Greece town , first of many turns to barter and their back to the euro. sees bal loans soar to the highest level since 2009 as foreign deposit flee. A quick look ahead to Spain ten year debt auction. And more gritty detail on Spain - real debt to GDP now at 134 percent !

http://www.zerohedge.com/news/birth-barter-how-one-greek-town-dropped-euro-and-moved

The Birth Of Barter: How One Greek Town Dropped The Euro And Moved On

Submitted by Tyler Durden on 04/18/2012 15:41 -0400

• default
 
• European Union
 
• Greece
 
• Gross Domestic Product
 
• Secured Debt

Greece was the first country to defect from the non-default game theory regime of the European Union (a move which ultimately will be in its great benefit, as it is forced, very shortly, to default higher and higher into the 177% of GDP secured debt, until finally even the Troika's DIP loan is impaired). It has also become the first country to demonstrate that people can, contrary to apocalyptic claims otherwise by the global banker consortium which realizes oh too well it will be its death if people stop playing by the broken rules, exist under a barter regime. The video below shows how the Greek town of Volos develops its own bartering system without the aid of the euro. Yes - it can be done, especially since one is forced to produce in order to consume, and borrowing infinitely from the future becomes impossible.

and.....
http://www.zerohedge.com/news/italian-bad-loans-surge-highest-2000-foreign-deposits-plunge

Italian Bad Loans Surge To Highest Since 2000, Foreign Deposits Plunge

Submitted by Tyler Durden on 04/18/2012 11:57 -0400

• Baseline Scenario
 
• Capital Positions
 
• Deutsche Bank
• European Central Bank
 
• fixed
 
• Gross Domestic Product
 
• International Monetary Fund
 
• Italy
 
• non-performing loans
 
• Recession
 
• Reuters
 
• Sovereign Debt

Maybe we can call today bad loan day: earlier today the Bank of Spain announced that Spanish bank loans, already rising in a rather disturbing diagonal fashion, have surpassed 8% of total for the first time since 1994. Now it is Italy's turn, where we find courtesy of ABI, that gross non-performing loans, aka bad-debt, has just reached €107.6 billion, or 6.3% of total, and the highest since 2000, not to mention a doubling of the 3.0% in June 2008. It gets worse: as Reuters reports, while domestic deposits in February rose by a heartening 1.6% in February, it is foreign deposits that confirm that not all is well with the country's financial system, declining a whopping 16% in February y/y, and the 8th consecutive monthly decline, a chart which resembles that of Greek deposit outflows. The reason why Italy, like all the other peripherals, is now a ward of the ECB? Simple: "Net funding from abroad stood at 182 billion euros, down 32.5 percent year-on-year." And if there is no external money, the Central Bank will need to save.

More from Reuters:

With the Italian economy mired in recession, gross non-performing loans rose 16.5 percent to 107.6 billion euros in February.

Credit quality deterioration was marked compared to the levels seen before the start of the financial crisis, ABI said, with bad loans as a percentage of loans to the private sector more than doubling to 6.3 percent in February from 3 percent in June 2008.

The growth in the overall volume of loans to the private sector stood at 0.9 percent in March, little changed from the month before, a sign credit expansion remains sluggish despite the ECB cash flood.

This may not even be the worst news: reminding everyone that in a deleveraging environment incremental cash can only come from retained earnings (yes, we jest), or asset sales, the IMF told the market that European banks "could be forced to sell as much as $3.8 trillion in assets through 2013 and curb lending if governments fall short of their pledges to stem the sovereign debt crisis or face a shock their firewall can’t contain, the International Monetary Fund said." Of course, for every seller there should be a buyer. And there will be. When the prices plunge.

From Bloomberg:

In a study of 58 banks including BNP Paribas SA (BNP) and Deutsche Bank AG (DBK), the IMF forecast that under such circumstances, gross domestic product in the 17-country euro region would be 1.4 percent lower than now expected after two years. Even under its baseline scenario, the IMF sees banks’ combined balance sheets possibly shrinking by as much as $2.6 trillion.

“So far, deleveraging has occurred predominantly through buttressing capital positions and reducing non-core activities, leaving the impact on the rest of the world manageable,” the IMF said in its Global Financial Stability Report released today. “It is essential to continue to avoid a synchronized, large-scale, and aggressive trimming of balance sheets that could do serious damage to asset prices, credit supply, and economic activity in Europe and beyond.”

Banks in the sample studied by the IMF reduced assets by almost $580 billion in the last quarter of 2011, it said.

Governments should complete and extend the measures already agreed upon to reassure investors if they want to limit the impact of banks’ deleveraging, the IMF recommended. That includes continuing to reduce budget deficits while supporting demand as much as possible, restructuring banks and having the region’s rescue funds inject capital directly into them, it said.

“For an effective monetary union, deeper integration is required,” the IMF said. “Fiscal arrangements will need to be redesigned to accomplish ex ante fiscal risk-sharing,” without which “countries will continue to face very different financing conditions and remain prone to having liquidity crises turn into solvency concerns.”

But, but, Mario Monti told us everything was fixed? Surely the ex-Goldmanite was not joking...

and.....



http://www.zerohedge.com/news/quick-reminder-ahead-tomorrows-spain-debt-auction

A Quick Reminder Ahead Of Tomorrow's Spain Debt Auction

Submitted by Tyler Durden on 04/18/2012 11:07 -0400

• European Central Bank
 
• Greece
 
• Gross Domestic Product
 
• International Monetary Fund
 
• Ireland
• National Debt
 
• Portugal
 
• ratings
 
• Real estate
• Reality
 
• Sovereign Debt

From Mark Grant, author of Out Of the Box

Devoured By Snakes

“'Tis an old saying, the Devil lurks behind the cross. All is not gold that glitters. From the tail of the plough, Bamba was made King of Spain; and from his silks and riches was Rodrigo cast to be devoured by the snakes.”

                                                     - Cervantes

Spain’s GDP                                                      $1.295 trillion

SPAIN’S NATIONAL DEBT

Admitted Sovereign Debt                                 $732 billion

Admitted Regional Debt                                    $183 billion

Admitted Bank Guaranteed Debt                      $103 billion

Admitted Other Sovereign Gtd. Debt                $ 72 billion

Total National Debt                                          $1.090 trillion

SPAIN’S EUROPEAN DEBT

Spain’s Liabilities at the ECB                             $332 billion

Spain’s Cost for the EU budget                         $ 20 billion

Spain’s Liabilities for the Stabilization 

Spain’s Liabilities for the Stabilization Funds     $125 billion

Spain’s Liabilities for the Macro Fin. Ass. Fund    $ 99 billion

Spain’s Guarantee of the EIB debt                     $ 67 billion

Spain’s Total European Debt                              $643 billion

---------------------------------------------------------------------------

Spain’s National and European Debt               $1.733 trillion

Spain’s OFFICAL debt to GDP Ratio                    68.5%

Spain’s ACTUAL Debt to GDP Ratio                    133.8%

These are the figures that I compiled and printed on March 29, 2012. They are not the opinions of Mark Grant but just the cold and hard facts that I was able to pull together from Eurostat and from the Bank for International Settlements. It is a long slog to find the truth but it is there if you look long and hard enough. Unfortunately the data for Spain’s GDP is deteriorating rapidly. The IMF is now projecting at 6.00% contraction in the Spanish GDP for 2012 which changes the numbers dramatically putting their GDP at $1.217 trillion. This then provides a debt to GDP ratio of 142.3% and likely to escalate further given the very serious problems with the Spanish banks and the Spanish Real Estate market. The question now in my mind is one of “when” and not an “if” any longer of when Spain hits the skids and requires European intervention. The problem of course here, unlike Greece, Ireland and Portugal, is that the needed amount of capital will overcome the present resources of the Stabilization Funds and require substantial additional funding which is likely to lower the credit ratings of every nation in Europe. If one of the two major Spanish banks hits the wall then the problem becomes magnified further as it would be catastrophic for the other major banks in Europe. Already we are seeing a sort of run on the Spanish banks as money is fleeing each day from their coffers. Any assumption that “muddle through” will be the outcome here is a mistake in my opinion and I would begin to prepare for that which is almost inevitable now as the crisis worsens.

The Centre for European Policy Studies published their own findings this week and they estimate that the Real Estate accumulated overhang is actually almost $500 billion which equates to 59% of the IMF revised projections for Spain’s GDP. The EU and the ECB may not mandate that the Spanish banks have to mark-to-market in the normal fashion but a quick calculation indicates that the equity of the major Spanish banks is well into the red and past the blood line of any sustainable position. In my opinion, I would state, that the Spanish banks are in fact bankrupt and are only still alive given the financial shenanigans of how Europe allows the numbers to be calculated. I am well aware that many in Europe do not like to be confronted with the truth and that the stock market in the United States is so myopic that they wish to ignore the truth but the numbers are right in front of your nose if you care to look and reality has a funny way of catching up with the markets and reminding them one still equals one in the end. I am an adherent of the Greater Fool Theory and the trick is to let the other guy be the Greater Fool and not one of us. The “when” is unknowable but the “if” is behind us now and I suggest great caution.

and.....

The Complete And Annotated "Hollande Victory" Matrix

Submitted by Tyler Durden on 04/18/2012 12:47 -0400

• Bond
 
• CDS
 
• France

Back in early February, long before anyone was too worried that French socialist candidate Hollande may win the French presidential election (after all the market was soaring on the fumes of a still ramping LTRO 1+2 effect, so why worry), UBS George Magnus penned a must read analysis of the macro implications what a Sarkozy loss would mean for Europe in "As Falls Sarkozy, So Falls Europe: The Full Story Behind The Upcoming French Election" which with 4 days to go until the first round of the French presidential election, is certainly worth a refresh (especially for Frau Merkel who will be roundly humiliated after backing the losing horse). And yes, it is only 4 days as UBS is kind enough to remind us. UBS also reminds us that, as strategist Stephane Deo believes Hollande has a 75% chance of winning, the french equity market is at substantial risk, as a Hollande victory is notpriced in, even as noted earlier, it is starting to seep into the credit market where French CDS jumped over 200 bps for the first time in 4 months. To wit: "The bond market may force the government’s hand if they don’t start walking the walk on debt  reduction. Plus, while we don’t think that France is as troubled as Spain, it’s not priced for election disruption." But that is the big picture. Below we present a summary matrix which breaks down the various Hollande proposals that may propel him to become the next French president as well as their implications on various micro items.

First, the timeline:

And full Hollande victory matrix:

Yet to think: if it wasn't for a certain hotel maid, DSK would be days away from being French president...