Spain rumors and counter rumor fest - Spain seeks bailout without conditions similar to Greece , Ireland and Portugal - is Germany still taking the position that Spain must accept the terms that come with the money ? As usual , the denials , rumors , truths and half truths add to the confusion.....

http://www.guardian.co.uk/business/2012/jun/08/eurozone-crisis-germany-suffers-imports

2.24pm: It looks like the Spanish banking bailout will be discussed at a senior level on Saturday, but an announcement on the specifics may take a little longer. The Guardian's Giles Tremlett in Madrid says Spanish premier Mariano Rajoy is unlikely to formally request help until after an audit of the country's banks, scheduled for later this month. Tremlett writes:

The finance ministry has said that the first part of the independent audit of Spain's banks will be done by June 21. This will be a stress test carried out by two separate consultants and covering 90 percent of the banking system.
A second phase of auditing will go into greater depth, but finance minister Luis de Guindos has previously indicated that the first phase will give a good enough idea of how much money Spanish banks need. It is widely presumed that this will be when a bank bailout is formally asked for.

Peter Spiegel, Brussels correspondent at the Financial Times, hasconfirmation two eurozone conference calls will take place on Saturday, one with senior officials from european treasuries and a second with finance ministers themselves.

However, Spiegel says this is unlikely to lead to an immediate announcement:

Although Madrid is expected to declare its need for outside funding for its banks on the call, the size and the structure of the bailout is not expected to be decided right away. "You don't sign on the dotted line by next week," said one person briefed on the preparations.

1.50pm: The eurozone conference call rumours appear to be having some positive effect, regardless of whether they're true or not.
Spain's IBEX 35 is trading up 1%, the only market to do so, while French, German, Italian and British indexes are all down

1.35pm: Merkel has tried to ease Spanish concerns at a news conference with her latest visiting world leader, New Zealand's John Key (after hosting David Cameron yesterday).
She said:

It is always clear that those countries that want to [make use of] solidarity make the request themselves.
It's down to the individual countries to turn to us. That has not happened so far and therefore will not exert any pressure here or anything.

1.15pm: Back to Spain, where rumour and counter-rumour about the possible phone call on Saturday where the country will ask the eurozone for a bailout has had another twist.
Spain's deputy PM Soraya Saenz de Santamaria said no formal European meeting has been planned (but admits to not knowing every planned meeting of every minister).
He added that Spain's central government will pay almost €17bn to banks in its autonomous regions and officials are still trying to work out exactly how much the banks need to survive.

and....

http://www.telegraph.co.uk/finance/debt-crisis-live/9318264/Debt-crisis-live.html

14.07 Spain's heading towards a unique sort of bailout, one which would inject cash directly into its ailing banking sector and leave the rest of the country free from the strict, painful and deeply unpopular austerity measures Greece endured in return for its own rescue. But this unique treatment won't work, argues Nicholas Spiro:

Firstly, the EFSF guidelines on direct recapitalisation of banks make it clear that in order to be eligible for such assistance, candidates must have a "sound fiscal policy record". For a country that is currently nursing a budget deficit of 9pc of GDP and has significant problems enforcing fiscal discipline in its regions, it strains credulity to claim that Spain's woes are solely in the banking sector.

Eurozone countries that were forced to sign up to the standard "macroeconomic adjustment programmes" with their stringent conditions attached would almost certainly be incensed at the special treatment Spain would be receiving. While Greece is an outlier, Ireland may take particular umbrage even though its bank-focused problems were far more severe than Spain's at the time that it was bailed out. Flexibility in bail-out programmes could set a dangerous precedent for the eurozone.

13.23 Spain's deputy PM Soraya Sáenz de Santamaría says no ministerial-level meeting is planned, nor any formal European meeting on the nation's banks, but concedes that he doesn't know what every minister has in their diary. No decision has yet been made, he claims.

all over the road today.......

http://www.zerohedge.com/news/risk-reality

From RISK ON To REALITY ON

Submitted by Tyler Durden on 06/08/2012 08:51 -0400

• Belgium
 
• Bond
 
• European Central Bank
 
• Fitch
• France
 
• Germany
 
• Greece
 
• Ireland
 
• Portugal
• Reality
 
• Recession
 
• Sovereigns

From Mark Grant, author of Out of the Box

Hope Springs Eternal - Then Reality Shows Up

"We need more Europe. We don't only need monetary union, we also need a so-called fiscal union," she said. "And most of all we need a political union -- which means we need to gradually cede powers to Europe and give Europe control."

                             -Chancellor Angela Merkel; June 7, 2012

This comment seems innocuous enough on its face, more political rhetoric; but maybe not. No one is kidding anybody. Europe is controlled by the country with the largest and most stable economy and that is Germany. As money has fled from the sovereigns in Europe; it has poured into Germany as being “best of class” so as everyone else falters on the Continent and has slipped into recession there is but one man standing and that is the Berliner Bear. If there is someone serious that thinks that Germany does not presently control Europe; I have yet to find him. So what is Germany really saying here; let me give you my translation:


We need more Germany. We don't only need monetary union, we also need a so-called fiscal union," she said. "And most of all we need a political union -- which means we need to gradually cede powers to Germany and give Germany control.You may ascribe what motives you like from the benign to the most worrisome but, to me, the implication is obvious and the case being made by Berlin is quite clear and requires no Wizard of Oz to look behind the curtain and see who pulling the levers. As I reflect back historically here is the manifestation of destiny; the “third time is the charm” in action. It was quite impolite prior to World War II to discuss what was going on in Germany as hadn’t they assured everyone of what they were not going to do, hadn’t they signed any number of treaties promising a world of peace and prosperity and why would anyone think anything else as that is what they told us and yet, as our forefathers so painfully learned, what was said was not exactly what then took place. 

There are many, today, who will get riled and raise their backs that I even deign to bring up this issue but it must be brought up, it must be considered if, for no other reason, out of consideration for those that gave their lives to stand in defense and while a final conclusion does not need to be found it would be very wrong not to honestly look at what is going on and wonder and so I wonder.Spain---Fogged In

 “For what we regard as reality is conditioned by the theory to which we subscribe.”

                          -Stephen Hawking

Lately I have listened to many that seem somewhat confused about what Europe can and cannot do presently and so I thought I would take a moment this morning to set the table straight. First and foremost there is no ESM, it does not yet exist and so cannot be used to do anything. It may well come into existence somewhere between July-September but it is not yet in existence. The present stabilization fund, the EFSF, has depleted assets after the bailout of Greece, Ireland and Portugal and has nowhere near the capital that would be required to provide any real financial assistance to Spain. The EFSF also can only give money to sovereign nations and has no authority to give money to banks and while this could be changed it would have to go back to the national parliaments to get changed and it would take months to revise its charter which is something that has not even been started so the conjecture about using the EFSF to give money directly to the Spanish banks is just hopes and prayers based upon misinformation. 

In fact, there is only one European institution that is already authorized to give money directly to banks and that is the European Central Bank but this is also a construct that is full of with difficulties. Yesterday Spain was downgraded three full notches by Fitch with a negative outlook which complicated matters. What is the ECB to do just hand some of the Spanish banks $125 billion which is more likely $350-400 billion in my estimation and to which banks; just some of the Spanish banks or all of the Spanish banks and who is to supervise the re-capitalization as the banks are supervised by the Spanish Central Bank and not the ECB and so the banking system in Spain would have to be totally re-organized and power ceded which would likely take months, if politically possible, and what would the other nations in Europe say if the ECB is to help the banks of just one country when they did nothing for Dexia (Belgium, France and Luxembourg) or the Irish banks and one could reasonably imagine screams all across the Continent. Perhaps some novel solution is found but this is not the muddling along kind of thing at all. This is the changing of charters kind of thing, the changing of national banking regulations kind of thing; the ceding of power to Europe kind of thing and anyone who thinks that this can all be accomplished in a matter of days is out having tea with Cinderella’ fairy godmother. Yet equities have rallied and bond spreads stopped widening on just this kind of hope but I predict that this will all be short-lived because, on its face, it is irrational. There is nothing wrong with having hopes and prayers but to base investment decisions on irrational interventions of some Divine power where there is not even a door for the Divinity to enter is just poor judgment by this name or any other you may concoct. It is no longer a case of “Risk on/Risk off” but of “Reality on/Reality off” and I advise you to keep pressing the “Reality on” button!

“Reason is a choice. Wishes and whims are not facts, nor are they a means to discovering them. Reason is our only way of grasping reality; it is our basic tool of survival. We are free to evade the effort of thinking, to reject reason, but we are not free to avoid the penalty of the abyss we refuse to see.”

                          -Terry Goodkind, Faith of the Fallen

and....




http://www.zerohedge.com/news/crazy-pills-here-comes-refutation-rumor-conference-bailout-broke-and-consultants

Crazy Pills: Here Comes The Refutation Of The Rumor Of The Conference Of The Bailout Of The Broke... And Consultants

Submitted by Tyler Durden on 06/08/2012 08:21 -0400

• International Monetary Fund

Just as we expected earlier, when we suggested that Spain is waiting to see Germany's preliminary response to its (re)newed push for a bailout, Spain has seen the outcome, and does not like it.

• SAENZ SAYS KNOWS OF NO `TECHNICAL' MEETING ON SPAIN

And another just brilliant headline:

• Consultants, IMF to Determine Spain Banks’ Needs

http://www.telegraph.co.uk/finance/debt-crisis-live/9318264/Debt-crisis-live.html

13.01 Angela Merkel has waded in to the Spanish situation, but said only that they won't force it to take a bailout. She said Germany won't pressureany country to apply for eurozone aid, but that rescue measures were in place if needed.

But Channel 4's Faisal Islam has a slightly different take:

12.51 Spain has said that the first independent report into the health of its banks - which it said it would wait for before deciding whether to ask for EU bailout money - is due out on June 21. The second is due July 31. Meanwhile, reports continue to suggest that the country will go back on its previous statement and ask the EU for cash to recapitalise its banks tomorrow.

11.37 While we're on the topic of bank bailouts: the chairman of Cyprus Popular Bank, the country's second-largest lender, says it will "realistically have to seek" an EU bailout to recapitalise. Michalis Sarris, a former finance minister, said that there's no longer stigma to it anymore. That will cheer Spain, which, Bruno Waterfield says, is looking increasingly likely to announce a plea for EU cash tomorrow:

11.21 German government spokesman Steffen Seibert has declined to comment on whether Spain would request a bank bailout this weekend, but said instruments exist to provide help if needed.

It is the decision of the Spanish government alone whether it seeks financial help... The eurozone instruments are in place.

10.34 Faisal Islam suggests that the IMF report due out on Monday isn't the only good reason for Spain to time a bailout plea for this weekend.

10.23 After reporting that Spain was preparing to seek a bank bailout from the EU this weekend, Reuters is now quoting a government spokesperson as saying she was unaware of any pending announcement. Has the eurozone rumour mill got ahead of itself, or is the government talking down the rumour until markets have closed? We'll bring you more on this as it comes in.

Spain situation clear as as mud , par for the course.....

http://www.abc.es/20120608/economia/abci-espana-pedira-rescate-este-201206081034.html

Early in the morning a teletype was assumed the partial redemption redemption request by Spain on Saturday. Reuters announced under the heading of 'exclusive' that Spain would be seeking this weekend a financial package to shore up their banks in trouble. The British agency quoted a German source and two senior European Union officials. Minutes later, Reuters itself a government spokesperson mentioned that the news dismounted and denied the request of any rescue. Meanwhile, government sources told ABC claimed that: "The Spanish Government does not comment on speculation and referred to statements made ​​yesterday on this subject the president."

Two hours later came the total negation in the words of Secretary of State for the Budget. Asked by the media, Marta Fernandez Currás denied "categorically" that Spain will ask the European Union rescue Saturday.

From Europe also denied most. The European Commission ruled that the Spanish Government had sent "no request" . "We are unaware of any request" by Spain, EU sources indicated. At the same time, remember that there are mechanisms in place ready to put it if necessary. In fact, some analysts believe the information published corresponds to a maneuver in Brussels and Germany to increase the pressure on Spain toseek help as soon as possible , preferably before the conclusion of the Greek elections on 17 June.

Meanwhile, the German government insisted Friday that the decision to ransom for the Spanish banking sector s and should be taken in Spain . "All I can say is what I've been saying all week. The decision on the bailout is a thing of the Spanish government. If you decide to apply, there are European tools with their rules, "said German government spokesman Steffen Seibert.

Rajoy already ruled yesterday to give a figure on how much amount the bank recapitalization until independent auditors hired by the Executive finalize their report. "I must be wise man," interrupted the president.

Spain Will you ask the rescue?

Reuters reported this morning that the request would be made ​​at a meeting of finance ministers from the euro zone to be held on Saturday, according to European officials say "The announcement is expected on Saturday afternoon , "according to a statement n of EU officials told Reuters.

According to ABC moved on Thursday, the International Monetary Fund (IMF) announced that Spanish banks need at least 40.0000 million euros in its latest report on recommendations of economic and financial policy .

The partial rescue of Spain could be done through the injection of aid in the FROB, as suggested by the government of Angela Merkel. If you carry out this formula for direct recapitalization of banks, the Spanish government would not have to adopt new economic reforms imposed from outside, as reported two days ago Germanic official sources . Of course, carried out the bank bailout, the financial sector would have to pass a new reform imposed from Brussels.

http://www.athensnews.gr/portal/11/56167

Spain to request EU bank aid on Saturday: sources

8 Jun 2012

Spanish Prime Minister Mariano Rajoy adjusts his glasses during a news conference, 7 June 2012 (Reuters) Spain is expected to request European aid for its ailing banks at the weekend to forestall worsening market turmoil, becoming the fourth and biggest country to seek assistance since the eurozone's debt crisis began, EU and German sources said. Four senior EU officials said finance ministers of the 17-nation single currency area would hold a conference call on Saturday to discuss a Spanish request for an aid package, although no figure had yet been set. The Eurogroup would issue a statement after the meeting, they said. "The announcement is expected for Saturday afternoon," one of the EU officials said. The move comes after Fitch Ratings slashed Madrid's sovereign credit rating by three notches to BBB from A on Thursday, highlighting Spain's exposure to its banks' bad property loans and to contagion from Greece's debt crisis. "The government of Spain has realised the seriousness of their problem," a senior German official said. He added that an agreement had to be reached before the Greek general election on June 17 which could cause market panic and lead to Athens leaving the eurozone if parties opposed to the terms of an EU/IMF bailout win. The EU and German sources spoke on condition of anonymity due to the sensitivity of the matter. In Madrid, where the Spanish cabinet was holding its weekly meeting, a government spokeswoman said she was not aware of any pending announcement on a bank rescue. She recalled that Prime Minister Mariano Rajoy said on Thursday he would await the outcome of two external audits later this month before talking with Europe about how to recapitalise troubled lenders. In Brussels, the European Commission's spokesman on economic and monetary affairs, Amadeu Altafaj, said he could not confirm that there would be a teleconference of finance ministers and said Spain had made no request for aid. "There are no signs of a request," he said. The eurozone has been under strong pressure from the United States and other major partners to take swift, decisive action to prevent the debt crisis spreading and causing greater damage to the world economy. Fitch said the cost to the Spanish state of recapitalising banks stricken by the bursting of a real estate bubble, recession and mass unemployment could be between 60-100 billion euros - or 6 to 9 percent of Spain's gross domestic product. The higher figure would be in a stress scenario equivalent to Ireland's bank crash. An International Monetary Fund report, due to be published on Monday, is expected to estimate Spanish banks' capital needs at a lower figure of 40 billion euros, but market conditions have deteriorated since the data was collected, officials said. Bailout lite? European shares and the euro fell amid mounting concern over Spain following the Fitch downgrade. Spanish bond yields rose after the steep credit rating cut. While Spain would join Greece, Ireland and Portugal in receiving a European financial rescue, officials said the aid would be focused only on its banking sector, without taking the Spanish state off the credit markets. That would be crucial to avoid overstraining the eurozone's rescue funds, which would struggle to cover Spanish government borrowing needs for the next three years plus possible additional assistance for Portugal and Ireland. The sudden escalation of the Spanish banking crisis, dramatised by last month's hasty nationalisation of troubled lender Bankia, has contributed to raising Italy's borrowing costs towards danger levels. The deputy governor of the Bank of Spain told parliamentarians on Thursday that 9 billion euros would also be needed to cover additional losses at nationalised banks CatalunyaCaixa and NovaGalicia, according to one source. Treasury Minister Cristobal Montoro caused consternation on Tuesday when he said Spain was effectively being shut out of capital markets by spiralling borrowing costs. Madrid managed to sell 2.1 billion euros in bonds on Thursday at higher yields, showing it could still access credit markets. The aim of a European bank rescue package would be to relieve pressure on the state and enable it to keep borrowing on the markets. A "bailout lite" would also help salve Spanish pride. Spain is the world's 12th largest economy and No. 4 in the eurozone. EU and German officials have cited prickly national pride as a barrier to requesting a full assistance programme. Any political conditions would be light, related to the banks and would probably not add to the austerity measures and structural economic reforms which Rajoy's government has already put in place, EU and German sources said. The European Commission and EU paymaster Germany both agreed in principle last week that Spain should be given an extra year to bring its budget deficit down below the EU limit of 3 percent of gross domestic product because of a deep recession. German Chancellor Angela Merkel said on Thursday that Europe was ready to act to ensure the stability of the eurozone. "It is important to stress again that we have created the instruments for support in the eurozone and that Germany is ready to use these instruments whenever it may prove necessary," she said, referring to the eurozone's temporary bailout fund, the EFSF, and to its permanent successor, the ESM. It was not immediately clear which of the funds would be used for the Spanish package. The ESM's rules are more flexible and do not require unanimous agreement by member states, avoiding the risk of political obstacles in a small creditor country. But the permanent fund is only expected to enter into force in mid-July, once ratification is completed. (Reuters) and....... http://www.zerohedge.com/news/germany-responds-renewed-spanish-request-cash-please-do-no-backdoor-bailout Germany Responds To (Re)newed Spanish Request For Cash: Please Do, But No Backdoor Bailout Submitted by Tyler Durden on 06/08/2012 07:02 -0400 Germany   Reuters Just as we noted minutes earlier, following the Spanish (re)submission its (still rumored) bank bailout application, the ball was in Germany's court. And sure enough, Germany has just come out with the token response, which was the worst possible outcome for the insolvent country, which may force it pull the unofficial bailout request for the second time. FromMarketNews: "The German government on Friday reaffirmed that the European bailout funds were ready to support Spain, if Madrid applies for aid and accepts the conditions tied to it. “The decision is up to Spain. If it makes it, then the European instruments for it are ready,” government spokesman Steffen Seibert said at a regular press conference here. “Then everything will run under the usual procedure: a state makes a request, it will be liable and it accepts the conditions tied to it.” Seibert declined to comment on rumours of a possible Eurogroup teleconference this weekend to consider an aid request from Spain that might be forthcoming." Translated: the framework is in place. As in,no new bailout instruments are being contemplated. Notice something here: no use of the word FROB anywhere. What is the FROB? Why the Spanish Fund for Orderly Bank Restructuring or bank bailout fund, which as a reminder, is what was rumored on Wednesday by Reuters and the FT as the loophole that Germany had agreed to fund in order to bypass funding Spain at the sovereign level with debt Spain can't afford to incur. In other words: the reason for the biggest market ramp of 2012... has just been found to be non-existant. Gotta love Europe. And with this disappointing German preannouncement to the Spanish pre-rumor of a bailout pre-demand, it is very likely that the entire "Spanish-rescue" weekend script, as explained moments ago, has just been scuttled.