Floodgates Open As Four More Spanish Regions Seek Bailout; German Nürburgring Faces Bankruptcy

Tyler Durden's picture


Even as Europe has become an utterly dysfunctional experiment in everything relating to modern economics and monetary theory, it has one redeeming feature: it has proven that the Defection regime under Game Theory is 100% correct. It says that once the defections from an unstable Nash equilibrium begin, there is no stopping until the entire system collapses under its own weight. This is precisely what has happened in Spain, where first Catalunya, then Valencia on Friday, and now virtually everyone else is set to demand a bailout. From Bloomberg: The Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout, El Pais reported. Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday, the newspaper said, without citing anyone."

"Spain created the 18 billion-euro ($23 billion) bailout mechanism last week to help cash-strapped regions even as its own access to financial markets narrows." What Spain's perfectly insolvent and highly corrupt regions also know is that the bailout money, like in the case of the ESM, will be sufficient for one, perhaps two, of the applicants. The rest will be out of luck.

Where the bailout money will come from? Ultimately from Germany of course. There is however one minor glitch. Some 80 millions Germans may soon be rather angry to learn that while they are working extra hours to fund the rescue of a few insolvent windmills, their own most legendary racetrack, the Nürburgring, is facing bankruptcy as soon as next week. From Spiegel:

With millions of euros in debts and an inability to pay back its loans, the operator of Germany's fabled Nürburgring racetrack, home to many of the country's Formula One races, could declare bankruptcy next week. It may be the end of the legendary racecourse, which first opened in 1927.


Formula One racing is in the blood of many Germans. The country is home to such car racing legends as Michael and Ralf Shumacher and Sebastian Vettel. And every two years, tens of thousands of Germans descend on the world-famous Nürburgring motorsports complex in the village of Nürburg for Formula One races.


But the days at the fabled track may soon be coming to and end. On Wednesday, the state of Rhineland-Palatinate, which owns the race track, said it would ask the operating company to file for insolvency, and bankruptcy proceedings could begin as early as next week.


The state's governor, Kurt Beck, is blaming the European Commission for not approving a €13-million ($16-million) state aid package in time for a July 31 payment deadline. The consequence, Beck said, "is a very high probability of an insolvency at the end of the month because of insufficient liquidity." After that, orderly bankruptcy proceedings would follow, he said. The state aid envisioned for the track would require EU approval.


Beck said the European Commission, the European Union's executive body, had sent positive signals in recent days that it might approve the aid, but it has now apparently delayed a decision. In recent years, the EU has sought to put a halt to years of giving millions in state aid for the failing race track complex.




Nürburgring is famous in Germany not only as a site that hosts Germany's Formula One races, but also as the location of the massive Rock am Ring music festival, which draws thousands of spectators to see headline music acts every spring.


Since 2007, Formula One races in Germany have alternated biannually between Nürburgring and the Hockenheimring track in the neighboring southern German state of Baden-Württemberg. The planned 2013 race is currently jeopardized by the dispute between Rhineland-Palatinate and the racetrack's operating company.


Nürburgring is one of the world's most famous race tracks. The 25-kilometer long course first opened in 1927. A new track was built in 1984 to accommodate Formula One racing. But in recent years, the future of the massively expensive Formula One race at the site has been in doubt. The state of Rhineland-Palatinate has threatened to reduce the level of subsidies it provides. The June conviction of former banker Gerhard Gribkowsky, who admitted he had accepted $44 million in bribes from Formula One boss Bernie Ecclestone, has also created uncertainty. For weeks now, speculation has been rife that Eccelstone could face corruption charges in Germany.


You want to piss a German off? Stand between them and their local Formula 1 race.

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Sun, 07/22/2012 - 10:39 | 2640149 bugs_
bugs_'s picture

my spanish region needs a bailout too

Sun, 07/22/2012 - 10:48 | 2640170 Future Tense
Future Tense's picture

Coming to a local town, city, or state near you in America. More foreclosures are ultimately going to crush the income for municipalities in the US. Projections with the "recovery" in real estate will not help spending cuts. This article quotes those in the industry who say that 90% of REO properties are being held off the market right now. That number is incredible:


Sun, 07/22/2012 - 11:09 | 2640204 The Monkey
The Monkey's picture

As difficult as it is to do, Europe needs to untangle.

Sun, 07/22/2012 - 11:38 | 2640235 AlaricBalth
AlaricBalth's picture

Dear Citizens of Germany,
May we have some money too, por favor?
The City of Miami
P.S. If you need collateral we have thousands of empty McMansions sitting on recently drained swampland and hundreds of anorexic models on South Beach. Knowing the ECB's history of collateral acceptance, these should suffice.

Sun, 07/22/2012 - 11:40 | 2640263 francis_sawyer
francis_sawyer's picture

Fahrvergnügen... OLE!

Sun, 07/22/2012 - 12:33 | 2640356 cossack55
cossack55's picture

No sweat.  The number will soon be 0% when the gubment converts all retirement accounts to Gubmint Annuities. Mom will get a check for about $35.00 per month, so she can spend $7  per day of food. 3 cheers for the gubmint.

Sun, 07/22/2012 - 15:02 | 2640660 sessinpo
sessinpo's picture

"Mom will get a check for about $35.00 per month, so she can spend $7  per day of food."


That's some interesting math. You have a future in government

Sun, 07/22/2012 - 19:22 | 2641169 Mentaliusanything
Mentaliusanything's picture

Saturday and Sunday's are for begging at the Mall

Sun, 07/22/2012 - 11:46 | 2640281 mick_richfield
mick_richfield's picture

Us too!

Michigancia, a little-known Spanish province bordering the Toledo region, also requests whatever German money Madrid can send us.


Sun, 07/22/2012 - 12:09 | 2640321 AlaricBalth
AlaricBalth's picture

To paraphrase Richard Nixon when he used Milton Friedman' s quote in 1971:
"We are all Spaniards now."

Sun, 07/22/2012 - 11:59 | 2640305 magpie
magpie's picture

Mr. Schäuble also offers the Do-it-yourself-bailout program: Just buy some EFSF bonds, lever them up and give yourself a loan.

Sun, 07/22/2012 - 12:02 | 2640308 Peter Pan
Peter Pan's picture

Europe is struggling to salvage the Euro whilst member nations are struggling to save themselves. It is this disconnect which will ultimately destroy the Euro.

Sun, 07/22/2012 - 12:38 | 2640362 RiverRoad
RiverRoad's picture

To The Monkey: 

And screw their heads on straight while they're at it.  What La La land are they living in?  The same one, I guess, as the King of Spain who unfortunately went elephant hunting the other day much to his chagrin.

Sun, 07/22/2012 - 13:01 | 2640400 indygo55
indygo55's picture

The 44 mil bribe was almost three times what the loan payment was. Claw back the bribe and fines and put this thing back together.


Mon, 07/23/2012 - 04:38 | 2641739 Buck Johnson
Buck Johnson's picture

I know, they are either being told to hold them off and/or it's mutual protection for the govt. and the banks.  By keeping them off it helps to maintain the high house prices and at the same time it keeps the market from not collapsing before an election.

Mon, 07/23/2012 - 04:39 | 2641741 Buck Johnson
Buck Johnson's picture

I know, they are either being told to hold them off and/or it's mutual protection for the govt. and the banks.  By keeping them off it helps to maintain the high house prices and at the same time it keeps the market from not collapsing before an election.

Sun, 07/22/2012 - 10:58 | 2640191 vmromk
vmromk's picture

I don't understand what all the fuss is about.....has someone hijacked the cocksucker Bernanke's printing press ?

Go to work Ben, you MOTHERFUCKER, print, print, print !!!!

Sun, 07/22/2012 - 12:55 | 2640388 ZeroAvatar
ZeroAvatar's picture

Ah, yes......cue the Bailout Fairie.

Sun, 07/22/2012 - 11:33 | 2640246 El Oregonian
El Oregonian's picture

Uh-oh, sounds like they've skidded into a ditch...

Sun, 07/22/2012 - 11:46 | 2640253 TheGardener
TheGardener's picture

Nürburgring is in the backward volcanic uninhabitable Eifel region where cops only venture out to when there is a race
and fines to be collected. Adobe huts hardly had jointed beams 20 years ago, two thousand years behind at least
so all the Dutch come to those "mountains" for adventure holiday with their caravans in tow.

Good old Europe will regionally survive, and the Eifel will be left alone, some volcanic eruption might even do the trick.

Sun, 07/22/2012 - 12:09 | 2640322 JustObserving
JustObserving's picture

Nurburgring needing $16 million is hardly worth mentioning with countries needing hundreds of billions now.  The debt and unfunded liabilities of the world are approaching $500 trillion with a world GDP of $60 trillion or so.  The US share of debt and unfunded liabilities is $136 trillion versus a GDP of $15.5 trillion - a bit more than the world average.

How long will the world's central bankers allow deflation to rage?  If they allow any longer, we may get cascading collapse of countries not to mention global failure engendered by $700 trillion in derivatives.  There will be coordinated printing soon enough.

Sun, 07/22/2012 - 12:44 | 2640372 RiverRoad
RiverRoad's picture

The world's central bankers are, interestingly enough, digging their own graves here and the best part about that is they know it.

Sun, 07/22/2012 - 10:43 | 2640152 5880
5880's picture

The idiots built an amusement park there that sucks adding debt

Save the Ring!


Sun, 07/22/2012 - 10:46 | 2640166 cossack55
cossack55's picture

Will whomever bails them out be forever known as the "Lord of the Ring"? Could be cool.

Sun, 07/22/2012 - 12:18 | 2640332 cbxer55
cbxer55's picture

"In recent years, the EU has sought to put a halt to years of giving millions in state aid for the failing race track complex."

According to that sentence, quoted from the article, the track has been getting bailed out for years. And the E.U. wants to stop it. Got bigger fish to fry than a race track. Gee, who'da thunk it?

Sun, 07/22/2012 - 10:44 | 2640159 robertocarlos
robertocarlos's picture

The Germans showered Alonso with gold leaf today after he won the German GP.

Sun, 07/22/2012 - 12:04 | 2640311 spanish inquisition
spanish inquisition's picture

NOOOOOOOOOOOOOOOOOOOOOOO!!!!!!!!!!!! It's on tape delay in the US today... Starts in about 2 minutes.

Sun, 07/22/2012 - 15:08 | 2640674 robertocarlos
robertocarlos's picture

I am so sorry. I was not thinking. It's still worth watching as it was a very good race.

Sun, 07/22/2012 - 16:41 | 2640877 spanish inquisition
spanish inquisition's picture

I did watch it and yes, it was a good race.

Sun, 07/22/2012 - 19:48 | 2641212 smiler03
smiler03's picture

The race was bizarre compared to most F1 races. Some drivers were actually able to overtake, very strange.

Sun, 07/22/2012 - 10:50 | 2640160 deepsouthdoug
deepsouthdoug's picture

Floodgates open?  Why it's just a little dampness!  I am reminded of this Monty Python clip -



Sun, 07/22/2012 - 10:44 | 2640162 Sisyphus
Sisyphus's picture

Foot fault?
I mean Pubes' fault?
I mean Willies' fault?
I mean Pubes' fault?
I mean Wie(Ron)nies' fault?

Sun, 07/22/2012 - 10:50 | 2640175 williambanzai7
williambanzai7's picture

...The Euro Family

Snap snap

Sun, 07/22/2012 - 10:52 | 2640179 jal
jal's picture

I want to be rich like the Germans.

Please transfer your debts to me.

I've got a pipeline that will send me a cash flow based upon those debts.


Sun, 07/22/2012 - 10:53 | 2640180 Wakanda
Wakanda's picture

Europe first, then US.

Let the games begin!

Sun, 07/22/2012 - 11:00 | 2640185 robertocarlos
robertocarlos's picture

Did you read the BBC today where it claims the rich are hiding $32 trillion in assets. That is a huge amount of money.

Sun, 07/22/2012 - 11:57 | 2640282 mick_richfield
mick_richfield's picture

It sure ain't what it used to be.

Sun, 07/22/2012 - 12:48 | 2640377 RiverRoad
RiverRoad's picture

And that is precicisely why this whole stupid globalization farce is falling apart; they all thought the sheeple would cough up to pay the tab.  You can see how that is working out.

Sun, 07/22/2012 - 19:51 | 2641216 smiler03
Sun, 07/22/2012 - 13:55 | 2640511 DosZap
DosZap's picture

Did you read the BBC today where it claims the rich are hiding $32 trillion in assets. That is a huge amount of money.

Sure not paper assets.

All paper is now belong to big bro's all seeing eye.

So, what asset class are they refering to?.

Sun, 07/22/2012 - 15:05 | 2640668 sessinpo
sessinpo's picture

The hidden ones of course. Heck, I've got about $80 billion hidden away. I can't seem to remember where I put it though. I bet you have a couple of hundred billion hidden from everyone too.

Sun, 07/22/2012 - 20:45 | 2641385 neidermeyer
neidermeyer's picture

I have a cool $100,000,000,000,000.00 next to my computer... and just to show how generous I am I have given away double that in the last year to relatives that don't seem to understand what inflation looks like..

Sun, 07/22/2012 - 15:21 | 2640708 robertocarlos
robertocarlos's picture

Financial wealth - excluding real estate, gold, yachts, and racehorses -  held in off-shore accounts. So basically currency and other paper products amounting to 21-32 trillion dollars. And think how much thay have hidden in physical assets. Although it is hard to hide real estate, yachts, and race horses, you could put the gold on the yacht and sink it.

Sun, 07/22/2012 - 16:21 | 2640845 RiverRoad
RiverRoad's picture

Wouldn't be the first time.

Sun, 07/22/2012 - 15:26 | 2640720 robertocarlos
robertocarlos's picture

I just report what was printed or on TV. Sometimes too early.

Sun, 07/22/2012 - 16:41 | 2640876 jonjon831983
jonjon831983's picture

Thanks - there's the link:  http://www.bbc.co.uk/news/business-18944097

Sun, 07/22/2012 - 11:06 | 2640199 debtor of last ...
debtor of last resort's picture

Time for a very long pitstop.

Sun, 07/22/2012 - 11:06 | 2640200 RobotTrader
RobotTrader's picture

The ECB better step and announce some "extraordinary measures" to stick save this situation.


Otherwise, we are going to see the 3 "Black Swans" intensify:

1) U.S. Treasury prices exploding up to unheard of heights

2) Huge surge in the U.S. Dollar

3) Horrific decline in commodity prices, led by a break of gold and silver under that massive support line

Sun, 07/22/2012 - 11:11 | 2640209 Mr.Kowalski
Mr.Kowalski's picture

Not all commodities-- grains are having a bumper year thanks to the heatwave in the MidWest and South. Personally I can't wait to see how many trillions in CDS's will be triggered when the Euro sinks below $1.00 USD. 

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