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As European FinMins Discuss Giving Spain €100 Billion, Spain Has Yet To Request A Bailout

Tyler Durden's picture





 

The European financial ministers' meeting started at 4:00 pm CET. What are they discussing? According to the WSJ, nothing short of "a commitment to provide as much as €100 billion ($125 billion) in support for Spain's ailing banking sector." At least we now know that that Spanish bank trot so widely avoided by the mainstream media was just a little more kinetically-charged than previously expected, because for Spain to actually demand the money, even if implicitly, it means it has a capital shortfall, which can only arise from an outflow of liquidity, as mere real estate impairments do not have any impact on liquidity. So far so good. There is only one problem: Spain has yet to formally request the money! According to newspaper ABC, "Spain wants to convince European partners that IMF shouldn’t participate in aid for country’s banks because of potential stigma. Aim of talks taking place today is to agree legal framework and conditions for a potential rescue, newspaper says." Potential rescue you see: not an actual one. Just because, as we explained patiently to the 5 year old algos out there, Spain will have none of this "conditionality" that would be imposed on it by Germany, and the IMF, should it actually be formally a bail out target. Which of course would also have the unpleasant side effect of pushing its spreads tighter for a few hours, then blowing them out parabolically once carbon-based investors out there realize what has just happened. As for the ultimate question: just where will €1 of money come from in this broke continent, let alone €100 billion... why, better not to bother with details.

Because it sure isn't coming from Germany, aka the only country in Europe who can afford it. Recall:

The German government on Wednesday reaffirmed its opposition to allowing European Stability Mechanism, Europe’s permanent bailout fund, to directly lend to troubled banks in the Eurozone.

 

Government spokesman Steffen Seibert said at a regular press conference here that the German rejection of the idea of any direct recapitalisation of banks by the ESM “is well known.”

 

The treaty creating the ESM explicitly states that the fund can only lend to governments in return for promises of reforms. The German government has stressed on numerous occasions that it insists that this passage of the treaty is respected. The treaty has yet to be ratified by most governments including Germany.

And why should they: as we showed yesterday, in April alone, German indirect costs to keep the Eurozone afloat increased by over €50 billion, or about €2 billion per day.

Which of course leaves just one source of funding...

To summarize: Europe is desperate to force Spain to accept a bail out, which the US will pay for.

And so look forward to headlines in 3-4 hours which promise much, but say nothing. Something along the lines of: "European FinMins are committed to providing Spain with financial assistance should it request it."

In other words nothing new.

More from the WSJ:

Spain, which is reeling from a real-estate meltdown, has not requested aid for its financial companies yet, the official said, adding that no disbursements are likely to come before the end of the month, when two independent consulting firms have finished their assessment of the country's banking sector.

 

However, the euro zone agrees that "quick and radical action" targeted at Spain's banking sector is necessary, the official said.

 

He said the draft statement mentions €100 billion as the "top figure" of support that Spain could get, but that the exact size, form and time frame of a bailout for the banks wasn't yet decided.

 

"That figure is mostly for the markets and doesn't mean that the actual disbursements have to be that much," he said.

 

The draft statement focuses on conditions linked to Spain's banking sector, but also requires Spain to resolve macroeconomic imbalances that the European Union has previously revealed, the official said.

Finally, as we showed yesterday, all the newsflow can be ignored courtesy of one simple inforgraphic: one which shows precisely what the final outcome in Spain will be:

One word: exponential.

 


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Sat, 06/09/2012 - 10:25 | Link to Comment StrictlyNumbers
StrictlyNumbers's picture

Money for nothing and CHICKS for free should be Europe's new slogan 

 

www.hedgethechaos.com 

Sat, 06/09/2012 - 10:30 | Link to Comment BlandJoe24
BlandJoe24's picture

How about "money for nothing and CHECKS for free"?

Sat, 06/09/2012 - 10:34 | Link to Comment Pladizow
Pladizow's picture

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

Spain: Sorry, our siesta ran overtime!

Sat, 06/09/2012 - 10:48 | Link to Comment WestVillageIdiot
WestVillageIdiot's picture

They were loading up on tapas and Estrella before heading out to see Barca play.  They can't be bothered with minor details like the destruction of their economy by the banking class.  Geez.

Sat, 06/09/2012 - 11:30 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

"Tapas & beer, tapas & beer, life is good when Ben is near."

Sat, 06/09/2012 - 11:39 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Sow, via Mohamed Bouazizi (29 March 1984 – 4 January 2011; Arabic???? ?????????‎) was a Tunisian street vendor who set himself on fire on 17 December 2010, in protest of the confiscation of his wares and the harassment and humiliation that he reported was inflicted on him by a municipal official and her aides. His act became a catalyst for the Tunisian Revolution and the wider Arab Spring, inciting demonstrations and riots throughout Tunisia in protest of social and political issues in the country. 

And Facebook, via

 

Wael Ghonim (Arabic???? ????‎, IPA: [?wæ??el ?o?ne?m]; other transliterations include: Ghoneim, Ghonaim) (born 23 December 1980 inCairo, Egypt) is an Internet activist and computer engineer with an interest in social entrepreneurship.[2]

In 2011, he became an international figure and energized pro-democracy demonstrations in Egypt after his emotional interview[3] following 11 days of secret incarceration by Egyptian police—during which he was interrogated regarding his work as the administrator of the Facebook page, "We are all Khaled Saeed", which helped spark the revolution.[4][5]The TIME magazine added him in its "Time 100" list of 100 most influential people of 2011.[6]

 

See how they forgot to mention that he worked for Google?

 

Arab Spring = Google+Facebook Revolution

 

Is the European Summer going be Twittered? 

The new Political Tool of choice? 140 or less...

Flash Mob! Not a pretty thought.

Twitter is an impulse. Open to serious mis-use. The RIIA must be rubbing it's gnarled hands in glee.

ori

Sat, 06/09/2012 - 11:44 | Link to Comment magpie
magpie's picture

When does #stopmerkel become #stophollande

Sat, 06/09/2012 - 12:58 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Precisely...

and finally 

#STOP

 

ori

Sat, 06/09/2012 - 10:45 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

The comments section of that article strikes me as much more sobering than the actual article itself.

A lot of that happens now a days.

Sat, 06/09/2012 - 11:04 | Link to Comment Spitzer
Spitzer's picture

So they have a bunch of devout keynesians over there. Crazy...

Sat, 06/09/2012 - 11:59 | Link to Comment falak pema
falak pema's picture

the Nutting article like many commentators does not address the derivative debt which is private, OTC, opaque and off balance sheets in shadow banking. Until this issue is squarely addressed all these articles of REAL debt deleveraging remain totally suspect iMO.

The article however does point out that the real issue on both sides of the pond is PRIVATE debt not PUBLIC debt. THis is the crux of the matter and why its resolution is such a bitch; AS IT IS THE VERY BLOOD LINE OF THE OLIGARCHY CONSTRUCT, THIS IS WHAT THE STUFF OF EMPIRES IS MADE OFF! 

TRY GETTING THEM TO GIVE IT UP....It'll have to be CLAWED out with awesome public legislation, by HONEST government,  unless its plowed back voluntarily into the real economy; under duress...of the guillotine. 

Sat, 06/09/2012 - 20:58 | Link to Comment Buck Johnson
Buck Johnson's picture

Germany won't lend to banks alone, and Spain wants them to loan to the banks and not to them.  This is a game of chicken and Germany is falling for it.  They loan to the banks 100 billion Euros and a few months later or even at the end of this month come to find out that they need another 100 billion and then another and another, just like Greece.  Greece forced them via the rest of Europe to keep giving them money and now what, they are about to leave the euro in a few weeks.  So they are going to play the game again and 18 months later find out that Spain is about to implode and leave the euro etc. etc.. 

 

The problem is that Germany doesn't want to be the one blamed for the implosion of euro and the EU for that matter, but it's a done deal.  What should be done is that Germany comes out and be honest and rat on everybody.  And that is to tell the world that they won't continue to bailout these countries under the issue of being blamed for the end of the euro and EU.  And then blame the other countires fiscal policies for bringing the euro down.

Sat, 06/09/2012 - 10:30 | Link to Comment jonjon831983
jonjon831983's picture

So you don't want to formally request funds eh?

 

Ok then. I'm just gonna put this money on the table here and turn around... and if it is gone... it is gone... ya know? *WINK*

Sat, 06/09/2012 - 10:36 | Link to Comment lolmao500
lolmao500's picture

100B... won't be enough. Not nearly enough. Spain needs 800B+ or Banco Santander goes under.

Yesterday's headline in Azerbaijan on the farce...

Spain suffers downgrade as EU says aid is ready if needed

Sat, 06/09/2012 - 10:37 | Link to Comment WestVillageIdiot
WestVillageIdiot's picture

What's the big deal?  It's only $100 billion.  Bernanke sleeps with that under his pillow.  Just launder it over to the ECB, force the Spanish government to take it, then have them slip it on over to those nice men and women running Spain's banks.

We will then be back here in 6 months.  Spain was Florida on steroids.  The true losses of their property bubbles have to be massive.  I remember hearing Irish co-workers talking about all of the people that they knew that were buying places in Spain.  They were leveraging up their Irish houses, which had shot up parabolically, to buy spec houses in Spain.  What could go wrong? 

Spain hasn't guaranteed anywhere near the levels of bank debt that Ireland has.  They still have a very long way to go.  Didn't Ireland guarantee $800 billion in bank debt?  In U.S. terms that would be like $60 trillion.  How come we haven't been hearing more about that disaster?

Spain will get the bailout.  Ireland must need more down the road.  Greece will be back at the Old Corral ECB buffet.  Italy will be there.  There is no way they are going to let the whole thing crash because somebody "refused" to be bailed out. 

Sat, 06/09/2012 - 10:45 | Link to Comment disabledvet
disabledvet's picture

and that's why it's a big deal. "only 4 billion for Spain" means Spain goes kaput. In other words "Europe is unable to raise that amount of money in their currency" and with "their type of economy." That means "your currency bears the brunt of the blunt force trauma."

Sat, 06/09/2012 - 11:43 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

Looks like Spain's gonna do a running of the bullshit festival year round now.

Sat, 06/09/2012 - 10:36 | Link to Comment azengrcat
azengrcat's picture

We're gonna need a bigger chart...

Sat, 06/09/2012 - 10:38 | Link to Comment WestVillageIdiot
WestVillageIdiot's picture

If that chart should last for more than 4 hours they should really contact a professional for help. 

Sat, 06/09/2012 - 11:10 | Link to Comment Alpo for Granny
Alpo for Granny's picture

We're gonna need a bigger printer...

Sat, 06/09/2012 - 10:38 | Link to Comment lolmao500
lolmao500's picture

Just ask the Lannisters... they have it... Lannisters always pay their debts!

/Lannister money or ECB money, same thing... all fictionnal.

Sat, 06/09/2012 - 10:39 | Link to Comment valley chick
valley chick's picture

To summarize: Europe is desperate to force Spain to accept a bail out, which the US will pay for.

Don't think the average US citizen has a clue that it is their $$$ to fund this. :(

Sat, 06/09/2012 - 10:49 | Link to Comment Caviar Emptor
Caviar Emptor's picture

When you say "US will pay for", you really mean US will create out of thin air yet again. This isn't gold we're talking about. This is binary digits in the server in the basement of the Fed. And there's no intention to recover or repay (though the MSM plants will argue strongly to the contrary)

Sat, 06/09/2012 - 11:27 | Link to Comment valley chick
valley chick's picture

yes.  But they will pay dearly as the currency is devalued. 

Sat, 06/09/2012 - 10:52 | Link to Comment WestVillageIdiot
WestVillageIdiot's picture

As long as we still have checks in the checkbook there must be money for bailing out European banks.  Bernanke just ordered a whole set of new checks.  He got them with the Charlie Brown cartoons on them.  He can't wait to start writing them out, especially the checks that have the picture of Lucy pulling the football away from Charlie Brown.  That is really funny and it should send a message to the rest of the world not to screw with Benny.

Sat, 06/09/2012 - 11:04 | Link to Comment IMA5U
IMA5U's picture

The average US citizen thinks Obama is a good president

 

 

Sat, 06/09/2012 - 11:30 | Link to Comment valley chick
valley chick's picture

as long as they get their free obamy money.

Sat, 06/09/2012 - 12:48 | Link to Comment jonjon831983
jonjon831983's picture

and most probably who hear of it probably feel like they have no control over it anyways

Sat, 06/09/2012 - 12:59 | Link to Comment valley chick
valley chick's picture

ahhhhh....but they do...and can control their own destiny.  IMO, I have found that most use that excuse of ignorance for they truly do not want to get involved nor want to educate themselves.  *sigh*

Sat, 06/09/2012 - 10:42 | Link to Comment The Count
The Count's picture

I like th Spanish 'Chuzpe', to use a jewish expression, of wanting bailout money, but only if there are no strings attached! I say...F- YOU, solve your own problems!

 

PS Take any of the published bailout amounts and multipy by at least 3.

 

Sat, 06/09/2012 - 10:44 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Look we all need to get over this "Bailout Phobia" hangup. 

I'll bail you, you'll bail me at some point in the future when I need it! 

When we all get over our bailout inhibitons, we'll wake up to a brand new day of shopping possibilities

Sat, 06/09/2012 - 10:45 | Link to Comment Byte Me
Byte Me's picture

One word: exponential.

Geometric??

 

And with time now an endangered commodity that Berlin, Madrid and Brussel seem unable to print more of (wonder why?) this may not last until Grelection Day. Madrid will likely stand pat with the eventual result of collapse/restructuring blossoming for Summer all over Europe.

But at least they won't be in the hole to the IMF.

Check to Berlin?

Sat, 06/09/2012 - 10:56 | Link to Comment WestVillageIdiot
WestVillageIdiot's picture

Am I the only one that thinks the November presidential election is also going to be a huge roadblock for much of this nonsense.  It was September 2008 when gridlock brought down the system, mainly due to impending elections in the U.S.  Were we any better off in June 2008 than we are now?  Were we any worse off?  At that time it still seemed like we could muddle our way through and then all hell broke loose. 

Right on queue we are now 5 months out from the elections and everything is lining up for another huge mess heading in to November.  I would definitely expect a mess if Romney is to be coronated to take over for Obama.  There isn't much of a difference but something tells me that some big players out there could see plenty of opportunity in another slop fest like the one of 2008 and 2009.  A presidential transition may be just what the doctor ordered to make it all happen.

Sat, 06/09/2012 - 11:26 | Link to Comment Alpo for Granny
Alpo for Granny's picture

Doesn't matter either exponential/geometric/parabolic..both are going to infinity as time increases.  Translation...buy and hold phyzz.

Sat, 06/09/2012 - 10:51 | Link to Comment The Aviator
The Aviator's picture

Eric Sprott says the ECB is too far behind the curve here.

http://www.silverdoctors.com/eric-sprott-the-silver-cartels-have-changed-their-m-o/

The ECB is WAY behind the curve here.  Because the Euro area is quite dysfunctional and you can’t get agreement among 17 groups  and of course there is different interests of the stronger countries vs. the weaker countries- I think they’ve been way behind the curve in dealing with the problem that they have. Fortunately in the US where there’s one central bank and one huge printing operation it’s easier for them to deal with the problem because they can literally do whatever they want- as we’ve seen them do on many other occasions.   The Fed getting behind the curve may be them getting Europe to solve it’s problems.   There have been Americans that went over to Europe to try to encourage them within the last week, and Obama was on the phone to encourage them to deal with the problems, and here we have the weekend meetings, and undoubtedly they’ll come up with some promise of something, whether or not it alleviates the ongoing bank run we’ll have to wait and see. The problem is WAY BIGGER than central banks can deal with, and its way bigger than governments can deal with- the whole banking community is massively larger than countries.   The countries of course have no excess funds anyways  because they’re all running deficits, so it’s very difficult for the countries to lean in there and bail them out when their own credit is under attack! Spain just got downgraded by 3 notches by Fitch, so what are they going to do?  They can’t go in and say we’re going to put €100 billion in our banks- their bonds would probably go through 10% so fast you wouldn’t know what happened! It’s a mess, everyone’s behind the curve, and I don’t think they’ll get in front of the curve quite frankly.

 

Sat, 06/09/2012 - 10:52 | Link to Comment Caviar Emptor
Caviar Emptor's picture

There's an alternative to "Bailout"  and "Corporate Welfare". 

We simply need to hand out sure winning lottery tickets to all intended recipients and hold a midnight, televised drawing with a jackpot of $1 Trillion. All winners will claim their portion of the winnings beginning next day. The mood will be upbeat ! Now that's what I call a win-win-win-win-win-!

Sat, 06/09/2012 - 10:52 | Link to Comment disabledvet
disabledvet's picture

"Europe is desperate to bailout Spain which the US will pay for." Huh?? how does that work? Not that i want to know what's going on in the President's mind right now..."being pulled many ways" i'm sure. Anywho "this needs approval from the Senate." And it's not going to happen because we have to "Save Syria" first! I would agree "things are not going according to script" here. When does it?
http://www.youtube.com/watch?feature=player_detailpage&v=JMK6lzmSk2o

Sat, 06/09/2012 - 10:56 | Link to Comment Printfaster
Printfaster's picture

This business that somehow northern Europeans are holier-than-thou in that they pay large amounts of taxes willingly into a socialist state is total hogwash.

I was talking over the European problems, and in particular how the Danish are held out as some kind of model of tax compliance, and as a model of the socialist state that the US president holds up as exemplarly.  

He told me that the only way the Danish economy functions is that the local economies all function in the mode of a black market barter economy.  He gave the obvious straw examples:  I give you a pig if you fix my roof, etc.

Folks, as Jim Sinclair says:  The global breakdown is here now.  Not in the future.  We are living it.

Greece and Italy have nothing on Denmark as far as tax non-compliance.

Sat, 06/09/2012 - 10:58 | Link to Comment magpie
magpie's picture

When is Spain's next election /sarc

Sat, 06/09/2012 - 11:02 | Link to Comment IMA5U
IMA5U's picture

and sadly, the market probably still goes up on monday as the market is happy simply that aid is being considered

 

and the evil CDS traders are not happy

 

and JP Morgan is feeling a little better as The Whale attacks have subsided for now

 

I wonder how much $ Boaz Weinstein has lost in this short squeeze?

Sat, 06/09/2012 - 11:06 | Link to Comment gratefultraveller
gratefultraveller's picture

Something is smelling fishy in Italy - waiting time to draw down 10.000 Euro from a cash (ha!) account at a big Credit Union in Northern Italy, "because they have to arrange for the money to be brought in"... not to mention the questionary you have to fill in about what you intend to do with the money...

Is Mussolini back from the grave?

Sat, 06/09/2012 - 11:08 | Link to Comment magpie
magpie's picture

Do your trains run on time ?

Sat, 06/09/2012 - 11:15 | Link to Comment gratefultraveller
gratefultraveller's picture

Forget about the trains, I'm more concerned with the concrete possibility of a Euro break-up, and the usual "we will convert the money in your account up to xxxx Euro, sorry for the rest, it is gone" that usually comes with a currency reform... you know, take one for the team or down that line...

Sat, 06/09/2012 - 11:35 | Link to Comment magpie
magpie's picture

Yeah, that always used to be the point of discussion in those "DM is back" scenarios - whether it goes hand in hand with a debt haircut or not.

Sat, 06/09/2012 - 11:35 | Link to Comment GMadScientist
GMadScientist's picture

Right to the chambers, on the dot.

 

Sat, 06/09/2012 - 11:38 | Link to Comment magpie
magpie's picture

Ouch. May i remind you your team assuming you are English is in Auschwitz right now ?

Sat, 06/09/2012 - 11:07 | Link to Comment Pygar
Pygar's picture

I'd like to believe that if POTUS and Kongress actually do agree to bail out Spain they would have to flee the country and Washington would be reduced to smoking rubble by mobs of angry peasants with torches and M1-As.  Unfortunately I can't sustain that level of fantasy without chemical assitance, and since I'm out of Vicodin and acid, that pleasant little fantasy will have to wait until I can get my shopping done later this week.  Until then I will have to live with the knowledge that the US govt probably will bail out Spain, and that most people will probably not notice, or if they do will believe the bullshit that somehow the equivalent of building a ziggurat of hundred dollar bills in the middle of desert and fucking setting fire to it will help our economy.

Sat, 06/09/2012 - 11:13 | Link to Comment Barefooted_Tramp
Barefooted_Tramp's picture

Really I don't get it: Why can't these Spaniards just cut on Health, Education and Pensions? That will leave them with enough money to pay the banksters.

Sat, 06/09/2012 - 11:16 | Link to Comment Joe A
Joe A's picture

If Spain gets a bailout with no strings attached, then a home-owner with a mortgage in Spain can perhaps try to renegotiate his mortgage with no strings attached. Or doesn't it work that way? ;-)

Sat, 06/09/2012 - 11:43 | Link to Comment Tom Green Swedish
Tom Green Swedish's picture

In Spain if a homeowner can prove hardship they do not have to pay their mortgage, nor do they go into foreclosure.  They are catholics.

Sat, 06/09/2012 - 11:20 | Link to Comment Mike Cowan
Mike Cowan's picture

A hundred billion won't even begin to cover my Facebook losses.

Sat, 06/09/2012 - 11:34 | Link to Comment GMadScientist
GMadScientist's picture

I am reminded of a scene where bankrobbers, after having done the deed, were quibbling about how to divide the spoils so loudly that someone else absconded with their ill-gotten gains.

Sat, 06/09/2012 - 12:31 | Link to Comment Tom Green Swedish
Tom Green Swedish's picture

It is very evident that Europe is at the point where the USA was 4 years ago.  2008 was not a good year.

 

And look back to 1997. The route of the entire cause of the problem.  The Asian Debt Crisis.  Bill Clinton comes to the rescue. Now look where Asia is.  If the USA bails out Europe we might as well give the country away.

 

http://www.pbs.org/wgbh/pages/frontline/shows/crash/etc/cron.html

Sat, 06/09/2012 - 12:49 | Link to Comment jonjon831983
jonjon831983's picture

Didn't someone say Mars or some aliens would come to bail us out this time?

Sat, 06/09/2012 - 15:05 | Link to Comment Amagnonx
Amagnonx's picture

Its in everyones best interest if the Spanish dont take the bailout - it means default - and thats the best thing that could happen.  The banks get stiffed on the money they are trying to steal.

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