Does A Spanish Bank Bail-Out Give The Vigilantes The Green Light To Move To Italy?

Tyler Durden's picture


The biggest news this morning is the talk that Spain's Rajoy will discuss 'how to shore up' his banking system with the EU officials this weekend. As SocGen noted earlier, EURUSD managed a 30 pip bounce and then promptly sold off - 'That says it all really'. A  'bailout' of Spanish banks poses a lot more questions than it answers.  Specifically that this crisis began with Greece and now has spread to Spain. Will the focus move on again?  The market believes that European officials have yet to put in place contingencies that will stem contagion and stress on other European countries. Hence the anemic response from currencies. What is clear is that Greece, and now Spain, have set the dismal example for their peers: 'Crush the banks, then get bailed out' which leaves only one course of action it seems, banks will be shorting themselves to force action from their overlords in Berlin and Brussels. If we get a risk-on bounce in Italian banks, on any weekend 'interim' resolution for Spanish banks, then shorting into that strength seems more than appropriate (or long credit, short equity as burdens are shared).

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Fri, 06/08/2012 - 09:53 | 2506984 Caviar Emptor
Caviar Emptor's picture

Yes, and then on to Denmark and Belgium.

Fri, 06/08/2012 - 09:59 | 2507000 eigenvalue
eigenvalue's picture

I think France is after Italy. 

Fri, 06/08/2012 - 10:01 | 2507012 Colombian Gringo
Colombian Gringo's picture

Italy, France, France, Italy.... either way it will amount to the same end result, Euro kabooie!

Fri, 06/08/2012 - 10:12 | 2507052 Pladizow
Pladizow's picture

Germany: What took you so long to ask for a bailout?

Spain: Our siesta ran overtime!

Fri, 06/08/2012 - 10:30 | 2507148 Chris Jusset
Chris Jusset's picture

Speaking of Germany, when will the German taxpayers REVOLT and say "ENOUGH OF THIS BAILOUT BULLSHIT!"

Fri, 06/08/2012 - 11:16 | 2507394 Vincent Vega
Vincent Vega's picture

Right around the same time we American's do.

Fri, 06/08/2012 - 11:18 | 2507411 GMadScientist
GMadScientist's picture

When German unemployment reaches the levels of the rest of Europe.

Fri, 06/08/2012 - 10:13 | 2507055 eigenvalue
eigenvalue's picture

 I really think Spain will be the tipping point of the Euro crisis. Germany doesn't have so much money to bail out Spain. It doesn't matter which one is after Spain.

Fri, 06/08/2012 - 10:32 | 2507162 Chris Jusset
Chris Jusset's picture

The problem, of course, is that the bailout (or the appearance of a bailout) MUST HAPPEN, lest the house-of-cards collapse.

Fri, 06/08/2012 - 10:13 | 2507057 Oh regional Indian
Oh regional Indian's picture

Eigenvalue is right. It is actually France before Italy. And Spain is not a Hurry-cane, it's just a storm. 

France is going to regret not having a Maginot line (financially) with Spain, because the Contagion is ready to jump.

Again though, all this is pre-olympic set-up. The Rockerfellers/Rothschields have prognosticated some nasty shit for the Olympics.

Not going to happen prior. 

Till then, more can-ckcking.

Rockerfeller Institute Pre Crime Horn Tooting Here


Fri, 06/08/2012 - 11:44 | 2507508 Ghordius
Ghordius's picture

I wrote last year on ZH that France is the Maginot Line for Italy's and Spain's debt, later Tyler brought those nice graphics that showed that "France", i.e. "the French Sovereign + it's banks" owes as much as the others owe "France".

So "France", i.e. the nation and the french banking system will function either as Maginot Line or as the Cascading Domino Stones Central Station.

We'll see. BTW, I heard that letting banks fail is Capitalism and bailing them out is Socialism.

Impossible, everybody knows that european=socialist and American=Capitalist.

Fri, 06/08/2012 - 12:01 | 2507579 Ghordius
Ghordius's picture

btw, Tyler, you are confusing me with this:

"'Crush the banks, then get bailed out' which leaves only one course of action it seems, banks will be shorting themselves to force action from their overlords in Berlin and Brussels."

I'm not sure, who are the bad boys here in your opinion? the "overlords" that refuse to bail out OR the banks that "go TBTF"?

Fri, 06/08/2012 - 09:59 | 2507001 MillionDollarBonus_
MillionDollarBonus_'s picture

Germany has single handedly taken down the entire Eurozone with their predetor lending. Now it's only fair that they chip in to clean up the mess they created in the first place. With great wealth comes great responsibility, and Germany has a moral duty to help out unfortunate countries like Greece, Spain and Italy.

Fri, 06/08/2012 - 10:18 | 2507078 mayhem_korner
mayhem_korner's picture

predetor lending


Is Germany is financing the drones?

MDB - clearly you haven't had your full ration of coffee yet.  Apart from the spelling/grammar debauchery, this just doesn't rise to your normal threshold of delusion.

Fri, 06/08/2012 - 10:25 | 2507120 eclectic syncretist
eclectic syncretist's picture

LOL! Stay long and strong over the weekend while they try to figure out what to do with Spain.  I double-dog dare ya!

Fri, 06/08/2012 - 10:48 | 2507258 RoadKill
RoadKill's picture

This weekend is about China not Spain. Next weekend is about GrExit. Btw my birthday is that weekend and all I want is a disorderly GrExit. The following weekend will be about Spain. Nothing can happen this weekend on Spain. They dont even know how much money to ask for yet. Spanish politicians have denied any meetings and Germany hasnt figured out what concessions it wants (what parts of Spain to annex).

However, following GrExit the finacing markets will be so FUBAR only the US, Germany, Japan and a few other small AAA lock box countries will be able to access cash. Spain will be forced to accept any terms Germany demands. Then Italy and France blow up and its all over.

Fri, 06/08/2012 - 10:42 | 2507222 GMadScientist
GMadScientist's picture

Greece shouldn't have been wearing that dress.

Fri, 06/08/2012 - 09:56 | 2506992 brewing
brewing's picture

damn, i'm long pasta and pizza...

Fri, 06/08/2012 - 09:57 | 2506994 Alpacanio
Alpacanio's picture

France, England,Germany...

Fri, 06/08/2012 - 10:11 | 2507049 mayhem_korner
mayhem_korner's picture



I was once told that wars are for teaching kids world geography (finding Afghanistan on the globe, etc.).  Now we have bank collapses to do it.

Fri, 06/08/2012 - 10:22 | 2507101 falak pema
falak pema's picture

the euro foot competition begins and euro money will go back stage. Europeans have their priorities well in place; even Greece is there to kick the competition off. It seems to be Greece's pre-written role in 2012, they started the Eurozone burning. I hope they do better with Euro goals. But the Poles have long poles to vault over small Greeks. If the Greeks play wait and see, like the ECB-Merkel Kraken in Spain,  its always a problem when to choose between Chronos and Kairos, until its too late and the Kraken is released.

Kairos - Wikipedia, the free encyclopedia

Fri, 06/08/2012 - 09:58 | 2506996 Vincent Vega
Vincent Vega's picture

Here is a suggestion: burn all the banks to the ground and hang all the bankers. Leave the charred rubble and skeletons as reminders for all to see.

Fri, 06/08/2012 - 09:58 | 2506997 prains
prains's picture

have yet to put in place contingencies that will stem contagion


because there really are no contingencies other than print the euro into toilet paper confetti what else is there?

Fri, 06/08/2012 - 09:59 | 2506999 LongSoupLine
LongSoupLine's picture

Just fucking get on with it already!

F'ing criminal the futures aren't lock limit down right now as it is!

Fri, 06/08/2012 - 09:59 | 2507002 youngman
youngman's picture

Yes, Yes, and Yes....the show must go on...and the caterers must make quiche....but we are talking trillions be it..

Fri, 06/08/2012 - 10:00 | 2507004 TomGa
TomGa's picture

Time to brush off Clarke and Dawe:


European Debt Crisis:


Dealing with the Sovereign Debt Crisis:


The Way Forward for Europe:

Fri, 06/08/2012 - 10:00 | 2507009 disabledvet
disabledvet's picture

This IN THEORY could happen. It would have to done in London and perhaps Hong Kong. Mr Chatty Jamie Dimon did say "there are other whales" which more than likely means a: "they're all European" and b: "his loss is about to get a whole lot bigger."

Fri, 06/08/2012 - 10:04 | 2507024 Dr. Engali
Dr. Engali's picture

Screw Italy ...I'm looking for them to hit the mother of all debtors. I' wondering what's taking them so long.

Fri, 06/08/2012 - 11:53 | 2507542 Ghordius
Ghordius's picture

mmmhhh.... let me see... 50 years and counting of having roughly the same debt levels vs. GDP?

we could have had the same conversation in the 70's and I was definitely more scared about them at that time.

of course, it could be a Normalcy Bias. And the "holders" statistics of the Italian Bonds has changed, though very little of this debt is outside the EZ, compared to "you know who".

nevertheless, if I'm not mistaken this week's Scare Special is Spanish Banks, not EZ Sovereigns.

Fri, 06/08/2012 - 10:07 | 2507030 goldinpenguin
goldinpenguin's picture

Does night follow day?

Three factors in Italys favor however

1)Italy unemployment rate much lower than Spain

2)No out of controll, bankrupt regional govs in Italy

3)No RE bubble burst in Italy similar to Spain and Ireland

But any sort of run at Italian finance and banking will really stretch the ability of the Euro alphabet soup saviors to respond as Spain goes critical

Fri, 06/08/2012 - 10:08 | 2507038 mayhem_korner
mayhem_korner's picture



So Greece won the Derby, and Spain is about to close out the Preakness.  So are we betting horses on the Belmont? Vegas has Italy at 4-5 favorite, with Ireland and Portugal at 6-1 each, followed by France at 10-1.  Longshot UK is pulling a lot of bettors, so their 25-1 opening might get bought down.

Fri, 06/08/2012 - 10:09 | 2507042 SwingForce
SwingForce's picture

Lets ask Nigel Farage, Nigel?

Fri, 06/08/2012 - 10:15 | 2507062 gaoptimize
gaoptimize's picture

And from "News That Matters" - Italy Industrial production sinks.

Fri, 06/08/2012 - 10:15 | 2507065 mayhem_korner
mayhem_korner's picture



OT, but it looks like the MSM is starting to change the narrative about whether or not the recession ever ended...

The 49 percent of Americans saying the economy is poor has fallen to its lowest level since the recession began in 2008, though it remains high

Seems everyone's throwing Barry under the bus.

Fri, 06/08/2012 - 10:18 | 2507076 spanish inquisition
spanish inquisition's picture

'Crush the banks, then get bailed out' which leaves only one course of action it seems, banks will be shorting themselves to force action from their overlords in Berlin and Brussels  -  A great way to get suicided or Ben can call Obama for a drone strike.

Fri, 06/08/2012 - 10:20 | 2507089 mayhem_korner
mayhem_korner's picture

banks will be shorting themselves


I think you fat-fingered an "o" in "shorting."  Should be an "a"...

Fri, 06/08/2012 - 10:19 | 2507084 Joe A
Joe A's picture

Hold on, why move so fast? I am sure there are still plenty of skeletons in Spain's closets.

Fri, 06/08/2012 - 10:33 | 2507172 orkneylad
orkneylad's picture

About time with this basket-case economy, I'm getting fed up of all that feta cheese & tzatziki.

Paella is now on offer, but how soon until we can drag the Pizza from the hamper and -perhaps- a good Madeira wine? [I'm afraid the Irish Whiskey has already gone].

It really is a cornucopia of goodies, but late-comers will be left with the frog’s legs, haggis and sauerkraut -which are buried at the bottom somewhere, but must be eaten by someone eventually.

And once the picnic’s over, it’ll be washed down with a good old pint of ale & a pork pie.

Longjing tea -with sushi- tomorrow, followed by NYC hotdogs the day after.

After that? Well the only thing left will be the fondue, which seems to survive all trends and never gets eaten by anyone.

Fri, 06/08/2012 - 10:45 | 2507242 GMadScientist
GMadScientist's picture



Fri, 06/08/2012 - 10:40 | 2507212 RoadKill
RoadKill's picture

Anybody have any info on how the bailout will actually proceed?

IE is the Spanish govrrnment going to take equity or lend the banks money? In TARP their was a bit of both. But here it seems like it would have to be all equity because the LTROs tried the debt route and failed.

If the government takes €80bbn of equity in its banks then current shareholders get dilluted to a couple percent.

Regardless AT best we will get some clarity on the above this weekend. Their is 0% chance of an actual bailout because the accounting firms havent figured out how much money the banks need yet.

Fri, 06/08/2012 - 10:42 | 2507221 shovelhead
shovelhead's picture

Will can-kicking become a new Olympic event?

Fri, 06/08/2012 - 10:47 | 2507247 GMadScientist
GMadScientist's picture

I'm going to train for the 1500m shit-kick.


Fri, 06/08/2012 - 11:05 | 2507336 grid-b-gone
grid-b-gone's picture

How about a lottery where one half of banks win and get bailed out and the other half get liquidated and absorbed by the winners, with top executives and board members of the losers precluded from working in the banking industry or receiving retirement/severence benefits for life?

All these people need is an incentive to do their jobs. The problem is, as it stands, their job is to rake in as much free capital by any means possible and the Paulson 2008 "solution" is their model.

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