Schauble Just Says Nein Again: German FinMin Denies Rumors Of ECB Bond Buying

Tyler Durden's picture

When day after day, for three days in a row last week, the ECB spread rumors that it would commence buying Spanish debt in what was in retrospect nothing but a massive bluff (just as we suggested yesterday), what passes for a market postulated that since there was no official German denial, and with Merkel on vacation that would mean a statement from her finance minister sidekick Wolfgang Schauble, that Germany was ok with the reactivation of Spanish bond buying and as a result ramped risk by over 4% in 3 days. All of that is about to wiped out as Schauble has finally spoken. Quote Spiegel: "For days, it is rumored that the ECB will buy Spanish government bonds in a big way. Now Finance Minister Wolfgang Schaeuble has rejected such reports - there was "no truth". And scene. Luckily all the momo chasers who bought stocks last week on hopes their prayer-based strategy will finally play out, will be able to sell ahead of all those other momo chasers who bought stocks last week on hope their prayer-based strategy will finally play out. Or maybe not.

From Spiegel:

For days, it is speculated that the European Central Bank (ECB) is planning, together with the bailout fund EFSF Spanish government bond buy - so come back to Spain to cheaper capital. The "Sueddeutsche Zeitung" According to the euro countries willing to support this approach . Federal Finance Minister Wolfgang Schäuble (CDU) has now dismissed the reports in an interview with the newspaper "Welt am Sonntag".


"No, at this speculation is not true," Schäuble said the newspaper. The Finance Minister said it was already a sufficiently large aid package for Spain have been laced.


The 100-billion-euro package to recapitalize Spanish banks also close an emergency aid of 30 billion €. "The short-term financial requirements of Spain is not so great", said Schäuble, "the painfully high interest rates - but the world will not, if you have to pay for some bond auctions a few percent more."

Why will Germany, which Schauble says himself is in a very difficult position, and has already been very helpful to Spain, not provide more funding? Simple - unlike all other broke globalist neo-socialists, he believes that the market is actually right in punishing profligate spenders, and having bonds trade above 7% is not the end of the world. Of course, he is absolutely right.

The interest for Spanish government bonds in recent days had passed, the legislation as critical threshold of seven percent. Schäuble said, however, convinced that the Spanish reform efforts, which he praised likely to be soon rewarded. The finance ministers will meet on Monday with his U.S. counterpart, Timothy Geithner . Observers expect that will also be in this conversation on the holiday island of Sylt in the center of the European financial crisis.

And in case one rejection is not enough, here is another, courtesy of Handelsblatt:

Federal Finance Minister Wolfgang Schaeuble has rejected speculation about impending purchases of government bonds by Spanish EFSF and ECB. Spain itself, meanwhile, calls for more solidarity from Germany.


When asked whether there would soon be a motion to allow the euro rescue could buy Spanish government bonds, Schaeuble said the "Welt am Sonntag", "No, at this speculation is not true."


Schäuble does not believe that the high risk premiums on corporate bonds Spain overwhelm. "The short-term financial requirements of Spain is not so big," he said. "The high interest rates are painful, and they create a lot of anxiety -. But the world does not go under if you have to pay for some bond auctions a few percent more," You have "tied aid package big enough" for Spain. The country receives for the recapitalization of its banks up to 100 billion €. "And we have them provided 30 billion euros in rescue EFSF as a possible emergency," said the Minister

Finally, no denial is complete unless it is in triplicate (biblical references notwithstanding), here is Dow Jones with the news that nobody could have possibly predicted:

German Finance Minster Wolfgang Schaeuble denied plans for a new aid program for Spain, according to newspaper Welt am Sonntag, after the media reported European Union leaders aim for Spanish government bond purchases by the European rescue fund and the European Central Bank.


Speculations that Spain might apply for additional aid from the rescue fund are unfounded, Mr. Schaeuble said, according to pre-released excerpts of an interview to be published Sunday in Germany's Welt am Sonntag. Spain's "high interest rates are painful and cause a lot of concern, but it isn't the end of the world when a few percent more have to be payed at some auctions," Schaeuble said according to the newspaper, adding "Spain's financing needs aren't that huge in the short term."


Schaeuble's remarks are a denial of a report in French daily Le Monde that the ECB and European governments are putting together a plan that would see the bailout fund and the central bank buying Spanish and Italian debt. A surge in Spanish government debt yields sparked fears the country might lose access to financing.


Schaeuble said the Spanish government has made all necessary decisions and is implementing them, according to Welt am Sonntag. "Financial markets haven't yet honored the reforms, but they will do so," he is quoted as saying. Spain's reform  program will have good effects, also on financial markets, he said

So what is Spain's strategy: nothing but more heart-string tugging and some World War II revisionist history:

The Spanish Minister for Europe, Inigo Mendez de Vigo has claimed in an interview from the federal government more commitment and solidarity in crisis management. After the Second World War, Germany had been helped in a very much more difficult situation, the minister said the "Bild" newspaper. Many countries have abandoned in favor of the Federal Republic of money. "That should not forget Germany".

In other words, help a brother out. Only problem is that when the Marshall Plan was instituted, there was a whole continent of incremental debt capacity still untapped, courtesy of debt repudiation. This time around, there is no such thing, and certainly not in the US where debt/GDP is now 103%. So unless somehow Africa is to be involved in the second Marshall Plan of Europe, we urge Spain to rethink its strategy.

Just as we urge all those who continue to buy stocks on hope and prayer to perhaps reevaluate if they are in the right business.

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CuriousPasserby's picture

At this point the Spanish probably wish they had been invaded by Germany in the war so they could use that guilt trip like Greece.

GOSPLAN HERO's picture

During WWII, the Spanish Army's "Blue Division" fought the Red Army on the Eastern Front. Through rotation, as many as 45,000 Spanish soldiers served on the Eastern Front. They were awarded both Spanish and German military awards.

flacon's picture

I'm curious to see what happens to "the white metal" next week. We are at the apex of the wedge and it is trying to break to the upside. 

Randall Cabot's picture

Did ZH miss something? "The leaders of France and Germany pledged to boost Eurozone Friday..."

Jake88's picture

They didn't really cover all relevant facts did they. Comments by Merkel and Hollande yesterday while seeming to express openess to all options were vague and open only to interpretation. Bulls are eager to read meaning into these statements that isn't really there. As far as Hilsenrath's statements are concerned they offer nothing we didn't know already yet the bulls are reading into them what they want to believe. The biggest fools in all this are the bulls (at least the ones still long) IMHO

Vaiman's picture

Very Interestink indeed.  Funny there have been no front page headlines of this on Bloomberg. 

vmromk's picture

Mario Draghi......SUCK MY COCK !!!!!

gmrpeabody's picture

So, with that..., can we assume you're one of the buyers?

Joe A's picture

Heard of a place called Guernica?

Buck Johnson's picture

Europe is screwed, and they are doing everything they can to save this corpse.

d edwards's picture

Only suckers pay serious attention to these "the euro is saved" statements. Every week or ten days theres a statement, the muppets get all excited and nothing changes.

The EU is just dying a s-l-o-w death.

silencemachine's picture

... that will never arrive. Agony maybe, and many things must change but euro is irreversible, none want his death. 

TPTB_r_TBTF's picture

the Euro is doing ok; the Sovereignty of EU-nations not so much...

Blammo's picture

Reminds me of a car I used to have. Every couple days it required a new hose clamp or something.

marz929's picture


Squid Vicious's picture

In the Hampsteins, with the rest of the pig men, of course...

Peter Pan's picture


He cannot remember.

derryb's picture

on a south pacific beach with Kenneth Lay.

apberusdisvet's picture

Oh well; at least the markets rose for the weekend.  Karma for Monday's opening of down 300.

It's a bitch when the PPT has to come in on a Sunday to program the algos.

GMadScientist's picture

Try coming in on Saturday to program the PPT!

BudFox2012's picture

So you think the markets are going to retrace their gains from this bs next week? Doubtful. Who needs qe when you can pump the market to infinity with bs press conferences, misleading headlines, and computer algo trading.

I wonder if there is anything that can cause the Dow to crash anymore? We'll be living in a mad max wasteland and computers will be trading the Dow up to 30000 on news that master blaster runs barter town...

you enjoy myself's picture

yep.  at what point over the last 3 years have markets ever retraced any bogus ramp?  maybe its happened 2 or 3 times, despite near weekly rumor ramps?  the market ratchets up a notch and then uses that level as a base.  this denial just means we'll be flat on monday.

Racer's picture

They allowed the 'market' to go up for a few days before they deny to get the most out of it...

ArkansasAngie's picture

On Saturday.

But ... how are the Algos?  Why the banksters of course

salting a mine is illegal isn't it?

Haager's picture

And anyone knows who is responsible for the crank up if the markets won't tank.

scatterbrains's picture

exactly and I'm sure the PPT was building /ES short positions all they way up so that they can cover and buy a bottom somewhere between 1000 and 1100 /es.. for a while anyway. I wouldnt be surprized if the jeethner is massively short just to arrest a potential crash if the euro shit's the bed.


Hetty Green's picture

"The finance ministers will meet on Monday with his U.S. counterpart, Timothy Geithner ."

Timmay to the rescue!

ArkansasAngie's picture

Lord!  Save us from Timmy.

I'd prefer he was in jail to out enjoying his day by ruining ours


slewie the pi-rat's picture

i thought that was the most important newsy here, myself, Hetty_G

timmah, BiCheZ!

the gathering of the mofo banksters;  the wizards of the rocky/rothy Oz&FiatFest

no wonder marioECB  amazed even robo_T   yesterday, glasshoppers!  the "string quartet" of cBanks cracked that EUR0,000 whip up & down like centralPlanningPapa's got a brand new bag - YouTube

Y/C is doing 2-a-daze w/ his chi-rhopractor...

mark7's picture

Spanish banks only loaned up to 60 percent of estimated value of a holiday house or second house which is almost always lower than the actual market price. The buyer has to come up to the table with usually more than half of the money. So Spanish real estate bubble is nothing like in Florida where every muppet got a 100+ LTV loan simply by walking into a bank.

There were also no reselling of loans without banks witholding some of the original package (required by law there).

Bazza McKenzie's picture

How much of the Spanish real estate bubble is in the hands of developers, who operate on commercial loans that certaintly don't require 60% down?  I suspect it is the same as Ireland, a large proportion of the unsellable property was in the hands of developers.

mark7's picture

"Spanish lenders hold 308 billion euros of real estate loans, about half of which are “troubled,” according to the Bank of Spain."

So these idiotic 400-500 billion euro bailout figures are just bullshit.

GMadScientist's picture

You think that (soon-to-be-)default rate is static? LOL

Are you so naive as to think they aren't multiply levered?

Are you intentionally neglecting to mention the indebted sovereign itself or just kinda dumb?

Tirpitz's picture

Mark, spot on. But don't let's forget the French & German (and other) banks which loaned like drunken sailors into the Spanish bubble. Like in Greece and like in Eire, these shaking corporations need to be saved, via Spanish bailout.

Spain's economic numbers were the best of the entire EU for years, so they'd do well to repudiate the fake debt and start over. Chilly thoughts for Frankfurt, Paris and London.

GMadScientist's picture

Too right, Bazza.

And commercial property in Spain as well...

“We thought in our wildest dreams that maybe it might make 100-million euros, which was a crazy price,” he said. “When the bids were opened there was a bid of 171-million euros and the developer was backed up by one of our main banks. That was just a flavuor of the madness.” The site is currently being used by a local luxury car dealer, MSL Ballsbridge Motors, to store vehicles, mainly Daimler AG’s Mercedes-Benz models. The adjustment is going to take much longer in Spain On the northern outskirts of Madrid, near Barajas airport and the Real Madrid soccer team’s training ground, is Valdebebas, a development project under construction covering more than 10.6 million square meters of space. About 5,400 of the planned 12,500 homes have been built and another 2,100 are under construction, according to a spokesman for the project who declined to be identified by name, citing company policy. The development, which belongs to private land owners who pooled their property, is backed by banks including Banco Bilbao Vizcaya Argentaria SA and Aareal Bank AG. There are bus tours on Saturday for potential buyers, and an open house of the model homes every Sunday."

GMadScientist's picture

It doesn't even matter if the houses get bought, if they overbuilt, they'll be in a slump with or without buyers and the chances of even getting the less-hard landing are slim to none with their current employment situation. They have an entire generation's worth of excess housing and an entire generation that can't afford it.

mark7's picture

You are overestimating badly the size of the problem. From the link I posted:

"“Spain has 1 million new homes that won’t be completely absorbed by the market until the middle of 2017,” Fernando Acuna Ruiz, managing partner of Taurus Iberica, said in an interview in Madrid. “Prices will fall a further 15 to 20 percent in the next two to three years.”

About 13 percent of Spain’s 25.8 million homes are vacant, according to LDC Group, an Alicante-based specialist in real- estate management. The hardest-hit areas are Madrid, with 337,212 empty properties, and Barcelona with 338,645, LDC said in a report published yesterday."

US has vacancy rate of around 10 percent (rental + homeowner rate).

GMadScientist's picture


Unemployment: 24.6 percent and climbing.GDP -?% and dropping. Yields 7.?% and rising (do not play Nazi with Herr Schauble).

I don't know what they gave you in Ibiza, but it fried your neural net somewhat badly.

mark7's picture

You obviously know nothing about Spain. It was also 24 percent back in 1994, so what else is new. Even during good times the unemployment rate is usually 7-10 percent in Spain. Also I'd bet many still work but collect unemployment benefits at the same time.

Calmyourself's picture

So whats the problem Mark, everything should be fine what the heck is Spain and her politicians bitching about, fix it..  Obviously there  are no problems in Spain, how about Italia?

FMR Bankster's picture

Spain has no problems in the same way the rest of southern europe has no problems. Say your one of the 24.6% unemployed, safely collecting your unemployment benefits while working for cash on the side. You live at home with your parents, who run a small shop and also pay no taxes. You party all night and put in a few hours for cash during the day. Your goverment, both the federal as well as state units borrow a bucket full of Euro's from others never to be paid back. Worst case, it all falls apart and you go back to living like you did in the mid 90's before the Germans were stupid enough to give you all this free money. Welcome to southern europe, sounds like the Germans have a problem and they have started to figure out what it is.

mark7's picture

Well, what is wrong with that?! :) Good life, no work stress, multiple sex partners and wonderful parties. I feel sad towards Americans who work like busy, obsessed demons until they are 65, collecting on the way everything from diabetes to hypertension. Then they go to "see Europe" by going to Disneyland in Paris and maybe even Normandy beaches when barely able to walk 10 yards without a crutch. Such a waste.

collon88's picture

Confucius say, "He who have hopium hard-on get splashed with cold water".

TPTB_r_TBTF's picture

they seem to have advanced water-boarding, so ya donT have to lie down any more to get it.

John Law Lives's picture

How decidedly convenient that this rebuttal comes after the drug lords juiced the market with crack pellets during the week...

100% FUBAR.

Tirpitz's picture

Let's see how many votes Schauble can roll in at the next ECB board meating. Talk is cheap and the old fool felt he had to be in the news once his chieftain left for the summer camp.

lizzy36's picture

Every good heroin addict chases his first high, and prays it isn't their last high.

No different here.

We all know how it ends the only question that remains is when.

earleflorida's picture

america brings heroin to afghanistan and hopium to the world,...

enjoy :-))