Newspaper

• Greek radical leftist SYRIZA leader Tsipras says will not join coalition government (as expected)
• Egypt Islamists claim presidency as army tightens grip (Reuters)
• French Socialists vow reforms after big poll win (Reuters)
• Greeks Back European Bailout (WSJ)
• France, Socialists Win a Solid Majority (WSJ)
• Denmark Warns over Pressure on Krone (FT)
• Obama to press Putin on Syria at G20 amid skepticism (Reuters)... Putin to smile
• China Home Prices Fall in Record No. of Cities (Bloomberg)
• Europe Gets Emerging Market Crisis Ultimatum As G-20 Meet (Bloomberg)
• Wolfgang Münchau – What Happens if Angela Merkel Does Get Her Way (FT)

With all the europhoria over Greece, some may have forgotten Spain. It is time to remind them that the real "fulcrum country" of Europe has now shifted a few thousand kilometers to the West, where as also reported on Friday the pain will come primarily from more home price declines (up to another 25% lower from here), and loan loss recognitions. How much? As Market News reports, the number may be as large as €150 billion. Of course, if that full number flows through the insolvent banking sector's bottom line, and forces a comparable FROB capital infusion via any of the bailout channels, this is €50 billion more in bond subordination (because good luck raising the capital via equity) than even the worst case Spanish bailout scenario had anticipated. It also explains why as of this morning, Spanish bonds traded at all time record lows. Because, sadly, nothing continues to be fixed in Greece, Spain, or anywhere else in Europe.

The most ironic moment in the Greek denouement will come when fractional reserve lending collapses onto itself:

"Stavropoulos and her friends have a new strategy to deal with their daily expenses. "We charge everything to our credit cards," she says. If the Greek banks fail, they won't be able to collect the outstanding debts, she argues. "If they want to mess me around, I will do the same to them."

In other words, Greece is now America, where the vast majority of people also live on credit alone, and have taken up the following motto when dealing with banks: "you pretend to be solvent, we pretend to have money." At the end of the day, it is all just one big global monetary circle jerk, only this time in reverse, as the snake of fractional reserve banking has finally started to eat its own tail. With people spending money they don't have, and in debt to their eyeballs to a banking system that itself is just as insolvent, is there any wonder that nobody really panics any more over daily threats the grand reset is finally coming?

Greece is on its way to becoming a "new, critical fragile state," and the ECB and EU will have to keep it on life support for years after it exits the common currency.

Indeed, one has to wonder… just how does a €100 billion bailout solve Spain’s banking woes when its Prime Minister was suggesting the real damage is more to the tune of €500 billion in a text message to his Finance Minister??? Indeed, if Rajoy’s text is even remotely truthful, then we can assume that Spain’s real capitalization needs are multiples of the €100 billion bailout… something that the EU media is picking up on already. As one example, JP Morgan believes that when all is said and done Spanish banks could be looking at €350 BILLION in capital needs.

The U.S. and Russia Are In a New Cold War ... And China May Join In

All you can read.

Turkey remained the world's number one minter of gold coins in 2011. There is an increasing tendency for gold bars to be retail investors' vehicle of choice – although gold coins still retain a majority market share. Turkish people can pay in gold in certain foreign exchange houses and most jewellers will accept gold as payment. Turkish banks are is now offering digital gold saving accounts. Turkey expanded its gold reserves by 29.7 metric tons in April. Turkey’s bullion reserves climbed to 239.3 tons last month meaning that Turkey increased their gold reserves by 14% in April. The central bank on March 27 doubled the share of lira reserves banks can hold in gold to 20%, saying it would provide 6.1 billion liras ($3.3 billion) of extra liquidity. "This addition," the WGC says, "was the result of a policy change under which the central bank will now accept gold in reserve requirements from commercial banks to help the banks utilize their gold in managing their liquidity." Some analysts have suggested that the increase in Turkish gold reserves, as reported by the IMF, may actually be a form of “double accounting”. Whereby the gold held in Turkish banks client’s gold account is transferred from the local bank as a reserve to the central bank, from where it then figures as gold reserves.

Five days ahead of the Greek parliamentary re-vote, the media propaganda machine has gone mute due to the moratorium on the RAND() known as popular polling: forgotten are the days when Syriza' popularity rating would swing from -100 to +100 in the span of hours, Diebold notwithstanding. Which leaves the media machine just one tactic: updates on the economic collapse as a tacit suggestion of what may happen if situation is not fixed. And while at this point it is nearly impossible to distinguish propaganda from fact, the latest numbers out of Kathimerini are just stunning. As Bloomberg's Marcus Bensasson reports, citing Kathimerini, the Greek banking system has continued to hemorrhage deposits this month, amid uncertainty over the outcome of elections on June 17. "Many people are putting money in shares of mutual funds denominated in dollars because of the bureaucratic difficulty of taking money out of Greece, or are keeping cash at home, the newspaper said." How much? "Deposits are leaving the banking system at a rate of 100 million to 500 million euros ($125 million to $625 million) a day, Kathimerini said, without specifying over how long a period that rate of outflow has continued."

... And what Germany wants, Germany gets. Sorry Spanish bondholders.

On Saturday, when we discussed the impact of the Spanish bailout for other European countries, focusing on Ireland which had promptly requested a renegotiation of its own terms to match those of Spain, we noted that "Syriza's Tsipras should send a bottle of the finest champagne to de Guindos - he just won him the election." It appears that the leader of the Greek anti-bailout party wasted no time to capitalize precisely on just this.

All you need to read and some more.

Gradually, the key open items from yesterday's Spanish bailout are getting some closure. First, we learned that Ireland, as speculated, will demand a comparable retroactive bailout renegotiation, an act which also puts the Greek elections a week from today in play. Then, we got definitive confirmation that the Spanish loan, coming at ~3% or half Spanish GGBs, is a priming loan, subordinating existing creditors. Finally, we learn that the ESM - the bailout mechanism at the heart of all current and future European bailout plans, and which still has not been ratified by Germany, is in danger of being scuttled by none other than the German opposition. The reason? According to a Reuters report, "A [Spiegel] report that German Chancellor Angela Merkel is not serious about implementing a European financial transaction tax threatens to undermine an initial deal struck last week with the opposition over the EU's planned fiscal pact... The Social Democrats (SPD) and Greens are insisting on a plan for a transaction tax and measures to boost growth."

Morgan Stanley's *hilarious* comic strip on our *hilarious* credit markets.

The European financial ministers' meeting started at 4:00 pm CET. What are they discussing? According to the WSJ, nothing short of "a commitment to provide as much as €100 billion ($125 billion) in support for Spain's ailing banking sector." At least we now know that that Spanish bank trot so widely avoided by the mainstream media was just a little more kinetically-charged than previously expected, because for Spain to actually demand the money, even if implicitly, it means it has a capital shortfall, which can only arise from an outflow of liquidity, as mere real estate impairments do not have any impact on liquidity. So far so good. There is only one problem: Spain has yet to formally request the money! According to newspaper ABC, "Spain wants to convince European partners that IMF shouldn’t participate in aid for country’s banks because of potential stigma. Aim of talks taking place today is to agree legal framework and conditions for a potential rescue, newspaper says." Potential rescue you see: not an actual one. Just because, as we explained patiently to the 5 year old algos out there, Spain will have none of this "conditionality" that would be imposed on it by Germany, and the IMF, should it actually be formally a bail out target. Which of course would also have the unpleasant side effect of pushing its spreads tighter for a few hours, then blowing them out parabolically once carbon-based investors out there realize what has just happened. As for the ultimate question: just where will €1 of money come from in this broke continent, let alone €100 billion... why, better not to bother with details.