CNBC reports Greece Austerity Strike Will Hurt GDP Further [16] even as Cyprus Expects Bailout as S&P Cuts Ratings to Junk [17]:
Cyprus
said on Wednesday it expected talks to start with lenders on badly
needed aid next week, as ratings agency Standard & Poor's pushed it
deeper into junk
territory, implying domestic political expediency lay behind a delay in
clinching a deal. One of the smallest nations in the euro zone, Cyprus
sought European Union (EU) and International Monetary Fund (IMF) aid in
June after its two largest banks suffered huge losses due to a write-down of Greek debt.
Well, our Contagion Model [18]showed
clear paths of the knock on effects of Greek infection, and we haven't
even gotten started with the economic pathogen party yet!
[19]
Of course, where there is a loser, there's always a winner as well -
sometimes hidden beneath all of their spoils... On Friday, 04 May 2012 I
penned The BoomBustBlog Pan-European Distressed Asset Acquisition Initiative [20], which clearly outlined the investment opportunities forthcoming in the tiny nation state known as Cyprus, as excerpted:
Asset sale by sovereigns is can be
seen in the sale of stakes in government owned infrastructure assets and
corporations. However, the approach adopted to dispose of these assets
is to make partial sales in tranches in order to participate in any
benefits of valuation recovery.
Professional and institutional subscribers should download the full version of this document (
The BoomBustBlog Pan-European Distressed Asset Acquisition Initiative [21])
which outlines investment opportunities in the following nation/banks:
UK, Portugal, Italy, Cyprus, Greece, Ireland and Spain. Our initiative
runs the gamut from whole companies and equities, to real estate,
infrastructure assets, rare earth and hard tangible assets to IP.
Dispositions by Europeans banks have
consisted mostly of foreign assets outside of Europe. Most of these
assets had the potential for high returns but are being offered at
prices reflecting the perception that future investment performance
would be robust. This is why there is so much interest in the private
equity and asset management space in scanning for strong deals among
those assets. However, the competition among these entities to buy
quality assets at reasonable valuations has created a micro bubble of
sorts, the type that make profitable vulture investing a very difficult
proposition.
Over the next week I will lead readers and paid subscribers through a
journey of distressed assets being disgorged by banks and sovereigns
that are poised to give those who are perceptive enough out-sized
returns. I find this research and foresight to be invaluable, and I
believe many institutions, asset managers and UHNWers will as well. Of
course, the potential winners may be those who aren't among the usual
suspects, and I feel TPTB amongst the EU clan may feel downright
intimidated.
Yes, Spain will contribute to this vulture-fest, as will those still hooked into Greece, et. al.
- The Embarrassingly Ugly Truth About Spain: The IMF, EC and ALL Major Rating Agencies Are LYING!!! [22]
- European Bank Run Watch: Spaniard Edition [23]
- And confirming opinion from ZeroHedge: Chart Of The Day: Spanish Bad Loans Hit New Parabolic Record [24]
- Last month we reported [25]that Spanish bad loans jumped by the most ever, rising by over 1%
to just under 10%. Today, last month's number was revised even higher to 10.1%.
But the worst news is that the August bad loan total just hit a fresh
record [26] of €178.6 billion, or 10.5% of the total €1,698.7 billion in bank
loans. Making things worse is that the primary bank funding lifeline -
deposits - continues to flow out. That both Spain, and its banking sector are
utterly insolvent, is clear to anyone but Oliver Wyman and those who have bought
SPGBs (although granted the latter are merely hoping for a quick flip). And the
ECB of course. Indicatively, as a % of GDP, this would be equivalent to roughly
$2.7 trillion in US bank loans going sour (for more on the collapse of Spanish
banking, and the laughable stress test whose worst case has already become the
baseline, read
here [27]). The chart summarizing this staggering statistic is below. 
[28]
- Last month we reported [25]that Spanish bad loans jumped by the most ever, rising by over 1%
- This Time Is Different As Icarus Blows Up & Burns The Birds Along The Way - Greece Is About To Default AGAIN! [29]
Stay tuned, and follow me!
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