The Spanish Bailout In Context

Tyler Durden's picture

In the context of the last 20 years of banking crises, the #Spailout would rank in the middle on the basis of cost relative to GDP. Despite all the talk of its size relative to some self-diagnosed capital needs, we wonder if EUR100bn is enough, and as JPMorgan's Michael Cembalest notes: given conditions in Spain, it might need to be higher. Other reservations include the implied subordination of government bondholders, since the EU presumably sees itself as a preferred lender to the Spanish government - which ha snow been pretty much confirmed by ISDA. Spain’s private sector is still in tough shape, so Spain may still have to opt for a sovereign rescue package in excess of EUR300 billion this year or next. In any case, this latest step does not otherwise change the cautious view the JPM CIO has on Spain given low growth, inter-regional capital flight and rising debt burdens across the Periphery.


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uno's picture

what ever happened with that new world thing Spain discovered, it had limitless gold, silver and slaves.

ACP's picture

And the Spanish Inquisition!

Nobody expects the Spanish Inquisition!


Motorhead's picture

One more word out of you, ACP, and it's the Comfy Chair for you!

boiltherich's picture

Something most people do not understand, the wealth, and there was a LOT of it, that the Spaniards took from the new world did little more in Spain once it crossed the Atlantic than to queue tremendous inflation. It actually harmed the Spanish economy far more than it helped it.

When you have a fiat money system and you suddenly double the currency in circulation the result is massive inflation, over a hundred years or so if you have 100 times the money printed up just think of the economic catastrophe that would imply.

Well, in a coinage/precious metal system the same is true. Posters here who think inflation cannot happen where gold and silver and other precious hard assets are the monetary system say you can't print gold. But what if the money system is based on precious metals and such and you COULD print it? That in effect is what the Spanish did when they took it from the Americas. And it was doubly harsh for 99% of the Spanish who had no access to PM's or wealth but dealt in the margins with low value copper coins. The wealth of the new world flowed to the crown and they in turn rewarded their nobility, but almost nothing went to the rest.  A similar problem happened in the USA when gold and silver were discovered in California and Nevada.

Another thing that people don't think of, when you see a shipwreck salvaged and the cargo is worth billions in modern terms, just a few casks of emeralds and a few chests of gold and bingo, legal fights between the finder, the Spanish government, the government of the island nearest to the wreck, the insurance company that paid off in the 1500's, everyone wants a chunk, but there were tens of thousands of cargoes that returned safely to Spain and all the wealth they carried is still in existence. Clearly there is no way to value the total take of just Spanish conquest in the Americas, but it would easily be in the trillions. The government, the crown, the wealthy remnants of the aristocracy, much of that wealth is still squirreled away. One wonders why they are not asked to pay taxes upon that wealth. There is enough Columbian emeralds in Spain to pay off all government debt and make the banks solvent.

HomeBrewPrepper's picture

They do make pretty light skinned Mexicans. The rest are just indigenous

walküre's picture

The Brits were better pirates before they settled on Wall Street and became Americans.

There's no rule of law, never has been. It's all bogus and ficticious. The pirates hired the lawyers to write the laws so they could do their dirty work in broad daylight. Pirates and lawyers either became politicians or voted their friends into office so they could organize entire nations.

Strip away the pomp & glory, the "national" symbols and "institutions" and what you have is a system that established the rule of pirates and shysters.

We need to go way back to make adjustments.

The trend is your friend's picture

bailout money to make interest payments on existing debt without haircuts (or payments to hit the principal) is like borrowing money from one credit card to pay for the balance on another.  My 8 year old gets it, why don't these ivy league idiots?

JackT's picture

I was going to try to be the first to say something witty..but at this point it's just a damn mess.

HomeBrewPrepper's picture

Grab your pm folks, print to q-finitey is under way.

Move on nothing to see here.

When is the can to big to kick?

Vegamma's picture

I love the countries that made the graphic more than once! They certainly learned their lesson. The question is, which lesson did they learn?

mayhem_korner's picture



Lotsa World Cup contenders; maybe they've been told that if they make the chart three times they get to keep a trophy.

insanelysane's picture

Just need to kick the can a little longer so Germany has time to print up a fancy looking new currency.

kito's picture

germany will not abandon the euro, nor will austria, finland, belgium, estonia, luxembourg, netherlands or slovenia. the rest are gone. the euro will absolutely come out of this leaner and meaner. the currency will be where everybody wants to be after europes problems are worked out and the u.s. moves into the radar screen.....

walküre's picture

So Germany has to acknowledge all the foreign debt in Euros and try and collect on the Euro debt from the periphery?

Quatsch. Unmöglich.

Germany is at a crossroads. Either go down with the ship when everyone else is jumping or cut the losses and watch the sinking from her own lifeboats.

Wood's picture

No the new mark will be convertible to gold. Gold will clear the transition from euro to marks.

insanelysane's picture

Germany will abandon the euro and leave it to France and the rest of the countries that need Ctrl-P.  This is how it goes down.

One morning the world wakes up and the German borders are closed.  German banks have changed all of their bank accounts from Euros to Marks.  German citizens have a day or two to exchange their Euros for Marks.  Borders reopen.  Marks trade at current rate of EURUSD, maybe a little better.  EUR falls at least 20%.

Non Passaran's picture

Sounds sane to me. Dealing with the deadbeats is a never-ending trouble.

Germany, no country, has years to screw around with PIIGS while the socialists in France are lowering retirement age and introducing laws that ban layoffs. Eurozone countries that still have some chance of paying back their debts should get their act together and soon.

kito's picture

if germany switches back the mark, austria then leaves, and the rest of the euro countries cut ties, even the ones who have fairly strong balance now germany is left with its currency suffering the fate of the swiss franc..... now its currency is stronger than nearly ALL of the european countries.....makes no sense to go that route.....wont happen

Wood's picture

Germany will suffer a strong currency long before she sees another nightmare inflation. Believe it!

Nussi34's picture

Wow suffering like the Swiss is really something I would like to do any day!

Dr. Engali's picture

Damn Tyler you are posting the articles so fast the robots are having a hard time keeping up.

LongSoupLine's picture

Algo robots aren't tuned to Zero Hedge because they give the truth and facts.

If they were, we would be lock limit down nearly every day.

GOSPLAN HERO's picture

Bailout = print = tax.

TrustWho's picture

See Tyler, Net is Gross. What, counterparty risk?

arkel's picture

Come on, let's just print and lend the 2.5 trillion Euros already and call it a day.

We know 100 billion is chump change now and we all know the TPTB want to tie that debt to every nation's real assets and collect when the naitons deafult. Can we just get to the last chapter of this story already???

This is all filler.

Ellesmere's picture

People... the chart is fucked.

There are repeats in the domain.

10044's picture

Can't keep up with the tylers today...awesome commentary as usual

slaughterer's picture

Tyler, we are very happy with you today.  You are the most important market commentator in the universe.   

disabledvet's picture

"and the Tylers' Durden pull back from the Brave New World they report on." AGAIN. Anywho "let me finish what you started." the folks of EUROPE are now showing up knowing that the pieces of paper in their pocket ("euro's") are not to be accepted anymore. not only that but "there is no complaint mechanism" against such a condition AT ANY LEVEL. In short "A TRUE FIAT CURRENCY" save for the significant part whereby "IT IS CONSIDERED A CURRENCY." Ooooops! In other words "the idea of FIAT MONEY is a complete fraud" sheeple! MONEY MUST BE ACCEPTED NOT EXCEPTED to be a CURRENCY. (and no, money need not be backed by gold to be money. but it must be backed by ANYTHING OTHER THAN THE STATE. Since ALL EURO'S ARE BACKED BY THE STATE simply put THE EURO IS A SCAM.) The implications of this reality are profound indeed since "what more do we take for granted more than the money in our pocket being worth something"? And of course "the answer is NOTHING." So i challenge ANYONE OF YOU ON THE PLANET RIGHT NOW...ALL OF YOU...RIGHT "come up with an alternative." And i GUARANTEE none of you will. Who will take this challenge from nothing more than a "disabled vet." NONE? I GUARANTEE IT! (now proceed to a cost of a WARRANTY morons...let alone what one is to begin with...

Toolshed's picture in mentally disabled obviously.

zerotohero's picture

lets start with say..... Marxism at its trueist form for 100 Alex.

zerotohero's picture

Or how about Participatory Economics?

JR's picture

With apologies to Barry Manilow, the central bankers’ European refrain:

 I Write the Songs:
I’ve been alive forever,
And I wrote the very first song.
I put the words and the melodies together,
I am music,
And I write the songs.

I write the songs that make the whole world sing…

(I am the banker, I am essential, I am the music, I write the checks that make the whole world sing...)

Oh my music makes you dance
And gives your spirit to take a chance,
And I wrote some rock ’n’ roll so you can move.
Music fills your heart,
Well, that’s a real fine place to start.
It’s from me, it’s for you,
It’s from you, it’s from me,
It’s a worldwide symphony…


slaughterer's picture

What?  There was a bailout recently?  

GlomarHabu's picture

O/T .... Marketwatch  via the US Government has released data showing the middle class as the recipient of an economic beat down..big time .. That's not news to us.

I suggest we impliment what almost every Founding Father endorsed .... a revolution to take back our liberties . Go ahead and fool yourself that our governmant is benign, it is not.

Thomas Jefferson ,Geo. Washington, Bebjamin Franklin, and a host of men who knew opression and endorse a good revolution in order to keep the "government" in check stand as our examples. Barack Obama is a factuer of the highest order, a Marxist.

What will we do?  What will you do as the government destroys this nation?



GlomarHabu's picture

Do something? You gotta be kidding . .... you folks can talk the talk but can't hack the load to secure the blessings ...don't let me hear any more about your anger  ..... it's as solid as a fart in the wind ..pantywaste posters

roadhazard's picture

On an up note Spain is allowing personal ads for prostitution in newspapers. It's all about jobs.

Alpo for Granny's picture

Dear Tyler(s),

While I work, CNBC alternates in the background between a preview of their special on Warren Buffet's security force and their live feed from the Apple conference. I feel like this is a good time to thank you for all you guys do.



Bullion King's picture

Why are INDO & PHL appearing twice on this chart, with two vastly different costs ??

firstdivision's picture

I see that US market is trying to nudge Ben into the Print-Octogon.

Johnk's picture



"These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel."



Abraham Lincoln, Speech in the Illinois Legislature, 1837


tony bonn's picture

"... it might need to be higher..."

fuck you, you stupid lying cunt....of course it will be higher and it will go to 400-500 billion usd before it is over....the strategy is always the same......we need just a little bit to save a whole lot, and then before you can say bankster, the amount balloons as week after week passes in the throwing of good money afer bad...

Mean Rooster's picture



Wood's picture

The ONLY reason the ECB has not started up the printing presses is the Germans.

Is there anyone out there who fails to understand this? If the ECB prints the Germans are GONE.

W10321303's picture

THE EMPIRE follows the 'growth' model of real estate speculation and....

Michael Olenick: How Servicers Lie to Mortgage Investors About Losses

By Michael Olenick, creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha). You can follow him on Twitter at @michael_olenick or read his blog, Seeing Through Data

A post last week reviewed a botched foreclosure for a mortgage loan in Ace Securities Home Equity Loan Trust 2007-HE4 dismissed with prejudice, meaning that the foreclosure cannot be refilled; a total loss for investors. Next, we reviewed why the trust has not yet recorded the loss despite the six month old verdict.

Of course, those are the loans with finished foreclosures. There are 65 loans where borrowers missed at least four consecutive payments in the last year with yet there is no active foreclosure. Among those are a loan for $593,600 in Allendale, NJ, where the borrower has not made a payment in about four years, though they have been in and out of foreclosure a few times during that period. It’s not just the judicial foreclosure states; a $350,001 loan in Compton, CA also hasn’t made a payment in over a year and there is no pending foreclosure.

There is every reason to think the losses will be higher for these zombie borrowers than on the recent foreclosures. First, every month a borrower does not pay the servicer pays the trust anyway, though the servicer is then reimbursed the next month, mainly from payments of other borrowers still paying. This depletes the good loans in the trust, so that the trust will eventually run out of money leaving investors holding an empty bag. And on top of that, when the foreclosure eventually occurs, the servicer also reimburses himself for all sorts of fees, late fees, the regular servicing fee, broker price opinions, etc. Longer times in foreclosure mean more fees to servicers. Second, the odds are decent that the servicers are holding off on foreclosing on these homes because the losses are expected to be particularly high. Why would servicers delay in these cases? Perhaps because they own a portfolio of second mortgages. More sales of real estate that wipe out second liens would make it harder for them to justify the marks on those loans that they are reporting to investors and regulators. Revealing how depressed certain real estate markets were if shadow inventory were released would have the same effect.

These loans will eventually end up either modified or foreclosed upon, but either way there will be substantial losses to the trust that have not been accounted for. Of course, this assumes that the codes and status fields are accurate;

Please, please, Easter Bunny, save me from the EVIL regullators...

W10321303's picture
BELLVUE, Colo.—Massive wildfires in drought-parched Colorado and New Mexico tested the resources of state and federal crews Monday and underscored the need to replenish an aging U.S. aerial firefighting fleet that is needed to combat a year-round fire season.

Wyoming diverted personnel and aircraft from two fires there to help with a 60-square-mile wildfire in northern Colorado. Canada also loaned two aerial bombers to fight the blaze following the recent crash of a U.S. tanker in Utah. And an elite federal firefighting crew arrived to try to begin containing a fire that destroyed at least 118 structures.

Read more: New Mexico, Colorado fires burn out of control - The Denver Post
Read The Denver Post's Terms of Use of its content:

But Colorado's House congressional delegation demanded that the U.S. Forest Service deploy more resources to the fire, which was zero percent contained and forced hundreds of people to abandon their homes. One person was missing.

In a letter to the Forest Service, Colorado's congressmen said the need for firefighting aircraft was "dire." Colorado U.S. Sen. Mark Udall urged President Barack Obama to sign legislation that would allow the Forest Service to contract at least seven large air tankers to add to its fleet of 13—which includes the two on loan from Canada.

One of the region's most potent aerial firefighting forces—two Wyoming Air National Guard C-130s fitted to drop slurry—sat on a runway in Cheyenne, 50 miles north of the Colorado fire. The reason: The U.S. Forest Service, by law, cannot call for military resources until it deems that its commercial fleet is fully busy. It also takes 36 hours to mobilize the crews and planes, officials said.

Read more: New Mexico, Colorado fires burn out of control - The Denver Post
Read The Denver Post's Terms of Use of its content:


Just Don't Raise Taxes!....Save me Easter Bunny from the Evil government!

W10321303's picture

THE EMPIRE and it's 'spculators' now find the ultimate PRIZE for destroying the social contract and speculative BUBBLES as a substitute for real growth....

For a third consecutive year, revenue from investment banking and trading at U.S. firms may fall at least 30 percent from the first quarter, Richard Ramsden, a Goldman Sachs Group Inc. (GS) analyst, said in a note last week. Greece, which gave English the word “cycle,” has been the main reason each year that the second quarter soured after a promising first three months.

Greece is compounding the impact of stiffer capital rules and trading restrictions for banks imposed after 2008’s credit crisis. Those measures already were fueling concern that the industry may be locked in a long-term slump. Combined trading and investment-banking revenue at the five biggest Wall Street banks -- JPMorgan Chase & Co. (JPM), Goldman Sachs, Bank of America Corp. (BAC), Citigroup Inc. (C) and Morgan Stanley -- is likely to drop from a year earlier for the seventh time in eight quarters, according to analysts surveyed by Bloomberg.

The five banks generated about $33 billion from those businesses in the first three months of the year, excluding accounting charges. That was led by $20 billion from fixed- income trading.

The INVISIBLE Guiding Hand of the cult of blood-sucking zombies....