The European "No Action, Just Talk" Rumor Mill Is Back

Tyler Durden's picture

Merkel must be back from vacation, cause Europe just fired up the all talk and no action rumor mill again.

  • Spain in talks with Euro-Zone over terms of sovereign aid, according to "sources" - RTRS

So far so good - this is to be expected by the country whose bonds are trading lower only because this has been priced in for the past month.  But:

  • No final decision has been made by Spanish authorities to request a bailout  - RTRS. So.... no news?
  • No decision expected before September 12 at the soonest, politicial negotiations to intensify on September 14 or 15 - RTRS. So... no news because the ESM which is critical to the Spanish bailout is contingent on the German constitutional court. But hey - let's pretend like someone is doing something
  • Preferred option is EFSF buying Spanish bonds on primary market, ESB buying in secondary market - RTRS. So... the EFSF whose 4th largest backer is Spain will be buying Spanish bonds, and the ECB, which Germany has just said 9 to, will be buying more bonds?


  • Discussions being held at the technical level, focus on conditions, monitoring. So.... more talk and absolutely no action, with Spain as usual demanding no conditions to its bailout, while Germany and the Troika telling Rajoy he has to essentially resign and work for the IMF when he tells the world that Spain is broke.

And this is the "news" sending the EURUSD higher by 50 pips. Because, oddly enough, while talk is cheap, what this non-news does prove, is that Spain is now officially broke. Which must be great news.

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alien-IQ's picture

This news certainly made gold and silver very happy.

AlphaDawg's picture

Got this from Mish Schedlock,

All you need to know....

Spain is Fooked


The Spanish economy continues its adjustment process. But the results in terms of deficit reduction, remain meager. Very meager. To the extent that in the first half of the year-on-national accounts, government spending-which really is committed to spend but have not been paid, have grown by 17.6% over the same period of 2011 .

Or what is the same, the central government already has obligations amounting to 87.967 billion. The resources, however, only amounted to 44.879 billion (-4.1%), which means that during the first six months of the year the state has spent (or is obliged to spend) almost double what it has collected in revenues.

Debt service has become the second biggest problem in the budget (after unemployment benefits). In fact, interest payments of 12.239 billion euros, is already 23% more than the government pays public employees (9.953 billion euros). This does not mean, however, that the debt service is causing the budget shortfall. In fact, the primary deficit (excluding interest payments) amounted to 30.839 billion in just six months.

Rising unemployment has forced the state to make some additional contribution of 4,404 billion euros to the Public Employment Service (SPEE), while Social Security has received an additional 2.575 billion euros.

The central administration also had to make advance payments to the autonomous communities totaling 5.476 billion, and another 865 million have gone to local corporations. In total, 13.320 billion of additional costs upward bias the data deficit for the first of the year. In any case, the underlying problem continues to be government revenue, strongly influenced by the deterioration of economic activity.

VAT receipts actually are falling at a rate of 8.6% on a comparable basis. Panelists expect the destruction of more than 300,000 jobs next year, 2% of the workforce. That is, ten times more than estimated as more likely the government.

fourchan's picture

the fed is trying to pump with nothing but propaganda too.

it really shows how dumb the people behind the markets are to fall for these charades.

NotApplicable's picture

Gee, it's like they're doing the ole "Extend and Pretend" routine while awaiting for an external distraction to be triggered. I'll note their end date is the day after the 11th anniversary of 9/11.

battle axe's picture

So pretty much a circle jerk as usual.....


CrashisOptimistic's picture

The sequence:

Bernanke will NOT promise QE in Jackson Hole next week.  The HFT folks can't prevent a 2-3% decline.

The German Court will rule to permit the ESM being funded.  HFT will drive ETFs and correlators will follow +1% on the S&P.

Greece's audit will show poor numbers, and worsening.  Europe will draft a report praising Greece's efforts and committing to support for the Greek gov't and people, but there will be no loosening of conditions.  The HFT guys won't be able to stop a -3% decline.

The Fed and ECB both will do no QE, constrained from worsening Brent at $115 [oops, make that 116].  It will be mid to late September by then and too late for an SPR release to actually enter the pipelines by election day.

The markets, after trying to pretend QE will actually come in December, will finally realize none this year.  The HFT people won't be able to stop a -4% move.

The fiscal cliff negotiations will make no progress in December, regardless of who is elected.  This will take another 2-3% off the S&P . . . 

Which for the 3nd straight year will close at 1257.


Peter K's picture

Like I posted on another great site:

Can I make the introduction please? Stupid money demand, meet Drahgi/SNB supply. ;)

God (with a capital G), you can't make this stuff up.

Mercury's picture

New strategy: If enough market participants die of boredom first, the Euro can be saved!

Stoploss's picture

Wonder what all the media outlets will do now that they have all discredited themselves.  All liars, hey maybe they can do some porn, umm no, that's for the SEC. Oh well i tried.

caimen garou's picture

lets have a meeting on what we are going to meet about in a month so we can meet again the following month to meet again in the near future.

youngman's picture

This is how a bureaucrat looks like they are working...

But you watch..Greece will probably start selling their islands or something

mirac's picture

number nein, number nein, number nein...

GolfHatesMe's picture

KTFC  new news acronym for no news, just Kick the Fucking Can

vertexa's picture


the situation is like 1929! we're going to the crash!, markets are very up without nothing like 1929, crash is here and will happen in weeks


the 300000000th percent's picture

we have a plan to make a plan about planning a plan

magpie's picture

...then why aren't European markets green already

OldE_Ant's picture

Blah, blah, blah.  "Talk, it's all talk."

What I still don't believe is that people actually listen to the hot air coming out of these peoples mouths, and that no-one has tried to do a European Hot Air IPO seeking to capture it to heat homes.

Hell by the time winter comes the f'rs will already have crawled back into their bunkers and will be sucking back drafts and smoking their pipes in front of roaring fires while fully 1/4 of Europeans will be freezing, hungry and homeless.

Ah but hey maybe they'll get lucky this year and global warming will cut the edge off and I hear parts of spain and greece are very nice in the winter.

End of Line's picture

The only European action to speak of is from Prince Harry

NotApplicable's picture

So much for the "What happens in Vegas..." motto.

Rathmullan's picture

It's called "firming up the bid so the global elitist socialist political insiders can dump their bonds".

Dr. Engali's picture

We have 25% unemployment and 50% youth unemployment,but we are going to wait until things start gettting  bad before we do something.

Abraxas's picture

Never underestimate the power of denial.

d_taco's picture

Zerohedge is fooling all its readers,

Surprise deficit raises risk of more UK austerity;

UK trade deficit hits new record

UK economy: Weak manufacturing order books hit hopes of recovery

NotApplicable's picture

I'm torn.

Is this a herp, or a derp?

d_taco's picture

I reading every day ZeroHedge and the FT. No word on the UK. It is regarded as a safe haven that was so clever to stay out of the Euro. Bloomberg may 2012: “how comes countries outside the Euro are doing so well”. The answer: “they do not.”

UK is after Spain the next Country that is on the brink of collapsing. Without growth it is not able to serve it debt. It has a deficit of about 8% and an economy that is completely dependent on the collapsing financial sector and a absurd private debt.
Europe and the US has more possibilities to use monetary politics without to much inflation. The UK, due to it size of its economy has not.

Zero hedge like the FT (maybe they are the same) do not spend a word on the bad situation in the UK.

i-dog's picture

The UK? Do any English speakers still live there? Isn't it on holiday for Ramadan, or something?

youngman's picture

Can someone explain to me why the EURO is almost $1.26......WTF

d_taco's picture

Maybe it is one of the only area’s left with a trade surplus.

We waiting for the moment the US congress discover that it is not only the Chinese renminbi that trades far to low

q99x2's picture

Do the Spanish islands have young virgin women on them?

Dareconomics's picture

First, I noted Spain's request to move forward €30bn in aid for its banks last week was an ominous sign about its financial position. Now, it appears that Spain is in talks for a full bailout, although they are not calling it a bailout. The euphemism being used is "sovereign aid." I think they'll wind up calling it a bond buying program with conditions, which is a bailout, but without use of the dreaded b-word. 

Spain needs this bailout, but it does not want the stigma of asking for it. In fact, no one, the IMF, the ECB, the Germans and the rest of the EU, wants Spain to ask for a bailout. What we have learned over the last two years is that requesting a bailout is tantamount to losing access to the debt markets. The Eurozone can afford to have Greece as a ward, but not Spain. The sums are way too large even for the combined financial resources of the entire Eurozone. 

Just like the article says, look for the ECB to buy bonds to stabilize the price on the open market while the EFSF purchases future Spanish debt issues straight from Spain.

The consequences of such a program are here:…ed-bond-buying/

adr's picture

So the nuclear reactor is overheating and all the adminstrators are going on TV telling people not to panic, epxerts have been called in. The first expert shows up and figures out the problem, he goes on TV saying the coolant pump isn't working properly and then leaves since his job is done.

Knowing the problem the administrators call for a meeting to find a supplier for the cooling pump. After some deliberation, they decide to order a new pump. A news conference is scheduled to tell everyone the new pump will be ordered and the reactor won't blow.

As the new coolant pump arrives to great fanfare and media coverage, all the administrators of the plant give each other high fives. The news outlets all start flashing, "Crisis Averted". All the anchors speak about the great central planning that allowed this crisis to be solved without incident.

As the administrators watch the pump come off the truck, each of them turn to each other and ask, "You know how to put this in, right?"

Michelle's picture

Talk versus action, at this point nothing's gonna work and the markets have to sell off eventually. Seems that the traders are letting the markets move higher so they can pounce with a load of short positions when the time is right, just a matter of time.

Thought criminal's picture

This is really beyond ridiculous, thought my charts have been inverted or something when I saw the move up in EURUSD. Anyway in my opinion the less the market makes sense, the closer the crash is.

sockratte's picture

european propaganda ministry in action

pazmaker's picture

Great news for the EUR/USD on it's way to 1.26!

poor fella's picture

WTF does "Discussions being held at the technical level" mean?

It's like debugging software. "We don't like the value of this solution so lets tinker around until we get something else" And if that doesn't work, we can always fake it and hardcode the value we need.