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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.

Wed, 04/18/2012 - 09:00 | 2354398 disabledvet
disabledvet's picture

The problem is Spain...er, excuse me..."Spain" and "Italy" are..."happening" (collapsing? Collapsed? Gold was stolen by the State in the name of the euro that's fee sure) simultaneously. They're BOTH sucking down incredible quantities of ECB...is it liquidity these high priests of finance call it? Anywho "one is more than adequate to break the ECB." Taken together and it is more than plausible to see the EU flying apart since if the ECB is annihilated "where's your next firebreak"?. I stick by my prediction: "first to default wins." my money is on France being that "first mover." the EU is after all a French creation.

Wed, 04/18/2012 - 09:02 | 2354411 MFL8240
MFL8240's picture

But yesterday all was fine!  This is simply disgusting to watch.

Wed, 04/18/2012 - 09:03 | 2354419 Stuart
Stuart's picture

They should get their accounting bodies to do a FASB, just change the accounting treatment so they can be more like their US cousins.  that way we can all compared fudged apples to fudged apples.  

Wed, 04/18/2012 - 09:05 | 2354423 Ted Baker
Ted Baker's picture

HEY TAYLOR THE BIG ELEPHANT IN THE ROOM IN EUROPE IS THE UK 400%+ DEBT TO INCOME RATIO....PERHAPS WE SHOULD FOCUS A BIT ON THE BRITISH

Wed, 04/18/2012 - 09:11 | 2354437 SheepDog-One
SheepDog-One's picture

I dont know who Taylor is, but I agree this focusing like a laser on 1 little area or another is ridiculous, the whole Western World is burning to the ground.

Wed, 04/18/2012 - 09:07 | 2354426 peekcrackers
peekcrackers's picture

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.

 

enoughf said!

Wed, 04/18/2012 - 09:07 | 2354431 MacroAndCheese
MacroAndCheese's picture

If these loans are bad--and given the prior 1% level that should roughly correspond to bad loans--it's likely that Spanish bank capital is wiped out.  Without the state, Spanish banks would be bankrupt.

Wed, 04/18/2012 - 09:23 | 2354482 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Ditto for the USA ... if mark to market were reinstated we would probably experience similar capital shortfalls.

Wed, 04/18/2012 - 09:14 | 2354451 vote_libertaria...
vote_libertarian_party's picture

Sooooooo...what I think you are trying to say is it is all fixed???

yepper....buy buy buy

Wed, 04/18/2012 - 09:21 | 2354483 NEOSERF
NEOSERF's picture

If the official Spain word on loans is 8.2% count on it really being more like 15%

Wed, 04/18/2012 - 09:24 | 2354488 web bot
web bot's picture

If any of these politicians had any guts in them... they would make the very difficult decision and default. 10 years down the road, they would be praised as heros that did what had to be done....

Same for toads on this side of the pond...

Wed, 04/18/2012 - 09:33 | 2354526 split4to1
Wed, 04/18/2012 - 09:39 | 2354546 Trader47
Trader47's picture

Riots this summer, will smash tourism revenue, game over, writing on the wall

Wed, 04/18/2012 - 10:05 | 2354656 chubbar
chubbar's picture

If the riots don't, the gas prices will.

Wed, 04/18/2012 - 11:20 | 2354898 Cpl Hicks
Cpl Hicks's picture

Spain is way overrated; the food is bland and boring, the natives are greasy dwarves. You might as well go to Gibraltar and eat soggy fish and chips and watch the apes play with their shit.

However- I do recommend Portugal!

Bom dia.

Wed, 04/18/2012 - 09:43 | 2354557 Vince Clortho
Vince Clortho's picture

Certainly hope they can get this resolved by lunch.  It would be a darn pity if the "market" did not finish in the green today.

Wed, 04/18/2012 - 09:44 | 2354575 sasebo
sasebo's picture

As long as the banks can create paper money out of thin air & loan it out for interest, we ain't going no where.

Wed, 04/18/2012 - 09:53 | 2354607 ZackAttack
ZackAttack's picture

Interesting how much worse this is than other historical crises of this ilk.

Back in the 90s, the investing rule of thumb was that you never wanted to look at a bank with more than 1.05% DQ.

The worst southwestern banks during the S&L crisis ran about 3% DQ, and that was considered really, really bad.

Now we're saying that the average of a whole country's banks are 8.17% DQ? If people knew what this implied, they'd be in line to pull out their cash right now.

Wed, 04/18/2012 - 09:54 | 2354618 Dick Darlington
Dick Darlington's picture

Here is what UBS had to say abt this:

BoS just issued the new NPLs data, €4bn new NPLs flows in February taking total flows in Jan/Feb to € 8bn nearly 2x the pace last year. NPLs ratio climbed to 8.2% (up 30bp m/m) while coverage declined 90bp to 57%.
**In our view this does not factor in the large amount of substandard/restructured loans which over time will flow into NPLs.**
We estimate that total problematic assets represent some c19% of the loan book (including subs/restructured loans and foreclosure) with coverage that even after the new provisioning rules will remain at c35% and to move to 50-60% would require €45-79bn additional provisions. We remain Sellers on most Spanish banks including Santander/BBVA.

Wed, 04/18/2012 - 11:01 | 2354834 Quinvarius
Quinvarius's picture

US Bond charts will never look like that.  But the inflation charts due to monetization will.

Wed, 04/18/2012 - 11:12 | 2354871 eurusdog
eurusdog's picture

"sufficiently loud wake up call", that no one will heed!

Wed, 04/18/2012 - 11:19 | 2354895 JW n FL
JW n FL's picture

 

 

WOW! 7% out of ALL! the Loans made by the Banks since 2007 have went bad!

LMFAO! <--- Laugh My Fucking Ass Off!!

If anyone believes that ONLY 7% of Spanish Laons are Bad with an unemployment Rate North of 30%..

They are FUCKING STUPID!!

The Spanish are known for a few things..

1. Bossy Women who Like! NO! LOVE!! to Fuck!

2. GREAT! Ham!!!

3. The Biggest Liar Banks in the WORLD!! There is NO OTHER BANKS ANYWHERE ON PLANET EARTH THAT COME COSE TO LYING AS MUCH AS THE BANKS IN SPAIN!

and anyone with a clue knows this un-spoken law.. so why is someone posting a 7% move in a 30% default (minimum) market place.. like it is the fucking Holy Grail?

 It must be Izzy or Marla posting under Tylers name again.. you girls dont have balls and it shows! go make me a samich and get me a beer bitch(ez)!

Wed, 04/18/2012 - 11:32 | 2354960 JW n FL
JW n FL's picture

 

You girls should stick to talking about how Bloomberg should make screen options in pastels.. or stick too.. laying out meetings for the men.. I love it when you take the time to fold the napkins into little animals! Nothing screams GREAT! Meeting ahead more than Little Folded Animals! That you can use to fight with the guy next to you when the meeting gets REALLY! boring. That is REAL! CLASS! BABY!! And it’s all because of you girls! We men would be cave men minus little folded napkin animals!

just because you ONCE! had a nice ass.. many years ago.. doesn’t mean people want to be sucked down into your toilet bowl sheepish conversations.

Plainly this type of shit is filler.. and there is NO need for it!

Go find some OTHER Busy Work to do!

instead of competing to see who can post the most amount of useless posts that people then have to sift to find a nugget of gold!

I almost wish Tyler still had no money to gamble with! then he would belong to the People again!

But I am Happy he is Happy! doing what he Loves! So that is that.

But you Bitches! need to get a fucking grip!

before I (as a marginal personality) get a restraining order placed against you and your Bullshit Posts!

Look! a Freedom of Speech Violation!

 

Wed, 04/18/2012 - 14:23 | 2355539 Lux Fiat
Lux Fiat's picture

Interesting chart.  As someone who is not up on delinquincy rates, it would be interesting to see some comparisons with other PIIGS, as well as some of the somewhat less insolvent countries in the EU and other side of the pond.  Assuming that the data is reliable...

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