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For Spain, The Beginning Of The End Arrives As Bank Of Spain Starts Using ELA

Tyler Durden's picture




 

As we described in detail yesterday, things are going from worse to worserer as the problems in Spain - more specifically in its banking sector - are deepening as deposit flight accelerates. As the WSJ notes PIMCOs' comment: "A bank 'jog' is happening in Spain - the private sector is leaving the banking system." But the Bank of Spain isn't leaving anything to chance. The WSJ disconcertingly highlights that last month the central bank appears for the first time to have activated an emergency lending program that will enable its banks to borrow from the Bank of Spain directly, bypassing the ECB's relatively tough collateral demands.

The so-called Emergency Liquidity Assistance program is shrouded in secrecy, and the Bank of Spain won't confirm that it has been used. The Bank of Spain appears to have doled out about EUR400mm under the program, based on publicly available data. That would make Spain at least the fourth euro-zone country - following Greece, Ireland and Portugal - to use the ELA, which generally is reserved for situations when banks have exhausted all other financing options.

As we pointed out yesterday, this would appear to confirm a "full-blown bailout" is imminent, as the collateral problems mount.

 

and The Bank of Spain was quick to respond to this reality (with a denial):

Bank of Spain comments in e-mailed statement on WSJ report that central bank provided ELA to lenders:

 

Sept. 5 (Bloomberg) -- Bank of Spain says “liquidity provision to banks other than ordinary monetary policy operations represents an insignificant fraction of total lending by the Bank of Spain to financial system.”

 

Measures adopted to lift restrictions on interest rates on deposits is not aimed at helping banks attract deposits, central bank says

 

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Wed, 09/05/2012 - 08:37 | 2763962 GetZeeGold
GetZeeGold's picture

 

 

Can't we just fix Spain? I'm sick of hearing about Spain every freakin day!!!

 

Wed, 09/05/2012 - 08:42 | 2763990 Jason T
Jason T's picture

but not as sick as hearing about isreal wanting to bomb iran everyday .. can't go a day without headlines about that ...  

Wed, 09/05/2012 - 08:51 | 2764005 GetZeeGold
GetZeeGold's picture

 

 

Do you see anyone bombing Iran?

 

New idea.....let's just focus on one problem at a time.

 

Wed, 09/05/2012 - 09:07 | 2764074 Dr. Richard Head
Dr. Richard Head's picture

It's hard to work on one problem at a time while the problems are coming at us like a raunchy Japenese bukake porn.  Speaking of Japan.....

Wed, 09/05/2012 - 08:53 | 2764042 Peter Pan
Peter Pan's picture

Prrsonally, i have given up reading these materials on Spain, Greece etc with any sort of enthusiasm. The writing is on the wall as much today as it was last week, last month and last year. It makes no difference when the train is going to come roaring through as long as you are not on the tracks.

Wed, 09/05/2012 - 08:43 | 2764003 EscapeKey
EscapeKey's picture

If you mean 'fix' as in 'neuter', then yes, we could. But it might lead to a 2nd rise of Hitler. Or Franco. Or someone equally disturbed.

Wed, 09/05/2012 - 09:02 | 2764066 Sudden Debt
Sudden Debt's picture

Hitler and Franco, evil as they where, where brilliant and charismatic people.

I just don't see politicians like that between the current ranks.

Greedy, self profiting, clueless and without any real conviction discribes them best.

Wed, 09/05/2012 - 09:36 | 2764176 ElvisDog
ElvisDog's picture

I agree. If there is a Hitler out there, we haven't seen or heard from him yet. The current crop of Euro leaders are the most incompetent, pampered, flabby bunch of self-serving bureaucrats I can imagine. One thing that made Hitler so effective was that he came from the streets and had a natural feel for the behavior of crowds. Draghu, Merkel, Hollande, and the rest don't mingle with the unwashed masses. They meet at places like Davos in facny hotels behind multiple lines of security teams.

Wed, 09/05/2012 - 11:18 | 2764515 DosZap
DosZap's picture

. If there is a Hitler out there, we haven't seen or heard from him yet.

 

Evidently you haven't been watching the one we have closing the doors on us.

Wed, 09/05/2012 - 12:00 | 2764672 ElvisDog
ElvisDog's picture

Don't be so cryptic, who are you referring to?

Wed, 09/05/2012 - 09:40 | 2764191 intric8
intric8's picture

Yeah, if Hitler just listened to his generals - europe would be a drastically different place

Wed, 09/05/2012 - 08:45 | 2764008 falak pema
falak pema's picture

only the bulls of Pamplona are juiced up in Spain; the rain has not fallen on the plains since ages.

The bankstas are suffering from extreme drought and their only issue  is singing "run, run, may the devil take the hindmost!'

Wed, 09/05/2012 - 08:50 | 2764033 jekyll island
jekyll island's picture

Spain is the new Greece.  Only 15 more to go.  

Wed, 09/05/2012 - 08:54 | 2764045 GetZeeGold
GetZeeGold's picture

 

 

Only 15 more to go

 

The departures have once more been delayed......it appears no one counted on rain.

 

Wed, 09/05/2012 - 10:28 | 2764327 midtowng
midtowng's picture

Spain capital flight now worse than Indonesia's in 1997.

http://www.cnbc.com/id/48891162

Wed, 09/05/2012 - 08:37 | 2763968 LawsofPhysics
LawsofPhysics's picture

Banks are insolvent, again.  What will the kleptocrats do?  print more money for their buddies and send the taxpayer the bill?

place your bets.

Wed, 09/05/2012 - 08:42 | 2763993 EscapeKey
EscapeKey's picture

remember, money printing does NOT cause inflation (and other fairytales for kids by... forbes)

http://www.forbes.com/sites/johntharvey/2011/05/14/money-growth-does-not-cause-inflation/

nice how all assumptions work in one direction.

Wed, 09/05/2012 - 08:53 | 2764041 LawsofPhysics
LawsofPhysics's picture

John Harvey is an idiot.  Two words for that guy "margin call".   Printing paper and stacking up paper promises on your fucking desk might not be inflationary initially, but in order to do that printing you had to make implicit promises that that paper will still be able to deliver the same value in the future - FAIL.   

Wed, 09/05/2012 - 08:38 | 2763972 Ar-Pharazôn
Ar-Pharazôn's picture

print print print

 

Wed, 09/05/2012 - 08:38 | 2763973 spanish inquisition
spanish inquisition's picture

things are going from worse to worserer

And its deteriorating FAST. Totally skipped over worser....

Wed, 09/05/2012 - 10:17 | 2764297 phalfa5
phalfa5's picture

hurry ...   it could get more worser  , or even worser than that, most worsest !

Wed, 09/05/2012 - 08:39 | 2763979 buzzsaw99
buzzsaw99's picture

Ingenious

Wed, 09/05/2012 - 08:41 | 2763987 fonzannoon
fonzannoon's picture

Great news! (from bloomberg)

James Ensley of Rocky Face, Georgia, took a $10,000-a-year job last month as a school-bus driver after almost two years of unemployment benefits ran out. While that’s a third of his prior pay as a warehouse manager, the father of two says he’s content.

“It feels great to go to work instead of having somebody tell you ‘I can’t help you,’” said Ensley, 51, whose former employer went bankrupt in the wake of the U.S. housing slump. “I miss my old job, but it is not coming back so I have to get over it.”

full stupid link: http://www.bloomberg.com/news/2012-09-04/long-term-unemployed-find-new-job-often-means-lower-pay.html

Wed, 09/05/2012 - 08:45 | 2764011 EscapeKey
EscapeKey's picture

Who the hell can live on $10k/yr?

Oh I forgot, they'll just fix some CPI weightings, and suddenly you'll live the life of Riley.

Wed, 09/05/2012 - 08:56 | 2764055 LawsofPhysics
LawsofPhysics's picture

and the rest of the taxpayers will pick up the tab for the his healthcare coverage, that of his family, his kids schooling (he won't pay any income tax as 10K is below the poverty line fo a single persons, let alone a family of four), plus he will also recieve a SNAP card to feed his family (family of four at 10k per year, damn straight he will have a SNAP card) - "Winning"

Totally fucking stupid, wages fucking matter!!!!

Wed, 09/05/2012 - 08:42 | 2763989 falak pema
falak pema's picture

ELA = back door butt bashing of government ledger by the privista oligarchs who run with their funny money pumped into the banks, by the EFSF/ECB combinat.

Wed, 09/05/2012 - 08:42 | 2763991 giggler123
giggler123's picture

So is now a good time to sell my spanish property?  lol

Wed, 09/05/2012 - 08:46 | 2764016 GetZeeGold
GetZeeGold's picture

 

 

Good as time as any I suppose.

 

Wed, 09/05/2012 - 09:07 | 2764073 Sudden Debt
Sudden Debt's picture

I'LL GIVE YOU ALL THE SPARE CHANGE IN MY POCKET FOR IT!

2 euros... and 60 cents...

BUT ONLY IF IT'S A 5 BEDROOM HOUSE ON A SQUARE MILE OF LAND!

Wed, 09/05/2012 - 08:43 | 2763994 Schmuck Raker
Schmuck Raker's picture

I need some "Emergency Liquidity Assistance" too... I need some butter for this popcorn.

Wed, 09/05/2012 - 08:53 | 2764002 Zero Govt
Zero Govt's picture

"...things are going from worse to worserer..."

Believers of the democratic (cough) system have 2,500 years of results to suck on, this sugar coated turd has no other flavours.

Spit or swallow Statists? 


Wed, 09/05/2012 - 08:45 | 2764010 GolfHatesMe
GolfHatesMe's picture

Donde Esta el Ducko Tapeo?

Wed, 09/05/2012 - 08:46 | 2764012 eeaton
eeaton's picture

Why won't EWP go down? I'm short waiting for Spain to crumble.

Wed, 09/05/2012 - 08:46 | 2764015 juicyfruit
juicyfruit's picture

when are the Spanish riot cams coming online?

Wed, 09/05/2012 - 08:47 | 2764021 magpie
magpie's picture

Ela Ole

Wed, 09/05/2012 - 08:47 | 2764023 intric8
intric8's picture

Where has fiscal prudence gone in this world? They'll find ways to bypass everything. Rule of law is meaningless.

Wed, 09/05/2012 - 09:21 | 2764126 kridkrid
kridkrid's picture

There is no reason to talk of fiscal prudence or the rule of law when the system that we have selected to facilitate our economic growth is behaving exactly as it was designed to behave. You can't get angry at the dog for eating out of the trash, it is the nature of the dog. Fiat money and fractional reserve banking... Where virtually all "money" is loaned into existence with interest attached. What the world faces now has been baked in all along.

Wed, 09/05/2012 - 08:48 | 2764025 ClassicCommodity
ClassicCommodity's picture

Spanish women are becoming an ever increasingly cheap commodity. What do they call that index? The one for whores

Wed, 09/05/2012 - 08:59 | 2764052 Zero Govt
Zero Govt's picture

Better we focus on the index of the political and banking classes who brought us to this point

Yet another page in the history books on the social and economic wreckage caused by this scum 

Wed, 09/05/2012 - 09:35 | 2764170 ClassicCommodity
ClassicCommodity's picture

I agree to an extent. This index shows a fairly sad (yet true) correlation with economic activity however. 

Wed, 09/05/2012 - 09:36 | 2764177 machineh
machineh's picture

What do they call that index? The one for whores

In the U.S. it's called the presidential poll.

Wed, 09/05/2012 - 08:48 | 2764028 shovelhead
shovelhead's picture

No more time for games.

Break out the Incredible Hulk towels, Mario. Call it a new 'green initiative'.

The Webslinger just ain't got enough sticky to keep the money in Spain.

Wed, 09/05/2012 - 08:50 | 2764030 stiler
stiler's picture

and another one bites and another one bites and another one bites the dust

why not call it a Mediterranean Spring?

Wed, 09/05/2012 - 08:58 | 2764059 jbc77
jbc77's picture

All this good news and the futures continue to push higher......will the markets ever become "unbroken" and snap back to reality. I'd really llike to capture 200-400 handles of downside on the S&P.....

Not to mention the news from FedEx last night......

 

Wed, 09/05/2012 - 08:59 | 2764063 AynRandFan
AynRandFan's picture

The ELA is the only thing that matters, and it is not discussed publicly.  There is no limit to liquidity, and no deadlines on debt.  It won't be inflation, it will be hyperinflation.

Wed, 09/05/2012 - 09:01 | 2764065 Schmuck Raker
Schmuck Raker's picture

Meanwhile in Brussels:

US embassy evacuated in Brussels and police check suspect vehicle according to US officials and police - updates to follow

Print 12:23 - Global News - Source: Newswires

Picture of the suspect vehicle here:

http://2.bp.blogspot.com/_X0c-HkaUxHA/TJaXKk5j_PI/AAAAAAAADBg/eG_im8um5z...

Wed, 09/05/2012 - 09:03 | 2764067 trilliontroll
trilliontroll's picture

furchtbar.

just one movie clip (dante's peak 1997)

http://www.youtube.com/watch?feature=player_detailpage&v=n_c7JtDNNUo#t=53s

Wed, 09/05/2012 - 09:18 | 2764105 ptoemmes
ptoemmes's picture

Worse to worserer?? Did I miss worser?

About as confusing as keeping track of Dumb and Dumber, Dumb and Dumberer, and Dumb and Dumberer To which is rumoured to be on again then off again, but seems to be playing in the EU now as I write this.

Which brings us to Bob Saget

http://www.youtube.com/watch?v=w6C9RBMCJOY

Wed, 09/05/2012 - 09:19 | 2764108 youngman
youngman's picture

I wonder about all the money leaving Spain....and other countries for that matter....will it EVER come back...To me its 5 years of pain as things settle out with new curriencies...new regulations....work rules...work ETHICS...whatever...it will take a generation..a very fast generation...

Wed, 09/05/2012 - 09:38 | 2764183 foodstampbarry
foodstampbarry's picture

Everything's fine.... Keep buying stock, keep shopping, keep watching the kardashians.

Wed, 09/05/2012 - 10:49 | 2764379 robertocarlos
robertocarlos's picture

All I see is continued growth of assets.

Wed, 09/05/2012 - 09:59 | 2764248 butchee
butchee's picture

Is the Bank of Spain lending in Pesetas yet?

Wed, 09/05/2012 - 10:01 | 2764254 Dareconomics
Dareconomics's picture

The use of the ELA is definitely a turning point; note the list of countries that turned to it and what happened next. The mainstream media is reporting on various pieces of the Spanish situation, but it cannot connect to dots. That's what we're here for:

 

http://dareconomics.wordpress.com/2012/08/28/spain-will-request-a-bailout/

http://dareconomics.wordpress.com/2012/09/03/spain-is-approaching-insolv...

http://dareconomics.wordpress.com/2012/09/03/draghi-rajoy-in-game-of-chi...

Wed, 09/05/2012 - 10:03 | 2764260 markar
markar's picture

It's even worse. The Spanish banks' real estate loans are still marked to fantasy.

Wed, 09/05/2012 - 10:19 | 2764300 Winston Churchill
Winston Churchill's picture

As they are in the USSA.

All those HELOC's are coming home to roost soon.

Wed, 09/05/2012 - 10:28 | 2764324 Daedalus
Daedalus's picture

I think you'll find that the following FIVE countries have all used ELA facilities over the past few years: Greece, Ireland, Belgium, Portugal, Cyprus

That means that Spain is the SIXTH country to use an ELA.

And incidentally that means that 35% (6/17) of the countries in the Eurozone have now used an ELA!

 

 

Wed, 09/05/2012 - 12:50 | 2764856 terex
terex's picture

ha ha, ELA is the stufffff, why dont they all use it?

 

liquidity over solvency, makes the day.... until it doesnt

Thu, 09/06/2012 - 01:35 | 2767101 agagshoes
agagshoes's picture

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