http://www.zerohedge.com/news/2012-10-21/spanish-regional-bailout-fund-runs-out-money-just-regional-elections-begin
Spanish Regional Bailout Fund Runs Out Of Money Just As Regional Elections Begin
Today is an important day for Spain, where two benchmark regions - the separatist inclined Basque region and Rajoy's own Galicia - are holding the first of many elections for regional government in what will be seen as a harbinger of popular (lack of) support for Mariano Rajoy's policies (and further explanation why any incremental steps taken by the increasingly unpopular PM to hand over Spanish sovereignty to foreign could well be his last).
"Two northern regions in Spain are holding elections for their legislatures Sunday in the first popular test of the central government's stringent austerity policies since it came to power late last year.A deepening financial crisis and how best to address the nation's separatist tensions are the main issues facing political leaders and voters in the turbulent Basque region and in northwestern Galicia. With 2.7 million voters, Galicia is a traditional stronghold of the ruling Popular Party and the homeland of Prime Minister Mariano Rajoy, so an upset there would rock the PP regionally and nationally.Spain has separatist groups in Galicia, the Basque region and prosperous and influential Catalonia. About 1.8 million Basque voters are likely to oust Socialist leader Patxi Lopez — who ruled thanks to an agreement with the PP — from the 75-seat legislature in the industrious and well-off northern region that borders France. The Basque region has been wracked by decades of separatist violence."We hope this election succeeds in bringing us peace, so we can reach an understanding between ourselves and let us know how to make concessions,"said Sister Teresa Ormazabal, a nun in the Basque region's largest city, Bilbao. Lopez was jostled by demonstrators carrying placards backing violent Basque separatist group ETA as he voted early Sunday."None of this is news. What may however surprise many is that as of Friday, Spain's "temporary" €18 billion regional bailout fund is now practically empty: a discovery which will hardly make any additional regions, who have so far dragged their feet in demanding a national bailout, happy with the Prime Minister's handling of Spain's creeping bankruptcy.Calculating:
- Total bailout fund size: €18 billion
Bailouts already requested:
- Cataluña: €5.023 billion
- Andalucía: €4.906 billion
- C. Valenciana: €4.500 billion
- C. La Mancha: €0.848 billion
- Canarias: €0.757 billion
- Murcia: €0.528 billion
- Baleares: €0.355 billion
- Asturias: €0.261.7 billion
Subtotal: €17.179Bailout funding left: €0.821 billion. Oops.Those who waited in hopes things will get better: tough luck.And as we observed last week, here is why the regional "bailout issue" is only going to get much worse.To summarize: Spanish regions: broke; Spanish banks: broke: Spain itself: on the verge of being bailed out by Europe. => Time to buy more SPGBs.
http://www.zerohedge.com/news/2012-10-20/clock-running-cash-almost-gone-and-make-believe-will-no-longer-suffice
"The Clock Is Running, The Cash Is Almost Gone And Make-Believe Will No Longer Suffice"
- Bond
- European Central Bank
- Finland
- France
- Germany
- Greece
- International Monetary Fund
- Ireland
- Italy
- Netherlands
- Portugal
- Sovereign Debt
From Mark Grant, author of Out Of The Box
This is the piece I wrote on Friday afternoon.
“I would say that we have entered the crisis stage of Europe now. We have a stand-off between France and the southern nations, the troubled countries, in one corner and Germany, Austria, Finland and the Netherlands in the other. The last summit yielded nothing and worse than nothing because the two camps are worlds apart and sharply divided. They couldn't agree on the banking supervision issue. They have no agreed upon path for Spain, for Greece, for Cyprus, for Ireland or for Portugal. Germany has drawn a line in the concrete concerning legacy sovereign issues, legacy bank issues and Ms. Merkel has stated quite dramatically that Germany will not allow the new ESM to be used for old problems and that the individual nations will have to foot the bill for them. The "Muddle" is over in my opinion and the "Crisis" has now begun. The long, long road of "put it off" has reached its conclusion and there is no agreement and no compromise on how to proceed. We have finally reached the "Danger Zone" and I advise you to note the change!”
Having had any number of questions since I wrote this I thought that it might be helpful to provide some further explanation. It is really a question of translation and some definition of “political-speak” because all of the wrangling in Europe now can get quite confusing and literal translations can lead you to incorrect conclusions. In Europe the old adage is firmly in play; “appearances can be deceiving.”
Grant’s Dictionary
Let’s start with the bank supervisor. Germany said no money for the banks without a European supervisor for the banks. France, Spain and the rest responded by saying fine then let’s have a bank supervisor in place and functioning by January 2013. The German response was not so fast and maybe by 2014 and maybe the ECB is not the right instrument and maybe not for all of the banks. On the surface you might think that these points are all distinct and separate but if you do; you are incorrect. The translation here is that Germany does not want to fund the European banks and so has set up a road block, a diversion, to stand in between “we will not fund the banks directly” and the desires of France and the rest who want a harmonized Europe where every country pays for everything for all of them; a socialized Europe. You see, the diversion is the bank supervisor and it allows Germany to thwart the desires of the needy countries without having to address the problem directly. It is a head fake and an effective one and it is just one of the instances where we are getting a quite clear Northern European response; “We will not fund.”
Did you think that Germany, Austria and the rest were going to just come right out and say, “We will not fund?” This is not the Simpsons you know and the politicians in Europe, think of them what you like, are not quite that stupid. As a matter of fact the only time the Germans have come right out and said “Nein” was concerning Eurobonds and that is because the stigma attached to them in Germany is so great that any German allowance of them would probably topple the government. Consequently, as in the case of the ECB and the “limitless” speech of Mr. Draghi; it is only limitless if the condition of EU approval is met and so if the condition never happens then there is no ECB bond buying at all. In each case there is a condition and Germany can manipulate the condition at will which prevents or stops the ECB bond purchasing or the direct funding of the European banks.
Please note that on the opposite side of the fence that the same type of strategy is in place. France, Spain, Italy, Cyprus and Greece are not going to come out and say, “We want the Germans to pick up the check for the financial difficulties of our countries” so that ask for Eurobonds, direct bank recapitalization, lines of credit from the ECB, bond buying by the ECB of their sovereign debt and all manner of things which are structured and presented to get Germany, the Netherlands, Finland et al to pay for their shortcomings. “More Europe” in the troubled countries means that Germany and her amigos should foot the bill for the Continent while “More Europe” in the fiscally sound countries means control and oversight and domination if you will as exemplified by Ms. Merkel’s proposal that there be one central European approval office for all of the national budgets in Europe. A concept quickly rejected by France, Britain and a host of other countries. Think of a very expensive mid-day meal; lunch is over and everyone wants everyone else to pick up the check and so they sit there and politely banter and try to contrive schemes so that it will be anyone but them. The actuality is that the numbers have grown so large, the meal has become so expensive, that no one can pick up the bill without quite severe consequences.
Let’s focus on Greece for a moment. In two or three weeks Greece will run out of money. We have already done the “Public Sector Involvement” trick and the last bit of magic was the ECB handing money to the Greek banks who then bought private sovereign debt issued by Greece, got the bonds, then pledged the bonds back to the ECB and got their money back. This is how they did the short term funding of Greece while everyone winked and blinked and went on about their business. The actual truth is; a form of Eurobonds was used, just under the letterhead of the European Central Bank. Now however, the IMF has said they will not fund as Greece couldn’t pay the money she owes unless the goddess Hera shows up with some loot. The IMF has shorted the fuse box and they want the EU or the ECB to take an “Official Sector Involvement” hit which you may translate into “Debt Forgiveness” which would probably be the end of the governments in more than one Northern European nation. Europe then is faced with writing off the debt of Greece, never mind the fancy words, or having the ECB take the hit which would mean a recapitalization of the ECB as they only have $18 billion of paid-in capital or the IMF refusing to fund the next tranche of Greek aid which means that the European Stabilization Funds would have to pick up the bill and that local politics may collapse without the IMF’s participation.
In the case of Spain it is not Mr. Rajoy “assessing the situation” but a very concentrated effort to get “Euros for Nothing and Conchitas for Free.” Not only does Spain have several of its integral regions calling for succession but it has a regional debt problem exceeding $50 billion in my estimation and a bank problem that is several multiples of that. The Oliver Wyman bank stress tests had all of the validity of a three toed sloth residing in your living room as there was no verification, no audits and nothing but garbage pressed into the shredding machine and so “garbage in is garbage out” and let’s not deceive ourselves that it was anything else. Once again, one more time, we have an example of a country trying to get anyone else, everyone else, to pick up the bill because they cannot afford it. Germany, in the meantime, says that Spain does not need the money and so the bills go unpaid and the crisis worsens.
“As long as there are individual national budgets, I regard the assumption of joint liability as inappropriate and from our point of view this isn’t up for debate...The Spanish government will be liable for paying back the loans to recapitalize its banks. Plans to give the Euro rescue fund the power to inject cash directly into banks won’t be made retroactive.”-German Chancellor Merkel
Here is the issue of legacy liabilities. Here Germany has been fairly clear. The new ESM fund will not pick up the check and it is up to each country to pay for their own past problems. You may translate this piece of jargon into a “No” to Ireland that the ESM will not pick up the bill for the Irish banks and the same response for Spain. This new German definition puts Portugal, Greece, Spain and Ireland back at square one and effectively closes the door on any further negotiations. While all of this wrangling continues the tone at the summit was no longer the nicey-nice repartee of past meetings. Cyprus needs money, Spain needs money, Portugal probably needs more money and Greece is just about out of money. The summit was held, the meeting is over and the worth of any accomplishments is about at Zero as the only agreement was a plan to have a plan to deal with bank supervision. This is not an inch forward, this is not a millimeter forward; this is quicksand where they are all stuck as both money and time run out as the Socialists scream for alms while the landed gentry, utilizing head fakes and other polite deceptions, refuse to provide it. The clock is running, the cash is almost gone and make-believe will no longer suffice. The crisis phase, in my opinion, has been entered.
“Heh, heh, heh! Lisa! Vampires are make-believe... like elves, gremlins and Eskimos.”
-Homer Simpson
and future dates to watch..... Oct / Nov - full list at the link
Oct biggies - 10 / 22 ; 10 / 25 ( ESM Contributions due ) ; 11/2 ; 11/6 ; 11/12-13 ; 11/25
http://www.zerohedge.com/news/2012-10-17/worlds-key-dates-next-three-months
October
November
and now we know when Greece runs out of cash - November 16th.....
| Samaras: Certainty of next loan tranche by mid-November | |||
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Prime Minister Antonis Samaras on Friday expressed certainty that a 31.5-billion-euro tranche of the EC-ECB-IMF bailout package will be disbursed by mid-November, preferably in its entirety, as soon as a report by the troika is adopted.
Speaking in Brussels at the end of a two-day EU summit, Samaras explained that a new summit will not be required to approve the disbursement, adding that the country's current cash reserves would run out on November 16.
He said the summit underlined the need to expedite the disbursement of the loan tranche, stressing that the Greek "economy and society are at their limits, the bloodline of the economy that is liquidity is at point zero; unemployment has reached nightmarish levels and every Greek is facing a personal tragedy".
"I was met with understanding on the part of the (EU) leaders, they asked with interest about Greece," the premier said, adding that the climate concerning the country has changed and the immense sacrifices of the Greek people are now being publicly praised.
On his recent meetings with German Chancellor Angela Merkel, who paid a one-day visit to Greece last week and with whom he met on Friday on the sidelines of the summit, Samaras said "Mrs Merkel is the chief factor in everything going on today".
He also said French President Francois Hollande had extended substantial support during the summit, and confirmed that Hollande accepted an invitation to visit Athens.
He further announced that Italian Premier Mario Monti accepted a similar invitation and will visit Greece.
The dates of the two visits will be set out through the diplomatic channels.
Samaras went on to express satisfaction at the way the Eurozone leaders' final statement had expressed confidence in Greece's ability to turn things around and thus ensure its future in the euro area, as well as the fact that the eurozone summit had issued a final statement exclusively about Greece.
In addition to the nightmarish unemployment, Samaras had also relayed to his EU counterparts that excessive statements and demands were feeding extremism and populism in the country, which were negative phenomena for both Greece and for Europe.
The prime minister expressed his own confidence that the country's economy will recover, vindicating the hopes of the Greek people and their desire to escape the current storm.
Reporting on the issues that dominated the EU leaders' meeting, Samaras said that this had mainly focused on how to deal with Eurozone state debts and on a common strategy to avoid similar crises in the future. He said that European leaders had singled out three areas in this effort: growth, the banking issue (which once resolved would also have a positive impact on Greece as well) and a fiscal compact that will allow eurozone countries to borrow on better terms in the future.
He highlighted the importance of the next National Strategic Reference Framework (NSRF) and argued against major cutbacks at the meeting. Samaras noted that, based on previous estimates, the money that the country would have received from the next NSRF was about half that of the current one, which came to a total of about 22 billion euros.
Concerning the tough measures demanded under the terms of the bailout loans, the prime minister said that many of these should have been done by Greece voluntarily, such as ending the subsidisation of OSE by tax payers. He also referred to projects to capitalise on potentially prime tourist resorts like the coast extending from Faliro to Sounio.
Asked to elaborate on the cost generated by the recession, which was threatening the sustainability of Greece's debt, but also on the cost of any extension of the period for achieving the adjustment programme, the prime minister replied that the problems would be overcome, while simultaneously stressing the need to also overcome the differences within the troika.
Finally, the premier expressed the need to thank the other two party leaders in the governing coalition, as well as others that supported the government, saying that "the three of us are determined to press forward in order to save Greece". (AMNA, dv)
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