http://www.athensnews.gr/portal/1/56282
Submitted by Tyler Durden on 06/14/2012 07:13 -0400
ARTICLE 41 ... payment of paid-in shares of the amount initially subscribed by each ESM Member shall be made in five annual instalments of 20 % each of the total amount. The first instalment shall be paid by each ESM Member within fifteen days of the date of entry into force of this Treaty. The remaining four instalments shall each be payable on the first, second, third and fourth anniversary of the payment date of the first instalment.
Reader Brett who pointed out that provision writes ...
http://www.telegraph.co.uk/finance/debt-crisis-live/9330493/Debt-crisis-live.html
11.25 Update on the markets:
Italian auctions are now as nerve-wracking as Spanish ones. While the Treasury tried to mitigate the dramatic deterioration in sentiment by limiting supply at today's sale, the scale of the concessions show how vulnerable Italy's debt market has become. Demand is holding up, just about, but only because of unprecedented domestic financial repression. Unless the ECB steps in very soon to restore confidence, Italy and Spain will no longer have market access.
In Spain's case, paying a 7pc interest rate to borrow new money means it becomes extremely expensive for the country to pay for its public services and service its debts.
If they throw one country to the wolves that will affect everyone, so they should have longer-term vision.
Submitted by Tyler Durden on 06/14/2012 06:44 -0400
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1. HOLLANDE WARNING French President Francois Hollande has warned that some countries in Europe would want Greece to be forced out of the eurozone if it did not respect its engagement to international creditors after Sunday's election. In an interview with Mega TV, Hollande said he wanted Greece to remain in the single currency and would argue for the use of European structural funds to help it return to growth. He said Greek voters would decide what they wished for. "But I have to warn them, because I am a friend of Greece, that if the impression is given that Greece wants to distance itself from its commitments and abandon all prospect of recovery, there will be countries in the eurozone which will prefer to finish with the presence of Greece in the eurozone."
2. EMPORIKI TROUBLE? French bank Credit Agricole is considering walking away from Emporiki Bank, its Greek unit, and letting it fail if Greece leaves the eurozone, the Wall Street Journal has reported, citing a person with direct knowledge of the bank's plans. Credit Agricole, which has poured some 6bn euros into Emporiki since buying it in 2006, could face some 5 billion euros of writedowns if the bank failed, which could force it to undertake a capital increase.
3. PHARMACIST GUNNED DOWN A 52-year-old pharmacist and father of two was shot dead in Rendi, district near Piraeus, on Wednesday. Police believe the motive for the attack on Spyros Poukamisas, which took place near his pharmacy, points toward robbery as the motive. According to eye-witness reports, the pharmacist was accosted by two men that tried to force him to hand over a bag containing an unknown quantity of money. When he resisted, one of robbers shot him and the two men then got away in a yellow car. The victim was hit by three 9mm bullets. As a mark of respect, pharmacies in Piraeus will remain closed on Thursday.
4. FINAL LEG OF CAMPAIGN It's the last 48-hours of the second election campaign in as many months. New Democracy leader Antonis Samaras will speak in Thessaloniki on Thursday at 7.30pm and Syntagma Square in Athens on Friday at 8.30pm. Syriza leader Alexis Tsipras will address his party's final campaign in Athens at Omonia Square at 7.30pm and in Thessaloniki on Friday at 8.30pm. Communist Party leader Aleka Papariga will speak in Thessaloniki at 8.30pm on Thursday and at Pedion tou Areos in Athens on Friday at the same time. Democratic Left leader will speak in Patras on Thursday.
5. WHO IS ALEXIS TSIPRAS? His name is Alexis Tsipras. Born into a comfortable middle-class family that runs a small construction business, he holds a postgraduate degree in engineering but had worked only briefly in the profession. His political career was forged in student protests in the 1990s and in 2008 he came the country's youngest political leader. He has one child and with his partner, Betty, is expecting another in July. For Reuters, his background doesn't make him a "working-class hero", but did he ever claim to be?
6. BROTHER PARTIES New Democracy has landed itself in a spot of trouble after its election coordinator in northern Greece, Panayiotis Psomiadis, described neo-Nazi Golden Dawn as a "brother, centre-right party of New Democracy". The comment was made some days ago and Psomiadis denied it. The issue returned on Wednesday when a recording of the comment surfaced on YouTube. Last year, a court removed Psomiadis from his position of governor of Central Macedonia after it found him found guilty of cancelling a fine for a petrol station owner while he was Thessaloniki prefect.
and.....
http://www.athensnews.gr/portal/1/56284
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http://www.zerohedge.com/news/spanish-bank-borrowings-ecb-surpass-italian-italy-sovereign-debt-hits-record-%E2%82%AC195-trillion
Spanish Bank Borrowings From ECB Surpass Italian, As Italy Sovereign Debt Hits Record €1.95 Trillion
Below we present two more charts for your rubbernecking pleasure. First, we observe the just released data showing Spanish bank borrowings from the ECB: at €287.8 billion, this was a €24 billion increase from April, €235 billion from a year earlier, and the highest ever. More importantly, as can be seen on the first chart below, for the first time since June of 2011, Spanish bank ECB borrowings increased to more than those of Italy, which at just €272.7 billion rose a mere €2 billion from April month (to a new record as well). In other words, both Italy and Spanish banks are now spurned by counterparties everywhere, but Spain's a little bit more than Italy's. Yet before Italy gloats, it bears reminding Italy that its own offsetting factor, and where it is weakest, its insane public debt, just hit a new record high of €1.95 trillion, pushing the country's debt to GDP ratio well into the 120%+ range.
Italian and Spanish ECB bank borrowings:
Italian sovereign debt:
and.....
http://globaleconomicanalysis.blogspot.com/2012/06/any-rabbits-left-in-hat.html
Any Rabbits Left in the Hat?
Inquiring minds are pouring over the ESM Treaty to see how it is supposed to work in theory, assuming it will be ratified by counties with the required 90% of EMU voting rights.
Given that Spain is supposed to get €100 billion from the ESM, some might be surprised to learn ESM Still Not Ratified by Germany, Austria, Belgium, Estonia, Slovakia, Netherlands
Finland is missing from the above group. Finland has signed but not yet ratified the treaty and May Ask for Collateral for Spanish Banking Bailout
Political football is holding up treaty ratification in Germany, with the opposition demanding a Financial Transaction Tax in return for passage.Assuming the treaty passes, please turn your attention to Article 41.
Given that Spain is supposed to get €100 billion from the ESM, some might be surprised to learn ESM Still Not Ratified by Germany, Austria, Belgium, Estonia, Slovakia, Netherlands
Finland is missing from the above group. Finland has signed but not yet ratified the treaty and May Ask for Collateral for Spanish Banking Bailout
Political football is holding up treaty ratification in Germany, with the opposition demanding a Financial Transaction Tax in return for passage.Assuming the treaty passes, please turn your attention to Article 41.
ARTICLE 41 ... payment of paid-in shares of the amount initially subscribed by each ESM Member shall be made in five annual instalments of 20 % each of the total amount. The first instalment shall be paid by each ESM Member within fifteen days of the date of entry into force of this Treaty. The remaining four instalments shall each be payable on the first, second, third and fourth anniversary of the payment date of the first instalment.
Reader Brett who pointed out that provision writes ...
The ESM total budget for 5 years is 700 billion euros. That means for 2012 the ESM will be able to contribute 140 billion euros. I have shown the breakdown by country (listed in Annex II) and amended another column to show their first contribution.Capital Contribution Analysis
Spain is clearly in no position to assist their own banks so we can forget about their contribution. We can also forget about contributions from Greece for obvious reasons, and Portugal whose sovereign debt is rated as junk status by S&P.
| ESM Member | Capital subscription (EUR) | 2012 Contribution (20%) |
|---|---|---|
| Kingdom of Belgium | € 24,339,700,000.00 | € 4,867,940,000 |
| Federal Republic of Germany | € 190,024,800,000.00 | € 38,004,960,000 |
| Republic of Estonia | € 1,302,000,000.00 | € 260,400,000 |
| Ireland | € 11,145,400,000.00 | € 2,229,080,000 |
| Hellenic Republic | € 19,716,900,000.00 | € 3,943,380,000 |
| Kingdom of Spain | € 83,325,900,000.00 | € 16,665,180,000 |
| French Republic | € 142,701,300,000.00 | € 28,540,260,000 |
| Italian Republic | € 125,395,900,000.00 | € 25,079,180,000 |
| Republic of Cyprus | € 1,373,400,000.00 | € 274,680,000 |
| Grand Duchy of Luxembourg | € 1,752,800,000.00 | € 350,560,000 |
| Malta | € 511,700,000.00 | € 102,340,000 |
| Kingdom of the Netherlands | € 40,019,000,000.00 | € 8,003,800,000 |
| Republic of Austria | € 19,483,800,000.00 | € 3,896,760,000 |
| Portuguese Republic | € 17,564,400,000.00 | € 3,512,880,000 |
| Republic of Slovenia | € 2,993,200,000.00 | € 598,640,000 |
| Slovak Republic | € 5,768,000,000.00 | € 1,153,600,000 |
| Republic of Finland | € 12,581,800,000.00 | € 2,516,360,000 |
| Total | € 700,000,000,000.00 | € 140,000,000,000 |
| Less Spain | -16,665,180,000 | |
| Total Less Spain | € 123,334,820,000 | |
| Less Greece | -3,943,380,000 | |
| Total Less Spain + Greece | € 119,391,440,000 | |
| Less Portugal | -3,512,880,000 | |
| Total Less Spain + Greece + Portugal | € 115,878,560,000 |
Subtract Italy crippled with a 120% debt to GDP ratio and Borrowing money at 4-5% to Lend to Spain at 3% and you are under the €100 billion mark.
Even including Italy, the fund for 2012 is nearly all spent.
What happens if Spain needs €350 billion as per analysis from JPMorgan?
What Happens if Italy needs a bailout?
Are there any rabbits left in the hat?
Even including Italy, the fund for 2012 is nearly all spent.
What happens if Spain needs €350 billion as per analysis from JPMorgan?
What Happens if Italy needs a bailout?
Are there any rabbits left in the hat?
and.....
http://www.businessinsider.com/spanish-10-year-yield-690-2012-6
UPDATE
According to FT's Chris Adams and CNBC's Ross Westgate, the Spanish 10-year yield just broke through 7.0 percent on Tradeweb.
According to FT's Chris Adams and CNBC's Ross Westgate, the Spanish 10-year yield just broke through 7.0 percent on Tradeweb.
http://www.telegraph.co.uk/finance/debt-crisis-live/9330493/Debt-crisis-live.html
11.42 Robert Fico, Slovakia's prime minister, has said he will demand Greece's exit from the euro if country fails to honour bailout agreement.
11.39 EuroGroup ministers have reportedly been asked to be on standby for post-Greek election call on Sunday.
11.27 EU says Cyprus has not applied for European aid but it faces very serious imbalances. Cyprus has questioned timing of Spanish downgrade by Moody's.
The EU says it is not up to ratings agncies to decide if the Spanish bailout is a success.
11.25 Update on the markets:
FTSE 100 -0.9pc
CAC -0.9pc
DAX -1pc
IBEX -0.1pc
MIB -0.9pc
10.59 The German government and opposition have reportedly agreed for the lower house of parliament to vote on ESM, fiscal pact on June 29.
10.53 This weekend sees a key election in Greece. If the Syriza party wins, it has vowed to tear up the country's bailout agreement, sending the entire euro project into chaos. Here is Syriza's economic programme:
Bigger borrowing costs for Italy, bigger problems.
Nicholas Spiro, managing director at Spiro Sovereign Strategy:
Italian auctions are now as nerve-wracking as Spanish ones. While the Treasury tried to mitigate the dramatic deterioration in sentiment by limiting supply at today's sale, the scale of the concessions show how vulnerable Italy's debt market has become. Demand is holding up, just about, but only because of unprecedented domestic financial repression. Unless the ECB steps in very soon to restore confidence, Italy and Spain will no longer have market access.
10.13 As Spanish bond yields pass 7pc, Amy Wilson has looked at why this threshold is so important:
In Spain's case, paying a 7pc interest rate to borrow new money means it becomes extremely expensive for the country to pay for its public services and service its debts.
The country could find itself in the position of borrowing more money just to make its interest payments - and, like using a credit card to pay off a mortgage, that does not make it an attractive proposition to potential lenders.
In November last year, Italy's borrowing costs surged past 7pc, eventually costing Silvio Berlusconi his job as Prime Minister and ushering in Mario Monti's austerity government, which has helped to calm the country's lenders.
Even worse, when the yields on Greek, Irish and Portuguese government debt got close to 7pc, those governments had to seek bail-outs from the European Union and International Monetary Fund because borrowing in the market was no longer an option.
10.02 Greek unemployment has jumped to 22.6pc in the first quarter from 20.7pc in the fourth quarter of 2011. Youth unemployment rises to 52.7pc, female unemployment at 60.4pc.
Eurozone CPI fell 0.1pc in May from a 0.5pc rise in April.
Eurozone consumer price inflation set to ease sharply, according to PMIs, providing scope for ECB to cut rates
09.59 BREAKING NEWS...
Spanish 10-year bond yields have hit 7pc - a level widely-believed to be unsustainable.
Italy's at 6.306pc.
09.56 Euro has fallen to a session low of $1.25430.
The Spanish government has requested up to €100bn in EU aid to recapitalize its ailing banks and has asked for the external assessment to help determine exactly how much they need. The results of the audit are due later this month.
Meanwhile, Spain's banks borrowed €287.8bn from the ECB in May versus €263.5bn in April. That's a new record.
08.56 The FT in Germany has reported that Economic and Monetary Affairs Commissioner Olli Rehn is staying in Brussels instead of attending the G20 in Mexico on Monday.
08.54 Jose Garcia Margallo, Spain's foreign minister, has say it would be a catastrophe if Spain "left Europe".
He calls on the ECB to ease market tension. Adds that Germany should have take a longer view of the crisis.
If they throw one country to the wolves that will affect everyone, so they should have longer-term vision.
08.22 German Chancellor Angela Merkel says the IMF must be ready at all times to step in. She adds that the lack of a political union has led to debt mounting, addressing EU union is a "Herculean task" but is necessary.
Merkel says Germany is strong, willing to help Europe and the world. Europe should not opt for quick and easy solution to crisis. Policies are made for citizens, not markets. Spain was right to seek aid for banks as it needed to deal with the consequences of a property bubble. Spanish crisis due to "irresponsible" decade.
She adds that Europe needs more independent supervision of banks and the ECB should take a bigger role.
08.13 Greece's labour and social insurance minister Antonis Roupakiotis has said the interim government can guarantee pensionsfor July, but not beyond that.
He confirmed that social insurance fund finances were in a poor state and that the largest social insurance fund IKA would need €1.4bn from the state budget to pay for pensions, while the Manpower Employment Organisation would need a further €260m to pay unemployment benefits, despite the fact that only one in five unemployed received unemployment benefit.
07.35 The Guardian has reported that analysis by Credit Suisse estimates that up to 58pc of the value of Europe's banks could be wiped out by the departure of the "peripheral" countries.
Few large eurozone banks would be left standing and the banking sector could face a €370bn (£298bn) loss if the euro crisis results in the single currency bloc breaking apart, according to one of the first in-depth analyses of what might happen if the eurozone disintegrates.
07.28 German wholesale price index falls 0.7pc (month-on-month) in May after a 0.5pc rise in April. Not a good start to a day that sees the release of data on Spanish house prices, Italian Government debt, EU and US inflation and US jobless claims.
http://www.zerohedge.com/news/italy-sells-%E2%82%AC45-billion-bonds-yields-soar
Italy Sells €4.5 Billion In Bonds As Yields Soar
There was a time in 2011 when every European auction, particularly those in Spain and Italy, was followed with great interest due to a morbid fascination that it may well be their last. In 2012 this time has come much faster than last year. Earlier Italy sold a total of €4.5 billion in 3, 7and 8 year bonds which was at the top end of the range of expected issuance. The problem was in the unsustainable yields this debt sold for:
- €3 billion in 2015 bonds, B/C 1.59 vs 1.52 in May 14, yield soared to 5.30% vs 3.91% a month ago
- €627 million in 2019 bonds, B/C dropped from 2.27 on April 27 to 1.99; yield soared from 5.21% to 6.10%
- €873 million in 2020 bonds, B/C dropped from 2.08% on May 14 to 1.66%, yield soared from 5.33% to 6.13%
The relevant, and unsustainable pieces have been highlighted, and on top of everything these yields were well inside market prices so absent the bank overbid funded with ECB money the situation would have been even more dire. As a reminder, none other than Bloomberg yesterday made it very clear that Italy had 14 days to change its bond market dynamics before it too is "forced into receiving a bailout". Keep an eye on Spanish debt: if it continues blowing out and passes 7% all bets for Italy are off.Analyst views on the Italian auction via ReutersMICHAEL LEISTER, RATE STRATEGIST, DZ BANK, FRANKFURT"It's very much in line with expectations. The pricing side of things is a bit mixed. The three-year was a tad above secondary market levels. It's not the greatest of achievements given the concession we've seen building up not only today.
"What the market is focusing on is this rise in yield levels with the three-year rates at 5.30 percent. It's not the best of signals given this renewed focus on fundamentals and also on the back of the Spain downgrade...That said, however, the auction went sufficiently well to prevent a further quickening of the selloff we've seen today."NICK STAMENKOVIC, STRATEGIST, RIA CAPITAL MARKETS, EDINBURGH"Italy manages to reach the 4.5 billion euro target for its latest bond auction with reasonable demand but yields significantly higher than previous month."Clearly investors are demanding ever higher premium to buy Italian sovereign paper. With overseas investors shifting out of BTPs domestic investors are stepping up to the plate but for how long?"ACHILLEAS GEORGOLOPOULOS, STRATEGIST, LLOYDS BANK, LONDON"The auction was a bit better than the market feared it would be. I don't think lots of people called for a bad auction but there was some fear after the downgrade for Spain.
"Overall good demand, they raised the money. Yields are higher, of course, but they sold the bonds at a premium to the 10 o'clock cutoff."But, we didn't expect the Italians to mess this up. The message cares only about the higher yields, but in terms of the lasting message it is clear Italy can still fund from the market - at high levels, but it can still fund."ALESSANDRO GIANSANTI, STRATEGIST, ING, LONDON"They sold the maximum amount ... I think the huge concession over the last days helped the outcome of the auction and the fact that the bond with the biggest size, the 3-year, is still attracting demand from domestic players.""As long as Italy issues bonds staying in the short-term maturity, it will find demand. They will need to pay a higher yield but it can still issue the maximum amount. It will not be the case if they want to issue bonds above 3-years maturity."PETER CHATWELL, RATE STRATEGIST, CREDIT AGRICOLE, LONDON
"Strong three-year BTP auction, coming around 10 basis points through the secondary market, which is very very impressive although some of that overbidding should be taken in the context of very one-sided markets (i.e. a lack of proper two-way flow). We thought the March 2015 was too cheap in relative value terms and we expect it will continue to re-richen."The off-the-run auctions (Feb19, Mar20) are a similar story i.e. very big concession but the auctions have come through the secondary market levels. These auctions will be judged a success in the short term, but the trend in yields and spreads is something which requires something from the policymaker level to reverse."
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