rest of the Spanish banks, let alone the Euro banks. 

Don't forget about RBS as well.


Wed, 06/06/2012 - 15:11 | 2500525 vh070
vh070's picture

So who is taking over who: Germany the Club Med nations or the other way around?

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