IMF Begins Spain's Schrodinger Bail Out

Tyler Durden's picture


Update: as expected, "IMF Says Spain Discussions Internal, No Talks With Spain"

Wondering what prompted the most recent "month end mark up" ramp in stocks? Look no further than the IMF, which one month after failing miserably to procure a much needed targeted amount of European bailout funds as part of Lagarde's whirlwind panhandling tour, hopes that markets are truly made up of idiots who have no idea how to use google and look up events that happened 4 weeks ago. So here it is: the Spanish bail out courtesy of the IMF. Well, not really. Because according to other headlines the IMF claims no plans are being drafted for a bailout. Why? Simple - if the IMF admits it is even considering a bailout, it will launch a bank run that will make the Bankia one seem like child's play, as the cat will truly be out of the bag. So instead it has no choice, but to wink wink at markets telling them even though it has been locked out from additional funding by the US, UK, Canada and even China, it still has access to funding from... Spain.

From the WSJ:

The European department of the International Monetary Fund has started initial discussions on a contingency plan for a rescue loan to Spain in case the country fails to find the funds needed to bail out its third-largest bank by assets, Bankia, people involved in the handling of the Spanish crisis said.


Both the European Union and IMF want to avoid having to bail out Spain at all costs, the people said, but early planning is under way given that the country is struggling to raise a €10 billion ($12.4 billion) shortfall in funds to bail out Bankia.


The stakes are extremely high because a three-year rescue loan for Spain could be as much as €300 billion, one person said, although any bailout could involve smaller, shorter-term loans.

That's ok IMF: let's play your game. You are bailing out Spain's banks? Fine. Here, as posted yesterday, is the list of banks that now officially, per Goldman, need a bailout:

Spain: Bankia Down, Who Is Next?

Bankia is done: at this point the only questions left are i) what will be the final bailout cost  ii) who will pay for these costs, and iii) whether the bank has enough beach towels to satisfy the onslaught of manic Spaniards desperate to hand over their €300 euros to the insolvent bank in exchange for some Spiderman-embossed linen. Oh, there is one more question: who is next.

Now, as we showed earlier today, in the aggregate the answer is simple: everyone. Because as JPM said "if a Spanish EU/IMF bailout package covered the government’s gross funding needs through the end of 2014, and included €75bn for bank recapitalisation, then it would amount to around €350bn." At roughly a third of its GDP, this is, needless to say, more money than Spain can procure. But, in a very Stalinesque sense, where everyone is merely a statistic, that is essentially the same as saying no one.  It is also certainly not helpful to any Spanish readers who may be worried about their deposits (and investments) which in a world of total disinformation, will first be lost before the government advises caution and safety. So instead we go to Goldman Sachs which has conveniently constructed the following analysis, which replicated the loss provision calculation of Bankia, and applies it to the other listed banks. The result: in addition to the €19 billion in bail out costs for Bankia, Spain will need to spend at least another €25 in bailout funding for six other listed banks which include CaixaBank SA, Banco Santander, Banco Popular Espanol, BBVA, Banco Espanol de Credito SA, Bankinter SA.

So now we are not dealing with mere "statistics."

The capital need breakdown is as follows: "Pro-forma capital gap assuming 9.5% CT1 hurdle rate, loss estimates comparable
to those outlined by BKIA and front-loaded in 1H12"

And in the grand scheme of things:

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Thu, 05/31/2012 - 12:41 | 2480042 vast-dom
vast-dom's picture

Come on asswipes don't you get it? Just fucking CNTL+P the €25trillion. What the FUCK IS SO HARD ABOUT DEPRESSING THE 2 KEYS? 

Thu, 05/31/2012 - 12:43 | 2480051 LawsofPhysics
LawsofPhysics's picture

LOL!!  Moral Hazard on steroids, this will end well.

Thu, 05/31/2012 - 12:48 | 2480080 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The "moral hazard" and "rational consumer" theories of economics no longer apply.  Bernanke's new text, "Economics for Dummies" will consist of the new theories, "Print future tax revenue now to expand the money supply so that the chief export of 1st World Nation-States, debt, is cheap, providing the Nation-States with enough liquidity to make it past a reality that no one except those damn Doomers wants" and "Moral hazard?  My banker friends love me!  I love sitting at the cool kids table!"

Thu, 05/31/2012 - 12:50 | 2480103 LawsofPhysics
LawsofPhysics's picture

Works until the commodity complex blows up and real shit stops getting delivered.  Now where have we all seen this before? 

Thu, 05/31/2012 - 12:54 | 2480128 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Shhh!  Bernanke is trying to sell some books here!

Thu, 05/31/2012 - 12:57 | 2480150 AL_SWEARENGEN

If these cocksuckers would just tell the people the truth everything would be better off.  Instead they do the only thing they know which is to lie, and confuse, and steal what people come to by toil.  

Thu, 05/31/2012 - 13:07 | 2480205 NotApplicable
NotApplicable's picture

Nah, they just need to hire Baghdad Bob.

Thu, 05/31/2012 - 13:20 | 2480282 DosZap
DosZap's picture

Works until the commodity complex blows up and real shit stops getting delivered.  Now where have we all seen this before? 

A Huge +1.

Just saw a large jar of Miracle Whip, was $3.00 last summer, @ $4.69,imagine when it all hits.+63% increase.

There is NO inflation....none, except for what it takes to keep you alive.

Thu, 05/31/2012 - 13:13 | 2480244 TheGardener
TheGardener's picture

Don`t post drunk, or so they told me.

As in an editors shoes, that translates into uninspired..

Thu, 05/31/2012 - 12:43 | 2480052 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Can I haz bailoutz?

Thu, 05/31/2012 - 12:45 | 2480064 vast-dom
vast-dom's picture

bailoutz, u haz it!

Thu, 05/31/2012 - 13:02 | 2480176 BlueCollaredOne
BlueCollaredOne's picture

I lurk the chat room.


Thu, 05/31/2012 - 13:05 | 2480196 vast-dom
vast-dom's picture


Thu, 05/31/2012 - 13:05 | 2480193 theTribster
theTribster's picture

I don't has it here wiz me now but I have it close by....

Thu, 05/31/2012 - 13:07 | 2480204 vast-dom
vast-dom's picture

So what do we do, walk in and start over? 

Thu, 05/31/2012 - 12:49 | 2480095 HD
HD's picture


Ben's keyboard is still sticky from operation "twist"...

Thu, 05/31/2012 - 13:01 | 2480110 vast-dom
vast-dom's picture

he cleaned his keys off with special babywipes; Ben don't need no Spiderman towels.


as of 12:55p today the DOW is in the green! Wonder (CNTRL+P) why??????

Thu, 05/31/2012 - 16:07 | 2481007 James-Morrison
James-Morrison's picture

Ben's keyboard only has two keys and he is missing the "P", leaving only Ctrl.

Thu, 05/31/2012 - 12:54 | 2480132 Quinvarius
Quinvarius's picture

They are practicing on gasoline pumps on the corner.  They are trying to get "the perfect pump".  How long do you hold down CTRL P to get to exactly 25 trillion?

Thu, 05/31/2012 - 13:08 | 2480212 NotApplicable
NotApplicable's picture

Depends on whether or not you have Sticky Keys turned on.

Thu, 05/31/2012 - 13:26 | 2480281 HarryM
HarryM's picture

"Wondering what prompted the most recent "month end mark up" ramp in stocks?"


Thanks - would have been great to know about 1-1/2 hours ago

Thu, 05/31/2012 - 19:34 | 2481722 phungus_mungus
phungus_mungus's picture

While they are at it, have them print me up a few hundred million too! 

Thu, 05/31/2012 - 12:43 | 2480048 Joshua_D
Thu, 05/31/2012 - 12:50 | 2480101 Joshua_D
Joshua_D's picture

Soon to be followed by ...

Thu, 05/31/2012 - 12:44 | 2480056 StockHut
StockHut's picture

Didn't get to my local Bankia branch in time to get the Spiderman towel. Damnit.

Thu, 05/31/2012 - 14:11 | 2480573 Marginal Call
Marginal Call's picture

It's the new peg:  300 Euro/spidey towel


Markets are catching up quick.

Thu, 05/31/2012 - 12:44 | 2480059 Joebloinvestor
Joebloinvestor's picture

Why is it it took 5 years or more for Greece to collapse and Spain is gonna do it in a matter of months?

Was Spain just travelling a parallel path and didn't get press time?

Is the Spain default (I assume one is comming) gonna be the trigger for a rise in gold?

Thu, 05/31/2012 - 12:51 | 2480107 5880
5880's picture

If you looked at the numbers it's been happening,

if you're waiting for CNN or CNBC to tell it to you...... Surprise!!!!!! they suck

Thu, 05/31/2012 - 13:44 | 2480415 XitSam
XitSam's picture

The Financial Trials of 2017 were a series of tribunals held by the reconstituted governments after the financial and political collapse of 2013, most notable for the prosecution of prominent members of the economic, financial and political leadership of the G8 countries. The trials were held in the capital cities of the major financial nations. The first and best known of these trials was the Trial of the Central Bank Presidents, including the IMF and World Bank. Tried were 25 of the most important officials, though several key architects of the collapse (such as Ben Bernanke, Christine Lagarde and Mario Draghi) had committed suicide before the trials began.

Thu, 05/31/2012 - 12:56 | 2480142 Mark123
Mark123's picture

Everything has collapsed....USA, Spain, Italy, France, Ireland, Portugal, Spain, China, India etc etc.  However - the central banks working with their puppet governments have papered over the collapse with their unlimited magic debt creation machine (perpetual motion?). 


What everyone is waiting for is some big economy (like Spain) to call the bluff.  No country will do that unless they have the support of the banksters (their bosses)....great fortunes will be made when the real collapse comes.  Sadly it will be the end of what we have come to accept as prosperity and stability.

Thu, 05/31/2012 - 13:10 | 2480224 Oh regional Indian
Oh regional Indian's picture

Patience Mark, it's a'coming, down the line, like a choo choo train with no driver or brakes...

June 6th.... stay loose, stay nimble or stay OUT.



Thu, 05/31/2012 - 19:41 | 2481741 phungus_mungus
phungus_mungus's picture

All that money and all those fortunes will do them no good once the revolutiuons start. 


We've seen this before, in 1789 and history is repeating itself.



Thu, 05/31/2012 - 13:09 | 2480220 NotApplicable
NotApplicable's picture

The drain in Spain falls mainly due to pain.

Thu, 05/31/2012 - 19:38 | 2481735 phungus_mungus
phungus_mungus's picture

Its not just Greece and Spain... Italy isn;t much better off.... the media lies its asses off, they almost have to. If they told the truth relative to what is going on in the EU... we would see the mother of all bank runs followed immediately by the mother of all collapses then global depression.... 

Thu, 05/31/2012 - 12:45 | 2480063 slaughterer
slaughterer's picture

Instruction: if the the word "bailout" and "Spain" or "Greece" appear in the same sentense, BUY equities, BUY EUR, SELL Treasuries. 

Thu, 05/31/2012 - 12:47 | 2480074 vast-dom
vast-dom's picture

TBT biyatchez!


huffin on hopium markets miraculously floated up!

Thu, 05/31/2012 - 12:45 | 2480067 Dr. Engali
Dr. Engali's picture

Good Lord...destroy the debt and move on. It's pretty fucking simple and far easier than holding your hat out every day.

Thu, 05/31/2012 - 14:46 | 2480709 roadhazard
roadhazard's picture

The debt will be destroyed but only after taking everything you own.

Thu, 05/31/2012 - 12:46 | 2480073 camaro68ss
camaro68ss's picture

The Titanic has come to save the passangers of the Lusitania. Its all good now 


Thu, 05/31/2012 - 12:57 | 2480149 kridkrid
kridkrid's picture

Little known fact: the Germans took out an ad in the NYT a few days before the Lusitania set sail warning passengers that the ship was running ammunition and would be seen as an act of war. Another little known fact, the three most vocal people who offered opposition to the creation of the fed died when the Titanic sunk.

Thu, 05/31/2012 - 19:12 | 2481675 TheFourthStooge-ing
TheFourthStooge-ing's picture

kridkrid said:

Little known fact: the Germans took out an ad in the NYT a few days before the Lusitania set sail warning passengers that the ship was running ammunition and would be seen as an act of war.

The German embassy warning, a prepaid ad placed in 50 American newspapers, was issued on April 22, 1915. The Des Moines Register ran the ad the following day, but east coast newspapers, including the New York Times, delayed publication of the ad until May 1. The Lusitania departed New York on its final voyage on May 1, 1915, at 10 AM.


Thu, 05/31/2012 - 23:31 | 2482441 StychoKiller
StychoKiller's picture

Explained in "The Creature From Jekyll Island, a Second Look at the Federal System", 5th Ed., G. Edward Griffin, ISBN:  978-0-912986-45-6

Thu, 05/31/2012 - 12:46 | 2480075 Piranha
Piranha's picture

not even the bots bought that move

Thu, 05/31/2012 - 13:11 | 2480227 NotApplicable
NotApplicable's picture

Well, that's immaterial. What's important here is, did they quote stuff it?

Thu, 05/31/2012 - 12:47 | 2480077 Paul Atreides
Paul Atreides's picture

OT: Any live feeds on the Irish Referendum?

Thu, 05/31/2012 - 14:45 | 2480706 Non Passaran
Non Passaran's picture

Who cares?
The government fucks said it'd be repeated until it passes.

Thu, 05/31/2012 - 15:22 | 2480845 Grimbert
Grimbert's picture

They don't start counting til tomorrow, but from 9.30am BST (Irish summer time?):


Thu, 05/31/2012 - 12:48 | 2480084 chet
chet's picture

ZH Opinions:  If there is a sizable QE3 will it juice the stock market like the previous two, or will it fall flat?

Thu, 05/31/2012 - 12:50 | 2480105 Dr. Engali
Dr. Engali's picture

It will have to be big as the market has already priced in a trillion at least. Anything less than 2 trillion will be disappointing to the markets.

Thu, 05/31/2012 - 13:15 | 2480250 chet
chet's picture

Seems like things will have to get much worse before they throw out a number like that.

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