A Quick Reminder Ahead Of Tomorrow's Spain Debt Auction

Tyler Durden's picture

From Mark Grant, author of Out Of the Box

Devoured By Snakes

“'Tis an old saying, the Devil lurks behind the cross. All is not gold that glitters. From the tail of the plough, Bamba was made King of Spain; and from his silks and riches was Rodrigo cast to be devoured by the snakes.”

                                                     - Cervantes


Spain’s GDP                                                      $1.295 trillion


Admitted Sovereign Debt                                 $732 billion

Admitted Regional Debt                                    $183 billion

Admitted Bank Guaranteed Debt                      $103 billion

Admitted Other Sovereign Gtd. Debt                $ 72 billion
Total National Debt                                          $1.090 trillion


Spain’s Liabilities at the ECB                             $332 billion

Spain’s Cost for the EU budget                         $ 20 billion

Spain’s Liabilities for the Stabilization Funds     $125 billion

Spain’s Liabilities for the Macro Fin. Ass. Fund    $ 99 billion

Spain’s Guarantee of the EIB debt                     $ 67 billion

Spain’s Total European Debt                              $643 billion


Spain’s National and European Debt               $1.733 trillion

Spain’s OFFICAL debt to GDP Ratio                    68.5%

Spain’s ACTUAL Debt to GDP Ratio                    133.8%

These are the figures that I compiled and printed on March 29, 2012. They are not the opinions of Mark Grant but just the cold and hard facts that I was able to pull together from Eurostat and from the Bank for International Settlements. It is a long slog to find the truth but it is there if you look long and hard enough. Unfortunately the data for Spain’s GDP is deteriorating rapidly. The IMF is now projecting at 6.00% contraction in the Spanish GDP for 2012 which changes the numbers dramatically putting their GDP at $1.217 trillion. This then provides a debt to GDP ratio of 142.3% and likely to escalate further given the very serious problems with the Spanish banks and the Spanish Real Estate market. The question now in my mind is one of “when” and not an “if” any longer of when Spain hits the skids and requires European intervention. The problem of course here, unlike Greece, Ireland and Portugal, is that the needed amount of capital will overcome the present resources of the Stabilization Funds and require substantial additional funding which is likely to lower the credit ratings of every nation in Europe. If one of the two major Spanish banks hits the wall then the problem becomes magnified further as it would be catastrophic for the other major banks in Europe. Already we are seeing a sort of run on the Spanish banks as money is fleeing each day from their coffers. Any assumption that “muddle through” will be the outcome here is a mistake in my opinion and I would begin to prepare for that which is almost inevitable now as the crisis worsens.

The Centre for European Policy Studies published their own findings this week and they estimate that the Real Estate accumulated overhang is actually almost $500 billion which equates to 59% of the IMF revised projections for Spain’s GDP. The EU and the ECB may not mandate that the Spanish banks have to mark-to-market in the normal fashion but a quick calculation indicates that the equity of the major Spanish banks is well into the red and past the blood line of any sustainable position. In my opinion, I would state, that the Spanish banks are in fact bankrupt and are only still alive given the financial shenanigans of how Europe allows the numbers to be calculated. I am well aware that many in Europe do not like to be confronted with the truth and that the stock market in the United States is so myopic that they wish to ignore the truth but the numbers are right in front of your nose if you care to look and reality has a funny way of catching up with the markets and reminding them one still equals one in the end. I am an adherent of the Greater Fool Theory and the trick is to let the other guy be the Greater Fool and not one of us. The “when” is unknowable but the “if” is behind us now and I suggest great caution.

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battle axe's picture

Ok, I might be wrong, Spain's 10yr at 10% next week and not 7% as I predicted. 

nope-1004's picture

BAC is no different than the Spanish banks.  BAC, JPM, GS have military backing and a petro-dollar gov't behind them, Spain does not.  If you compare both Spanish banks and US banks minus the FASB coverup, they're all bankrupt beyond all doubt.


LawsofPhysics's picture

Precisely, all the "major players" are bankrupt.  You also underscore why none of this will be resolved peacefully.  hedge accordingly.

SheepDog-One's picture

I think we're now simply reduced to waiting for who is the first to wig out and go postal. Its the 5 minute long gunfight staredown scene at the end of The Good, The Bad, and The Ugly.

LawsofPhysics's picture

"Its the 5 minute long gunfight staredown scene at the end of The Good, The Bad, and The Ugly."


yes, but on a geological time scale.  So it could be a while.

DeadFred's picture

Downgrades this Friday could speed things up a bit. Don't be long over the weekend. Why did I bother saying that on Zerohedge?

Dead Canary's picture

All the "major players" are bankrupt. No. Not as long and there are taxpayers who blindly believe that our "Shadowy Overlords" will make things right. Our money is their money.

FlyPaper's picture

RE: Nope-1004:

Yes, our banks are playing fast and loose with the rules on mark-to-market.  However, FASB did attempt to reinstate the rule and got immense pressure (wonder from who) and abandoned the effort.

On a side note, I just visited my BAC branch where they handed me a "special deal" that offers to pay me $50 if I deposit $10k in my account by early July; $150 if I deposit $25k in the same period, etc.

Now this is quite a switch.  They won't pay interest; but now they will pay you to do a deposit of new money?

Gee, wonder what is going on here...


StychoKiller's picture

MFGlobal should tell you just how far to "trust" any financial institution these daze!

101 years and counting's picture

spain is selling a whole 1.5-2.5B EUR in debt.  does anyone really believe this auction will fail?  ECB just has to promise a little reach around and some bank will take it down at 5.9%.

pretending this will fail is laughable.

ZeroPower's picture

No estimates i've seen or talked with smart sov people about see the auction as failing tomorrow... as for indirect ECB "help", watch the bid-to-cover which will most likely come in way lower than the previous 10yr auction - this is something arguably harder to manipulate than the flat out yield the bonds go out at.

scatterbrains's picture

Are suggesting these crooks wouldn't let the bond auction almost fail temporarily so they can profit on the cds spike ?


TooBearish's picture

110% agree - why would anyone think the ECB and TPTB would not support this PIG with all they have already thrown at the situation- i mean comon peeps....

ghostfaceinvestah's picture

It is possible the ECB will let Spain hang in order to put in their own technocrat, like they did in Italy.

Dabale arroz a la zorra el abad's picture

I'd say Mr Rajoy is already a technocrat in the sense that, while he has actually been elected (unlike Italy's Monti or Greece's Papadimos), he is acting exactly like one. For example, he put Luis de Guindos as Minister of Economy, who used to be Lehman Brother's head of the Spanish and Portuguese branch at the time of its bankruptcy.

slaughterer's picture

The Spanish debt situation is being instrumentalized very heavily by European media, with a very distinctively pessimistic and angry tone.  Even today's "BILD-Zeitung" is covering it--I would not be surprised if German taxi drivers will be buying CDS for Spain soon. ;-)  

FlyPaper's picture

Does anyone know how to find out WHO purchased the Spanish debt on 4/17 that kicked off such a stock market surge?   

I have this feeling ECB intervened in the secondary market, and LTRO money, via Spanish banks, were responsible for a large portion; but have been unable to find a source.


Everybodys All American's picture

I would bet Bernanke's swap lines are all over this tomorrow. The scam must continue at all costs you know.

CrashisOptimistic's picture

There has been an entire week, or more, to prepare for tomorrow's auction.

There is no way in hell the ECB will let it be a disaster.


Isn't the bankster playbook to offer more fiat debt to sovereigns in exchange for something real such as let's say, I dunno........gold.   

xela2200's picture

They have been plundering gold all along. Selling it to the Chinese at a profit for sure.

xela2200's picture

By now they have placed many backstops to be sure. However, if the auction goes badly, then that is a reflection on the shape of ECB as a whole. It will be interesting to watch.

SheepDog-One's picture

Well, unless they want it to be a 'disaster' and planned for it. We just dont know. One of these will be the grenade pin sooner or later though.

slaughterer's picture

Unless the ECB itself is a disaster...

q99x2's picture

They'll print that shit. Give it to Jose. He won't tell anyone. And that will be all to another successful auction.

SheepDog-One's picture

I can see it surprisingly going off without a hitch. Why not? Its all just Fantasy Economics League anyway.

El's picture

Such a benign title to a gut-churning article. Sobering.

Dad Was Right's picture

Anyone know what time the Spanish 10 year will go off tomorrow?  I'm in California. Do I need to need to stay up late or get up early to watch the show?

Dad Was Right's picture

Thanks xela, I have a world clock. I just don't know what time the auction occurs.


ZeroPower's picture

It's quite tentative, our desk usually watches for results around 9-10 GMT

bluebare's picture

I'll give you thirty bucks for that flag.  Honest.

SheepDog-One's picture

Just ad Tyler to your Twitter, he'll Tweet it to you soon as it goes down I bet.

Dad Was Right's picture

Hey Dog,  I use a subscription news service that reports live. Just want to know what time to be listening. Can't seem to find a web site that will give me that info so I'm still looking for the time.   Thanks

youngman's picture

yes it will be "successful"...it has to be...and the markets will rally another 200......lol..what a world we live in...and gold and silver are down...are we that stupid...or is the casino that rigged....

xela2200's picture

I can't wait for machine overlords to take over the world. At least they will be consistent and predictable.

Snakeeyes's picture

Probably will go well. ECB is going to have a heart attack pumping all that money through banks in sovereign auctions. Europe is like "The Wizard of Oz."


writingsonthewall's picture

I agree - I don't think it will be unsuccessful as a lot of the information is already known.

Surely the bond buyers cannot be so dumb they don't see the obvious pitfall of tomorrow?


I don't know anymore - bullshit rules and rationality is dismissed as 'conspiracy'.

Vince Clortho's picture

Fake money for phoney bonds.

Extremely Bullish.

DJIA up 175 tomorrow.

Village Smithy's picture

Sadly, it really is that simple isn't it?

SheepDog-One's picture

$1 little billion is what its all supposedly hinging upon? This is all just getting silly. 

Dr. Engali's picture

"$1 little billion" Think about what you just said. When the fed gets done with us we will be saying..."all this fuss over one little trillion".

SheepDog-One's picture

Well also consider the amount of REAL 'US currency', theres only $300 million dollars of LEGAL currency 'United States Notes' according to the Federal Reserve Act of 1913.

Tax Exemption - Federal Reserve Act - StormThunder

So everything else is just rubber funny money anyway, they can say there are $5 quadrillion FRN's and they know its all just BS plasctic poker chips, unreedeemable.

writingsonthewall's picture

Why is Tyler writing this anyway - surely the way to find out what happens tomorrow is to ask "the whale"?


What's his position?

Flounder's picture

As has been mentioned in the last few days - if it doesn't have its own central bank and own currency, then stay the fuck away from it.  Tomorrows SPG auction could be ugly regardless of Euro's large supply of lipstick.

johny2's picture

damn the fargin bond markets and corksuckers who run them. 

banksterhater's picture

Close all ZOMBIE BANKS, imprison the fking Bankster criminals for using the ignorant masses and future generations as pawns in their Cartel power-struggle. DO IT NOW!