http://www.danielestulin.com/2012/06/05/bilderberg-reportinforme-2012-part-1/

Bilderberg Report / Report 2012 Part 1

Jun052012

Part 1 / Part

We hung the first part of the Bilderberg report directly related to Spain. Summary: The situation is critical. Bilderberg is determined to sacrifice Spain to save a part of the financial system.

BILDERBERG: "SPAIN WILL BE sacrificed."

Bilderberg Report / Report 2012 Part 1 Spain will be sacrificed

THROUGHOUT the three day Bilderberg meeting, European bankers, American Government Officials and international money managers Conducted tense discussions behind closed doors on the wisdom of Germany Extending the country's credit to paper over the indebtedness of the rest of Europe. One German Bilderberger Pointed Out That Germany's resources are finite, while another German Stated Matter Of Fact That "it would be impossible in the Currently rarified Political and Economic climate to try and convinces German voters to support Spain, a country Plagued by corruption and inefficiency. "

The key message from the meeting: come hell or high water, it is imperative to preserve the Functioning of the banking system. Spain's Vice President received a Dose of humility When she tried to push the issue of "responsibility" telling her high powered German colleagues Bilderberg That They Should issue Eurobonds to save the system. The reply WAS more than telling: "go pound sand, little girl," is how Bilderberg elite high powered replied to "Soraya's" baseless pretensions. Eurobonds are guaranteed by Germany would be Spent But mostly by Europe's PIIGS.

CONCLUSION Could Have Been the more frightful for Spain's immediate future. Spain will be sacrificed on the altar, of high finance. "Why would we want to save you, if Spain has lied about the depth of STI Financial troubles?" Asked one German participant of Spain's vice president."Your banking system is worthless. Do you have equity might be of interest That to anyone? "The answer Was a resounding," NO. "One official U.S. Government Stated That" the time has come to press the alarm button. "

The growing sense of panic WAS as the weekend progressed and more and more Deliberations Became tense. Unlike Spanish Citizens, Bilderberg has access to a complete flight data on deposit money from Spain Which They believe to be twice the 66.2 billion euros Announced in March.

"March Was an eternity ago in Financial Terms," as one Bilderberg noted. Hard numbers speak for Themselves. The debt of Spanish Financial Institutions is 109% of Gross Domestic Product, twice the amount in France or Germany, and three times That of the United States. Unpayable loans in the construction industry are 40% of GDP in real terms, and not the 20% the Government Has Been Rajoy selling to the world.

Another Bilderberg Stated That "The Problem with Spain Is That STI is an industry construction 800kg gorilla in a china shop," as large as the Entire manufacturing sector. By contrast, in Germany, construction is 20% the size of manufacturing.

Another Bilderberg Pointed out That One year ago, the ratio of financial-sector debt relative to Gross Domestic Product Declined from $ 8 trillion to $ 6.1 trillion. One trillion dollars of These can be Attributed to Loses the collapse of Lehman Brothers, JPMorgan Chase's purchase of Bear Stearns, and the Bank of America-Merrill Lynch merger.

In conclusion, the Spanish banking system Held Including Spanish bank debt of Spanish Households are going to die. As I Stated on record on May 31, Spain's leading bank, Banco Santander has an Unpayable debt of over 800 billion euros. Obviously Bilderberg knows this.Metastasis has spread to all parts of the system. Shadow Masters Have Spoken and written the script Has Been. It Remains to Be Seen how long the actors take to play out Their parts.

There is a solution. Spain Must leave the immediate euro and go back to Being an independent nation-state republic.

and...

http://www.zerohedge.com/news/fitch-follows-sp-slashes-spain-3-notches-bbb-only-moody-left-step-3-collateral-downgrade-immine

Fitch Follows S&P, Slashes Spain By 3 Notches To BBB, Only Moody Is Left - Step 3 Collateral Downgrade Imminent

Submitted by Tyler Durden on 06/07/2012 12:48 -0400

First it Egan-Jones (of course). Then S&P. Now Fitch (which sees the Spanish bank recap burden between €60 and a massive €100 billion!) joins the downgrade party of rating agencies that have Spain at a sub-A rating. Only Moody's is left. What happens when Moody's also cuts Spain from its current cuspy A3 rating to sub-A? Bad things: as we explained on April 30, when everyone has Spain at BBB or less...If all agencies downgrade Spain to BBB+ or below, the ECB could increase haircuts by 5% on SPGBs

The key aspect in terms of the Spanish downgrade(s) is the ECB's LTRO. If all three rating agencies move Spain to BBB+ or below then under the ECB's current framework it moves into the Step 3 collateral bucket which requires an additional 5% haircut across the maturities. In classifying its risk management buckets, the ECB uses the highest of the ratings to determine an asset's position (unlike the sovereign benchmark indices which use the lowest rating, in general). Fitch and Moodys currently rate Spain at A and A3 respectively, with both having a negative outlook in place leaving only a small downgrade margin before Spain migrates to the lower ECB bucket.

Italy's position is marginally more precarious in that it shares Spain's A3 rating from Moody's but is rated lower at A- by Fitch, and is similarly outlook negative from both agencies. One would hope ECB pragmatism would prevail and move to be more accommodative on its collateral haircut rules on sovereign debt.

The weakness of the eurozone's growth outlook is undermining the efforts of many sovereigns to rein in budget deficits, thereby highlighting the self-defeating nature of the fiscal compact as currently defined.Including the political impact, this has potential to lead to further downgrades

LTRO funding is not suitable when collateral values are unstable LTRO, like all repo funding, should only have been implemented with quality assets to avoid excessive margin calls. In 2009-10, when the operations were used to good effect, the majority of European sovereign assets were still perceived to be 'risk free'. 5-year SPGBs rallied from 4.95% in mid-2008 to 2.62% in December 2009 and non-performing loans were at roughly half of their current levels. In 2009, despite economic weakness, risk had generally been contained through continued fiscal programs, and with the ECB providing continued cheap funding it was sufficient to allow some normalization. The key difference between then and now is that sovereigns no longer have the ability to utilize the fiscal side. When the ECB announced the twin LTROs at the end of last year the sovereigns were clearly in a different state from 2009.

If the ECB believes in the mandated reforms it should be comfortable with warehousing sovereign risk

If the ECB believes in the currently prescribed course of reforms and their implementation it should have little issue with holding a major sovereign's collateral on its balance sheet. Taking this a step further, the ECB is generally concerned with moral hazard, which along with subordination, is likely also a reason why we have yet to see the SMP program buying bonds recently. But this is a double-edged sword in that it gives investors little confidence in the sovereigns' recovery prospects if the central bank appears to be in internal turmoil and is showing no action besides utilizing measures that are more suited to a strengthening market. One of our common refrains during the crisis is that moral hazard should not frame the reaction function of central banks. Rather, the over-riding and immediate objective of policymakers during a crisis needs to be avoiding non-linear or dual equilibrium risk. This requires aggressive and bold policies to be enacted. Europe's policymakers have notably failed on this front, and, hence, we have a crisis that has entered its third year.

The ECB’s discomfort is no comfort to investors, eroding confidence

The key question remains in Spain as to who is the marginal buyer of debt beyond the domestic banks and primary dealers. Although the Spanish Treasury has sold a significant amount of its 2012 requirements, as things currently stand the country faces a multi-year funding problem. The extent to which domestic savings filtering through to bond buying is limited given that the general level of savings is likely at its limit. Banks, Santander and BBVA, have also said that they have no more capacity for further sovereign bond purchases given they are at the limit of their risk concentration limits (link), which we think was rather diplomatically put. One risk is that domestic institutions shorten their SPBG holdings and focus more on bills, which would likely be unaffected by any debt restructuring.

We will see a worse situation before any meaningful response is produced by the ECB: QE

Our view is that things will get significantly worse before any meaningful policy response occurs. From the ECB?s perspective this entails pre-announced QE in a size which is commensurate to the problems faced. If the ECB believes in the actions taken by sovereign governments, which it has largely mandated, then its current responsibility is to stabilize sovereign markets in order to facilitate sovereigns' continued financing. The key inhibitor is the deterioration in the political union and the consequent ability to formulate a political response. Absent a proportional policy response, euro breakup remains more probable than possible at this juncture.

Key takeaways for us are:

the 5% haircut that will force margin calls on the most cash-strapped banks;

the 10% funding level beyond which the ECB's intervention in the banking system becomes restrictive and self-defeating;

LTRO funding is not suitable when collateral values are unstable LTRO, like all repo funding, should only have been implemented with quality assets to avoid excessive margin calls;

greater ECB use defers the point at which a sovereign or bank faces a funding challenge, but accelerates the point at which a return to private market financing is unlikely without external support;

and finally, the most effective response for Spain would be to de-link sovereigns and their banks, following recent steady accumulation of sovereign debt by peripheral banks, in our view.

* * *

and....

http://hat4uk.wordpress.com/2012/06/07/euroblown-as-spanish-rules-suddenly-apply-the-transfer-of-sovereignty-continues/

EUROBLOWN: As Spanish rules suddenly apply, the transfer of sovereignty continues

Merkel’s mad desperation is more obvious by the day

As more and more of what’s left of European Sovereignty moves towards Berlin-am-Brussels, it’s increasingly clear that the rules are being made up as we go along.

Thus the word from Berlin this afternoon is that a deal is under the table allowing Spain to recapitalise its stricken banks with aid from its European partners – but avoid the embarrassment of having to adopt new economic reforms imposed from the outside, German officials say.

What one might also observe is that, as the debtors become more and more impossible to lose from Angela’s Fiskal Union (or bail out) bullying is less and less noticeable.

Thus, while Berlin remains firm in its rejection of Spain’s calls for Europe’s rescue funds to lend directly to its banks, German officials said that if Madrid put in a formal aid request, funds could flow without it submitting to the kind of strict reform programme agreed for Greece, Portugal and Ireland.

Instead, Spain would only have to agree to new conditions tied to the reform of its banking sector. I will give you just the one guess as to how that’s going to go down in Dublin, Athens and Lisbon.

A Slogger has pointed out an interesting (in the Chinese sense) piece by Richard N. Haass, President of the US Council on Foreign Relations. His subject is the relationship between globalism and sovereignty, and these are the key extracts:

‘The world’s 190-plus states now co-exist with a larger number of powerful non-sovereign and at least partly (and often largely) independent actors, ranging from corporations to non-government organisations (NGOs), from terrorist groups to drug cartels, from regional and global institutions to banks and private equity funds….This is not to argue that Microsoft, Amnesty International, or Goldman Sachs be given seats in the United Nations General Assembly, but it does mean including representatives of such organisations in regional and global deliberations when they have the capacity to affect whether and how regional and global challenges are met…..Globalisation thus implies that sovereignty is not only becoming weaker in reality, but that it needs to become weaker. States would be wise to weaken sovereignty in order to protect themselves, because they cannot insulate themselves from what goes on elsewhere. Sovereignty is no longer a sanctuary….sovereignty must be redefined if states are to cope with globalisation.’

The flaw in the argument lies right there in the tail-end – that is, the assumption that Globalism is here to stay, and will increase. Me, I’m looking through the other end of this telescope: Globalism has been a terrible mistake, and so have supranational States. We need to get back to devolved self-suffiency at and below national level.

But at the moment, what we need is not what we’re getting; and nowhere is this more apparent than in the complete screw-up formerly known as the EU’s eurozone. Having created the original Common Market with the aim of caging the German invasion habit forever, we have allowed a single currency’s total imbalance to not only set Germany free from its enclosure, but also ensured that it now has a new non-violent form of invasion called Fiscal Union. (In German,Fiskalpakt…..which oddly enough rhymes with Krystallnacht. As Twain remarked, history doesn’t repeat itself, but it does rhyme.)

Merkel’s vision (if her meeting with Scameron is anything to go by) is a Europe where everyone speaks English (one needs clarity when dealing with one’s servants) and all the edicts are in Made in Germany. The French will do the farming and cooking, the Italians will cook the books, and the Greeks will be there whenever any Teutonic coward feels like giving them a good kicking. As Kathimerini reports today, “German Chancellor Angela Merkel said that she supports a two-speed European Union, with a core group in the euro pressing ahead with deeper integration and the U.K. among the others relegated to Europe’s margins”.

“Those in a monetary union will have to move closer together,” Merkel said in an interview with ARD television today. Closer my God to thee and all that, but it still comes down to the same result: the collection and centralisation of power. Ed West wrote a piece somewhere recently (the links are good here, aren’t they?) observing that the governments would screw up first, followed by the banks, and then the media and security services would run everything. Although not an attractive prospect, I’d say the banks will go first and that’ll do for the Governments. Specifically, the ISPs and the security services would be in a near-unassailable position then, but they won’t be able to keep the lid on things. I still believe something better will come out the other end, but if it’s OK with everyone else I may hibernate until we’re there.

I am increasingly coming round to what I call the MIM explanation of contemporary weirdness. The MIM stands for Malignancy, Incompetence and Madness. My hypothesis is that the elite 7% is made up of folks who have one of these dimensions predominating. Thus Bob Diamond is so malignant, he could fend off jointly-emitted chemo and radiotherapy going at full belt, Herman van Rompuy is incompetent enough to merit being thought of as outcompetent, and Christine Lagarde is clearly madder than any of them. Some players have two dimensions at once – Venizelos is malignantly incompetent – but only a select few have the full, three-dimensional MIM ticket. Merkel is one, Putin another, and Wolfgang Schäuble is shaping up nicely in that direction. Above all, the Greek bloke who runs Golden Dawn is truly and deeply a poisonous half-baked fruit-cake.

The only thing remaining is to get some decent shrinks and people-watchers to work out why the MIMs rise to the top. Or better still, develop a sort of ‘anti-recruitment’ questionnaire to shoot each one as they’re discovered. Perhaps soon it’ll be possible to detect them in the womb, so they can be either aborted – or stolen from their parents in order to build the final bulwark against Islamism. Fire with fire is a detestable idea, but sometimes (after the liberals have let things drift too far) it is the only way.

Don’t get upset by the darkness of this posting, there’ll be a lighter one along in a minute.

http://www.zerohedge.com/news/spain-sells-smallest-amount-10-year-bonds-2004-yield-over-6

Spain Sells The Smallest Amount Of 10 Year Bonds Since 2004 At A Yield Over 6%

Submitted by Tyler Durden on 06/07/2012 06:52 -0400

On the surface, the overnight Spanish bond auction, in which the country sold a tiny €2.1 billion of 2, 4 and 10 year bonds was a success, simply because it wasn't a failure. Anywhere below the surface and things get fishy. The Treasury sold €638 million of a 2-year bond, €825 million of a four-year bond and €611 million of a benchmark 10-year bond. And while the bid-to-cover ratios were higher than at recent auctions, with the 2012, 2014 and 2022 bonds covered 4.3, 2.6 and 3.3 times respectively, so were the yields: the 2014 bond was issued at a yield of 4.335 percent, the 2016 bond at 5.353 percent and the 2022 bond at 6.044 percent, a lower price than the 6.14 percent the same maturity bond trades at in the secondary market. In other words, Spain is back to using the same tricks it did back in the fall when bonds would magically price well over 10 bps inside of fair value. Just don't ask why. More notably, as Bloomberg reminds us, this was the lowest amount allotted to a 10 year note since 2004. In other words Spain sold the bare minimum of the longer-bond just to keep up with appearances: an amount likely recycled by its broke banks, which scrambled to get the last remaining LTRO cash and to show just how strong the demand for the country's debt is. In fact as Nicholas Spiro of Spiro Sovereign said, "If it wasn't for its banks' continued support at auctions,Spain would be unable to sell its debt. Right now confidence in Spain is

at an all-time low." Either way, the good news is that according to Spain it has now covered 58% of its borrowing needs for 2012. the bad news: 42% remains uncovered. Especially in the aftermath of an EU announcement that not only has it not received an aid request from Spain, but that there is no EU rescue plan for Spanish banks. Europe has now completely lost the script and is making up day by day.

Reuters has the analyst snap view on the auction:

NICHOLAS SPIRO, SPIRO SOVEREIGN STRATEGY, LONDON

"Although a very modestly sized auction, this was a nerve-wracking one nonetheless. The Treasury will be pleased that the sale was comfortably covered but displeased with the size of the concession.

"Although the yield on the 10-year is just a tad below secondary market levels, these are prohibitive rates which underscore the dramatic deterioration in Spain's perceived creditworthiness.

"If it wasn't for its banks' continued support at auctions, Spain would be unable to sell its debt. Right now confidence in Spain is at an all-time low."

SERGIO CAPALDI, FIXED INCOME STRATEGIST, INTENSA SANPAOLO, MILAN

"It was a little bit better than I was expecting. Of course they have issued the maximum amount that they were targeting and this is good news. The bid to cover ratios were higher than previous auctions generally.

"Only the tail of the auction was a little bit too fat. That signals anxiousness on the part of the investors, so that was the only weak spot of the result of this auction.

"By and large it is a good auction and it is another step towards normalisation of the Spanish funding condition."

PETER CHATWELL, RATE STRATEGIST, CREDIT AGRICOLE, LONDON

"It's a strong auction, no doubt helped by the relatively small size, but nonetheless tapping into the post-ECB meeting theme of further closing out of periphery short positions.

"A good auction today does not reverse the trend of rising yields, all it really shows is that there was good demand for the paper on the day."

ALESSANDRO GIANSANTI, STRATEGIST, ING, AMSTERDAM

"It went quite well, they sold more than 2 billion, the bid to cover was fine. It was a good auction. The amount was very limited, and especially in the five-year to the 10-year there was some cheapness on the curve that helped them rally into the auction. There is a better environment over the last few days for Spanish bonds. Talk of a rescue for Spanish banks is the thing that is reducing risk aversion in the markets."

ACHILLEAS GEORGOLOPOULOS, RATE STRATEGIST, LLOYDS, LONDON

"The market will be pleased with the auction size, the bid/cover, the prices at the auction that were below the bid prices at 0930 (0830 GMT). Clearly there was demand for it, it was one of the good auctions.

"I'm sure he (Treasury Minister Cristobal Montoro) meant to say that they can't raise an extra 20 billion with the market not to be scared about it. But this was another 2 billion.

"If the auction was messed up then you would be 100 percent sure that Spain would need a bailout, a proper one. It was a very, very bad comment to make.

"The market is still trading on the fact that there is a solution in the background. But that's a bit exaggerated, we all know what Germany's position is and what Spain's position is."

LYN GRAHAM-TAYLOR, RATE STRATEGIST, RABOBANK, LONDON

"There was a big move downward in Spanish yields going into the auction which seemed to have been driven by the hope that there is shortly to be joint action by several of the major central banks. However, in terms of the auction results, yields are still significantly above the levels seen when these bonds were last auctioned.

"A strong set of bid/covers, as was expected, probably driven by domestics. Spain can clearly still borrow in the markets but it must pay high yields for the privilege."

http://ftalphaville.ft.com/blog/2012/06/07/1032431/spanish-auction-nothing-to-see-here-move-on/

Spanish auction: Nothing to see here, move on

Posted by Simon Hinrichsen on Jun 07 11:06.

Spain sold bonds today, and the auction happened without any drama. Here’s a recap from the Reuters wire:

Spain sells 2.1 bln euros in bonds. It sold 638 million euros worth of bonds maturing Oct. 31, 2014 with a 3.3 percent coupon, and 825 million euros worth of bonds maturing Oct.31, 2016, with a 4.25 percent coupon. It also sold 611 million euros of a bond maturing Jan. 31, 2022 with a 5.85 percent coupon. The Treasury had expected to sell between 1 billion and 2 billioneuros of the debt.

And a quick comment from Citi:

Spain raised EUR2.07bn at an auction of 2y, 4y and 10y Bonos on Thursday. Market players reported good demand for the 2y and 10y lines, with a weaker take-up in the 4y. France raised EUR7.9bn in 7y, 10y, 15y and 50y paper. The amount was near the top of the issuance range, but bid-to-covers were on the weak side.

It might have been a risky time to auction bonds, but with the limited size (€2.07b) demand could have come purely from domestic sources.

It’s worth pointing to the negotiations to save the Spanish financial sector, from today’s FT:

European officials are weighing up a bailout programme for Spain that would aid its fragile domestic banking sector while imposing only “very limited conditionality” on Madrid, a concession that could make a reluctant Spanish government more willing to accept international assistance.

Unlike earlier bailouts for Greece, Portugal and Ireland, the proposed Spanish rescue would require few austerity measures beyond reforms already agreed with the EU and could even dispense with the close monitoring by international lenders that has proved contentious in Athens and Dublin, according to people familiar with the plans.

For more detail, Peter Spiegel at the Brussels Blog has a look at what the deal might look like. It’s worth reading the full piece, but let’s just share this bit on timing:

Officials said the rescue isn’t likely to happen until the International Monetary Fund and the outside advisors already hired by Spain give the banks a final once over to decide, once and for all, how much new capital they need – not unlike Irish banks, which at long last did the same last year. That process is unlikely to be completed for a couple weeks, but probably before the end of the month.

At pixel time, Spanish yields were down slightly, with the 10-year at 6.140.

and....

http://www.guardian.co.uk/business/2012/jun/07/eurozone-crisis-spain-auction-bailout-rescue

10.11am: City analysts say today's Spanish bond auction is a relief, even though Spain had to pay higher bond yields (see 9.49am for the details). There is concern, though, that Italy could be dragged deeper into the crisis. Here's a round-up of fresh reaction:

Nicholas Spiro of Spiro Sovereign Strategy

1. Although a very modestly sized auction, this was a nerve-wracking one nonetheless. The Treasury will be pleased that the sale was comfortably covered but displeased with the size of the concession. If it wasn't for its banks' continued support at auctions, Spain would be unable to sell its debt. Right now confidence in Spain is at an all-time low.

2. The sooner the uncertainty over the form and timing of the bail-out is lifted, the better. It has been a month of purgatory for the markets, to say nothing of the nightmare that Spain is living through. This has as much to do with the repeated failures of eurozone policymaking as it does with the Rajoy government's loss of credibility.

3. The bigger fear is that the longer the uncertainty about Spain persists, the more at risk Italy becomes. Part of the reason why a bail-out for Spain is fraught with complications is the risk that it further damages sentiment towards Italy.

and...

9.00am: As European officials start thinking about what terms and conditions to impose on Spain for a future bailout of its banks funded from Europe's rescue funds, one of the main problems - concern about corruption, cronyism and political interference in savings banks - features prominently on the front page of El País this morning.

Giles Tremlett reports from Madrid:

The newspaper leads this morning on a story about anticorruption investigators looking into the creation of Bankia, the country's fourth-biggest lender, and its later partial flotation.

Fraud, theft and document fraud are amongst the potential wrongdoings under investigation at a bank which last summer sold itself to investors - mostly small Bankia clients - as the next great thing in European banking.

Bankia itself was created at the end of 2010 by the merger of seven ailing savings banks, led by Caja Madrid. As the part-nationalised bank asks for a further 19bn euros from Europe's taxpayers, investigators will concentrate on how Bankia could go from declaring a 309 million euro profit for 2011 to then admitting net losses of 3bn.

The suspicion is that some of the seven cajas may have hidden their own toxic real estate holes when the merger took place. The investigation is at a very preliminary stage, El Pais says.

El País also quotes anonymous German officials in Berlin as saying the Merkel government is now in favour of the "bailout lite" option for Spain, which would see Europe's rescue funds putting money into Spain's bank rescue fund, the so-called Frob. That would then be used to inject capital into banks that are choking on the loans they made against unsaleable real estate developments and building land.

Here's a flavour of today's front-page story on the eurocrisis:

With fears of a euro meltdown having rapidly shifted from Greece to Spain, Rajoy is pleading for a direct eurozone rescue of his country's banks, to avoid the humiliation attached to requesting a national bailout.

Sources familiar with the Spanish government's thinking said its negotiating position was that the fundamental quandary facing the eurozone was not Spain, but a European failure of leadership in persuading the financial markets that the euro would be defended at all costs.

So Spain's goal is to get new funding for its banks, without signing up to a full bailout – and all the extra austerity measures, tough targets, and Troika assessments that would bring.

And surely that will annoy Greece, Ireland and Portugal, who all took a bailout. As Gary Jenkins of Swordfish Research points out:

It appears that Spain does not want a bailout in order to recapitalise its banks, they just want cash. And it also appears that there may be plans underway to give them pretty much exactly what they want, with numerous reports suggesting that officials are working on an idea for the EFSF/ESM to lend directly to the Spanish banking rescue fund (FROB) in order for them to on-lend to the banks, thus avoiding the embarrassment of the Spanish government itself receiving a bailout.

Catharsis Ours

Thursday, June 7, 2012

Spanish items of interest including today's bond auction