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Spain Runs Out Of Money To Feed The Zombies
One of the problems with the Hispanic Pandora's box unleashed by a now insolvent Bankia, which as we noted some time ago, is merely the Canary in the Coalmine, is that once the case study "example" of rewarding terminal failure is in the open, everyone else who happens to be insolvent also wants to give it a try. And in the case of Spain it quite literally may be "everyone else." But before we get there, we just get a rude awakening from The Telegraph's Ambrose Evans-Pritchard that just as the bailout party is getting started, Spain is officially out of bailout money: "where is the €23.5 billion for the Bankia rescue going to come from? The state's Fund for Orderly Bank Restructuring (FROB) is down to €5.3 billion."
From here on out, the alternatives have been discussed to death and are clear as day: either the ECB, and the global central bank syndicate, inflates away the debt, which can only happen if Germany gives the ECB a carte blanche to print up the the $3-5 trillion required to backstop the European financial system, or we proceed straight to an instance of "Odius debt"/debt moratorium/write down, which however with trillions in daisy-chained, rehypothecated, partly submerged within the broker-dealer mediated shadow banking system, liabilities permeating throughout the global financial system, the outcome would be a tremor that shakes the very foundations of the financial system, in the process also impairing the $1 quadrillion OTC derivative credit money pyramid. In other words: nobody wants to, pardon, nobody dares to do anything, and the best Europe, and by implication the world, can hope for is to survive day to day, without launching the terminal financial D-Day. Pritchard's summary of next steps is expected: "The result of Europe's policy paralysis is more likely to be a disorderly break-up as Spain – and others – act desperately in their own national interest. Se salve quien pueda." Only it is not only Europe. It is the entire world. But it will start in Europe. And specifically Spain, which unlike Greece is too big to be swept under the rug. It is also a place where the zombies are now congregating.
In an indication of just how surreal the modern financial world has become, none other than Bloomberg has just come out with an article titled "Spain Delays and Prays That Zombies Repay Debt." We can only surmise there was some rhetorical humor in this headline, because as the past weekend demonstrated, the best zombies are capable of, especially those high on Zombie Dust, or its functional equivalent in the modern financial system: monetary methadone, as first penned here in March 2009, is to bite someone else's face off with tragic consequences for all involved. What Bloomberg is certainly not joking about is that the financial zombies in Spain are now everywhere.
Spain is trying to clean up its banks, requiring lenders to set aside more for possible losses on loans deemed performing to developers like Metrovacesa SA (MVC), which hasn’t completed a project in more than a year and has none under way. While that represents about 30 billion euros ($38 billion) of increased provisions, it’s not enough because many of the loans said to be performing aren’t, said Mikel Echavarren, chairman of Irea, a Madrid-based finance company specializing in real estate.
“Spain has engaged in a policy of delay and pray,” Echavarren said in an interview. “The problem hasn’t been quantified by anyone because there is huge pressure not to tell the truth.”
Yes, lying and ignoring reality are truly signs of a stable, mature system. Just look at Bankia, which went from "profitable" to broke in a few days. And at the risk of repeating ourselves for the nth time, Bankia is merely the beginning.
The Economy Ministry says that Spanish banks have 184 billion euros of developers' loans and assets that are “problematic,” while the remaining 123 billion euros are performing. The need for more reserves to cover losses on the loans can’t be ruled out, Nomura International analysts Daragh Quinn and Duncan Farr said in a May 14 report. If Spain took losses on developer loans like Ireland did, Spanish banks would need 8.9 billion euros under the best case to 76.5 billion euros of additional provisions in the worst scenario, Nomura estimates.
A hole as big as €76.5 billion, plugged with... the €5.3 billion left in the FROB? Good luck. And why is the hole there to begin with? Because of the same lies and same prayers and delays that are now the only policy instrument left in the administration's arsenal:
Many Spanish banks are avoiding property sales so they don’t have to make “mark to market” valuations. Instead, they’re giving developers new loans to pay debt coming due to prevent defaults, said Ruben Manso, an economist at Mansolivar & IAX and a former Bank of Spain inspector.
“The larger banks have been selling bits and pieces and can absorb the losses,” Manso said. “Smaller savings banks are acting in bad faith in their refusal to allow transactions and saying they can’t mark to market because there isn’t one.”
A spokeswoman for CECA, the association for Spanish savings banks, who declined to be identified citing company policy, said the group can’t comment on the banks’ commercial policies.
While there is virtually no clarity, one case gives us a terrifying glimpse into the murky waters beneath the surface:
Metrovacesa, once Spain’s largest developer, is typical of the industry, according to Manso. The Madrid-based company, which once owned HSBC Holdings Plc’s London headquarters and had about a 50 billion-euro market value, was taken over by creditors in 2009 after its largest shareholder struggled to service billions of euros of debt.
Metrovacesa has racked up 1.8 billion euros of losses since 2008. It has debt of 5.1 billion euros and property assets valued at 3.9 billion euros.
“The banks have made writedowns in their Metrovacesa stakes, but they haven’t taken the full hit,” Manso said.
Metrovacesa currently trades at 38 cents a share, valuing the company at about 375.5 million euros. UBS AG downgraded the shares to sell on May 22 and changed its target price to 32 cents. In August, its lenders renegotiated the terms of 3.6 billion euros of its debt, extending maturities on 2.47 billion euros of obligations and granting a five-year grace period for interest payments on 1.12 billion euros of loans.
“Having no controlling stake in Metrovacesa means that its creditor banks don’t have to consolidate the company’s debt or assets and contaminate their own balance sheets,” Manso said. “There are hundreds of cases like Metrovacesa out there, albeit smaller in size, and this distorts the official amount of real estate and bad developer loans that banks profess to have.”
Terrifying, because proper accounting treatment would mean that the abovementioned €76.5 billion in max provisions is really orders of magnitude lower than what the final number will be.
Of course, it wouldn't be an article about a ponzi scheme if it didn't have an official refutation. Sure enough:
Metrovacesa isn’t a zombie, said a company spokesman, who
declined to be named citing company policy.
And That, ladies and gents, just won the prize for the most hilarious denial in the history of denials... to date. As the ponzi unravels more and more each day, the above case will be rather serious compared to what is in the pipeline. But for now, a company spokesman forced to deny that the company he works for is not an undead creature with a penchant for brains does it for us.
Metrovacesa has
projects in mind, but the market doesn’t allow homebuilding, he
said.
Wait, wasn't everything Bush's fault? Or in the worst case: Merkel? Now we get one more culprit for lack of market clearing. Why, the market itself of course.
But if the above hasn't caused blood to shoot out of one's ears yet, the next paragraphs absolutely will.
More than half of Spain’s 67,000 developers can be categorized as “zombies,” according R.R. de Acuna & Asociados, a real-estate consulting firm. They have combined debt of 180 billion euros that will lead to 104 billion euros of losses that hasn’t been fully provisioned for, Acuna estimates.
“They aren’t officially bankrupt because they have been refinanced time and time again,” Fernando Rodriguez de Acuna Martinez, a partner at the company, said by telephone. “Their assets are worth much less than their liabilities, they struggle to repay loans and they haven’t revaluated them to reflect today’s prices.”
And that, in a centrally planned world, is why no company is allowed to go bankrupt - because the central banks merely allow them to refi into perpetuity, even if, as is admitted, "assets are worth much less than their liabilities" - surely a justification to invoke the Fed's emergency Section 13(3) emergency powers...
In the meantime, the Fed's domestic partner, the Bank of Spain is doing all it can to avoid the realization that zombies walk among us:
The Bank of Spain allows loans that are refinanced before turning delinquent and interest-only loans to be considered “normal” or “performing” on banks’ books, according to Manso.
“You won’t find that data anywhere,” Manso said. “There has been a lot of cheating going on where banks have lent developers new money, classed as new lending, so they can pay off their original loans.” That’s masking delinquency, he said.
Refinancing the current and future zombie developers will cost 30 billion euros over the next two years, according to Acuna. The depreciation of those developer assets from 2012 onwards will generate a further 20 billion euros of losses in that time, he said.
And saving the absolute farce for last:
Echavarren’s Irea brokered the refinancing of a 200 million-euro loan two years ago for a developer. After two more rounds of refinancing, there is about 180 million euros left on the loan and it’s classified as performing, he said, without identifying the company.
“The probability that this loan will be paid when it comes due is zero,” Echavarren said. “There are dozens of similar cases.”
Spain’s government and banks need to be more like their counterparts in Ireland and be more forthcoming about loan losses, according to Echavarren. He forecasts that the larger Spanish banks with income from international operations will be able to pay for domestic real-estate losses within two years. The rest can’t take such a hit and will have to be nationalized, he said.
“We cannot continue to jeopardize the whole financial system by not telling the truth,” Echavarren said.
Who says we can not: why, it is the sole prerogative of every central bank not to fight inflation, not to maximize employment, and lately, not even to keep the Russell 2000 over 800. It is merely to perpetuate the lies, to extend and pretend, to keep the zombies in check, to repeal every law of math, physics and statistics known to man: from the second law of thermodynamics, to simple sine wave oscillations, to prop the insolvent as the liabilities get exponentially bigger than the assets, to change accounting rules, and to pretend that reality matters, until everything finally crashes.
Which at this point is a certainty.
For those of an inquisitive nature, the only question is when. But, frankly, even that is becoming less and less relevant with each passing day.
* * *
Finally, as a courtesy to our readers, with the global zombie apocalypse about to be unleashed in every format possible, here are some hints on defending from the undead, both banks and those whose EBT cards have run out, courtesy of Shaun of the Dead and Zombieland.
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after having given it some thought, i find that, really, what's the big deal. all you have to do is transfer all of spain's math to another bigger computer, and let the games continue. give spain a new computer, and let them go from there. consider the old banking computer as Spain,the Derivative; and the new banking sytem, as spain.
don't tell me that dont solve the equation, cause it actually does.
sure the top cannibalize themselves, but it would make a heck of a reality show.
ALERT
http://m.cnbc.com/id/47587509
If this is it, Italy is gonna get out either 'cos Prodi with Goldman's help cheated too. And... Who else? On the other hand, Germany knew. They're all cheaters, it was the way to build a Bank System based on private bankers running things using an impossible single currency. As far as I know, no banker gives a shit about everything else but its revenues and in spite of technoctrats, no system can work without taking into account people at a certain point. Anyway, party is over. They went a little too far, nobody is having fun anymore.
Look! Up in the sky!
It's a bird. It's a plane.
No, it's TheBernank!
Yes, it's TheBernank ... strange visitor from another land, who came to Europe with powers and abilities far beyond those of mortal Central Bankers! TheBernank ... who can change the course of insoluble debt, print money with his bare hands, and who, disguised as Chairman of the U.S. Federal Reserve, mild-mannered theoretician from a great ivy-league university, fights a never-ending battle for printing, twisting, swapping and the quantitative easing way!
In the last episode, the evil villainess, Frau Merkel of Austereia, was completing the final touches to her diabolical scheme to enslave the commoners of Euro land under the yoke of debt servitude. Upon hearing the cries of despair, welling up from socialist leaders of sovereign states, and calling for growth and EU bonds, TheBernank immediately leapt into action.
“I will backstop every debt”, became his battle cry.
And tears of joy rolled from the eyes of the Bankers.
“We are saved”, they proclaimed.
Stay tuned for the next episode, where the Goldman Sachs Vampire Squid is freed from its lair and loosed upon sovereign states, to help adjust their deficit reports and demand righteous tribute from tax payers.
Would this be a bad time for my IPO?
My company is called Eat My Facebook.
Hey Zuckerberrrg, come and git your Twinkie!
of course it's not a bad time at all. cnbc will roll out the red carpet for you. just send them an email. 38 buckaroos a share seems about right.
The sobering part of this, and I don't know about the rest of you, is I see the effects of this so called "recession/depression". I know of people moving their families into homes occupied by families as they have no place to live. People close to retirement age without coin and no chance for a job to replace the one they lost.
All the commerical real estate sitting empty with for lease or for sale signs.
Yes, the freeways are full, but not as full as they should have been when things were going strong. People still go to malls and things, but many times I go into places where I wonder how they pay rent, never mind employees and inventory.
Maybe I am looking in the wrong place. I realize there are places the economy is doing well.
But the stuff I read here tells me we are close to the edge of a cliff. I just can't shake the feeling, maybe it is just that, a feeling and everything will be all right next week.
"We've all been raised on television to believe that one day we'd all be millionaires, and movie gods, and rock stars. But we won't. And we're slowly learning that fact. And we're very, very pissed off!"
zombie
economics....
mark it to zero
market to zero
central zombie incest magic.
Barry Ritholtz on the Crisis: Causes, Cures, Corptocracy, and Suggested Reading
http://www.capitalismwithoutfailure.com/2012/05/barry-ritholtz-on-what-l...
.
"...No, no. Here’s what happened. Jamie Dimon [the chief executive of JP Morgan] completely outplayed Ben Bernanke. Dimon went to Bernanke and said, “Look, we’re a counterparty with Bear Stearns, we could probably absorb them – but why should we step up? Normally we wouldn’t do this in a shotgun wedding, it would take a year to negotiate. I have a weekend to make this decision, so you have to guarantee $29bn of losses.” And the Fed did that.
If I had been the Fed chief, I would have said: “Let me explain this to you, Jamie. I know the history of JP Morgan” (Everybody thinks Dimon is this genius who avoided the subprime situation, but that’s actually not true. They just ran into their subprime problem way earlier than everybody else, so when they had to liquidate, there was a bid there.) “I’m looking at the derivative book of Bear Stearns. It’s $8 trillion and you’re the single biggest counterparty. So if they go down, it’s your problem. So here is what I am willing to do. When you go into receivership, I’ll promise not to put you in jail! If you want to buy them, buy them. If you don’t want to buy them, we’re going to put them into a pre-packaged bankruptcy and if it ultimately causes JP Morgan to go bankrupt, well, put it this way, this is your opportunity to avoid it. So take a walk once around the park, and have a good think. As Fed chair, I have no problem testifying that I suggested you buy Bear Stearns because, if you didn’t, it really looked like they were going to blow up JP Morgan – and good luck with the shareholder lawsuits for the rest of your life.”"....
.
http://www.veteranstoday.com/2012/05/28/war-press-tv-and-death-by-politi...
War, Press TV and Death By Political Correctness
Some Inexorable Truth, Deal With It Quickly Before More Die
By Gordon Duff, Senior Editor
ZH, ready to report from the jungle?
ZH, ready to report from the jungle?
"where is the €23.5 billion for the Bankia rescue going to come from? The state's Fund for Orderly Bank Restructuring (FROB) is down to €5.3 billion."
Well, surely they also have a Fund for Disorderly Bank Restructuring? Use that. Or Bankia could rehypothecate something. Or exchange something for something else with the ECB. We're talking guys with MBAs here. They'll work up €23.5 billion before lunchtime.
"Metrovacesa isn’t a zombie, said a company spokesman, who declined to be named"
One of the best things I've read for ages. Two possible reasons for this charming shyness:
1. Metrovacesa has already eaten this employee's brain and so he can't remember his name.
2. He's thinking about his next job. He doesn't want to be identifiable as the man who said Metrovacesa wasn't a zombie.
Asia finally decided to short squeeze. Rally ahead, then the end of the world. Looking at three months, a few days of short covering, then volatility etc etc etc
Europe is boring and clinically insane, it's all Asia, they the paymasters of the west. So they go, we all go.
In summary, yes EUR will be short, as will most if not all EZ equities on swing trades ad infinity, until a war or something.
in other news
cesium tuna burgers will be all the rage in cali this summer, get em while they glow fukisashimi style
yeah I'll roll with that.
keep it fat
23.5 Bil EUR
ok. i lost count after 21. get it?
23.5 it is!
the zombie theme is coming alive, tyler!
the face eating will continue until morale improves
London6:43AM BST 29 May 2012
http://www.telegraph.co.uk/finance/financialcrisis/9296628/Bank-of-England-prepares-plans-for-euro-collapse.html
What more needs to be said...
the masks are for the hopium which keeps the victoms tranqiuil as hindu cows.
those who do not hold gold are the cows
http://www.youtube.com/watch?v=z5LW07FTJbI
ah, cannabilsim to ensue
So what else is new?
Hmm, the Banker Whore(s) of Babylon riding the Beast (is)are actually dead ...zombies, still screwing around, eating (FB Lol) the dead muppets wilfully buying and selling the black hole. There must be some enochian physics twist to this zero hegemony (lack of mercy ''posing'' as a Christ http://www.biblegateway.com/passage/?search=Daniel%2011:%2037&version=KJV ) ...I'm sure. Lol. Ah yes, it's the New World Order ''Worm Hole Hooker'' Gate of Hell Code Blue! Code Blue! ...and print! http://www.youtube.com/watch?v=n9FVPApHPFM&feature=relmfu
Graduation of the 13 Bankers in Zombie Land http://www.youtube.com/watch?v=w6DjHvDXNSw
^
..$..
..666..
..........
...........
............
http://www.youtube.com/watch?v=kUkaW7ZMMtY
http://www.washingtonpost.com/politics/obama-govt-open-for-business/2011/04/08/AF94Vw4C_video.html
http://www.nbcwashington.com/news/local/Donor-Steps-Forward-to-Save-Washington-Monument-137635208.html
remember FDIC
LET'S FOR ONCE SPILL THE BEANS:- THE EUROPEAN BANKING AND GOVERNMENT DEBT FAILURE HAVE BEEN PLANNED, ORCHESTRATED, ORGANISED AND IMPLEMENTED BY THE US BANKING FRAUDULENT CARTEL - THOSE ARE JP MORGAN AND GOLDMAN SACHS, PERIOD!!
LATEST ON THE STREET:- ITS OFFICIAL AND FOLLOWED BY THE UK GDP CONTRACTION DURING Q1 AND NEXT IT WILL BE Q2, THE US ECONOMY WILL ENTER A DOUBLE DIP RECESSION FROM THE 15TH OF JUNE THIS YEAR...WILL THE FED, POLITICS AND GOVERNMENT AGENCIES ACKNOWLEDGE IT IS A DIFFERENT MATTER ALLTOGETHER..
So it is somehow "better" to print money to cover losses than kick ass, take numbers and write down bad debts? If Europeans refuse to print money, it is the end of the world?!
This US/UK financial system is really weird.
1 Billion last Tuesday
6 Billion on Wednesday
18 billion on Thursday
23 Billion on Monday
100 Billion on Tuesday
If only I could invest like that.....oh wait Spanish banking loses...
fyi Turd Fergusons interview of Jim Willie of The Hat Trick Letter was 'interesting'....
http://www.tfmetalsreport.com/podcast/3834/tfmr-podcast-21-jim-willie-returns?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TFMetalsReport+%28TF+Metals+Report%29
quadrillion? ... you sure that's next? ... I'm pretty sure gazillion comes before it.
no a qazillion comes after that...naturally a gazillion isn't a real number....but then allof these numbers are now unreal anyway ;-)
Check this out - it seems the cracks of truth are breaking through the vase of lies....
http://www.guardian.co.uk/business/2012/may/28/one-bust-bank-spain-pm-ma...
"We are not going to let any region or financial entity fall, because otherwise the country would fall," he said.
update: greece doesn´t run out of money by august. they run out of money by the end of june:
"Die Steuereinnahmen sind im Mai um fast ein Drittel eingebrochen, die Wirtschaft schrumpft weiter. Doch so lange der Machtkampf tobt, bekommt Griechenland keine neuen Hilfskredite. Das Geld reicht noch bis Ende Juni"
google translate:
"The tax revenue has fallen by almost a third in May, the economy continues to shrink. But as long as the power struggle is raging, Greece receives no new aid loans. The money will last until the end of June"
- handelsblatt.de
some banks are already excluded from TARGET. reforms aren´t doing any good. so no more € from the troika.
..endgame times. carry on.
Question. The term "zombie" is being thrown about with increasing regularity lately. Being someone who never watched zombie movies, I can only partly infer what is meant by zombie in the current ZH context. Anyone care to clarify and elaborate?
zombies are walking dead and in the context discussed here think of a bank/country that is bancrupt but beeing held alive or prevented from going into default by financial aid in some form allowing that bank/country or whatever to operate for a while longer
Christine Lagarde does not pay income taxes due to her status as a diplomat and she tells the Greeks they gotta pay. The typical CEO, an employee, nothing more, makes $9.5 million a year while their workers in Mexico and China or even America make shit. Without these workers, the typical CEO would be worth nothing.
Henry Ford found out the hard way, it is better to pay your people a decent wage for a decent days work, many became his customers.
The CEO of today is making a deadly enemy out of people who have to work hard, support families and still apply for food stamps while the asshole CEO is on CNN pontificating.
I am an old guy and I am getting angry.
Government workers are like CEOs now.
I don't begrude an enterpenuer his or her coin for taking personal risk to bring a new product to the market his or her millions, but these people are just making it on the backs of their slaves and the spirit of Spartacus is still out there.
"...but these people are just making it on the backs of their slaves and the spirit of Spartacus is still out there."
Not enough of it! The day will come, however. Once the size of the pissed off mob reaches critical mass, there will be (as RoboCop puts it).. "Trouble".
So let's examine the opposing sides:
Blue Team: The mob is very large and, in the US at least, pretty heavily armed.They know their neighbours, know who is an asshole and who's a good guy. They know where all the back-country roads go, where there is fresh water and hunting. Which farmers and other producers will quietly support them with supplies. They are effectively the Viet Cong, or the Taliban.. pick your guerrilla army. They can blend into the civilian population at will. They wear no uniform, show no flag.
The Red Team: The PTB have the police, military and security services on their side, at least initially. This support will atrophy very quickly once these guys are asked to shoot kids and old people - not to zero (there are always a few assholes!) but they'll decline rapidly and the Blue Team will probably pick up some of their deserters as allies. They can control the official food, power, fuel and economic networks. They have at their control devastatingly effective weapons, surveillance assets and probably a ready network of informants (some folks are too addicted to the .gov sugar to ever quit it willingly). they also control the propaganda apparatus!
This means that any conflict -and let's hope it doesn't come to that! - will be asymmetric in nature. The Blue Team advantage is that they can play the guerrilla role for a long period. It's probably in their interests to do so, even, as over a long term the Reds will suffer ever greater desertion, depletion of (real) money and resources. Brutal repression of the 'terrorists' will gradually lose the Reds the support of many of the uncommitted masses, swelling the ranks of the Blue Team.
The only way the Reds can win a decisive victory is to throw the works at the Blues right from the start. Every weapon in the arsenal. Bio and chem weapons. Maybe tactical nukes. Drone strikes. Artillery bombardment. Air power. Naval strikes on coastal targets. You name it, they'll have to do it if they want to win.
The big question being: Do these fuckers really have the balls to do what's necessary to win? And will the guys who necessarily have to operate these weapons go along, once they know what they're being asked to do?
Btw, you understand BFSA(Blue Force Situational Awareness) are you or were you DoD/NSA/NSC?
The other question I would ask is do the "Red team" have the people to carry out what they want, I don't think that all their men will do what they want after they realise what is happening. (75% of military donations are to RP) This tells us that there are ALOT of awake people inside the military and police, and I think alot more are waking up as we speak. I am just an observer from NZ( everyone is asleep here we are so fucked it's not funny), but USA however bad it is, there looks like there is light at the end of the tunnel.
but these people are just making it on the backs of their slaves and the spirit of Spartacus is still out there.
__________________________________________________
Sour ending though. Very few slave rebellions in human history and Spartacus was not one.
>>they must like us.<<
Like us? They ARE us.
Pogo quote goes here.