Greece election euphoria lasted just a few hours longer than the Spanish bank bailout euphoria.......half life of scam bailouts or elections that change anything shrinking faster and faster !

http://soberlook.com/2012/06/italy-spain-spread-reaches-record-as.html?utm_source=BP_recent

MONDAY, JUNE 18, 2012

Italy-Spain spread reaches a record as Spain's fiscal problems come into focus

As analysts look deeper under the hood of Spain's public finances, they are finding an an increasingly unstable engine. It's not just the growth in the debt to GDP ratio that worries people but also the "contingent" liabilities and other debt not yet included in this ratio. In many cases the central government will be stepping in to bail out regional governments,some of which are in trouble (sometimes unable to pay vendors such as garbage collectors, etc.). FROB (Fund For Orderly Bank Restructuring) that gets consolidated into government's balance sheet has contingent liabilities to the banking system. And the government continues to guarantee bank-issued unsecured bonds that banks use as collateral at the ECB to borrow funds. That allows them to buy more Spanish government paper to support Spain's bond auctions. The chart below shows how government guarantees have grown in the past few years - both on an absolute basis as well as the percentage of the GDP.

Spain's government guarantees

Italy is also facing some of the same issues. But at this point market participants' view is that even though Italy has more debt to roll, Spain's issues are more extreme - particularly the banking sector. The market views the recent announcement of Eurozone's support for Spanish banks as lacking in detail and insufficient in size. Many view Spain's property market bubble as dwarfing that of Italy.

Italy to Spain 10-year spread has hit a record (as did the Spanish yields, spreads, and CDS levels this morning). In fact some in the market are now putting on Italy to Spain spread trades (long Italy short Spain).

Italy 10y yield minus Spain 10y yield.

With the Greek elections out of the way, Spain will now be the primary focus.

and.....

http://www.zerohedge.com/news/troika-considering-changing-irish-bailout-terms-rte-says

Troika Considering Changing Irish Bailout Terms, RTE Says

Submitted by Tyler Durden on 06/18/2012 08:11 -0400

• Creditors
 
• Greece
 
• Ireland
 
• Portugal

The Spanish precedent is indeed spreading, and as noted here previously a week ago, the Irish demand to get equitable treatment may be about to be granted:

• TROIKA CONSIDERS CHANGING IRISH BAILOUT TERMS, RTE SAYS

However:

• BROADCASTER RTE DOESN'T CITE SOURCES FOR BAILOUT REPORT

So most likely just a trial balloon to see the European response. But why not? What is the downside: Europe blinked and now it is up to the peripherals to demand the same. Next up: Portugal, Greece (again), and again... Spain. And so on, until the socialist utopia finally does run out of other people's money.

From RTE:

The Troika is considering making big changes to the terms of Ireland's bailout as part of a concerted effort to organise the country's return to the markets, RTÉ News has learned.

The changes would focus on extending the repayment schedule of Ireland's bailout loans.

At present Ireland's loans to the EU are an average of 15 years long.

The Troika believes the country has been sticking to its bailout targets and its cost of borrowing would be lower were it not for the worsening of the euro zone crisis.

In an effort to secure a return of Ireland to the markets, sources say the Troika is considering adjusting the terms of the country's repayments. Instead of paying back EU loans over an average of 15 years it is considering extending them to 30 years.

The issue has not yet been raised with the Irish Government or with EU leaders.

The move would amount to Ireland's official creditors taking some pain and would require political agreement.

However, Troika sources say the step is being considered in an effort to convince the markets that private sector bondholders would not be burned in future by Ireland.

and.....


http://www.zerohedge.com/news/five-days-spanish-bailout-you-are-here

Five Days Since The Spanish "Bailout": You Are Here

Submitted by Tyler Durden on 06/18/2012 08:19 -0400

• Bond
 
• Germany

With few (if any) natural buyers of Spanish debt (especially given the lack of CDS-cash basis now), Spanish bonds continue to crumble lower in price and higher in yield/spread. For the first time ever, 10Y Spanish bond yields have passed 575bps over Bunds - currently trading at 7.15% yield. Since the post-banking-bailout open, Spanish bond spreads have soared a remarkable 114bps and whether this is seen as the fulcrum security or Italian bonds (which are also deteriorating rapidly this morning), it would appear that just asSpiegel reports today from the G-20, via a senior EU official: "If Germany Doesn't Make A Move, Europe Is Dead".

European sovereign bond spread movements post Spanish bailout

http://www.zerohedge.com/news/and-spanish-10-year-record-712-sp-futures-down-and-eurusd-unchanged

And... Spanish 10 Year At Record 7.12%, S&P Futures Down And EURUSD Down

Submitted by Tyler Durden on 06/18/2012 06:38 -0400

Below is a market recap where we find that, yes, as we expected yesterday, the half-life of yesterday's Greek election euphoria is shorter than even that of the Spanish bailout.

• S&P500 Futures down
• EURUSD down 0.1%
• Spanish 10Yr yield up 24bps to 7.12%
• Italian 10Yr yield up 12bps to 6.05%
• German 10Yr yield little changed to 1.44%
• Bund future up 0.08% to 142.4
• BTP future down 0.75% to 98.44
• • Sterling spot down 0.16% to $1.569
  • 1Yr euro cross currency basis swap up 1bps to -52bps
  • Stoxx 600 up 0.07% to 244.38
  Hopefully this is not a surprise to Zero Hedge readers, who were warned on Friday, that courtesy of the idiotic desperation press leak, we shifted to a risk/reward momentum to a Tsipras victory being theonly positive Risk On catalyst as it would activate a global central bank intervention. Looks like that is now off the table.
  So... now what?

http://www.zerohedge.com/news/europhoria-fades-spanish-banks-may-need-whopping-%E2%82%AC150-billion-loan-loss-provisions

As Europhoria Fades, Spanish Banks May Need Whopping €150 Billion In Loan Loss Provisions

Submitted by Tyler Durden on 06/18/2012 07:09 -0400

• Bond
 
• Eurozone
 
• fixed
 
• Greece
 
• Newspaper

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 billionmore 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.

From Market News:

An independent auditors' report to be published  later this week on the financial needs of the Spanish banking system will show that as much as E150 billion in additional loan loss provisions may be required,  Spanish business daily El Confidencial reported Monday.

The provisioning estimates contained in the anxiously awaited report, commissioned by the Spanish government and conducted by private consultants Oliver Wyman y Roland Berger, will be higher than previously estimated because their calculations now include large provision figures for the retail mortgage sector, the newspaper said, citing sources at various banks.

The E150 billion in required loan loss reserves is not to be compared directly with the E100 billion of recapitalization aid offered to Spain earlier this month by its Eurozone partners. However, the strong increase in required loss provisions will raise the capital need to be estimated by the consultants, El Confidencial said. 

It said the capital requirement for Spanish banks -- after reserves and profits are consumed -- could be "amply superior to E60 billion," though it did not purport to be citing from the auditors' report.

and....

http://www.zerohedge.com/news/right-now-greece

Right Now In Greece

Submitted by Tyler Durden on 06/18/2012 07:02 -0400

• Germany
 
• Greece
 
• Unemployment

While the market is finally figuring out what was obvious about 12 hours ago, that even if, and that is a big IF because Pasok has made it clear it will not join ND outright, there is some coalition government formed it will most likely last all of a few weeks before the whole charade has to be repeated once more as the entire plan is to keep Greece without a government as its last assets are plundered via the Greek "rescue vehicle", events in Greece are once again going through their preset moves. Below, courtesy of Athens News is what is happening in the Greek capital today. Needless to say, if the headline comes that Samaras is unable to form a government, watch out below.

From Athens News:

12.55pm Antonis Samaras has received theexploratory mandate to form a government from the president. Speaking to the press at his meeting with the president, Samaras said:

I will try to form a government with the pro-European parties. We have to make the necessary amendments to the programme so that our people will get out of unemployment and out of the hardships that Greek households are going through. The new government has to be decisive on the issue of social cohesion. National understanding is imperative. 

Responding, Papoulias said: 

I want to congratulate you once more for your success and to underline that there is a great need for the formation of a government. The country cannot stay not even one hour without a government. I wish you every success in the effort that you are doing for the formation of a government.

12.50pm At noon, caretaker Prime Minister Panagiotis Pikrammenos tendered his government's resignation to President of the Republic Karolos Papoulias. The caretaker government will remain in office until the new government is sworn in.

12.35pm Antonis Samaras will meet with Syriza leader Alexis Tsipras at 2pm in parliament and with Pasok's EvangelosVenizelos at 6pm, New Democracy has announced

*  *  *

And perhaps most importantly, Germany will not renegotiate contrary to more stupid rumors:

1.40pm After two leading German politicians called for some easing of the deadlines for Greece to meet its memorandum targets (see 10.15am), a  government spokesman has said that Germany does not believe the time is right for granting Greece any leeway or additional time on its reform commitments.

"It's decisive now for the troika to be convinced that Greece will stick to its agreements and fully implement the agreed reforms. Now is not the time for any kind of discounts to Greece," said deputy government spokesman Georg Streiter. Asked about whether there was any room for giving Greece extra time to meet its reform targets, as suggested by German Foreign Minister Guido Westerwelle earlier on Monday, Streiter said: "We stand by what has been agreed."