So Much For The "Bailout"

Tyler Durden's picture


Spain's bank bailout bought a few months of liquidity, but at what cost? Well, the cost can be seen perfectly on the chart below, which shows Spanish and Italian sovereign bond spreads literally exploding.

Recall what we said yesterday: "Keep a close eye on Spanish sovereign bonds at the moment when the bond market understands what just happened, and once the euphoria over the very short-term bailout of insolvent Spanish banks passes. Because a month from today another €100 billion will be required, then another €100, and so on." The moment can be seen very distinctly on the chart below: it happened at 2:00am Eastern, and the bond market has not looked back since. We are likely hours away from screams for the ECB to come and re-bail out a just bailed out Spain.

Chart: BBG

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Mon, 06/11/2012 - 08:16 | 2513912 MoreLiver
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I've collected the blogs' coverage to one blog post that I update as the "bailando" progresses:

Mon, 06/11/2012 - 08:33 | 2513950 LeonardoFibonacci
LeonardoFibonacci's picture

Tim & Ben can fix this

Mon, 06/11/2012 - 09:01 | 2514021 BeetleBailey
BeetleBailey's picture


There, "fixed" it for ya!

Mon, 06/11/2012 - 09:15 | 2514064 Chief KnocAHoma
Chief KnocAHoma's picture

Oh good... I knew someone would fix this over the weekend. Don't we all feel better now? Carry on consumer.

And this needs commenting on too:



Mon, 06/11/2012 - 09:41 | 2514149 Chris Jusset
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The concept of a "re-bailout" will be the next big thing to hit Europe, to be followed quickly by the "re-re-bailout" ...

Mon, 06/11/2012 - 10:29 | 2514357 Widowmaker
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The fix has been in for over two decades of unadulterated fraud (and counting).

Maybe another banner would help distract from truth.   "No law enforced" ought to suffice.  It's all but surety anyway -- same as it ever was in the land of skittles and unicorn tear finance.

Mon, 06/11/2012 - 08:21 | 2513916 LULZBank
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We are likely hours away from screams for the ECB to come and re-bail out a just bailed out Spain.

Talking of screams ...

Mon, 06/11/2012 - 08:43 | 2513980 bobnoxy
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Given that this money was lent to Spain, has anyone thought of how Spain might pay these loans back?

Mon, 06/11/2012 - 08:51 | 2513989 LULZBank
LULZBank's picture

Yes, ofcourse, by monetising these loans.

Mon, 06/11/2012 - 08:57 | 2514010 jez
jez's picture

Well, obviously, by selling some more bonds to bankrupt Spanish banks, of course.This is Asylum Economics 101.

Mon, 06/11/2012 - 09:27 | 2514108 francis_sawyer
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 "has anyone thought of how Spain might pay these loans back?"


They'll 'point shave' a few games in Euro2012

Mon, 06/11/2012 - 09:46 | 2514164 eclectic syncretist
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I'll let you in on a little inside secret.  They will never pay them back, and even more importantly, the lenders know they will never pay them back, and don't care.

The lenders are protected by taxpayer funded insurance and so are risking nothing in making the loans.  Even more startling is the fact that the money is created out of thin air for the lenders, so they haven't really lent anything that was of value to them.   It's a game where they get free interest payments with no risk at all.  This is all just about keeping those interest payments coming in continuing to feel empowered for a very few individuals.

if you don't believe this is how the game works that's understandable, but I would suggest reading some history of central banking.

Mon, 06/11/2012 - 10:10 | 2514277 Dead Canary
Dead Canary's picture

I know. We can put on a show! There are costumes in the barn, and my dad knows music....

Mon, 06/11/2012 - 10:35 | 2514416 Widowmaker
Widowmaker's picture

You bet, it's quantified in needless soldier deaths in the desert.

What we need is another absofuckinglutely meaningless "war" aka printer-stimulus. 

The war on bright colors ought to do it for at least a couple $trillion in fraud-fiat!

Mon, 06/11/2012 - 08:22 | 2513917 Zola
Zola's picture

As it should be . Who expects you can just transfer Bank liabilities to the public sector without consequence ? Only in USSA and EUSS . Now will come Draghi and Bernank to make everyone poorer and destroy another free market action.

Mon, 06/11/2012 - 08:23 | 2513925 GeneMarchbanks
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A hearty LOL @ "free market action" that shit is gold. You're excellent at Open Mic Night.

Mon, 06/11/2012 - 10:03 | 2514229 MachoMan
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Free market = loch ness monster...  some drunk fuckers take a picture of an animal or object that might resemble it every once and a while, but that's about the extent of it.

Mon, 06/11/2012 - 09:41 | 2514155 ElvisDog
ElvisDog's picture

One thing I don't understand about the "transferring the loans to the taxpayer" thing is that the Spanish populace is either broke or hiding their money. Stated unemployment rate at 24%, youth unemployment at 51%. How exactly is the Spanish taxpayer going to pay back these loans?

The thing I don't understand about the "they're just going to monetize the debt" thing is didn't the lesson of the Arab Spring teach TPTB anything? How is an unemployed mass of young Spaniards with no job prospects going to react when inflation starts biting into what little money they have?

Mon, 06/11/2012 - 10:04 | 2514238 MachoMan
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Because the backstop is from us, the U.S. taxpayers...

Mon, 06/11/2012 - 10:08 | 2514262 AnAnonymous
AnAnonymous's picture

Nope. There is no backstop. Only consumption through the pretense of infinite growth.

US citizen tale.

Mon, 06/11/2012 - 10:36 | 2514445 Widowmaker
Widowmaker's picture

One taxpayer is a corporation's shitizen.

Open wide.

Mon, 06/11/2012 - 10:07 | 2514257 AnAnonymous
AnAnonymous's picture

The thing I don't understand about the "they're just going to monetize the debt" thing is didn't the lesson of the Arab Spring teach TPTB anything? How is an unemployed mass of young Spaniards with no job prospects going to react when inflation starts biting into what little money they have?

Us citizen solution.

Mon, 06/11/2012 - 08:20 | 2513921 azzhatter
azzhatter's picture

Isn't that special. And CNBC is touting that all is well with the world. Buy buy buy

Mon, 06/11/2012 - 08:25 | 2513931 Martial
Martial's picture

I'm guessing they weren't recommending silver?

Mon, 06/11/2012 - 08:24 | 2513926 insanelysane
insanelysane's picture

I get the feeling on Bloomberg that analysts are actually "getting it" this morning.  The realization that everything that was done in 2011 and early 2012 was supposed to prevent contagion to Spain and Italy and yet contagion we have.  However, the central banksters and CNBS are totally ignoring the contagion aspect and just going with the bailouts is what we do theme.

Mon, 06/11/2012 - 08:55 | 2513999 ThirdWorldDude
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I doubt it they're "getting it", but maybe they're on a good path...

The bailouts plan in was never intended to prevent contagion, just to transfer the existing and pile up some new debt from the banksters' to the sovereigns' balance sheets. Eventually they start screaming for help and that's where the wizard appears from behind the curtain to save the day.

Mon, 06/11/2012 - 08:24 | 2513930 CEOoftheSOFA
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I don't think there will be any help from the Bernak. I think he will be resting the printing press until after the election in an effort to fix the election in favor of Romney, following an offer he can't refuse from Wall Street.

Mon, 06/11/2012 - 08:25 | 2513932 GACGB1000
GACGB1000's picture

Who was it that said it happens slowly .. then all at once ? maybe we're about to see the all at once ?

Mon, 06/11/2012 - 08:36 | 2513961 insanelysane
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There is an interesting demo that I saw once in a Strengths of Materials engineering class.  The prof took a ruler and placed it on the edge of a desk but fully on the desk.  He then pushed it so 1 inch was hanging off desk.  And then another inch.  Of course when you pass the half way point the ruler falls to the floor.  As with real world materials, things flex until they snap.  The economy is no different. (at least this time)

Mon, 06/11/2012 - 09:19 | 2514084 Satan
Satan's picture

The problem with this is that you are comparing a scientifically irrefutable natural law ie Gravity, with a wholly human construct ie Economics. One could always mathematically calculate the tipping point of any object. Trying to define an economic tipping point has become impossible as basic economic principles such as supply/demand and scarcity have been crushed by manipulation in a broken market place.

A theoretical elastic band can go on stretching to infinity...or can it?

Mon, 06/11/2012 - 08:56 | 2514007 TWSceptic
TWSceptic's picture

Yes the law of exponential growth also applies to the amount of shit hitting the fan.

Mon, 06/11/2012 - 09:08 | 2514042 Treason Season
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From "The Sun Also Rises"

"How did you go bankrupt?'

'Two ways. Gradually then suddenly."

Mon, 06/11/2012 - 08:27 | 2513938 LULZBank
LULZBank's picture

Nothing a few well placed debits and credits cannot fix.

Mon, 06/11/2012 - 08:28 | 2513939 asteroids
asteroids's picture

Bullshit story on weekend. Massive no-volume ramp Sunday night. Sell-off Monday and Tues. Fool me once, shame on you! Fool me twice.....

Mon, 06/11/2012 - 08:30 | 2513944 I Am Not a Copp...
I Am Not a Copper Top's picture

We won't get fooled again!

Mon, 06/11/2012 - 09:17 | 2514075 Sauk Leader
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You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.


Mon, 06/11/2012 - 10:47 | 2514536 nodhannum
nodhannum's picture

Unfortunately, you can fool enough of the people enough of the time to get 'er done.

Mon, 06/11/2012 - 08:32 | 2513946 the not so migh...
the not so mighty maximiza's picture

heheheheh, "We Fixed Everything for Good: Part XXXVIII"

Mon, 06/11/2012 - 08:33 | 2513949 booboo
booboo's picture

I suspect the Bond girls are watching how fast that Marine barber can lop off their precious locks and are starting to squirm BZZZZZZZZZZZZZZZZZZZZZ

Mon, 06/11/2012 - 08:34 | 2513952 hedgehog9999
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SPX could easily drop 60 to 100 points Today........

Amazing that Geithner and the broad from the IMF made truly positive pronouncements over the week end!...It shows their fucking ignorance!.... they should have said nothing and look smart for a day!

Mon, 06/11/2012 - 09:03 | 2514027 francis_sawyer
francis_sawyer's picture

Rather unusual to see a WEEKLY chart gap candle on the S&P... Come hell or high h2o, they always get filled... So actually, I'd kind of expect a bit of a head fake...

Gold & Silver also started with gaps, but both of those have been painted in... (Strange ~ or, 'not so')...

Mon, 06/11/2012 - 09:18 | 2514080 SilverTree
SilverTree's picture

Who is that in the wheel-chair?

Mon, 06/11/2012 - 11:03 | 2514151 GeneMarchbanks
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Schauble. Were you all giddy about 'The Man Behind It All'?

Mon, 06/11/2012 - 08:35 | 2513957 wonderatitall
wonderatitall's picture

everything is fine...spain will not need a bailout....obama eats dogs...the germans will pay for everyone to fuck around ...and marshmellows are hard..

god damn racists axeing qesions and all..give me your god damn money...if u got any

Mon, 06/11/2012 - 08:39 | 2513968 crawl
crawl's picture

So there is no free money? And no money tree?
I was wrong thinking the US markets would be on a rocket ride to the moon this morning.

So unicorns aren't real? I nearly had convinced myself over the weekend they were. And they shit skittles too.

Mon, 06/11/2012 - 08:39 | 2513969 monopoly
monopoly's picture

And absolutely nothing has changed. Move along. Keep preparing for time is slowly running out.

Mon, 06/11/2012 - 08:54 | 2514003 SmoothCoolSmoke
SmoothCoolSmoke's picture

Meanwhile, in Japan.............

#1 Japanese Prime Minister Naoto Kan is urging all people living within 30 kilometers of the @#$%ushima Dai-ichi nuclear facility to stay indoors.

#2 Andre-Claude Lacoste, the head of France's Nuclear Safety Authority, says that the containment vessel surrounding the No. 2 reactor at Japan's @#$%ushima Dai-ichi nuclear complex is "no longer sealed".

#3 Radiation levels in Tokyo are already 10 times above normal levels.

#4 Reuters is reporting that some residents of Tokyo are already starting to flee the city.

#5 Radiation levels in one city north of Tokyo, Utsunomiya, were recently reported to be 33 times above normal levels.

#6 Radiation levels in the city of Saitama have been reported to be 40 times above normal levels.

#7 According to Japanese Prime Minister Naoto Kan, the "possibility of further radioactive leakage is heightening."

#8 The Japanese government is admitting that radiation levels near the @#$%ushima Dai-ichi complex are very harmful to human health.

#9 According to the World Nuclear Association, exposure to over 100 millisieverts of radiation a year can lead to cancer. At this point the level of radiation being measured right outside the number 4 reactor at the @#$%ushima Dai-ichi complex is 400 millisieverts per hour.

#10 A U.S. Navy crew that was assisting in relief efforts was exposed to a month’s worth of nuclear radiation in just a single hour.

#11 According to the U.S. Navy, low levels of radiation have been detected at their bases in Yokosuka and Atsugi.

#12 The USS Ronald Reagan recently detected significant levels of radiation 100 miles off the Japanese coast.

#13 The operator of the @#$%ushima Dai-ichi complex has pulled out 750 of the 800 workers that were working at the facility.

#14 The French embassy in Tokyo is advising French citizens to leave the city.

#15 The German embassy in Tokyo is advising all German citizens to leave the country entirely.

#16 German technology company SAP is evacuating their offices in Tokyo.

#17 Austria has announced that it is moving its embassy from Tokyo to Osaka due to fears about the radiation.

#18 Finland is urging all of their citizens to leave Tokyo.

#19 The Czech military is sending planes to Japan specifically to evacuate the Czech Philharmonic Orchestra.

#20 Air China is canceling many flights to Tokyo.

#21 The Chinese Embassy has announced that it will be evacuating all Chinese citizens from the Miyagi, @#$%ushima, Ibaraki and Iwate prefectures.

#22 Russia is making preparations to evacuate civilians and military units from the Kuril Islands.

#23 Physicist Frank von Hippel recently told the New York Times the following about this disaster: "It’s way past Three Mile Island already".

#24 The president of France's nuclear safety authority says that this crisis is now almost as bad as Chernobyl was....

"It's clear we are at Level 6, that's to say we're at a level in between what happened at Three Mile Island and Chernobyl."

#25 There have been reports of extremely high radiation at another nuclear facility in Japan. It has been reported that at the Onagawa nuclear plant radiation that is 700 times the normal level was detected at one point.

#26 One anonymous senior nuclear industry executive told The Times Of India that Japanese power industry managers are "basically in a full-scale panic" and that "they don't know what to do".

#27 It is also being reported that there were over 600,000 spent fuel rods stored at the @#$%ushima Dai-ichi complex. Most of these rods were apparently stored near the top of the 6 reactor buildings. There have already been major explosions at three of those buildings. It is now feared that there is now nothing to prevent many of these spent fuel rods from releasing radiation into the atmosphere. That is really, really bad news.


Mon, 06/11/2012 - 09:07 | 2514040 farmerjohn2112
farmerjohn2112's picture

Your source, please?

Mon, 06/11/2012 - 11:06 | 2514630 MachoMan
MachoMan's picture

it looks like this * except with a little more fur on it and smells kind of funny...

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