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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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Wed, 04/18/2012 - 11:09 | 2354867 battle axe
battle axe's picture

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

Wed, 04/18/2012 - 11:19 | 2354892 nope-1004
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.


Wed, 04/18/2012 - 11:28 | 2354943 LawsofPhysics
LawsofPhysics's picture

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

Wed, 04/18/2012 - 11:34 | 2354961 SheepDog-One
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.

Wed, 04/18/2012 - 11:46 | 2355012 LawsofPhysics
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.

Wed, 04/18/2012 - 11:53 | 2355037 DeadFred
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?

Wed, 04/18/2012 - 21:06 | 2356861 Dead Canary
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.

Wed, 04/18/2012 - 16:30 | 2355969 FlyPaper
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...


Wed, 04/18/2012 - 22:25 | 2357018 StychoKiller
StychoKiller's picture

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

Wed, 04/18/2012 - 11:25 | 2354922 101 years and c...
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.

Wed, 04/18/2012 - 11:56 | 2355041 ZeroPower
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.

Wed, 04/18/2012 - 12:22 | 2355099 scatterbrains
scatterbrains's picture

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


Wed, 04/18/2012 - 12:13 | 2355121 TooBearish
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....

Wed, 04/18/2012 - 13:00 | 2355247 ghostfaceinvestah
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.

Wed, 04/18/2012 - 14:09 | 2355486 CharlieSDT
CharlieSDT's picture

ooh, good point.

Wed, 04/18/2012 - 14:30 | 2355564 Dabale arroz a ...
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.

Wed, 04/18/2012 - 12:11 | 2355109 slaughterer
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. ;-)  

Wed, 04/18/2012 - 16:34 | 2355979 FlyPaper
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.


Wed, 04/18/2012 - 11:10 | 2354868 Everybodys All ...
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.

Wed, 04/18/2012 - 11:13 | 2354872 Newsboy
Wed, 04/18/2012 - 11:13 | 2354881 CrashisOptimistic
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.

Wed, 04/18/2012 - 11:19 | 2354894 SHEEPFUKKER

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

Wed, 04/18/2012 - 11:22 | 2354904 xela2200
xela2200's picture

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

Wed, 04/18/2012 - 11:19 | 2354897 xela2200
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.

Wed, 04/18/2012 - 11:25 | 2354923 SheepDog-One
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.

Wed, 04/18/2012 - 11:30 | 2354944 slaughterer
slaughterer's picture

Unless the ECB itself is a disaster...

Wed, 04/18/2012 - 11:17 | 2354891 q99x2
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.

Wed, 04/18/2012 - 11:20 | 2354896 SheepDog-One
SheepDog-One's picture

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

Wed, 04/18/2012 - 11:20 | 2354905 El
El's picture

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

Wed, 04/18/2012 - 11:21 | 2354909 Dad Was Right
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?

Wed, 04/18/2012 - 11:25 | 2354921 xela2200
xela2200's picture

Stay up or wake up early. Your call.

Wed, 04/18/2012 - 11:28 | 2354941 Dad Was Right
Dad Was Right's picture

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


Wed, 04/18/2012 - 11:58 | 2355056 ZeroPower
ZeroPower's picture

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

Wed, 04/18/2012 - 12:10 | 2355104 Dad Was Right
Dad Was Right's picture


Thu, 04/19/2012 - 01:19 | 2357337 bluebare
bluebare's picture

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

Wed, 04/18/2012 - 11:25 | 2354926 SheepDog-One
SheepDog-One's picture

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

Wed, 04/18/2012 - 11:37 | 2354972 Dad Was Right
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

Wed, 04/18/2012 - 11:23 | 2354916 youngman
youngman's picture

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

Wed, 04/18/2012 - 11:27 | 2354927 xela2200
xela2200's picture

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

Wed, 04/18/2012 - 11:26 | 2354925 Snakeeyes
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."

Wed, 04/18/2012 - 11:33 | 2354958 writingsonthewall
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'.

Wed, 04/18/2012 - 11:27 | 2354937 Vince Clortho
Vince Clortho's picture

Fake money for phoney bonds.

Extremely Bullish.

DJIA up 175 tomorrow.

Wed, 04/18/2012 - 11:31 | 2354949 Village Smithy
Village Smithy's picture

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

Wed, 04/18/2012 - 11:31 | 2354951 SheepDog-One
SheepDog-One's picture

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

Wed, 04/18/2012 - 11:35 | 2354967 Dr. Engali
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".

Wed, 04/18/2012 - 11:41 | 2354971 SheepDog-One
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.

Wed, 04/18/2012 - 11:33 | 2354964 writingsonthewall
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?

Wed, 04/18/2012 - 11:37 | 2354974 Flounder
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.

Wed, 04/18/2012 - 11:37 | 2354980 johny2
johny2's picture

damn the fargin bond markets and corksuckers who run them. 

Wed, 04/18/2012 - 11:37 | 2354983 banksterhater
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!

Wed, 04/18/2012 - 11:41 | 2354990 youngman
youngman's picture

And don´t forget France..they have one too tomorrow.....

Wed, 04/18/2012 - 11:41 | 2354999 schatzi
schatzi's picture

Got the popcorn ready.

Wed, 04/18/2012 - 11:44 | 2355003 e92335i08
e92335i08's picture

I think selling calls on EUR/USD OR EUR/CAD is a risk free trade over the next year. With all the bailing out there gonna have to do to these soverigns the EUR is gonna be trading PAR.

Wed, 04/18/2012 - 11:44 | 2355009 johny2
johny2's picture

thanks for making me laugh...."risk free trade"

Wed, 04/18/2012 - 11:44 | 2355010 Scalaris
Scalaris's picture

I propose a Tapas-for-Bonds Programme with the help of the monetary troika.

Wed, 04/18/2012 - 11:45 | 2355013 Ratscam
Ratscam's picture

the 500 billion real estate overhang is probably too little.
Spain is full of unfinished, aka worthless real estate and the prices have hardly adjusted while they are still offering 100% financing at 75-80% of 2008 prices.
Pipeline is full, demand has declined dramatically, unemployment is up, people trying to sell their houses. Looks like an ideal start to buy a house, not.

Wed, 04/18/2012 - 11:46 | 2355014 Venerability
Venerability's picture


Once again, we all need to emply Technical Analysis of Propaganda. Whichever side is louder and shriller, bet against them!

I have no opinion on Euro, the currency.

But the Shorts betting against the Eurozone stock markets and bond markets are now literally screeching like banshees.

So bet against them.

As for the Gold Shorts, hardly worth mentioning, they're such nasty little Ninnies.

And we finally have a chance to kick Princess Dennis into the gutter forever.

I am printing up bumper stickers: Buy a Gold Stock, Kill Princess Dennis.

Since his reputation is already in tatters, if we get him this time, maybe they'll pull him off the air.

Of course, he will probably claim that he was Long OF Gold against the Papua New Guinea Shrunken Head, the Haida Totem Pole, and the Antarctica Snowball.



Wed, 04/18/2012 - 11:48 | 2355020 bnbdnb
bnbdnb's picture

No loss ECB will save the day. No question.

Wed, 04/18/2012 - 11:47 | 2355022 kurt
kurt's picture

Questions?. Isn't the GDP number an ANNUAL figure? Are the above "debt" figures of differing maturities or all due when? Can we represent a matched maturity picture vis a vis GDP/DEBT? The picture would be pretty grim if Spain had to pay all of its debt within the year. Please set me straight.

Wed, 04/18/2012 - 12:43 | 2355201 machineh
machineh's picture

GDP is flow; debt is stock.

What you're proposing is to apply a weighted interest rate to the debt to a obtain debt service amount (in euros). Then divide it by GDP to figure debt service as a percent of GDP.

Basically, since Spain is running a fiscal deficit of about 5% of GDP. it has NO marginal cash flow to devote to increased debt service. But with debt (especially European debt) mushrooming up, debt service in euros is rising as GDP falls. 

Double plus ungood!

Wed, 04/18/2012 - 11:50 | 2355032 distopiandreamboy
distopiandreamboy's picture

You sure you're not double counting some numbers?

Wed, 04/18/2012 - 11:56 | 2355053 Dick Darlington
Dick Darlington's picture

These guys will bail out everyone!

IMF: Republic of South Sudan becomes IMF’s 188th Member


Poor South Sudan, body is still warm and the jackals are already chewing the carcass...

Wed, 04/18/2012 - 12:01 | 2355069 DB Cooper
DB Cooper's picture

If Obummer wants to find "excessive speculators" he can start with anyone stupid enough to buy a Spanish 10 yr bond! You can bet it will lead to a Ponzi scheme promoter as well!  A twofer.

Wed, 04/18/2012 - 12:03 | 2355076 walküre
walküre's picture

I am well aware that many in Europe do not like to be confronted with the truth

But it's Spain! They have Gaudi, Picasso and Banderas! Millions of Germans, Dutch and Brits get stupid drunk there every year! Oh no! Not Spain!!! In my universe, the sun never sets on Spain. It's beautiful and has tasty Tapas!

Brittney Spears can afford $20,000 for a bra she only uses once. She and the other little Marie Antoinette's of our time like to party on Ibiza. Spain is saved!

/sarc off.

Spain is the dark horse. The Spaniards have revolutionary ancestry and they're angry at the banks. What's more important, they're unemployed, vastly underemployed and they're hungry. Spain will be the catalyst. It is a powder keg waiting to go BOOM. The tourists will leave or not show up at all. Germans are avoiding Greece due to potential resentments and backlash over the bailouts. Spaniards are not taking any hostages. They're going straight for the jugular.

Ben knows this of course.

Wed, 04/18/2012 - 12:46 | 2355207 machineh
machineh's picture

So Ben's skipping Ibiza this year?

Wed, 04/18/2012 - 19:25 | 2356576 theTribster
theTribster's picture

I agree, Spain will not be the same as Greece and will react in a much more aggressive way. Maybe a million Spanish march to Brussels, wouldn't surprise me. Then the Greeks, Italians and Portugese can join in and scare the shit out of the eurocrats - the French can give them water as they cross through on their way to Belgium.

Its actually coming to this pretty fast, A Europe Spring. Will it motivate Americans to engage and finally wake up to what's happened and is happening right here? Nah, doubt it. American Idol is on. Besides, the American presstitutes will not show anything happening in the EuroZone as it falls apart. I'd like to things crumble sooner than later, its best for everyone.

The pain will be unbearable everywhere but especially in the EuroZone, USA and even Japan will (finally) fall apart from the incredible debt they carry and a substantial loss in revenues. Japan's exports will be hit very hard by the EuroZone crash, lucky they can afford to help out by contributing 60 billion to the IMF over the weekend. Insane.

We'll see about tomorrow, this money will be extremely expensive for the Spanish. I expect our boys at the Fed to continue the swaps  - ya know, becuase their profitable :) Since I believe this is exactly where we should be according to the plan - I do expect Spain to have a very bad day tomorrow. Keeping the Ponzi scheme going isn't were we are in the game, we are in the end game - this changes things a bit.

Wealth is being consolidated on a grand scale, part of that consolidation is to crash the economies and assimilate the assets and resources - where is Spain in that cycle? I think pretty close to the end - kill Spain and Italy just like Greece. They'll restructure, front end load the new debt and in the process own the country and all of its assets - Gold reserves, utilities, you name it.

Is this tomorrow? Probably not but it certainly could be, how much longer are they willing to hold up the house of cards? America is ready for this eventuality in terms of the Gubmint and required laws (Patriot, NDAA, etc) being in place for the resultant civil unrest. Will they and do they want to keep things propped up in Europe for the US election?

Tomorrow will be interesting regardless. I've watched the IMF (Laguarde) talk about how Spain and Italy are stable one day and that the world is close to a collapse the next. The statements from the politicians are pretty indicative that things are really bad - especially when they say "No way, we don't need the money" - you KNOW that's bullshit.

Wed, 04/18/2012 - 12:31 | 2355139 wang (not verified)
wang's picture

The Elephant in the Room

Spain's King Juan Carlos prepares to leave a hospital in Madrid Wednesday April 18, 2012. Spain's King Juan Carlos says he is sorry for having gone on African elephant-hunting trip.


and, to boot, to hunt elephants even though he is honorary president of the Spanish branch of the World Wildlife Fund

Wed, 04/18/2012 - 12:39 | 2355188 jaygould
jaygould's picture

isn't this the same guy who "predicted" 5y ago that Japan would default?? how's that working out?

Wed, 04/18/2012 - 12:42 | 2355202 Jason T
Jason T's picture

but their utility  company, Iberdrola, owns my electric company up here in NY state, NYSEG.  My bills help support the banksters in Spain.  

Wed, 04/18/2012 - 15:17 | 2355709 youngman
youngman's picture

Just happened.... the wierdest exchange on CNBC....they just painted over the whole mess in Spain as a don´t worry about it.....all is good...the CB´s will save us...them...."confidence" was the key word......if anyone else saw it left me and the British guy could tell they were getting info in their earpieces to shut up and make it sound OK...just another nail in the coffin of the so called world free "markets"...its all Central Banks now...

Wed, 04/18/2012 - 21:18 | 2356892 xcehn
xcehn's picture

" is necrophilia – a last ditch attempt to ‘show’ the markets that the Troika will triumph in the end. This triumph will involve stopping debt contagion hitting US banks on Wall Street, US banks in the EU, and US banks in Asia. It will involve keeping $300 trillion of self-created debt out of the real world, in order to save the perverts who created it in the virtual world of obligations and derivatives cut every which way and then some. And it will do this by engaging in sexual congress with dead people. Not until every last ‘consumer’ has been rendered unable to consume will the next stage begin. Do the elites around the Globe know this is unlikely to succeed as a defence strategy?"

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