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ECB to Spain: Drop Dead.

given ZH's previous accuracy on the Greek bond situation, I think this is relevant.

http://www.zerohedge.com/news/goldman-spanish-bond-subordination-its-only-13-existing-spanish-debt

Sadly however, the mere assumption that €100 billion in senior debt will be sufficient to plug the hole in Spanish banks, which rose from €40 billion to €100 billion in under one week, is laughable. And of course, every incremental dollar of senior debt means less value to existing subordinate Spanish bonds.

Finally, confirming that one should get the hell out of Dodge, is the fact that Goldman now is telling its clients to, wait for it, buy Spanish bonds.
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and given Goldman's documented sell side Muppetry this means they are unloading Spanish bonds as fast as they can to any remaining muppets left whatsoever.
 
lol. pathetic. bailout half-life approximately 8 hours of markets opening.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/06/Spain%20Italy%20Bonds.jpg

Edited by LashL: 
Changed hotlink to regular link. Please see Rule 5.


Spanish and Italian sovereign bond spreads exploding.

Recall what we said yesterday: "Keep a close eye on Spanish sovereign bonds at the moment when the bond market understands what just happened, and once the euphoria over the very short-term bailout of insolvent Spanish banks passes. Because a month from today another €100 billion will be required, then another €100, and so on." The moment can be seen very distinctly on the chart below: it happened at 2:00am Eastern, and the bond market has not looked back since. We are likely hours away from screams for the ECB to come and re-bail out a just bailed out Spain.
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Blue Mountain said:
The United States went through something like this four years ago. Didn't Europe learn anything from that?
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I'm sure we did.
But have you ever seen 'Europe' make anything resembling a decision?

My feeling is that we're pretty much screwed unless we turn on the printing presses.
Germany will never let us because 'inflation=hyperinflation=chaos=Hitler'.
 
Democracy Simulator said:
I expect that when it comes to the crunch, that all the dirty tricks will come out - playing on the German's sense of guilt for past aggression; threats that the world will end if the Germans don't stump up. It's not going to be pretty.
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Here we go:

Italian law professor and elder statesman Antonio Padoa-Schioppa wrote in an open letter to Mr Schaeuble that "the German government is playing with fire" by blocking the crucial steps needed to halt the immediate crisis and restore faith in monetary union.
"The German federal republic has a heavy historical responsibility, more than any other country in the union," he said, warning that the current course threatens "a catastrophe comparable to a third world war."
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http://www.telegraph.co.uk/finance/...nk-scuppers-all-talk-of-EU-banking-union.html

Expect more.
 
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Francesca R said:
They just need more and more ways to engineer fiscal union without it looking like that's what's happening.
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Except that nobody is going to be fooled anymore. The people of Europe have been subjected to a 50 year period of fantasy state-building. The eurozone consists of 17 independent democracies, and however much the people running the europroject would like to be able to engineer a closer union (not just fiscal), they have the slight problem of 17 skeptical parliaments and 17 electorates needing to agree to it....next week.
 
Eddie Dane said:
I'm sure we did.
But have you ever seen 'Europe' make anything resembling a decision?

My feeling is that we're pretty much screwed unless we turn on the printing presses.
Germany will never let us because 'inflation=hyperinflation=chaos=Hitler'.
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From the German perspective, it is even worse than that. Last time they printed money like there was no tomorrow, the money was at least going into German pockets. This time they are being asked to print money, devaluing the money already in German pockets, but with the new money going to stabilise banks in other countries.

They may do it anyway. Why? Because the immediate consequences of not doing so are much worse than doing so. That's a fascinating political call, and will have a big influence on how this whole thing plays out. We will find out next week, after Syriza win in Greece, what the Germans are going to do.

I am not yet convinced that any but a tiny minority of people in the eurozone (anywhere in the eurozone) believe that the euro has to break up, but I can't see a politically credible plan to prevent that break up either. That suggests to me that the most likely outcome is a very messy breakup of the eurozone.
 
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UndercoverElephant said:
From the German perspective, it is even worse than that. Last time they printed money like there was no tomorrow, the money was at least going into German pockets. This time they are being asked to print money, devaluing the money already in German pockets, but with the new money going to stabilise banks in other countries.
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I thought it was going to pay war reparations.

Anyway, looks like things in Spain are getting worse again:

http://www.nytimes.com/2012/07/24/b...ond-yields-soar-while-global-stocks-sink.html
 
Francesca R said:
Just sayin'. Rubbish sales job so far from the politicians, but a case could rather be made that this is better than Germany's only viable alternative which is to leave the euro unilaterally itself. Plus, Merkel remains one of the most popular chancellors ever IIRC.
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Just reading the thread again - if Merkel is so popular at home, maybe the sales job worked exactly as intended.
 
UndercoverElephant said:
Yep. Short selling of stocks has just been banned for 3 months. Like that'll solve the problem...
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because it worked so well this time last year :D

PuppyCow said:
Yup. Doomed:

http://www.theatlantic.com/business/...doomed/260233/
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when the 2 year and the 10 year bonds invert thats the market saying a default is certain, - they'll be going down the PSI route ala Greece (default 1 - 2 is now imminent)

the UK law bonds are now trading at 15% above the Spanish law ones, if this follows the Greek precedent UK law will be paid out at full value and everybody else gets a crew cut.
 
They're considering monetizing bonds, which was prohibited. But since they have a mandate to loot the public via inflation, debt monetization is now a-ok because they have deflation.

They might as well come out and declare that they have the authority to counterfeit as much money as they want, for any purpose they want, because that's exactly what they will do, if it suits them.

Draghi would be hilarious, if he weren't a hardcore criminal.
 
Francesca R said:
ECB to everyone: We'll do whatever it takes.
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The words must be followed by action, and soon, or the markets will conclude that they were only words.

Draghi Boxes Himself Into a Corner With Bond Signal: Euro Credit

European Central Bank President Mario Draghi may have boxed himself into a corner.

Spanish and Italian bond markets rallied yesterday as investors cheered Draghi’s signal that the ECB is prepared to intervene to reduce soaring yields. Now he has to deliver, or face deep disappointment on financial markets, analysts said. The risk in doing so is alienating key policy makers on the ECB council, such as Bundesbank President Jens Weidmann.

“Draghi is damned if he does and damned if he doesn’t,” said Carsten Brzeski, senior economist at ING Group in Brussels. “He maneuvered himself into an extremely difficult situation. Expectations are very high.”

The ECB is under pressure to lower borrowing costs after three interest-rate cuts since November failed to stop bond yields rising to records in Spain and Italy, threatening the survival of the euro. The Frankfurt-based central bank shelved its bond-purchase program in March amid opposition from council members including Weidmann, and some economists doubt it will be revived any time soon.
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kevsta said:
notice he waited until the usual German rumour refuters were all on holiday..
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there we go, a day late, but well, everyone's on holiday

http://in.reuters.com/article/2012/07/27/markets-europe-stocks-negative-idINL6E8IR6R920120727

(Reuters) - European shares turned negative and the euro fell on Friday, after the Bundesbank said it had not changed its critical stance on the ECB buying government bonds.
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Draghi said nothing he hasnt said before anyway.
 
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