Three Out Of Four: Spain Joins Ireland, Portugal With A Gun To Its Head, Demanding Concessions

Tyler Durden's picture

Previously we noted that, just as expected, the weakest PIIGS - Portugal and Ireland - wasted no time to start rumblings about a "suddenly slowing economy" in the aftermath of the Greek bail out which achieved nothing but to delay contagion by 48 hours (we won't bother readers with the blow out in Italian bond yields any more), and to unleash demands by everyone else to get the same concessions, in essence pushing Europe into an even deeper hole, forcing Golum Van Rompuystiltskin to say he was only kidding about the 4-5x EFSF leverage: he really meant 45x. Confirming that the tsunami of demands has been unleashed is today's announcement from the Bank of Spain that not only was Q3 GDP flat (read: negative), but that the deficit target for the year would not be achieved. Google translated from Expansion: "The Bank of Spain says the Spanish economic growth was zero in the third quarter from the previous quarter and warns that there are significant risks that may prevent achieving the deficit target this year. The Bank of Spain said that the information available for the third quarter suggests that the pattern of decline shown in the previous quarter "would have continued in the middle months of the year, in an environment marked by the deepening crisis of sovereign debt euro area." Truly nobody could have seen this coming, yet it is odd how it was casually slipped in broader discussion three short days after the Greek bailout.

The Bank of Spain admitted that absent for that mysterious exporting force (somehow everyone in the world is exporting to someone: just who is importing?) the country would be in a recession:

The report said domestic demand would have experienced a further decline in the third quarter (with a GDP contribution of -0.8 percentage points from April to June period), reflecting the contraction of the components of public spending and the path still down in residential investment, while household consumption and business investment showed little progress.


Instead, "net exports remained a mainstay of the economy and increased its contribution to GDP growth (up 0.8 percentage points) due to the dynamism of exports of goods and tourism.

Yet what is more troubling for the country is that it has indicated it will miss deficit targets for the year: an event which will have implications on both its rating and the treatment of the ECB vis-a-vis the SMP's purchases of its bonds.

The deficit target at risk


"current trends indicate the existence of risk of occurrence of a deviation from the deficit target of 6% of GDP in 2011, as a result of weak tax collection and spending of inertia, mainly in the area of the CCAA, "says the Bank of Spain.


The agency explains that "the magnitude of the deviation is within the margins that can be corrected through proper management of budget implementation in the remainder of exercise."


In any case, "if the budget execution data in the coming months indicate the likelihood of these risks materialize, it would be necessary to adopt additional measures in line with the unconditional nature of the commitment by the Government in meeting the fiscal targets and the close scrutiny to which public finances are subject amid the current sovereign debt crisis ", defends the organization headed by Fernandez Ordonez.

And by additional measures, the country means incite further protest once more cuts are announced, which in turn will lead the country to demand debt cut concessions in order to appeas the "angry mob" in the process getting another rerun of Greece.

The only question we have now is: when will the 4 out of 4, Italy, finally make its anticipated appearance on the concessions-demanding bandwagon and tell Europe to take it or leave it... and but "it", we mean a 25%-50% haircut on its debt.

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srsly-wtf's picture

Gap Down Bitchez....but it won't...

TruthInSunshine's picture

Off Topic and if you like The Bernank and despise Ron Paul (yes, you would meet the DSM criteria for sociopath, if so), look away:


10-31 14:59: The Fed failed to fully document authority to rescue AIG (AIG)


But hey - it's all good; Goldman, JPM, Barclays, HSBC, Buffet/Munger, and many, many others with CDS winning bets against the derivative department of that world renowned insurance giant, AIG, all GOTS PAID IN FULL, courtesy of the U.S. Taxpayer (i.e. forced, involuntary bloodletting to the tune of 202 billion - just for AIG - and counting).

The Federal Reserve Bank, under the tutelage of The Bernank, William 'iPad2 is delicious' Dudley, and Brian 'Charity Unto JPM & Goldman' Sack (not to mention current Treasurer of the U.S. and former head of the NY Branch of the Federal Reserve) - corruption like we've never seen before, bitchez.

Canuckistan Al's picture

I dont know about you, but I sure would like to kick Goldman in the Sack.

Miss Expectations's picture

Hell's bells, more paperwork issues?

Stoploss's picture

But, but, Robotard said the market would grind higher!!@#!%$^*

slewie the pi-rat's picture

good to see you posting, srsly, wtf?

and, you have the macro- & micro-economic terminology down well, already! +++  maybe an avatar?  wtf pics - Google Search:  that freaking cat looks adequately pi-rat-ical to moi!

the R2K held on pretty well this morning but is starting to break down a bit, now, but if these down-day markets were any more orderly, sedate, and proper, i'd hafta take a shower and put some clothes on, BiCheZ!


Buck Johnson's picture

It's all falling apart before it really even started.  If Greece gets a 50% cut, WE want a 50% cut.  LOLOLOLOLO, this is just getting better and better.

philipat's picture

Who cares. Let the PIIGS fail and the French Banks fail. Let them sort out their own problems so the rest of us can move on.

kaiserhoff's picture

But, but, but, the fat lady said we had to make sure this didn't happen.

You mean there is no free lunch? 


Dick Darlington's picture

I really really wonder where does Spain reap these "growth" figures from... Busting real estate bubble, insolvent banking sector, 22% unemployment, 48% unemployment among the people under 25 yrs old etc etc. Would really like to see updated version of the analysis made and revealed by the "anonymous blogger" abt yr or so ago.

Alvaro de Esteban's picture

Don´t forget we, in Spain, have some of the best cooks (food, facts & figures) in the world.

And we can do it by ourselves without hiring GS

Richard Chesler's picture

Sure. but can you make chorizo de pigman???

Use of Weapons's picture

Its made of donkey, so there's room for some of the MF crew in there.


philipat's picture

That's why even Adrian failed and is now trying to sell hamburgers?

jm's picture

Big mistake is looking at governent debt to GDP as opposed to trying to estimate total debt to GDP ratios, although such estimates are hard.  Anyway you slice it a big chunk is coming on the government balance sheet.

There is, I suppose, a place for factoring in general citizen willingness to pay and sacrifice for certain advantages.  DV01 trumps these concerns.  In fact, credit risk itself is closely tied to interest rate risk here.

While there may be a hard floor on Spanish real estate due to German and UK bids, this floor is cyclical and correlated to home country GDP.

Don't expect to hedge fixed income in this space.  The political calculus skews determination.

Don't expect the ECB to act decisively even when they understand the risks.  They will remain inactive until it is too late and contagion makes the situation impossible.


GeneMarchbanks's picture

Who could've seen such events? Well played... your move Merkozy...

beastie's picture

a graphic from blazing saddles with the black guy with a gun to his own head would be appropriate here.

s2man's picture

Yep.  No body move, or the Spaniard gets it.

Canuckistan Al's picture

Headline should read: Barber of Saville requests haircut!

The Axe's picture

Is Halloween the new Christmas eve...cause this volume sucks worse then a rotten apple in the old Halloween bag...Did very trader in this market work at MF Global....?

Temporalist's picture

Pay no attention to the razor blade...

Vincent Vega's picture

Bwahaaaaaaaa! Awaiting ISDA to issue a statement declaring soverign bankruptcies to NOT be credit events. Bwahaaaaaa!

JenkinsLane's picture

Reality is what the ISDA say it is. Are you sure you want to say that Jim? 


Now, on face value I appreciate the graph looks terrible. However, if you transpose the axes and turn it 90 degrees - bingo, that's much better!

israhole's picture

I read it first at Zero Hedge.   Thanks, TD.

bigdumbnugly's picture

timmah geithner looking stylish sporting what appears to be a 50% haircut.

so why not the piigs?

Sequitur's picture

Someone please track delivery of the OfficeMax printer/toner cartridges to the ECB.

SeverinSlade's picture

Rumors swirling that the ECB is in talks to buy OfficeMax's printer/toner division.

Troll Magnet's picture

Shit...I've been long Kinko's in anticipation of this.  Guess I'll just rely on my physical stash of weed to get me through this transitory phase.

topcallingtroll's picture

I hope you have a really big stash.

Maybe collapsaholics ought to think about drugs post collapse. Some quality marijuana seeds ought to be put in storage.

spekulatn's picture

Paging Dr. Bass.

Dr. Kyle Bass!!

Your next patient is here to see you.

SeverinSlade's picture

I really hope everyone took Jim Cramer's advice on Friday.  EVERYONE should be piling into equities here, because Hedge funds will put firm floor in the markets...

But that's assuming that anyone that listens to Jim Cramer has any capital left after buying into Lehman the day before it went under.  That NFLX buy at what, $135 was pretty profitable too...right?....RIGHT?!

YesWeKahn's picture

Jim Cramer will tell you that he told everyone to sell during Friday AH session.

Ronaldo's picture

And Cramer says, "There is always a Bull Market Somewhere"!  Maybe in Pamplona dipthong!

At one time I thought I should listen to hear what he had to say.  Now I am glad that I listened before believing his drivel.


Manthong's picture

We need to keep the stuper going.. mix up another bucket of Sangria, and don't hold back on the Everclear!

lolmao500's picture

If Spain doesn't like it, they can leave the euro.

Cdad's picture

...all while the long bond goes totally apeshit nuts.  I there any "risk off" signal NOT present in today's session?

Cdad's picture

Any second now, a BlowHorn [CNBC] reporterette shall report that capital inflows into treasuries indicates capital outflows from marked to fantasy equities...because they always report the reverse effect.

Any second now...the BlowHorn will show that it has even a fraction of an ounce of integrity left.  

Holding.  My.  Breath.

Cdad's picture

Ooops...Bob "the cheerleader" Pisani passes on the opportunity to explain it to the waitinig public.  I am becoming concerned that Bob actually does not have enough brain stem activity left to drive vital organ functions.

Piranhanoia's picture

They can't do anything because Corzine owes them $800K plus for "soivices rendered"   Did MF advertise on CNBS or was it payola?

Cdad's picture

Good question.  Don't know.  I pay no attention to adverts...especially financial services adverts.

Eireann go Brach's picture

The Irishman who uttered the now famous "Wankin fuckin Bankers" rant on Youtube deserves another view as a reminder of how the average folks in Ireland really feel..please EU sir, may we have our 50% haircut handout please LOL!

SheepDog-One's picture

Great reporting Tyler. Only place around laying out whats really going on.

Hippocratic Oaf's picture kardASSian is getting a divorce. Shouldn't that take precedence?!?!