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JPM Tries To Explain Why The Bailout Train In Spain Will Lead To Much More Pain
Reports citing European sources state that Eurozone finance ministry officials, followed by finance ministers themselves, will hold conference calls on Saturday. A formal request for Spanish EFSF/ESM/IMF support, solely for the purposes of bank recapitalization, could be announced after these calls, and appears to be the motivation for them. As JPMorgan notes, while the timing of such a request would come as something of a surprise, the substance does not.
JPMorgan goes on to note that:
Yesterday, Spanish PM Rajoy said that the authorities were awaiting reports from independent audits of the banks before assessing the overall recapitalization need, and then deciding how to proceed. One obvious possibility is that the region will agree to a Spanish request in principle, leaving the exact amount to be specified at a later date. To provide some guide posts, our banking analysts have suggested recapitalization needs may ultimately run to €150bn if Irish experience is a template for the losses that may ultimately accrue on the mortgage book. However, reports suggest that the IMF's assessment of recap needs is much lower at near €40bn.
Given that there have been no reports of Germany dropping its resistance to the EFSF/ESM investing directly in the banks, it appears very likely that support will be channelled through the sovereign. The conditionality alongside that support looks set to be relatively light – focused on the banks themselves, rather than requiring more monitoring of broader aspects of policy. But given that the Rajoy administration has already internalised objectives of fiscal consolidation and structural reform - and is seeking to bring its deficit to GDP ratio down by nearly 6 percentage points over two years - this sort of package should not come as a surprise.
A key question is whether this request for external support will serve to improve conditions in the Spanish bond market and raise Spain's chances of avoiding a broader support package. Our best guess is that it will not.
The request for support has at least three negative consequences:
- It implies some degree of subordination of other holders of Spanish sovereign debt.
- It provides a clear demonstration of the limits of the ability of the sovereign to raise funds on its behalf.
- And it crystallizes banking losses accruing to the State which it had hoped to avoid.
We suggest that a banking support package would be likely to turn out to be a stepping stone to a broader package of support for Spain, with that likely to be in place by the end of August. That remains our central view.
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And the Market is green because..... ?
Spanish bondholder haircut coming.
No they will simply do a swap Spanish Olives for Greek
I hear Bwanee Fwank will swap just about anything - including olives - for greek...
and the spx never entered correction territory........what gives?
da Zoos....which now excludes American Jews
Israeli Govt: Don't Marry American Jews
http://www.youtube.com/watch?v=4P7XTbm9ED0
True colors are shown...by Israli Ministry of Immimgrant Absorption
I recently heard something to the effect that “credit is the art of getting paid”.
It seems though that in today’s market, credit is the art of making people think that you are getting paid.
Detroit about to collapse in a week:
http://www.prisonplanet.com/city-officials-detroit-will-go-broke-in-a-we...
Wow, how did they ever last this long?
Bring back RoboCop
that's called Banking.
taking money from depositors and lie them about your ability to repay all of them immediately.
Whilst you are actually getting laid without being kissed.
JPMorgan's direct exposure to Spain as of the latest 10-Q, as measured under JPM's internal risk management approach is $5.6 billion net in non-sovereign lending. However, they have $42.72 billion in notional CDS protection sold and purchased in Spain, 98% of which is offset, leaving an approximate CDS exposure of another $1.00 billion. This leaves JPM's total Spanish direct exposure at about $6.6 billion.
Seeing as these trading desks are run out of the London office, it would be fair to assume that these assets have been re-hypothicated to infinity and therefore JPM's indirect exposure, in the event of further deterioration in Spain, would be catastrophic.
Becasue its extremely easy to move a dead market. And the easiest way is up. Just wait for the algos to swtich to sell side and move it back down for shits and giggles.
Beats the hell out of me... Even banks are green...
Beats the hell out of me... Even banks are green...
Its the new initiative. Environmentally friendly banking.
Energy down, bonds up, copper down big, stocks up. No logic whatsoever.
I'd expect the logic to turn more volatile leading up to Greek elections. With the poll moratorium in Greece, the ever prescient market is rallying on nothing and has put Greece on the backburner. The market is exercising wilful blindness about the upcoming elections right now.
Obama spoke. No other reason. The market will NOT go down if Obama, Ben, or Timmay speak. That is all.
... because central bankers have the attitude of, "Who needs and economy, since we have PRINTED prosperity now".
News and economics are now irrelevant. We have PRINTED prosperity now!
No volume and the PPT doing everything they can to have a positive Friday. In all actuality this Friday should have been bloody as hell because of all the news. And going into a weekend with Spain about to fall.
The financial terrorists speak.
President O did speak earlier this morning. Offering plenty of platitudes.
Like we're really supposed to pay captive attention to whatever comes out of the mouth of these homos?
You - no.
People who trade and have to know every piece of marginal, market-moving information, as well as which way momentum and focus is shifting - yes.
Where is this "market" you speak of?
looooooooooool
+soap
These days we know it as the Fed-powered, algobot network.
Just think of it as a really, really efficient market. So efficient, it doesn't do anything other than to generate false signals.
Beyond human comprehension, one might say.
People who trade and have to know every piece of marginal, market-moving information, as well as which way momentum and focus is shifting - yes
~~~
The 'PEOPLE' you refer to are fucking idiots (assuming they're sitting around waiting for the latest vowels & syllables to spew forth from the JPM cum filled mouths)...
Are you a 'TRADER'?... Yes ~ Then you're a fucking idiot (until this whole paper ponzi collapses)... So ~ if you're a MINUTE 2 MINUTE MARKET MOVING JUNKIE ~ based on the cum filled gargling of these insiders to determine your NEXT MOVE???...
Well, I rest my case... Have a good day...
Hey Morgue ,speaking of pain....how's that trade you're trying to unwind working for you? I'd like to see you feel some pain covering your short position on silver.
I'd like to see you feel some pain covering your short position on silver.
Patience. That special day - a day of infamy - will come.
Too bad JPM is merely an abstraction. There'll be no pound of flesh to obtain in return. Only broken promises and TARPS. Lots and lots of them.
Tom Lee: "BULLISH"
Some Ford Fairlane quotes for Jamie Dimon:
Ford Fairlane: Have a twinkie, snapperhead.
Lt. Amos: Are you calling me an asshole, asshole?
Ford Fairlane: No, I'm calling you an anus, anus.
Ford Fairlane: ...I hope you signed some organ donor cards.
Ford Fairlane: You're 10 seconds away from the most embarrassing moment in your life.
Ford Fairlane: So many assholes... So few bullets...
Ford Fairlane: Yo. Snapperhead.
Ford Fairlane: Un-fucking-believable.
Ford Fairlane: Here's to you, Jamie. Sucking my dick.
Someone explain why the Spanish government cannot look at which banks are healthiest, which banks are actually gaining deposits as Euros flee banks like Bankia, and then make an executive decision to close many of the banks and move the deposits to the stronger banks. Write down the assets and allow the acquiring bank to take the assets at 20-30 cents on the dollar and clear the decks. The new assets will balance out the hit the resulting banks will take on their existing bad loans.
The market, the market, etc. etc. Banks are not market instruments, they are tools of the Sovereign and implement signiorage. Cut the crap and get it done. Otherwise Europe is going to have to get ready for their next 6.
As far as I can tell, they don't have an FDIC to do that kind of thing.
Kind of late now; like having a whole town wait until there is a forest fire raging nearby, and have everyone run to the insurance agent and try to buy fire insurance on their homes.
"To provide some guide posts,our banking analysts have suggested recapitalization needs may ultimately run to €150bn if Irish experience is a template for the losses"
Umm yea right guys....Lets starts with two problems
a. the Irish did not have a huge housing bubble like Spain did
b. equating estimates of honesty when countries have differing rates based on culture, rule of law, tax avoidance rates, retirment ages and finally social norms is a BIG mistake
Actually, Ireland did have a large housing bubble. Half the borrowers there are underwater. I know this market pretty well, and there is basically no bid for a huge swath of Irish property inventory. I've seen 50-75% haircuts on properties sold.
Spain on the other hand had a housing bubble and a commercial real estate bubble.
No Government can stop the banksters from taking everyone's money. Something is wrong here and not going to end well.
What ever happened to Short JPM Long Silver?
The CME, BBs, Fed, and the authorized participants for GLD put a hurting on that trade... although now might be a great time to get back in it.
What's going on with Greece?
Well gee, it's great to see that 'the Rajoy administration has already internalised objectives of fiscal consolidation and structural reform - and is seeking to bring its deficit to GDP ratio down by nearly 6 percentage points over two years'. It's exactly these kinds of bold proclamations and 'commitments' that are the key to fixing the sovereign debt crisis in Europe. As I've said before, I'm pretty sure that if enough politicians make enough stern speeches, promising to 'take bold action', 30+ years of debt-driven excess can be resolved painlessly, and in no time at all.
"A key question is whether this request for external support will serve to improve conditions in the Spanish bond market and raise Spain's chances of avoiding a broader support package. Our best guess is that it will not."
Is this is as good of a guess as their hedge book guesses? ..Spain is in a much better shape in comparison to the Portugal/Ireland/ and Greece, I don't see Spain needing a bail out, they have taken the bitter pill of real reforms, they will have a rough path for another year or so, but they will come out much faster and much stronger than the likes of France which is going backwards in terms of reforms. As a matter of fact Spain added jobs the last couple of months, their unemployment could have possibly peaked already.
It is also probable that the June 28th/29th will look for a comprehensive (temporary solution) that will likely paper over things in Europe for another year or two; a move toward a redemption fund would the best “temporary” solution, the market will go wild if they agree on that.
Regards,
Nawar
Is that the President's re-election going up in flames? Or is he saving it? I mean "where's the fire" here? Or are we talking Smoke and Mirrors bullshit AGAIN?
Support for Spanish banks will be a first exercise to begin to know the true size of the problem in Europe. Also, see how they think the European authorities face the crisis.
Gotta love how JPM says "pain" is coming, while concurrently ramping ES, etc to fucktard levels on no volume.
Fuck you JPM and your prop desks that "don't exist anymore". Assholes.
FUCK JPM and FUCK Jamie Dimon in the ass with a steak knife
Carefu, Azz. Your Mom might put back on the parental controls on that computer in her basement.
Thats was funny man. LULZ were had!
JPM : "our banking analysts have suggested recapitalization needs may ultimately run to €150bn if Irish experience is a template for the losses that may ultimately accrue on the mortgage book"
All irish banks as a template ? aplicable to all spanish banks? small irrelevant difference of € 110bn with IMF?
just rounding differences for JPM, for London Whale standards.
It seems JPM uses here the same tracking methodology brought in by Iksil. They could have also used 1575's Spanish Bankruptcy as a template, with much better correlation.
jpm is so full of crap...the slow fuse burning in their own bowels will be the cause of financial armageddon....they would do well to clean up their irswaps rather than dwell on spain's paultry 300-500 billion euro mess....jpm and deutsche bank are the fuses of economic catastrophe....
bank recapitalization...is there an app for that?
But bailout train to JPM front door is ok!