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ECB Calls Spain's Bluff... Or Does It? And Did Europe Just Check To The Fed?
While most of the early action today was driven by a baseless rumor that the ECB would announce some magical recapitalization plan that would put everything back into its normal (by this we mean somehow sustainable) place, the alleged time when Draghi would make such an announcement came and went... and nothing. Instead, the ECB, using the FT as its mouthpiece, came out late in the day, however not with news that Europhiles wanted to hear. As a reminder, as part of the proposed Bankia nationalization scheme, Spain would inject Spanish debt into the insolvent entity, thereby allowing it to pledge the debt for ECB repo cash. Or so the thinking went. This was, in effect, Spain's bluff. The ECB has just called it.
A Spanish plan to recapitalise Bankia, the troubled lender, by indirectly tapping the European Central Bank for cash, was bluntly rejected as unacceptable by the ECB, European officials said.
News of the rejection came as Spain faces elevated borrowing costs in the bond markets, tries to persuade investors it can contain problems in a banking sector weighed down by €180bn of bad property loans and, on Tuesday, saw its central bank governor stand down early.
Instead, it seems that the ECB is a fan of the old fashioned type of capital raise: one involving equity, and cash, and none of this newfangled repo monetary ponziness. Of course, the only bank that did try a capital raise by way of a rights offering in 2012 was Italian UniCredit which plunged by nearly half in the days following the announcement as a market test would clearly indicate it was woefully undercapitalized and its equity may well be worthless. This, however, does not seem to bother the ECB:
The ECB told Madrid that a proper capital injection was needed for Bankia and its plans were in danger of breaching an EU ban on “monetary financing,” or central bank funding of governments, according to two European officials
ECB's calling of the Spanish bluff also explains the earlier news of Ordonez' premature evacuation from the Bank of Spain, which we noted:
News of the ECB’s hardline response emerged as the Bank of Spain announced that Miguel Angel Fernández Ordóñez, its governor, would step down at the end of next week, a month earlier than planned. Mr Fernández Ordóñez – known by his initials Mafo, who was appointed by Spain’s previous socialist government – has been subject to increasing attacks from politicians over his failure to prevent the country’s banking crisis.
In summary:
“This is like a game of poker now,” one government adviser said, “and I don’t think Spain is bluffing”.
Well, it is. Because its cards, as explained yesterday, are all merely collateral backed by zombie banks which carry their "assets" at idiotic valuations.
So yes - in the great game of monetary poker, the ECB just called Spain's bluff. Or maybe not. Because paradoxically this may all be simply a means to crash the market, as we have been cautioning since last week, when Citi, correctly, said that Crossover would cross over (pun intended) 1000 bps, before the central banks would get involved.
In other words: yes, it is a game of cards, but one which may well have Spain and the ECB on the same side of the table, and now both have checked to Ben Bernanke, who has 3 weeks to decide if the cost of bailing out Europe, and thus US banks, is worth the printing of another $1 trillion.
We can't wait to find out.
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Bernanks going to print some up.
Still looking for his chopper. No sign of him yet.
If history is anything to go by, then these measures will do little in the long run.
We were told in 2010 the facts by Neil Cavuto and then it was reiterated by none other than Brian Williams on David Letterman.
“We simply have no money. The world has no money. And right now, the emperor has no clothes"
No, there's plenty of money because the central bankers print it.
The problem is the productive people are being pushed to the bottom by those who are able to print money and produce nothing all the while diluting its value (for those who actually have to work for it). There should have been a massive depression where the savers were rewarded and the over-leveraged money addicts fucked in the ass. Instead, we got the opposite. Theft by printing.
The problem is that central bankers don't know how much they can steal without causing a bloody revolution.
You can slice and dice the Euopean mess any way you want to, but the bottom line is there is no solution short of default. Live with it.
'former Greek Finance Minister George Papaconstantinos'
And, How many of these G Paps they got hiding under the bus anyway.
Instead of having the same one say the same thing over they just come up with another one to say the same thing.
'The euro is in the best interest of the Greek people'
They're running a G Papathon as the ship goes down.
Sadly, the American taxpayer via the Fed, is the lender of last resort for all planetary central bankers. This doesn't end well folks. :-(
cue the alien invasion...
Don't think for one second, CRIMINALS, are getting cold feet, NOW!
Too far, to turn back now!
Is Spain too big to fail? Or too big to bail? Or maybe both?
It looks like a long hot summer in Madrid this year.
time for a running of the bears
Ben is still considering Madrid for the statue he wants of himself erected as the "Savior of Europe".
So total deleveraging to attain some new low leverage normal (which rally monkeys can not comprehend) is like 20-40 trillion? So Bernanke is gonna print how much to have any meaningfull effect?
Think we need another war.
Ctrl-p baby!
If you look at the 5 year chart of gold thelast 9 months is looking very similar to the nine months leading up to Oct 2008 crash. May be nothing, but....
If you look at the 5 year chart of gold thelast 9 months is looking very similar to the nine months leading up to Oct 2008 crash. May be nothing, but..
*********
There are a few other gold indicators that are similar now to those that preceded the 08 crash-
http://bit.ly/KFCsZd
Fed should just check to germany
Asia starts the short squeeze the world follows - simple. European news is somewhat meaningless now.
But, Spain is them one to wtach for a total bank run/meltdown/equity implosion/ECB can't do sh*t trade.
with all the opacity, obfuscation and secrets, who knows what TPTB are doing, keep digging
Have the Greeks started reaching out to Ben to get some ideas on printing boatloads of Drachma quickly? Anyone know?
Benny is only good at printing imaginary bucks. Greeks should jsut use thier Bonds and buyout HP to print the drachmas.
Pressed olives and squeezed euros.
OK, assume the CBs push ctrl-p, has anyone calculated how much actually has to be printed to sop up this mess?
I'll bet it starts with Q
& ends in [insert infinity symbol here]
Why stop once started?
Just need to figure out a way to replace printer ink cartridge without stopping the printer.
the bernank loves debasing the currency for the benefit of bankers and billionaires, it's his thing. b.s. bernank will give the usa big banks all the clownbux they want. the #pomolist was no joke.
you get yers already?
now much for the shoe with the broken heel?
I smell another round of QE in the air......
"Your boss is quite a card player , kid...how does he do it?"
"He cheats."
.
ok buried here, i guess this is a tyler appreciation society but i can help to refine the understanding here of whats really going on but not as a comment on a story.
Obama set to arm Italy's drones in milestone move
Stay in the Euro and the NWO's going to get you when it decides to make its move.
Obama is a dog eating shithead. Him Jesse Jackson Jr. and Rahm Emmanuel can all go shove it. I haven't bought any of the crap coming from their mouths from day one. They will go down as the worse than George Bush as president. In fact I think George Bush was god as president compared to Oloser. He's a money wasting clown act.
Spain is Europes newest punching bag. Greece was first. Who's next?
It's all an strategy to devaluate the Euro!!!!
U guys don't get it.
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cHEAp nfl JerSeysAnfield, such as compensation, Swansea's reluctance to lose their manager and the new management structure intended for Liverpool, can be overcome in the next few days.Rodgers signed a new three-and-a-half-year contract with Swansea
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I thought we'd see some type of plan out of Europe by today, this is pretty amazing. As the region falls apart and the financial system falls further into disarray they are doing what? Having Christine Lagarde go out and talk about the lazy Greeks and how they need to pay taxes, meanwhil eshe pays zero tax on her income. You knew she had to be evil, after all she is running the IMF.
Maybe tomorrow they'll make an announcement about some action they plan to take that will do this and do that, I'm surprised the markets haven't burnt down given the lack of information coming out of the European institutions. If something isn't done soon things will implode, probably Spain first as Greece is happy to wait for the 17th.
Capital controls coming to Spain? and maybe Greece and Italy? People must still be taking their money out of the banks because nothing has been done to change their minds, has it? Am I unaware of some announcement that seemingly solves at least the short term problem of capital fleeing? Based on their incompetence, ECB/IMF/Troika/etc will hopefully feel extreme pain from this debacle, maybe the Europeans will remove the technocrats but keep the union.
Fuck You Draghi, you too Bernanke and yea, you as well Geithner you piece of shit (I think recess is over).
Zombies don't give a shit about plans. Just print more brains, err, I mean, fiat...
Go to the Fed? I'd go to China first. They'll be happy to take EU commodities in trade for U.S. dollars.
BTW ZH, can you remove that f'n anti-Kasich ad on your page? The socialists tried their best to sink Ohio and kill the middle class already. Let's not give them any more ammo.
http://baselinescenario.com/2012/05/28/the-end-of-the-euro-a-survivors-guide/
Simon Johnson wrote a nice article about the collapse of Europe.
I like his talks and what he writes but he seems to be a strange creature in that he is like a good globalist. Maybe he is a best choice of all odds type of guy and offers ideas and optional paths to take.
Anyhow, the article is a good read.
Spain has nothing except for a madness Keynesian style building boom that blew up 5yrs ago. The don't immigrate (Greeks and Italians can send monies out to families o/s), they don't import, they don't export, but rather sucked off Germany and the weak and crippled fools of the EU. Plus mad Mario has most of Spain on his balance sheet anyway.
That is it. Spain is ready to blow, WTF can Bernanke do? Just increase USD swaps (massive USD drop) to the ECB/Spain banks.
Let's just hit the reset button already! These games are getting tiresome.
Japan and China
start trading in their own currencies
bypassing dollar ...this friday
ouch
that's gotta hurt....
Black [ silk ] swan
honey badger gonna get paid
or is this bitch gonna have to eat a face around here?
Off topic a bit, but somewhat related to the pain in Spain being on the gain or the wane.....
Of nations with a GDP in excess of $10 billion (a low bar, indeed), name five countries whose real estate is valued, on a price to median income basis, less than the US and Germany.
Winner gets a Liar Loan from Countrywide for a home of his choosing in Detroit, signed personally by both Angelo Mozilo and Linda Green.
Mozzilo dressed like a rock star. Rock stars dress like Mozillo. Yes, it is that time of night on ZH, Washington mutual is next.
Gimme Shelter.
http://www.youtube.com/watch?v=MVor2Xm8qg0
cosmo_d: your words have iron
name 5 countries where it makes less sense to go into debt 10Cents to "buy" RE than the US (can't speak for eoropa/germany)
of course! it just doesn't make sense anywhere! heh. heh. ergo, the rest of that shit is just overpriced for for the "winter" market?
as GM goes, so goes the freaking globalization, BiCheZ! L0L!!!
and flush twice!
how about "farmland"? DJ Hog/Corn, Steer/Corn Ratios - May 29 why is the price of corn going down? can iowa make the roseBowl from here? is it b/c the price of oil is down and ethanol ain't what it usta be now that peak oil and death to iran are taking well-deserved breaks?
or just the banksters? again? <get it?]
Fed USD swap lines to the ECB went out past 120b last week. So the FED is doing it's part :)
The Fed will prime a massive one, once Spain goes into a total bank/fiscal meltdown...anyday now.
I need for Ben to hold off printing a little longer.
Just enough to spook the long bond yields then my TBT calls are money!!!
(If those pay off I promise to give a nice cut to some nice charities)
In poker, a semi-bluff is a bet or raise with a hand that is drawing for a card. The question is only how likely is the card to fall, how many outs does the draw have. Spain holds a straight draw and a flush draw. Several quite likely scenarios make coordinated international central bank efforts to pump the system full of liquidity. Spain is a favorite to hit its draw; it just needs time, or two cards, to do it. They are getting all their chips in on the flop to play for the river in a pot they are favored to win.
As expected, gold continues to follow the euro/US$ exchange rate ... I know that many here don't believe it is happening but it is actually quite amazing how in-sync gold and euro are these days.
There went that correlation, today.
Is "check to the Fed" anything like "skip to my lou"? Or something?
Greece 2.0
I hear Spain mixes the best Molotov Cocktails
xlnt analysis
i disagree with the conclusion; the FED an the other CBs need to finance their goobermints; this is a problem for the swissies and the ECB imo, at this point
this is the regionalism angela may or may nor face up to, depending ion the "crisis" which gets generated; it seems to be in place, now; i don't think the FED is gonna arc a $Tril over spain at this point, myself; what are firewalls for, if not exactly for this situ?
this is vampire bankster fascist capitalism; spain is right where they want it; the US is getting there: keep having the pols spend money they don't have; indebt thePeople; lie about what you are doing and the obvious consequences; then, take their assets, if there are any left; poison the wells too? or just destroy the RE, lending, and other markets by extra-lawful activities?
the banksters outa theCity0'London are leading the race! better hurry!
the chairsatan will take care of the stock matket, this bank, that bank, joe's bank? not true at this point, imo
the goobermint budgets come first; those check get in the mail or there ain't no mail and no cBanksters, either? yes. this bank is part of that goobermint thing, so it will get dealt with. isn't it amazing tho, that country after country, bank after bank, is now being "revealed" as hopeless? totally zombied and shelled out already? who coulda knowed?
now, these same goobermints, centralBanks and commercial financials and banks who have demonstrated everything is bullshit and nothing is real or trustworthy, will attempt to use economic data and theory to brainwash us into accepting what they wanna do next
trust me!
the EU is not totally dependent on either germany or the FED for its survival
it has the SNB and the swiss franc to support it: by printing Trillions
imo this is by design; the swiss banksters stand outside the EU; THEY are providing credit and support to the ECB and it's monetary unit; just as germany is providing earnings credibility to extend and pretend from within the union
now, i'm just slewie, but it seems it seems to me that these fuking asswipe banksters hafta be pretty damned careful that they don't let inflation get away from them, here; this is their achilles heel, not the EU banks; not the prices of equities
and i see the chairsatan understanding this and doing his job in this respect
now, i'm wrong all the time and i may change my mind completely the next time i hit refresh and see what tyler has put up for us, but i'm not getting paid to bullshit here and this is what i see
How is it possible that the European Union allows the weak states to enter the international money market and borrow the money they need without help – based on their own potentials? How is it possible that the “chain” of interests of euro can let its weak “links” exposed to outside pressures? How is it possible for a “herd” with common interests to let each “ship” defend itself against the wolves, without help, and its general security threatened? How is it possible for Greece, which represents a minor 3% of the Eurozone’s economy, to be allowed to threaten the other 97% of that economy, due to the latter’s weakness?
www.eamb-ydrohoos.blogspot.com/2010/02/ten-plagues-of-pharaoh.html
The European Union should be the one borrowing from the national banking system – thus dealing with profiteers itself based on its overall potential – not its weak “links” alone. The latter should be under the EU’s protection and constant monitoring. They should borrow from it at a subsequent time and if they became victims of profiteering, the problem should be kept in the bosom of the euro. Domestic profiteering should bring profits to Europe’s influentials, therefore bring profits in the euro area, and not threaten it.
From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007