http://www.zerohedge.com/news/reign-spain-may-soon-be-over
Submitted by Tyler Durden on 07/19/2012 07:59 -0400
We assume many Spaniards are growing more and more frustrated with the fact that they have to dig into the websites of foreign governments and parliaments to find out details of the bank bailout their country is set to receive. After the 'confidential' EFSF proposed timeline we took from the website of the Dutch finance ministry and analysed on our blog, new information emerged from the dossier the German finance ministry prepared from German MPs ahead of today's vote on the Spanish bank bailout in the Bundestag (available here).
The 139-page dossier includes a "Master Financial Assistance Facility Agreement" - never seen before - between Spain, the Spanish national Orderly Bank Restructuring Fund (FROB), the Bank of Spain and the EFSF. The draft agreement confirms that, as expected, once the eurozone's permanent bailout fund, the ESM, takes over, the loans Spain receives will not become senior to Spanish debt held by private investors.
However, the most interesting part (see page 78 of the dossier) concerns the fact that, in principle, Spain could request that part of the €100 billion rescue package be used for purposes other than bank recapitalisation - including direct loans to the Spanish government and purchases of Spanish debt on both the primary and the secondary markets.
In other words, if it turns out that Spain does not need the entire amount to sort out its troubled banking sector - which the government has suggested will be the case (although we don't agree, see here) - it could, for instance, ask its eurozone partners to use the cash left to buy Spanish bonds and try to keep its borrowing costs down.
This would imply a revision of the Memorandum of Understanding (MoU), which would almost certainly include tougher conditions - probably directly relating to government spending and reforms as well. All very speculative at the moment, but it's still interesting that the agreement opens for Spain seeking something closer to a fully-fledged bailout deal.
A European Commission spokesman has just told reporters in Brussels,
A pretty definitive denial....
The Reign In Spain May Soon Be Over
From Mark Grant, author of Out of the Box
The Reign In Spain May Soon Be Over
"Double, double, toil and trouble; fire, burn; and caldron, bubble."-William Shakespeare, Macbeth
Knock knock; wake up and smell but it will not be the scent of roses that will fill your nostrils this morning but the singe of burning flesh. “Wolf” has been cried so many times that no one is paying any attention but I think that the robed man with the scythe is at the door and that he is about to enter the room. I first warned about the Spanish banks in June 2010 and suggested exiting from the credit of Spain around that time and while firewalls were built and all matter of supporting statements were made to protect the fourth largest economy in Europe it was all to no avail as demonstrated quite succinctly by the comments of the Budget Minister in the Spanish Parliament this morning:
“There’s no money in the public coffers.”
I am on the record stating that to fix the problem in Spain will require approximately $350-400 billion dollars. This was my assessment of the regional debt and of their banking problems. This number did not include their national government which seemed to be in decent shape and which obviously is not. It may be that the bank problems and the regional issues overcame the national government but one thing is now quite clear; Spain is in real trouble and the $125 billion for Spain under discussion in Europe will not even come close to fixing the problem and by the looks of things the money will not be coming too soon so that Spain could actually default on some of its obligations.
The Budget Minister went on in Parliament, this morning, to proclaim that “There is no money to pay for public services” which is quite a statement to make after the Prime Minister had told everyone that Spain was fine and that only the banks were having some issues. Of course this same Prime Minister said bailing out the Spanish banks was a “Great victory for Europe” so we already know that he is suffering from some serious psychological deficiencies and needs some help. Poor Mr. Rajoy; where is Sigmund Freud when you need him?
“The European Central Bank intervened in the secondary market to buy public debt to avoid the European monetary system collapsing. Spain would have collapsed without this intervention.”-Budget Minister Montoro in Parliament this morning in Madrid.
The Spanish ten year is back at 7.00% now in London and the auctions they held today were nothing short of dismal on every count. Germany may well be holding the next Spanish Inquisition soon and it is all but a certainty now that a full scale bailout for Spain is about to be debated. Watch for the arrival of the Men in Black in Madrid. Spain is the ultimate proof of what I have contended during this entire process; firewalls do not work and ring fencing the weaker countries has not done one thing, nothing, to cure the sickness of the troubled nations in Europe. Spain is now verging on disaster and you may expect a rapid infection spreading into Italy. Just remember, everything is always fine right up until the moment when it is not and I fear that the “when it’s not” moment is very close upon us now.
Recently two noted Spanish economists were interviewed. One was always an optimist and one was always a pessimist. The optimist droned on and on about how bad things were in Spain, the dire situation with the regional debt, the huge problems overtaking the Spanish banks and the imminent collapse of the Spanish economy. In the end he said that the situation was so bad that the Spanish people were going to have to eat manure. The pessimist was shocked by the comments of his colleague who had never heard him speak in such a manner. When it was the pessimist’s turn to speak he said that he agreed with the optimist with one exception; the manure would soon run out.
and from the Dept of Pissing Up a Wall ......
http://www.openeuropeblog.blogspot.co.uk/2012/07/more-news-on-spanish-bank-bailoutfrom.html
Fresh Details On The Spanish Bank Bailout... Again From Abroad
The 139-page dossier includes a "Master Financial Assistance Facility Agreement" - never seen before - between Spain, the Spanish national Orderly Bank Restructuring Fund (FROB), the Bank of Spain and the EFSF. The draft agreement confirms that, as expected, once the eurozone's permanent bailout fund, the ESM, takes over, the loans Spain receives will not become senior to Spanish debt held by private investors.
However, the most interesting part (see page 78 of the dossier) concerns the fact that, in principle, Spain could request that part of the €100 billion rescue package be used for purposes other than bank recapitalisation - including direct loans to the Spanish government and purchases of Spanish debt on both the primary and the secondary markets.
In other words, if it turns out that Spain does not need the entire amount to sort out its troubled banking sector - which the government has suggested will be the case (although we don't agree, see here) - it could, for instance, ask its eurozone partners to use the cash left to buy Spanish bonds and try to keep its borrowing costs down.
This would imply a revision of the Memorandum of Understanding (MoU), which would almost certainly include tougher conditions - probably directly relating to government spending and reforms as well. All very speculative at the moment, but it's still interesting that the agreement opens for Spain seeking something closer to a fully-fledged bailout deal.
A European Commission spokesman has just told reporters in Brussels,
"The up to €100 billion, which the eurozone has undertaken to provide to Spanish banks is to do just that, it is only for that purpose and not for any other."
This seems to be only a half-truth, though. In fact, the draft agreement does indeed specify that, for the moment, the entire amount is being provided in the form of a "Bank Recapitalisation Facility". However, the document also establishes that Spain can make an official request to move part of the money to another facility, provided that the combined total does not exceed €100 billion.
In any case, the bailout agreement will be wrapped up by eurozone finance ministers in their conference call tomorrow. Meanwhile, the day has not started well for Spain. In this morning's debt auction, almost €3 billion of medium and long-term debt was sold, but with higher interest rates and significantly lower demand than in the previous auction. The interest rate on Spain’s ten-year bonds reached above 7% again – a level widely seen as unsustainable.
All this happened while Spanish Treasury Minister Cristóbal Montoro (in the picture) was telling MPs that “There is no money in the public coffers to pay for services.” As usual, you can follow the latest developments of the eurozone crisis via our Twitter feed@OpenEurope.
In any case, the bailout agreement will be wrapped up by eurozone finance ministers in their conference call tomorrow. Meanwhile, the day has not started well for Spain. In this morning's debt auction, almost €3 billion of medium and long-term debt was sold, but with higher interest rates and significantly lower demand than in the previous auction. The interest rate on Spain’s ten-year bonds reached above 7% again – a level widely seen as unsustainable.
All this happened while Spanish Treasury Minister Cristóbal Montoro (in the picture) was telling MPs that “There is no money in the public coffers to pay for services.” As usual, you can follow the latest developments of the eurozone crisis via our Twitter feed@OpenEurope.
and more pissing up a wall.....
http://www.guardian.co.uk/business/2012/jul/19/eurozone-crisis-spain-bond-auction
Interesting... a European Commission spokesman has rejected the claim that Spanish banking bailout funds could also be used to buy government bonds (see 11.27).
Speaking in Brussels, spokesman Simon O'Connor insisted that the eurozone governments had only committed €100bn of aid to Spain's banks.
O'Connor said:
The up to €100bn, which the euro zone has undertaken to provide to Spanish banks is to do just that, it is only for that purpose and not for any other.There is no link between assistance for bank recapitalisation in Spain and any other type of financial assistance, which might be requested at some further juncture by Spain or anybody else
A pretty definitive denial....
UPDATE:
Could well be wrong, but I think this is the parapraph in question (on page 81 of the contract):
5(a):
In the event that the Beneficiary Member State wishes to obtain financial assistance in the form of an additional or alternative form of Facility, it shall request such other Facility in writing by a letter addressed to the Eurogroup provided that the amount of such other Facility when aggregated with all other Financial Assistance that EFSF has made or is to make available to the Beneficiary Member State under this Agreement shall not exceed the Aggregate Financial Assistance Amount.
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