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Spain: For Whom The Bell Now Tolls

Tyler Durden's picture





 

Via Mark J. Grant, author of Out of the Box,

“It is 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.”
 
               -Miguel de Cervantes, Don Quixote
 
It was not so long ago that I spoke at the “Strategic Forum” which was sponsored in part by TD bank. After my presentation about Europe where I had stated, quite clearly, that Spain would hit the wall I found myself accosted by the economist of one of Spain’s major banks. Fortunately Craig Alexander, the senior economist at TD, was walking next to me and as the quite impolite lady from Spain tried to verbally incase me in the famous “iron lady” of the Spanish Inquisition he grabbed my arm and led me out to the patio to speak with some other people and so saved me from not only the diatribe of the loca senorita but from saying several impolite things which I was about to say in retort. As I consider the latest data about Spain I think of this incident and take some delight in saying, “I told you so” or other things inadmissible in my commentary.
 
To use the analogy offered by Senor Cervantes I would say that Rodrigo, as representing Spain, is about to be devoured by the snakes. The central bank of Spain just released the net capital outflow numbers and they are disastrous. During the month of June alone $70.90 billion left the Spanish banks and in July it was worse at $92.88 billion which is 4.7% of total bank deposits in Spain. For the first seven months of the year the outflow adds up to $368.80 billion or 17.7% of the total bank deposits of Spain and the trajectory of the outflow is increasing dramatically. Reality is reality and Spain is experiencing a full-fledged run on its banks whether anyone in Europe wants to admit it or not.
 
The Spanish ten year now yields a 6.81% and their thirty year is yielding 7.34%. Spain has now set up a fund for its regions to tap of $22.6 billion and this, in my opinion, will not even be close to what is asked for or required with the regions needing some $50-75 billion in assistance in my estimation. Many of the regions in Spain are not paying suppliers or their other local debts and the situation is clearly out of control.
 
In October Spain has $25 billion in sovereign debt maturing plus will be adding new debt under their current plan so that the snakes are not only coming out from under the rocks but dropping from the trees. On top of this Bankia, late Friday, reported out bad loans of $8.24 billion and an operating loss of $5.58 billion causing the government to go into hyper-drive and promise to inject $5-6 billion into the bank immediately to prevent its collapse. If funds from the EU/IMF are to be utilized, which has been widely discussed, a very political problem arises. Bankia has issued preferred shares to many of their depositors and they would be wiped out if the European money is utilized under the current regulations which would cause Mr. Rajoy more than a few problems and could send people back into the streets. Then Spain has the highest unemployment rate in Europe, even higher than in Greece, with a 25.1% jobless rate. For those under twenty-five the job situation is extreme with a 53% unemployment rate.
 
"Was there ever a people whose leaders were as truly their enemies as this one?"
 
                  -Ernest Hemmingway, For Whom the Bell Tolls
 
The River Runs Dry
 
Between December of 2011 and the end of March 2012 the Spanish banks bought $109 billion of the Spanish sovereign debt. Much of this was facilitated by the ECB who lowered and lowered again the collateral rules and handed the money to the Spanish banks in such a size that bad things, very bad things will result if Spain hits the wall and defaults. Then since March, as forced by their own inadequate capital positions, the trend has reversed and the Spanish banks have sold $21.3 billion of Spanish sovereign debt with $11.7 billion in July alone as capital flees from the Spanish banks and the actuality of the balance sheets overcomes the “dynamic provisioning” that helped to cause the fantasy.
 
The friendly “suggestions” by national governments in Europe are also getting a push back from European buyers. BNP recently imposed a $12.5 billion debt limit by country and many other banks in Europe are following suit. BNP has reduced their sovereign debt holdings by 35% since June 2011. In July, the aggregate of sovereign debt reduction for all of the French banks was $8.7 billion as they took advantage of the ECB speculation to lower their holdings.
 
The Cries of Desperation
 
Spain’s Prime Minister’s rather comic call that his country’s heading into bankruptcy was a “victory for all of Europe” is more properly found in some Theatre of the Absurd. The recent rants and raves by the Prime Minister and the Finance Minister that the ECB should buy their debt without limit is an obvious last ditch Hail Mary pass before the plunge into the financial abyss begins. The ECB may not require audits of the national government or of the regional governments or the Spanish banks but the ECB pledge of Mr. Draghi is dependent, you may recall, on the EU and the various stabilization funds’ use and alone, or with the IMF, audits will be demanded by many countries and the results of the “dynamic provisioning” will be found to be just what I have asserted I would bet which is the juggling of the books for all three entities. The gasps for breath will be resplendent in Paris, Berlin and in Brussels and panic attacks will be on the rise in many European capitals. Spain has begun the well-worn “walk of shame” already traversed by Greece, Ireland, Cyprus and Portugal.
 
Forthcoming Events
 
There are some major flashpoints coming soon in Europe. One is the ruling by the German Constitutional Court on September 12 whether the ESM is legal in Germany or not. While it is widely expected that the High Court will go along with the program; who knows? On Tuesday, September 4, Draghi will release his “save the world” plans to the European Central Banks ahead of the next ECB meeting which begins on September 5. There is a huge and serious division between Mr. Draghi and the head of the Bundesbank. There were rumors last week that Jens Weidemann, head of the German Central Bank, might resign over the policies about to be proposed by Draghi. Here we have the troubled nations and the healthy nations of Europe locked in mortal combat in what could become a very serious situation. It is the haves versus the have-nots and where the needy countries have more votes as one nation after another has gotten into financial trouble. Draghi may well put the funding countries in such a position that local politics will not allow what is going to be asked of them and “refusals to fund” could be the result which would throw the ECB into chaos. I expect a very rancorous session at the ECB with potentially explosive results. Even if the outcome is muted by the connection to the EFSF and the possible ESM, the funding may not be available when all is said and done by the individual nations and so the ECB’s bond buying or other forms of Quantitative Easing may be stopped dead in their tracks by any form of help being appended to programs that may not function. I personally think that Draghi has vastly overplayed his hand and that expectations based upon his frothy comments may prove to be without merit.
 
Also this week we will get the release of Barroso’s ambitious plans for bank oversight. He will announce a Brussels type bureaucratic scheme where the ECB will oversee all of the banks in Europe. This would be one more blow to national sovereignty and I expect a major push back from a number of countries. Germany has already come out against the concept stating that the ECB should only regulate the 25 largest banks in Europe. The plan will be put on the table no doubt but here I think that whatever may come eventually will bear little resemblance to the proposal that will be soon released.  With the current trend in Europe becoming decidedly more nationalistic I think this new grand scheme will have little chance of success as proposed. 
 
The End of the “Muddle”
 
We are now at the virtual epicenter of the European Crisis where decisions will have to be made; avoidance is no longer possible. We have reached the end of the road where there is no more path left for can kicking. It is now and here and in the next few weeks where the rock and the hard place will converge and explosive political and economic consequences may result. The “future” has arrived in the “present!” “Now” is “Here.”
 
Greece---to fund or not fund and bear the costs and market reaction.
 
Spain---about to go bankrupt and to fund or not fund and how to do it. Expect quite serious reverberations in Spain and in Europe as the amounts of money involved are not trivial. The Firewall has been breached. Expect Firestorms.
 
Italy—soon to join the long line asking for alms.
 
The ECB---a major fight where the troubled countries will demand so much from Germany that politics in Berlin may not allow for giving what will be demanded of them.
 
The ECB---a grand plan to be put forth that will pit the Bundesbank against most of the other Central Banks in Europe.
 
"You only heard the statement of the loss. You did not see the father fall as Pilar made him see the fascists die in that story she had told by the stream. You knew the father died in some courtyard, or against some wall, or in some field or orchard, or at night, in the lights of a truck, beside some road. You had seen the lights of the car from down the hills and heard the shooting and afterwards you had come down to the road and found the bodies. You did not see the mother shot, nor the sister, nor the brother. You heard about it; you heard the shots; and you saw the bodies."
 
              -Ernest Hemingway, For Whom the Bell Tolls
 
There will be bodies.

 


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Sun, 09/02/2012 - 09:57 | Link to Comment selectricity
selectricity's picture

JPMorgan Estimates What Yield Levels The ECB Might Target On Spanish And Italian Bonds http://read.bi/PP7Ae7

Sun, 09/02/2012 - 10:07 | Link to Comment SilverDoctors
SilverDoctors's picture

If the ECB is going to cap Italian rates, they had better announce it before the 10 year crosses 7% again. 3 taps and out!
Will be interesting to see which implodes first, Spain or Morgan Stanley.  Jim Willie believes Morgan Stanley is imploding, and is a month or 2 away from bankruptcy!

http://www.silverdoctors.com/jim-willie-morgan-stanley-faces-imminent-fa...

Sun, 09/02/2012 - 10:09 | Link to Comment falak pema
falak pema's picture

tweedle dee and tweedle dum!

Sun, 09/02/2012 - 10:53 | Link to Comment THX 1178
THX 1178's picture

There will be bodies?

I...Eat...Your...Paella. NOMNOMNOMNOMNOM! I EAT IT UP!

Sun, 09/02/2012 - 14:45 | Link to Comment economics9698
economics9698's picture

Print some more bitches.

Sun, 09/02/2012 - 15:05 | Link to Comment Michael
Michael's picture

Under normal circumstances I’d say I told you so. But, as I have told so with such vehemence and frequency already the phrase has lost all meaning. Therefore, I will be replacing it with the phrase, I have informed you thusly.

— Sheldon, The Big Bang Theory
Sun, 09/02/2012 - 21:11 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Spain: For Whom The Bell Now Tolls

 

Better break out some airhorns......cause no one is paying attention to that crap.

 

Hey look equities are up.....everything must be going great!

Sun, 09/02/2012 - 12:22 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Guys, by now we have learned how Europe works.  

There is not EVER going to be a meeting and a march out to microphones where it is announced that "we can reach no agreement, it will all fail".  That is not how Europe works. 

What will happen is a meeting will be held by the ECB council, no agreeement will be reached, and they will march out to the microphones and announce:

"we had a great discussion and it is headed firmly towards full arrangements to lend money to individual countries while also seeing those those countries successfully reduce their deficit as a % of GDP.  Our meeting was hugely successful and we will see this success within a year.  The Euro is thus proven to be irreversible."

There is never going to be the big explosion moment.  They will claim progress and huge success right up til the day their salary stops arriving.

 

 

Sun, 09/02/2012 - 12:40 | Link to Comment falak pema
falak pema's picture

...right up til the day their salary stops arriving...

The USSR imploded, but those KGB shills still have their salaries paid under a another name. Putin is/was one of them. 

So I wouldn't bet on that occurring.

Europe can go that way like the USSR but we will still have the bureaucrats who will be required to build the new, new blue print for the future Union THAT DOES WORK! 

We are now truly heading to Oligarchy rule with super bureaucrats pulling the wool over our eyes that "governments are necessary at Euro level to balance their corpocratic power"; all the while they collect their paychecks from those very plutocrats they are supposed to regulate. 

Its a nice happy family, where God and the Devil sit side by side and exchange their masks like at the Venetian ball. Go  try tell who is who, not that it matters. Its your blood that is their life line. 

We need another Voltaire to ridicule their game and then a Danton who says "off with his two heads!

Sun, 09/02/2012 - 15:05 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Whereas your analogy may have merit, your specifics are not applicable.

The KGB may have kept getting salary under a different name, but that only happened because oil is the underpinning of Russia's success.

Europe has little, and what it has (up in the North Sea) is dying.

So, no.  The no salary moment can indeed happen in Europe.  They will just claim all is well and try to move headline reading algorithms right up until that moment.

Sun, 09/02/2012 - 15:07 | Link to Comment earleflorida
earleflorida's picture

:-))   __ `fP'

Sun, 09/02/2012 - 10:19 | Link to Comment BurningFuld
BurningFuld's picture

That's a good read. I think Morrgan Stanley was going to do a number on gold after Bernanke's last speach to try to save their ass, but there is some huge money that is not letting it happen anymore. (China) Feel the pain boys.

Sun, 09/02/2012 - 11:46 | Link to Comment unununium
unununium's picture

Jim Wille is hung up on the fact that liquidity cannot solve the problem.  He ignores the possibility that central banks can simply give money to the banks with no strings attached.  The Fed tabulates the balances of every wholesale and retail bank's account and creating or moving funds only requires a few keystrokes.  The Fed is not audited, so no one would ever know.

Central banks have already proven they are willing to hand money to banks free and clear:

 - Purchase of MBS at unspecified discounts (assume full par value) then quietly eat the losses (rolling 1.5T par value)

 - Promise to hold short term rates low for a specified period, handing banks the spread to treasuries of that duration.

 - Paying interest on fed deposits

... and these are just the schemes that one can discern from public information.  Who knows what else is going on?

 

Sun, 09/02/2012 - 12:53 | Link to Comment ElvisDog
ElvisDog's picture

Sorry, I'm suffering from Imminent Collapse Fatigue (ICF). I've heard too many of these breathless imminent demise predictions over the past four years. I'll believe it when one of these apocalyptic predictions actually happens on schedule.

Sun, 09/02/2012 - 21:29 | Link to Comment neptunium
neptunium's picture

I agree, If the blogosphere wasn't continually telling us that the world was about to descend into anarchy, where we'll sort through trash longingly searching for a half-eaten tin of dog food it'd just be a bunch of shit-boring economic fuckery. 

But the strange thing is, most of us are actually looking forward to some sort of crash, we are actually really excited about the prospect of something interesting happening for a change, we spend our entire lives enviously watching newsfeeds of disasters, riots, famines and civil insurrections mindful of the fact that for us in the west living average lives, the greatest curse we have is boredom and some part of our 3+ billion year genetic heritage of continual violence, fighting, fucking, and feeding senses that this isn't as fulfilling as we'd hoped. 

So bring it on, I'm stockpiling Pedigree..

 

 

Sun, 09/02/2012 - 10:46 | Link to Comment vmromk
vmromk's picture

Nothing that an asshole with a silo full of ink and paper couldn't fix.

Sun, 09/02/2012 - 10:01 | Link to Comment williambanzai7
williambanzai7's picture

/

Sun, 09/02/2012 - 10:08 | Link to Comment falak pema
falak pema's picture

The more money Draghi pours into those banks "to save Spain" the more money flows out to private accounts, and the greater is the bank hole that will one day have to be nationalised and ECB "bonded". 

This has to be a scene from a Three stooges movie. Even Hemingway could not have imagined such villainy being done without a single shot being fired! 

"Before we shoot your wife, your mother, and rape your daughter, we will first transfer our profits abroad and socialise our debts on the government balance sheets. Then the fireworks can begin!"

We are after all in the 21 st century and don't use vile 20 th century methods! 

Does Draghi have pointed ears ...and clawed toes like a vulture?

What a pierced wine barrel that is! 

Sun, 09/02/2012 - 21:17 | Link to Comment New_Meat
New_Meat's picture

Our Dear Ms. got junked for a . {dot}

You get (so far) seven greenies for a / {slant}.

I'm a'hopin' that this doesn't go to your head, don't cha' know.

- Ned

Sun, 09/02/2012 - 10:00 | Link to Comment williambanzai7
williambanzai7's picture

As long as it is an orderly withdrawal by wealthy citizens, corporations and politicians, it is not called a bank run...but the minute the little guys line up at the ATMs, heavens to Betsies!!!

Sun, 09/02/2012 - 11:34 | Link to Comment kito
kito's picture

That orderly withdrawl is what got the world into this mess......the elite sucking money and wealth OUT OF THE SYSTEM and into their hands......

Sun, 09/02/2012 - 17:13 | Link to Comment dogbreath
dogbreath's picture

why wait for the line ups to start

Mon, 09/03/2012 - 00:21 | Link to Comment andrewp111
andrewp111's picture

By definition, a bank run is a disorderly panic mass withdrawal. Sort of like happened to the Money Market Funds after Lehman failed. It lasted an hour with $250B withdrawn- until the FDIC put on a total guarantee and stopped the run. The current Spanish withdrawals are a very slow leak by comparison.

Sun, 09/02/2012 - 10:02 | Link to Comment Haager
Haager's picture

They will kick the can no matter what happens.

 

http://www.youtube.com/watch?v=eqS35BHIrzw

 

Time is marching on...

Sun, 09/02/2012 - 10:02 | Link to Comment Spastica Rex
Spastica Rex's picture

Ride the lightning, Spain!

https://www.youtube.com/watch?v=bg92QpjRcJk

Sun, 09/02/2012 - 10:07 | Link to Comment eigenvalue
eigenvalue's picture

Mark Grant doesn't mention his "NO MORE QE" prediction any more? Is it his tacit admission that he is wrong?

Sun, 09/02/2012 - 11:23 | Link to Comment i-dog
i-dog's picture

You don't mention your $2,830 gold prediction for August 2012 any more either (1534618)! Is that your tacit admission that complex systems can't be predicted with any guaranteed accuracy?

Sun, 09/02/2012 - 12:44 | Link to Comment Non Passaran
Non Passaran's picture

OUCH! +1

Sun, 09/02/2012 - 14:53 | Link to Comment kito
kito's picture

But I-dog, is it not you who called for the end of the dollar in just a few short months......i believe you wagered credibility with a side of fries.......you seem so certain about your prediction regarding such a complex system......

Sun, 09/02/2012 - 15:53 | Link to Comment Votewithabullet
Votewithabullet's picture

What you say can and should be shoved down your throat...

Sun, 09/02/2012 - 19:56 | Link to Comment eigenvalue
eigenvalue's picture

To be honest, I was actually kidding when making that prediction. However, I'm quite impressed by your good memory. I myself already forgot I made such a prediction before. Anyway, thanks for the reminder.:)

Sun, 09/02/2012 - 10:08 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture

I guess this devastating news means another fantabulous week for the Spanish stock market and bond yields.

Sun, 09/02/2012 - 10:10 | Link to Comment BurningFuld
BurningFuld's picture

Only way out is currency devaluation...say a 2 for 1 trade. Every country did it in the 1930's. Oh wait you need something to devalue against don't you? Well here is where a gold standard makes a bit of sense now doesn't it?

Sun, 09/02/2012 - 10:32 | Link to Comment The Paucity of Hope
The Paucity of Hope's picture

Before they return to a gold standard, they will confiscate the gold from the peasants.

Sun, 09/02/2012 - 14:59 | Link to Comment MrSteve
MrSteve's picture

But aren't peasants called peasants because they have no gold? Ergo, confiscating their non-existant gold is illogical and impractical. Other ZH reports on 28,000 gold buying shops in Italy seems to indicate that Italy is also pretty far down the road to collapse if the people have already sold out of their gold. What else could they have left?

Sun, 09/02/2012 - 16:59 | Link to Comment Ghordius
Ghordius's picture

Have you any idea how much gold private citizens hold in Italy? It's the UK and the US that have the lowest average personal possession among the rich countries.

Italians? A country of goldbugs second only to Turkey and India. Look at the statistics.

And they haven't forgotten the Lira. Poverty line used to be 1'000'000 Lira per month while popular songs about hoping to achieve 1'000 Lira per month were still not oldies.

Sun, 09/02/2012 - 18:02 | Link to Comment SamuelMaverick
SamuelMaverick's picture

aka 'cash for gold' stores in the good ol USA !!!!

Sun, 09/02/2012 - 10:53 | Link to Comment SilverDoctors
SilverDoctors's picture

BurningFuld- currency devaluation can aka gold revaluation- the last arrow in Bernanke's quiver.  I expect it's coming...this next QE will likely be the last before gold revaluation.

Sun, 09/02/2012 - 10:13 | Link to Comment apberusdisvet
apberusdisvet's picture

 I hereby nominate  Nigel Farage as the new supreme ruler of the Euroland.  Go kick some ass, Nigel.

Sun, 09/02/2012 - 10:23 | Link to Comment Ghordius
Ghordius's picture

>Groan<

Sun, 09/02/2012 - 13:36 | Link to Comment Hangfire
Hangfire's picture

We're only making plans for Nigel!

Sun, 09/02/2012 - 14:30 | Link to Comment Acet
Acet's picture

It would be really great if Nigel Farage was just as critical towards politicians and the elites in his homeland - Britain - as he is towards the EU.

Unfortunately his speeches are just playing to a certain kind of Brit, the kind that was trained to be unthinkingly Euroskeptic by Murdoch-owned newspapers and their ilk, which frequently publish such bulshit as for example saying that the EU regulates the curvature of bananas.

Effectivelly Nigel is a tool of a certain kind of elite in the UK that, having gained control of British public opinion, see the EU as the only risk to their dominance.

For all the bureaucratic clusterfuck that the EU often is, thanks to the presence of the likes of the Dutch, Germans and Nordics it has in fact passed a lot of legislation that has avoided the likes of Britain to trample all over it's own citizens' rights. Without the EU the UK would be far more advanced in its path towards totalitarianisms than it is.

As a Portuguese I can tell you it's even more so with regards to Portugal - if it wasn't for the EU there would be a lot more shit going on in my homeland than there is.

The Euro, on the other hand, turned out to be a shit idea.

Sun, 09/02/2012 - 17:03 | Link to Comment Ghordius
Ghordius's picture

+1 It's too early to say if it was a shiity idea, IMHO.

Sun, 09/02/2012 - 10:18 | Link to Comment max2205
max2205's picture

Like the eye of the storm. Will the weakened structure hold when the next winds begin.

At 20x ( and more like 40x) spain has lost 20 trillion of loan backing with 1 quarters worth of bank run outflow. Bad loans at that. Those will have to be called in or written off.

Even Ben can't do those numbers

Sun, 09/02/2012 - 10:33 | Link to Comment Jason T
Jason T's picture

Martin Armstrong had said his computer was jumping up and wishing it had legs so it could hide under itself from those outflow numbers..

he likenedi it to 1998 when LTCM went bust from outflows in Russia.

 

 

Sun, 09/02/2012 - 10:51 | Link to Comment americanspirit
americanspirit's picture

I guess the 64 Peseta question is - outflow to where? I have a friend in the investment business who tells me that he has direct knowledge of one Spanish group is quite frantically shopping the US for somewhere to put their $500 million in cash. That's quite an outflow. IMO they should just buy gold and sit on it very tightly - but I know nothing.

Sun, 09/02/2012 - 11:01 | Link to Comment tao400
tao400's picture

Martin armstrong also said gold would plunge

Sun, 09/02/2012 - 13:00 | Link to Comment delacroix
delacroix's picture

martin armstrong spent years in prison, at that hands of the club. he has to be careful, what he says. read between the lines. pay attention to the bolded text. he may be saying something, without outright saying it. jmho

Sun, 09/02/2012 - 18:07 | Link to Comment SamuelMaverick
SamuelMaverick's picture

I have read the last few writings of Armstrong and have sadly noticed that he has trouble getting his points across and seems to be ' off ' and somewhat incoherant.  His comments on gold just do not make sense. 

Sun, 09/02/2012 - 11:03 | Link to Comment unununium
unununium's picture

Querido España,

Les aconsejo que sigan nuestro ejemplo.

Atentamente,
Islandia (Iceland)


Mon, 09/03/2012 - 02:56 | Link to Comment Theosebes Goodfellow
Theosebes Goodfellow's picture

Querida Islandia,

Muchas gracias por el consejo. ¿Pero que vamos hacer con esos hijo-de-putas los Alemanes?

Sinceramente,

España

Sun, 09/02/2012 - 11:10 | Link to Comment Squid Vicious
Squid Vicious's picture

Insert Spanish word for bullish here ___

Sun, 09/02/2012 - 11:16 | Link to Comment Global Hunter
Global Hunter's picture

toro-ish?

Sun, 09/02/2012 - 13:49 | Link to Comment Bananamerican
Bananamerican's picture

Horny

Sun, 09/02/2012 - 11:27 | Link to Comment ebworthen
ebworthen's picture

torofluvic

toroific

torophilic

Sun, 09/02/2012 - 12:17 | Link to Comment machineh
machineh's picture

Ha ha ... he said 'torophallic' !

Sun, 09/02/2012 - 12:00 | Link to Comment Schmuck Raker
Schmuck Raker's picture

"Chingate Bernanke!"

Sun, 09/02/2012 - 11:29 | Link to Comment ebworthen
ebworthen's picture

Why can't the banks just do a couple keystokes and have the money there?

Why do any accounting at all?

There is nothing in money but numbers, computers can create numbers in the blink of an eye.

Why have a national debt?

Why don't these banks and governments just say the money is there, that there is no debt?

Then, tell people they have no more debt.

What is money anyway?

Jubilee.

Global reset.

Why not?

Are we going to have riots and war instead?

Sun, 09/02/2012 - 11:38 | Link to Comment dark pools of soros
dark pools of soros's picture

Only when maintaining the slave is more trouble than having him free will the debt chains be removed. And when they are, many will only find the freedom that brings starvation to their incapable hands while the rich dine unburdened.

Sun, 09/02/2012 - 12:02 | Link to Comment Schmuck Raker
Schmuck Raker's picture

That's some darkness

Sun, 09/02/2012 - 12:19 | Link to Comment machineh
machineh's picture

Better to keep the lights dimmed while dining on 'long pig' ...

Sun, 09/02/2012 - 11:31 | Link to Comment azzhatter
azzhatter's picture

how about everyone have a personal jubilee. Load up your cards and tell the bankers to suck juice. Bring the fuckers down

Sun, 09/02/2012 - 11:43 | Link to Comment yogibear
yogibear's picture

Right when their ready to loan freely and have laxed rules take all you can and convert to offshore investments in safer assets.

Tell the banksters to suck eggs and default. When enough people with assets do this the banksters can suck the big one.

Sun, 09/02/2012 - 23:03 | Link to Comment dark pools of soros
dark pools of soros's picture

That's why they keep track of your money more than your kids when you leave the country - if you sold a kid they are more concerned on taking a cut than finding the runt

Sun, 09/02/2012 - 11:35 | Link to Comment Gordon Freeman
Gordon Freeman's picture

One-Trick Grant rides again!  Chaos is upon us!  The guilty cannot hide any longer, nor escape the vengeful wrath of the cosmic order!

What a load of crap.  If recent history has taught anything, it is precisely that can-kicking can go on many, many times longer than the doonsayers can even imagine.  I don't think it's right or fair, but it is reality.

Directional bets on the imminent End of the World is a sure ticket to the poorhouse.

Sun, 09/02/2012 - 13:48 | Link to Comment Bananamerican
Bananamerican's picture

Sure. They'll be fine for quite some time....

The monee WILL come...from somewhere...

The Spanish kids will cool their collective heels, en masse, indefinitely.....

Any transitions will be handled smoothly and effectively.

Carry on.

Sun, 09/02/2012 - 16:04 | Link to Comment Votewithabullet
Votewithabullet's picture

...see how easy that was? Attitude is 90% of the fight.

Your asked to give.

Your asked to give.

Your ass gonna give.

Sun, 09/02/2012 - 16:06 | Link to Comment Gordon Freeman
Gordon Freeman's picture

Your sarcasm is magical thinking.  Do you see evidence of the imminent demise of the status quo?  If so, time to show 'em, Lumpy--'cause I'm calling.

Sun, 09/02/2012 - 16:48 | Link to Comment Bananamerican
Bananamerican's picture

"what a load of crap"

Sun, 09/02/2012 - 23:35 | Link to Comment Bringin It
Bringin It's picture

Gordo - re. evidence of TIDOTSQ - How's this?

An Israeli attack on Iran would delay but probably not stop its nuclear programme, the most senior US military officer has claimed. General Martin Dempsey reinforced Washington’s opposition to unilateral Israel military action as he made clear that US military chiefs were equally wary of getting ensnared in Syria.

(…)

Distancing himself from any Israeli plan to bomb Iran, Dempsey said such an attack would “clearly delay but probably not destroy Iran’s nuclear programme”.

He added: “I don’t want to be complicit if they [Israel] choose to do it.”

http://www.outsidethebeltway.com/joint-chiefs-chairman-an-israeli-attack...

A different take

http://www.haaretz.com/blogs/west-of-eden/general-dempsey-is-complicit-i...

Sun, 09/02/2012 - 11:48 | Link to Comment mind_imminst
mind_imminst's picture

Greece was supposed to cause the collapse of the Euro 2 years ago. If Greece's semi-default and collapse of their economy was not enough to stop the central planning freight train, Spain will not either. Central bankers and planners will just do more of the same. Printing, papering over, borrowing, kicking the can.... The vast majority of the world's population could care less that their wealth is being stolen. As long is there is food on the table, they will go along with central planning tyranny. "Smart" investors and trades who "see through the facade" will continue to get crushed. Just like the last couple of years.

Mon, 09/03/2012 - 08:36 | Link to Comment mvsjcl
mvsjcl's picture

"...semi-default..."

Is that like "almost pregnant?"

Sun, 09/02/2012 - 11:57 | Link to Comment gnomon
gnomon's picture

Mount Vesuvious burped and rumbled and lulled Pompeiians into an ashen death.  Since the Fall of 2008 I have never let my guard down.  And I am continually shoring up my defenses, financial and otherwise.

We are on a razor's edge, like it or not.  And if you stay out of the government sponsored (and rigged) casinos, all will be well, (as well as it can be).

Sun, 09/02/2012 - 12:00 | Link to Comment Peter Pan
Peter Pan's picture

This whole situation conjures up an image of an overladen rubbish truck struggling to go up hill when suddenly it's about to run out of fuel and its brakes are also about to fail. If you aren't holding gold and/or silver then you must be the poor unfortunate bastard who happens to be stuck in his car behind the truck without an overtaking lane.

Sun, 09/02/2012 - 12:28 | Link to Comment TheSilverJournal
TheSilverJournal's picture

Europe will have access to an unlimited printing press Sept. 12. Any liquidity problems can be postponed with the printing press. The can can be kicked down the road until hyperinflaton.

Sun, 09/02/2012 - 15:13 | Link to Comment MrSteve
MrSteve's picture

No need to wait until the 12th, they have infinite access to cash via New York and the FRB backing swaps as we have already seen when the euro banking system got too tight. August 5 saw R.D.Shell announce it was pulling its holdings out of euro-based banks, except for local daily cash management requirements. All of Europe is being hit by bank runs. Meanwhile, Americans sleepwalk through the nightmare, with the preview screening in Europe right now.

I like your closing street rap about the Parisian dance, "The can can be kicked down the road....". That be kickin' !!!

Sun, 09/02/2012 - 23:45 | Link to Comment Bringin It
Bringin It's picture

The most astounding thing about this whole turn of events is the astounding complacency of the mass of people.

No one looks past their nose.  Everyone thinks they can get ahead with just one or two more spins on the hamster wheel, when what they really need to do is get off the wheel and let it stop spinning.

Amazing!

Sun, 09/02/2012 - 12:57 | Link to Comment FutureShock
FutureShock's picture

We haven't seen any real printing yet, just getting started, Banks HAVE to keep on kicking.  Us wants it in Eu... everyone wants it.

Lending must be slowed with the printing  reduce volume liquidity and fractional insaneness, that is the key to controlling hyper inflation. Business will be smarter to use cheap loans even when they have the cash it but it will not be that easy, the Fed will offer better rates to the banks.

Wild guess but the smart/stronger countries will leave the Euro first, lower the Euro value and owe less and survive Germany? I am looking for that change. Gold will be up and then down, The next down could be the real time but we should push $1900 soon I would think.

Anyone know any possible way to hold physical (coffee can) and still treated as an IRA? take tests? license?

And how about re-financing my home in Euros? anyone?

Sun, 09/02/2012 - 13:01 | Link to Comment RiskAverseAlertBlog
RiskAverseAlertBlog's picture

One wonders if Weidmann's rumored departure was for internal German consumption alone (i.e. the constitutional court). One also wonders what treacherous Timmy over at Treasury and his sophist sidekick at the Fed might have up their sleeves.

Sun, 09/02/2012 - 13:02 | Link to Comment MillionDollarBoner_
MillionDollarBoner_'s picture

"an orderly withdrawal by wealthy citizens, corporations and politicians"

Well spotted, William. It's what all the can-kicking is for...so the "important" people can get theirs out before the rush.

Democracy, Bitchez!

Sun, 09/02/2012 - 13:32 | Link to Comment Zero Govt
Zero Govt's picture

"...Barroso’s ambitious plans for bank oversight.... a Brussels type bureaucratic scheme where the ECB will oversee all of the banks in Europe."

absolutely fantabulous

the ECB's Stress Tests 1 and 2 were such a roaring success at overseeing the European banks they were bankrupt before the ink was dry 

national regulators have failed miserably and so too have pan-European. But no matter, yet more regulation is coming down the pipe because in the public sector abject failure must be repeated ad nusium 

Madness is repeating the same action and expecting a different outcome. Einstein

the EC makes the Mad Hatter look like a serious intellectual, bury these clowns, Stop Paying Your Taxes

Sun, 09/02/2012 - 13:39 | Link to Comment q99x2
q99x2's picture

Interesting. Europe with the different countries and all. I wonder if they will keep giving money to bankers, watch their economies crumble as they do and watch the banksters move the money out of the countries into their private accounts. Seems disturbing that groups of humans will sit back and watch this happen to them. Help.

Sun, 09/02/2012 - 13:50 | Link to Comment gHoldit
gHoldit's picture

FS. Sterling-trust. Can do self directed IRA and send the phys there. It's a vault. I guess it's a counterparty, but at least you can audit. I send a few scratched maples so I could see them on the lil camera they have. Some here, and some in the shipwreck I guess. Only way to roll dig Ira to phys. Can even go to your dealer to pick the coins, but you can't touch :-)

Sun, 09/02/2012 - 13:53 | Link to Comment steve from virginia
steve from virginia's picture

 

 

Between December of 2011 and the end of March 2012 the Spanish banks bought $109 billion of the Spanish sovereign debt. Much of this was facilitated by the ECB who lowered and lowered again the collateral rules...

 

Spain is experiencing a full-fledged run on its banks whether anyone in Europe wants to admit it or not.

 

When the central bank is insolvent because it makes/appears to make leveraged/unsecured loans there is no lender of last resort. No lender of last resort and there is no guarantor for deposits. If all institutions are insolvent the currency which represents these things is worthless.

 

Capital flow is from bank account => account at another bank => account in another country => account in another currency => out of currency into durable good/asset. Unsurprisingly gold price is increasing during deflation.

 

If Draghi institutes direct bond-buying the runs will accelerate and there will be nothing to stop them.

 

 

Mon, 09/03/2012 - 00:08 | Link to Comment andrewp111
andrewp111's picture

If this happens, the EU heads of state will have an emergency conclave in Rome, and they will appoint a Dictator to exercise absolute sovereignty over Europe. The New Roman Empire will be born.

Sun, 09/02/2012 - 14:27 | Link to Comment Bruce Krasting
Bruce Krasting's picture

Great writing Mark.

Sun, 09/02/2012 - 14:46 | Link to Comment marketblip
marketblip's picture

Yes, Spain is important but let's not forget September is make or break for the Eurozone!

http://www.marketblip.com

Sun, 09/02/2012 - 15:09 | Link to Comment Nachdenken
Nachdenken's picture

Rajoy has just put forward a three phase plan for a European Fiscal Union, ending in 2018, with Eurobonds.  The report is in German -

http://www.n-tv.de/politik/Spanien-stellt-Euro-Plan-vor-article7116706.html

The Spanish plan will save Europe, what are we worried about?

Sun, 09/02/2012 - 16:12 | Link to Comment elwu
elwu's picture

"Between December of 2011 and the end of March 2012 the Spanish banks bought $109 billion of the Spanish sovereign debt"

 

Thanks, Mr. Draghi and Mr. Sarkozy!

Sun, 09/02/2012 - 17:51 | Link to Comment oogs66
oogs66's picture

Bet Spain does not go bankrupt!

Sun, 09/02/2012 - 20:28 | Link to Comment deflator
deflator's picture

Are you, "in the know" be cause only government officials(and their private sector benefactors) are, "in the know".

 

 I am betting, based on what I am seeing, that there will be chaos in Spain. This will cause an immediate Control-P reaction by ECB.

 

http://www.youtube.com/watch?v=2zjADAK4ODg&feature=related

Sun, 09/02/2012 - 19:28 | Link to Comment deflator
deflator's picture

 Just an, "on the ground observation" but I have been to two different stores today and both times there have been Spanish people going in and out of the store at the same time as me here in Germantown , TN. Could be a coincidence? At Kroger the couple was driving a 2012 4 door BMW and the woman said something to her husband in Spanish about my eyes. Just awhile ago I was going into the convenience store just as three 20'ish females and one 20 something male was coming out. I asked if they saw the huge rainbow just over their shoulder and it was then that they began speaking Spanish after they looked and said."ahhhh".

Sun, 09/02/2012 - 19:35 | Link to Comment chump666
chump666's picture

C'mon Germany grow the balls.

Look, you have two ex Goldman Sach buttnuts, both Italian, that doesn't matter, but lets face it, Italy is a f*cking basket case. And Goldman is a legalized mafia backstopped by the Fed.  Running the show.

The PIIGS will all go into a stagflation hell, because there governments are f*cking stupid, once oil goes back over 100 as Bernanke goes QE3 light, and the ECB is about to go nuclear on bond buying and officially becomes a rogue governing body.

Forget the equity markets, we go 3-5% neg (it's primed in Sept anyway), it's nothing, Bernanke's put is 12411 on the Dow, no one will blame you when markets sell off, they are 95% machines that attempt (daily) to strip big players foolish enough to buy above the HFT supports.

You either allow Europe to re-balance it's economies with a deflation in assets and yes some pain, but you'll be stronger in the long run.  Or get conned by central bank stooges that will ignite the beginnings of world war three, turmoil, food riots, social unrest and complete and utter chaos.

 

 

Sun, 09/02/2012 - 21:15 | Link to Comment New_Meat
New_Meat's picture

Sr. Potter is dusting off his corpse, with this new, target-rich, environment revealing itself. - Ned

Sun, 09/02/2012 - 22:02 | Link to Comment Gamma735
Gamma735's picture

De-mock-racy for sale.   Management will pay any price for a new central banking facist system.

Sun, 09/02/2012 - 22:58 | Link to Comment jerry685
jerry685's picture

So out flow to the safty of US tresuries ? FR off loading before they raise rates...and drop bond prices...?

Tue, 09/04/2012 - 01:55 | Link to Comment Elikal
Elikal's picture

Adorno once said: "There is not right life in the wrong". (Es gibt kein richtiges Leben im falschen.) Meaning: We do not have a banking crisis, a debt crisis, a rich vs poor issue,, an education crisis or whatever you my cite: we have a fundamentally and entirely wrong sort of society. The entire system itself is wrong. Not alone or not so much morally or ethical wrong, that too: but dysfunctional, essentially self-destructive. It is like an ever accelerating centrifuge, which blasts itself as society apart. Our western, modern society model creates super-egoism, atomization and a man-eats-man everybody for himself mentality. It creates neurosis and psychosis, and is in itself a sick system. The debt crisis is just one result that is at the moment the most visible one. Therefore there IS no "solution". And I see no power to transform or bring it down. It must go through the entire, destructive cycle until it TOTALLY and profoundly breaks down back to a tribal state from where a new society can grow. Alas the natural fall is prolongued by elites who do not realize this truth and masses, who are in apathy.

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