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Spain Yield Back Above 7%

Tyler Durden's picture




 

Summit full life: One week. Literally. Last Friday morning speculation that Germany had "caved" to Mario Monti, somehow allowing beggars to be choosers, and would allow an unconditional and IMF-free rescue of Spain and Italy while the seniority of the ESM was eliminated, sending the Spanish 10 Year yield to under 6.2%. The same security is now back over 7%, where it was just before the summit, as Finland and Holland (or half of Europe's AAA-rated countries), and even Germany, made it quite clear, as we said all along, that stripping seniority of a piece of debt is far more complex than saying one wants to do it in a Memorandum of Understanding. The other thing pushing Spanish spreads wider was German FinMin spokesman Kotthaus saying that no decision on Spain can be taken on Monday as there is no Troika report on Spain bank aid yet, and that the European bailout activation, which was supposed to begin on July 9th, may be delayed until July 20. At that point it will likely be delayed again, only this time GSPGs may be trading wider than their lifetime highs of 7.285%. Finally, adding insult to Mario Monti "victory" is that Merkel's popularity rating just hit a multi-year high. So: who was last week's summit "winner" again?

And just in case there is any confusion about why the European Union is the biggest possible misnomer:

Finland would rather exit euro than pay for others: Jutta Urpilainen, Finance minister

 

HELSINKI: Finland would consider leaving the eurozone rather than paying the debts of other countries in the currency bloc, Finnish Finance Minister Jutta Urpilainen said in a newspaper interview on Friday. 

 

"Finland is committed to being a member of the eurozone, and we think that the euro is useful for Finland," Urpilainen told financial daily Kauppalehti, adding though that "Finland will not hang itself to the euro at any cost and we are prepared for all scenarios."

 

The finance minister stressed that Finland, one of only a few EU countries to still enjoy a triple-A credit rating, would not agree to an integration model in which countries were collectively responsible for member states' debts and risks.

 

She also insisted that a proposed banking union would not work if it were based on joint liability.

 

"Collective responsibility for other countries' debt, economics and risks; this is not what we should be prepared for," Urpilainen said.

 

Urpilainen acknowledged in an interview with the Helsingin Sanomat daily that Finland "represents a tough line" when it comes to the eurozone bailouts.

 

"We are constructive and want to solve the crisis, but not on any terms," she said.

 

As part of its tough stance, Finland has said that it will begin negotiations with Spain next week in order to obtain collateral in exchange for taking part in a bailout for ailing Spanish banks.

 

Finland has also voiced concern about an agreement reached at an EU summit in Brussels last week to use the European Stability Mechanism (ESM) to buy bonds to ease the unbearable borrowing costs which are squeezing Spain and other vulnerable eurozone economies.

 

And last year, Finland created a significant stumbling block for the eurozone's second rescue package for Greece, agreeing to take part only after striking a collateral deal with Athens in October 2011.

 

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Fri, 07/06/2012 - 06:57 | 2591148 mrkolice
mrkolice's picture

btw, slovenia 6.74%

Fri, 07/06/2012 - 07:33 | 2591188 Cast Iron Skillet
Cast Iron Skillet's picture

Oh, man! Double-plus up-arrow for the Finns!! I'm getting an urge to immigrate ...

Fri, 07/06/2012 - 07:00 | 2591149 SeverinSlade
SeverinSlade's picture

Europe, you've just been fucked.

Fri, 07/06/2012 - 07:32 | 2591187 LeBalance
LeBalance's picture

please discuss when that action ever ended.

Fri, 07/06/2012 - 07:01 | 2591151 fonzannoon
fonzannoon's picture

My guess is we get 105k jobs today and you hear "upward trajectory" all day. Equities will be just fine. Gold will be off $50 by lunch. Now that it no longer serves as a safe haven or a risk on asset the msm will cease to talk about it going forward. Energy prices will continue their drop since actual demand is dropping (also bullish for equities).

Ironically qe talk will pick up again in the fall, because complaints of an extroadinary strong dollar is hampering the economic recovery.

Fri, 07/06/2012 - 08:18 | 2591261 disabledvet
disabledvet's picture

Qe talk a LOT sooner as "all our bad bets in Europe mean the taxpayer must make us whole" again. Pure evil down there. This war in Syria can't come soon enuf.

Fri, 07/06/2012 - 08:41 | 2591332 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Oil prices dropping have been bad for equities.  From 2007 to 2009 oil prices fell harder and faster then equities.

Fri, 07/06/2012 - 07:01 | 2591152 GerritB
GerritB's picture

The dutch will bring them to court if they use their tax money to fix banks. Next september the people will vote against the EU and then the ESM changes will not pass.

 

Fri, 07/06/2012 - 07:02 | 2591153 Debtless
Debtless's picture

Can the whole fucking system just implode already, so we can all move on with our lives please.

Thanks much.

 

- Crisis fatigue

Fri, 07/06/2012 - 07:06 | 2591161 jay28elle
jay28elle's picture

No, silly... everything is fine.  The equity markets say so. 

Fri, 07/06/2012 - 07:19 | 2591174 DogSlime
DogSlime's picture

Relax - Europe's leaders will hold a crisis summit and everything will be fine.  Everything was fine after the last summit... and the summit before that... and the one before that.

Fri, 07/06/2012 - 07:27 | 2591184 bank guy in Brussels
bank guy in Brussels's picture

Main fact at the moment is that it is European holiday and long vacation season ... Brussels gets very pleasant with so many people out of town.

The ongoing series of 'crisis fixes', not to mention Euro-geddon or Eurocalypse etc., will likely be delayed till at least September when Europeans are back from holiday-making.

Generally at least five weeks vacation here ... and not much can get done if you are back from your time on the Riviera, but other people are taking their several weeks' holiday.

Fri, 07/06/2012 - 07:33 | 2591189 fonzannoon
fonzannoon's picture

I thought the whole point of a crisis was that you did not get to plan it.

Fri, 07/06/2012 - 07:26 | 2591182 negative rates
negative rates's picture

Pretty cool, think i'll buy 6 months worth.

Fri, 07/06/2012 - 07:03 | 2591154 timbo_em
timbo_em's picture

Quick, we need another summit!

 

btw: Spain's average coupon is less than 4 percent.

Fri, 07/06/2012 - 07:05 | 2591157 hugovanderbubble
hugovanderbubble's picture

STOP ESM

ACCEPT DEBT HAIRCUTS

 

Fri, 07/06/2012 - 07:06 | 2591159 Global Hunter
Global Hunter's picture

the summit winner is "zee price stabiliteee" guy

Fri, 07/06/2012 - 07:06 | 2591160 mark7
mark7's picture

Vulture funds from London and New York are behind this bullshit. They attack those bond markets which are quite thin. Fundamentals are way worse in the US, government debt skyrocketing (100 percent GDP vs. 70 percent in Spain) and the real unemployment rate close to Spain. Spanish export sectors btw hit all time monthly record high in March this year, so it is not all gloom and doom in there.Markets are underestimating the depth of crisis in the US and overestimating it in the eurozone.

 

Fri, 07/06/2012 - 07:12 | 2591167 GeneMarchbanks
GeneMarchbanks's picture

Nothin' but the price propaganda mechanism in action. The power of suggestion at work, throw away 'fundamentals' and the rest of it.

 

Fri, 07/06/2012 - 07:30 | 2591186 kridkrid
kridkrid's picture

It's a trap! Don't fall for the bs that bond vigilianties are "evil ne'er-do-wells" somehow responsible for the demise of a thing. The US may be worse, but they can "buy" their own crap, or now. Everyone has stage 4 cancer. Everyone will go down, more or less together. It is just math.

Fri, 07/06/2012 - 07:07 | 2591162 HellZero
HellZero's picture

Weren't Goldman advocating go long spitalian bonds?

Fri, 07/06/2012 - 07:11 | 2591166 timbo_em
timbo_em's picture

Indeed, they were. This advice to their clients must have created a huge profit for their prop trading desk. I did not see this coming ^^

Fri, 07/06/2012 - 07:11 | 2591164 Caviar Emptor
Caviar Emptor's picture

Lucky for US that Spain is in worse trouble. TPTB can use that schadenfreude to keep merican sheeple quiet "see, things can always be a whole lot worse, u got it good"

Fri, 07/06/2012 - 08:08 | 2591238 Peter Pan
Peter Pan's picture

Hey Caviar, I hate to tell you this but all these nations carrying on remind me of someone trying to run a beauty contest in a hospice full of dying patients. One by one all the nations of the world will fall off their economic perch and the for that brief moment that they feel triumphant as they do their droppings on those below, they should instead ponder the aftermath and whether leaders will be leaders or whether they will continue to serve the interests of those who caused their nations to fall.

Fri, 07/06/2012 - 07:12 | 2591165 Caviar Emptor
Caviar Emptor's picture

Dupe

Fri, 07/06/2012 - 07:18 | 2591171 milanitaly
milanitaly's picture

Merkel is the winner if europe goes bad. Great winner. Hitler won in the same way.
And there are people happy. Nice.

Fri, 07/06/2012 - 09:27 | 2591534 GMadScientist
GMadScientist's picture

Pay your bills.

Fri, 07/06/2012 - 07:22 | 2591177 luckylongshot
luckylongshot's picture

Lord, please let currencies in their death throes die quickly

Fri, 07/06/2012 - 07:25 | 2591180 bdc63
bdc63's picture

"So, who was last week's winner again?"

... clearly it was the world's equity markets ... short lived as it may be ...

Fri, 07/06/2012 - 07:51 | 2591207 Peter Pan
Peter Pan's picture

Greece has always been in a state of civil war. In ancient times the city states were always at each others throats and during their war of independence in 1821 they were as busy feuding between themselves as they were fighting the Ottoman Turks. And then after WWII the right wingers and the communists were at it again with a vengence to match anything seen on the planet.

But let us not be too critical because civil wars have been going on in Libya, Syria and eventually even in the USA if people get desperate.

Mind you I don't know what is civil about civil wars.

Fri, 07/06/2012 - 07:52 | 2591206 Hype Alert
Hype Alert's picture

Finland should be a model for all of us.  Why are we having to bail out the people (banks and individuals) that made bad decisions?  Moral hazard isn't even mentioned anymore.

Fri, 07/06/2012 - 07:57 | 2591218 Peter Pan
Peter Pan's picture

Buddy you are spot on. When their is a humanitarian disaster as a result of famine etc it"s like pulling teeth to get sizeable aid in the millions but if any banks are in trouble untold billions and trillions come out of nowhere.

The hypocrisy is sickening.

Fri, 07/06/2012 - 09:25 | 2591526 GMadScientist
GMadScientist's picture

Finland's public sector is large, comprising about half of the GDP. Practically all health and education services are provided by the public sector. Even though this model could be called socialistic, it is very effective. High quality health care is available for all, and this costs only 7,5% of GDP (e.g. in USA the costs is 16%). Also education is free, and the quality of education especially in primary and secondary schools is among the best in the world.

Because of the large public sector, tax rates in Finland are high. Typically employees pay approximately 30% income tax, but the rate is heavily progressive, and can be much less with low salaries. Also the mandatory payments to various pension and other funds by both employer and employee account for about one fifth of actual salary. Additionally general VAT is 23% and there are also corporate taxes.

Fri, 07/06/2012 - 07:52 | 2591209 youngman
youngman's picture

This is good for USA Pensions..they need 8% to survive..and they can buy these for a close 7% return....and all the fat cats in retirement can have their dream fulfilled...

 

What is really funny is that the numbers are getting worse around the globe...but no one seems to care anymore....stocks are up..gold is down..someone keeps buying all the bonds that are offerred...I would think by now we should have some failed bond auctions by now.. all is good..

Fri, 07/06/2012 - 08:00 | 2591225 Peter Pan
Peter Pan's picture

Everything IS fine if we allow the illusionists to bend reality. But the trance cannot last forever and when we snp out of it it will be too late.

Fri, 07/06/2012 - 08:03 | 2591229 falak pema
falak pema's picture

...So: who was last week's summit "winner" again?...

What a dumb question, as we all know its neither Monti NOR Merkel, its the crazy rigged market.

The same that will go belly up if this whole thing explodes in the longer run. How short term manic speculative plays makes the HF mice blind to the cliff up ahead! 

Where oh where shall I stash my fiat money?...What a nightmare to be rich today; greed and fear the two uber-tits feeding irrational exuberance and manic Mr M – Eine Stadt sucht einen Mörder - panic. 

Lol, ask those poor in Syntagma square. 

Fri, 07/06/2012 - 08:07 | 2591235 yogibear
yogibear's picture

Sorry, cheap money isn't working anymore. Everyone that has the ability to pay and wants a loan already borrowed.

Those that cannot pay and want a loan are the only ones left.

A decisive moment in history for many living beyond their means!

Fri, 07/06/2012 - 08:11 | 2591247 Peter Pan
Peter Pan's picture

Cheap money is about as effective as chep wine.

Fri, 07/06/2012 - 09:20 | 2591502 GMadScientist
GMadScientist's picture

It's fungible. Refill their bottles of Bollinger with swill when they're not looking. Turn-about is fair-play eh wot?

Fri, 07/06/2012 - 09:19 | 2591498 GMadScientist
GMadScientist's picture

I don't believe jello wrestling necessarily has "winners".

Fri, 07/06/2012 - 23:32 | 2594112 InfinityZero
InfinityZero's picture

I would like to understand why the 7% is so dangerous, anyone ?

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