This Is The Chart Spooking Europe This Morning

Tyler Durden's picture




 

There have been many scary parabolic charts associated with Spain demonstrated here over the past few weeks. Today, the market is focused on the following line that goes from the lower left to upper right, which if not parabolic yet, may be getting there soon. The chart shows Spanish banks' bad loan ratio, which at 8.16% of the total €1.763 trillion in loans, or €143.8 billion, is the first time loans more than 3 months overdue were greater than 8% since October 1994. Indicatively bad debt levels were about 1% in the years prior to the collapse of the country's property market. Furthermore, with the rapid deterioration in Spain in the past 2 months, expect this chart to leg up substantially in June when the series catches up to April real time data, most likely crossing double digit territory. But for now the fact that of the country's roughly €1.4 trillion in GDP, over 10% in bank debt is "bad" and surging, should be a sufficiently loud wake up call.

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Wed, 04/18/2012 - 08:47 | 2354319 battle axe
battle axe's picture

Again I say, Spain 10yr at 7% by next week. 

Wed, 04/18/2012 - 08:49 | 2354325 MoreNails
MoreNails's picture

Sure, if Paulson keeps buying CDSs. But given his track record, I wouldn't sell Spain at these levels. Everything has a price.

Wed, 04/18/2012 - 08:53 | 2354352 lizzy36
lizzy36's picture

The thing about Paulson is he sucks on the long side. But as a distressed investor, and generally spotting short oppurtunties (whether in credit or equity) his track record is substantially better.

Wed, 04/18/2012 - 09:14 | 2354449 MoreNails
MoreNails's picture

Especially when Goldman is manufacturing his short idea and then sets up the instrument while finding the unsuspecting long.

Wed, 04/18/2012 - 08:52 | 2354356 Ivanovich
Ivanovich's picture

I thought there was no more point to buying CDS?

Wed, 04/18/2012 - 08:47 | 2354320 GeneMarchbanks
GeneMarchbanks's picture

Real estate mostly.

Wed, 04/18/2012 - 08:50 | 2354340 Oh regional Indian
Oh regional Indian's picture

Gene, And not even Spanish owned for the most part.

Spain was a holiday home destination (buying that is) for a plumber from Great Britain on a loan from Landsbanki.

But it's okay, if Spaniards get too restive, Il Papas can always calm them down.

Or King Joo Ann Carlosito can shoot another big elephant, so everyone is happy. For reference, google Juan Carlos and Elephant Hunts.

ori

socthr-e-never-too-late/

Wed, 04/18/2012 - 08:48 | 2354326 lizzy36
lizzy36's picture

Bernanke will mention QE3 next week at FOMC and equity market will surge 10%.

#btfdkids

Wed, 04/18/2012 - 08:54 | 2354358 DavidC
DavidC's picture

Jawboning it up without doing anything will work...until it doesn't.

DavidC

Wed, 04/18/2012 - 09:03 | 2354415 SheepDog-One
SheepDog-One's picture

Oil markets will surge 10%?

Wed, 04/18/2012 - 09:07 | 2354433 Ted Baker
Ted Baker's picture

AT LEAST SOMEONE HERE GOT IT RIGHT! THERE WERE TALKS AT THE FED ALREADY LAST WEEKEND AND THEY ARE FINALISING DETAILS THIS COMING WEEKEND!!! 

Wed, 04/18/2012 - 09:13 | 2354446 SheepDog-One
SheepDog-One's picture

Fine, you claim QE3 is a 'done deal'? OK, then unleash it, have fun with that $7 gas. 

Wed, 04/18/2012 - 09:35 | 2354531 lizzy36
lizzy36's picture

I didn't say it was a done deal.

All bernanke needs to do is talk up the possibility for markets to react.

Why the hell would they unleash QE3, when all they have to do is create perception it is coming and insane market positions itself accordingly.

Hell they are getting most of the #wealtheffect, just by leaking to hilsenrath and having every 2nd Fed speaker discuss possibility.

Wed, 04/18/2012 - 09:30 | 2354515 Captain Kink
Captain Kink's picture

@TB:  Source?

Wed, 04/18/2012 - 08:50 | 2354333 Eddyspain
Eddyspain's picture

Change your last phrase,  GDP is little bigger than 1Trillion €, or yes, 1,4T $, not 1,4T€, over 14% of GDP is bad debt

Wed, 04/18/2012 - 09:19 | 2354477 Don Diego
Don Diego's picture

the 1.4T USD GDP figure comes from Spanish authorities so you are safe reducing it by 10-15%

Wed, 04/18/2012 - 08:51 | 2354335 jus_lite_reading
jus_lite_reading's picture

Wait... CNBS just showed this chart and called it the recovery and said there is no better time to buy stocks...

Wed, 04/18/2012 - 08:49 | 2354336 HyperLazy
HyperLazy's picture

Yeah, that is spooky. Maybe not a parabolic spooking but one of those gradual spooked build ups. Clearly, loans are going bad in Spain and all over.

But you know what else is spooky and just downright creepy?

Mr Buffets prostate. I am getting really tired of hearing about his fucking prostate. Is he trying to win over some sympathy? Some sort of distraction from all of his financial malevolence? HEY - my prostate is the size of a grapefruit with bulbous protusioins that throb with every heart beat! Is anyone gonna fawn over my prostate like they fawn over Buffets? FUCK

Wed, 04/18/2012 - 08:55 | 2354368 SheepDog-One
SheepDog-One's picture

Die Buffet, DIE!

Wed, 04/18/2012 - 09:00 | 2354393 scatterbrains
scatterbrains's picture

What's really spooky is how hard at laughed at this. I could have choked to death and it's not even 9am yet.  Now I'm worried dementia might be creeping in. 

Wed, 04/18/2012 - 09:06 | 2354407 knukles
knukles's picture

Ah yes, oh yes.
Warrren Buffet's prostate.  Now this morning on CNBS, I just couldn't help it and turned the sound back on when they started showing pics of Uncle Sleazy and some printed nonsense about %ge this and %ge that prostate fuck all who cares.... but then as the sound was coming up, the best of all worlds.

Joe hands it over to Becky with the line, dripping with Gravitas (BTW, is prostate cancer transmitted orally?)  "And Becky, you know Warren...."
Like I know fucking Santa Claus so when he's bleeds form his dingdong because he yanked his catheter out again I should cover the fucking story? 

In the Grand Days of the Hegelian Dialectic and Bernaysian Manipulations, this is simply another form of Diversion from The Miasma.
Personally, I think it was great, wonderfully patriotic of Warren to Contract Prostste Cancer so that he would be a riveting story to divert our collective attention from the Cruise to Hell on the Good Ship of State, Leviatnian.

Wed, 04/18/2012 - 09:05 | 2354425 HyperLazy
HyperLazy's picture

I gave you a plus one (+1) for using the word, MIASMA! Sweet!

Wed, 04/18/2012 - 16:48 | 2356028 Spigot
Spigot's picture

meaning ... stench of death hanging in the air ... very appropriate.

Wed, 04/18/2012 - 09:14 | 2354452 libertus
libertus's picture

Knukles:

Thank you for bringing a smile to my face this early in the morning. You really made me laugh. Nice writing. 

Wed, 04/18/2012 - 10:41 | 2354754 Mentaliusanything
Mentaliusanything's picture

Nuk Nuk Nuk Knuckles. Your cooking tonight.

but back to the graph. 8% not paying. Those that are are not covering the losses.

No bank at current interest rates could survive that bleed to the bottom line.

Back to the markets fora little more diliution me thinks, but so many have the hands out fo mo its a hard ask.

Wed, 04/18/2012 - 11:01 | 2354843 Shadowsil
Shadowsil's picture

+100 if I could Knuckles.

I had to look up the definition of a few choice words you tossed around in there. Thanks for the laughs as usual.

 

Wed, 04/18/2012 - 09:14 | 2354456 Dr. Engali
Dr. Engali's picture

They are trying to draw some sympathy for him and the failure of the Buffet rule in congress.

Wed, 04/18/2012 - 09:39 | 2354547 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

Didn't we hear about Reagans prostrate alot during Iran-Contra scandal.

Mine the harbor!

Wed, 04/18/2012 - 08:49 | 2354337 trampstamp
trampstamp's picture

Enough with the QE3 bullshit!

Wed, 04/18/2012 - 08:55 | 2354366 Ivanovich
Ivanovich's picture

Exactly.  No way QE3 happens with Oil @$104 and gas near $4 a gallon in Obama's election year.

Wed, 04/18/2012 - 09:11 | 2354442 Christoph830
Christoph830's picture

Don't you get it? It doesn't matter that oil is at $104. QE will still be announced and the spike in oil will be blamed on Iran. Most Americans are too dumb to understand the inflationary ramifications of loose monetary policy. Much easier to understand when "its the Arabs fault."

Wed, 04/18/2012 - 09:31 | 2354518 MachoMan
MachoMan's picture

Why do they need Iran when they have evil speculators to blame?  At some point, credibility loses the luxury of plausible deniability...

Wed, 04/18/2012 - 10:26 | 2354707 CH1
CH1's picture

I'm still going for "a stimulous check for each member of the mioddle class" in October.

Wed, 04/18/2012 - 08:57 | 2354381 SheepDog-One
SheepDog-One's picture

Whenever they roll out the QE3 hype to bring back Little Miss manic/depressive markets from sobbing in the corner to running around the rubber room throwing glitter in the air I always say 'Go ahead shitbrds, I dare ya'!

Wed, 04/18/2012 - 09:03 | 2354338 LetThemEatRand
LetThemEatRand's picture

If the huge salaries and bonuses of those in the financial sector were subject to meaningful clawback provisions, these problems would eventually right themselves.  So long as people continue to be able to make money risk free by paying themselves bonuses based upon issued loans that no one will be paying back, banks will continue to blow up unsustainable bubbles.

Wed, 04/18/2012 - 09:03 | 2354418 tmosley
tmosley's picture

Yes, yes, if only we had more laws!

As if there weren't already laws against fraud.  As if these guys aren't in bed with the regulators, meaning that no matter what ridiculous laws you try to pass, they will insert loopholes or they simply won't be prosecuted.

Wed, 04/18/2012 - 09:27 | 2354504 kridkrid
kridkrid's picture

letthemeatrand is so similar to such a large group of my friends, most of them college professors or similar knowledge workers (whatever that means, exactly).  His positions sound so rational to him, I'm sure, but are based on any number of logical fallacies... and always delivered with a bit more than a little bit of arrogance. 

Wed, 04/18/2012 - 09:37 | 2354538 MachoMan
MachoMan's picture

It actually is correct in theory, but his thesis is predicated upon "the rule of law" and "consistent application thereof."  Essentially, his entire premise is reliant upon a viable bankruptcy mechanism...  Unfortunately, that mechanism has had so much surgery, it no longer looks human (definitely has the duck lips).

IF companies had to actually report their financial affairs in a transparent manner AND IF they were ever allowed to actually go into bankruptcy AND IF that mechanism did not arbitrarily bone creditors AND IF the bankruptcy trustee was actually interested in finding all of the money and investigating any nefarious dealings, THEN clawback provisions might work...  and this is presuming there is NO OTHER ISSUE.

The simple fact is that this is a legal construct that has been complicated to a point of worthlessness in the relevant context.

Wed, 04/18/2012 - 09:46 | 2354577 kridkrid
kridkrid's picture

I was talking about LTER in general, more than this specific response... but yes... I believe this fallacy would be considered a Genetic Fallacy... the "genetics" of his position is different from the current definition... or something like that.

Wed, 04/18/2012 - 09:40 | 2354552 Zero Govt
Zero Govt's picture

the Law is oppression of the masses on behalf of the Masters who are of course 'above the Law'

and when there's no Law to prosecute those out of favour, they rig an 'Ethics Enquiry' as they have on Murdoch in Britain to nobble ya

..shame the 'Ethics' guys have just been caught red-handed accepting £200,000.00 backhanders for dinner with the Prime Minister

Wed, 04/18/2012 - 10:28 | 2354715 CH1
CH1's picture

Yes, yes, if only we had more laws...

Agreed.

The Law has become an idol.

Wed, 04/18/2012 - 08:52 | 2354342 Jlmadyson
Jlmadyson's picture

MS catchin up with reality. Reuters this morn: Spanish bailout not if, but when.

Debt bomb roll on!

Wed, 04/18/2012 - 08:52 | 2354353 RyanW525
RyanW525's picture

Relax....its all priced in

Wed, 04/18/2012 - 08:54 | 2354354 Watts_D_Matter
Watts_D_Matter's picture

That chart looks like Buffet's Xray of his prostate.....

Wed, 04/18/2012 - 08:54 | 2354357 SheepDog-One
SheepDog-One's picture

Its all just unicorns jumping over rainbows, and betting on how much higher they can jump.

Wed, 04/18/2012 - 08:53 | 2354359 lolmao500
lolmao500's picture

The chart shows Spanish banks' bad loan ratio, which at 8.16%

Still way higher than German banks leverage...

Wed, 04/18/2012 - 09:01 | 2354394 SheepDog-One
SheepDog-One's picture

But they all learned their lesson in 2008 from leveraging up bullshit 40:1...so now they leveraged it all 50:1.

Wed, 04/18/2012 - 09:51 | 2354595 Zero Govt
Zero Govt's picture

US sub-prime crumbled like a house of cards when the bad loans hit 3-4% going rotten

what's holding Spanish Banks up with 8% of loans collapsing???

Wed, 04/18/2012 - 08:54 | 2354361 orangegeek
orangegeek's picture

And interest rates will have to soar to keep the bond holders buying.

 

Defaults won't be far behind.

Wed, 04/18/2012 - 08:58 | 2354390 Apostate2
Apostate2's picture

Guernica a la Damien Hurst.

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