Commentary on the economic , geopolitical and simply fascinating things going on. Served occasionally with a side of snark.
Friday, November 16, 2012
While Europe begs for Spain to call it a day and request the bailout already..... Meanwhile Spain is begging for money from Latin America ! Lol Spain Bad Bank finds no bid for shit sandwiches - despite the ad bank debacle and the recent "invitation " to seek a bailout deal now , Spain still plays coy.... ... As far as investing in bad banks , 66 billion pounds probably lost by UK taxpayers just for RBS and Lloyds clusterfucks........
Yesterday, in what is an appetizer to thegreat 2013 convergence trade (that, between the now thoroughly dead Greek and the Spanish economy, which is rapidly getting there, of course), several thousand Spanish policemen took the streets of Madrid protesting the latest round of austerity, which included frozen pensions and the elimination of the Christmas bonus (they will have many more opportunities to protest not only the loss of any future upside, but the eventual cut of existing wages and entitlements). As RT reports, protesters blew whistles, shouted slogans, and carried anti-austerity banners as they marched through the city centre to the interior ministry. But perhaps the most telling message read on one of the slogans, was the following:"Citizens! Forgive us for not arresting those truly responsible for this crisis: bankers and politicians."
And there you have the entire current clusterfuck summarized in one simple sentence: because as long as those responsible for the ongoing economic collapse, which will inevitably end in war as many have observed, Kyle Bass most recently, are not only not arrested but preserve their positions of power, any and all change will merely be cosmetic and any real change will only affect the bank accounts of the global middle class which are slowly but surely drained to zero.
The Spanish government has imposed harsh spending cuts aimed at saving 150 billion euros between 2012 and 2014. The move has been met with anger and protests from hundreds of thousands of Spanish citizens.
The austerity measures are in exchange for a rescue loan of up to 100 billion euros from the EU to help the country’s stricken banks.
"The problem is they take from us to give to others, like the autonomous regions and the banks," 33-year-old police officer Antonio Perez told AP.
But it’s not just their pay the police are worried about.
A spokesman for Spain’s Unified Police Union, Jose Maria Benito, said the cuts will affect the nation’s security, adding that working conditions have become more precarious and law enforcement equipment was no longer up to standard.
“We are here to tell the government that security has to be its priority…in socially convulsive times, we need an adequate police response,” Benito told AP. He added that 15,000 workers who have left the force were not going to be replaced.
"Each year, between 1,500 and 2,000 police officers retire and 125 are recruited, which means in three or four years, there will be more insecurity and crime in Spain," the union’s general secretary Jose Maria Sanchez Fornet said in a speech.
A picture summary of the event:
Spanish police officers take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)
Spanish police officers hold a banner of the Unified Police Union (SUP) depicting Spanish Prime Minister Mariano Rajoy (L) and Spain's leader of the opposition Socialist Party (PSOE) Alfredo Perez Rubalcaba and reading "They are the same" during a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)
Spanish police officers take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)
Spanish police officers hold banners of the Unified Police Union (SUP) and a giant banner reading "Against the cuts, all the policemen together" as they take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)
Spanish police officers take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)
Spanish police officers march past police vehicles as they take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)
Irony of ironies. While the world awaits the Spanish request for 'help' from its friends in Europe (which the market 'hopes' will escalate to EUR740bn very rapidly), it seems the King of Spain and his trusty Prime Minister have another cunning 'inverse-conquistador' plan. AP reports that "Spain receives Latin American investment with open arms," as Rajoy asks the former LatAm colonies to help. Falling back on the assured quid pro quo, Rajoy said Spain had invested heavily in Latin America during its crisis 10 years ago... so fair's fair right? Now that the roles were reversed, he called upon those nations to increase their participation in his struggling empire's economy. The perfect irony is complete as the Iberoamerican Summit at which he was begging speaking was held in Cadiz - the country's main gateway for importing Aztec and Inca treasure!
CADIZ, Spain (AP) — Spain's prime minister on Saturday joined its king in asking former Latin American colonies to help the EU nation overcome a deep financial crisis by channeling investments its way.
Prime Minister Mariano Rajoy said Spain had invested heavily in Latin America when it suffered a crisis 10 years ago, and now that the roles were reversed, he called upon those nations to increase their participation in his country's economy.
"Spain receives Latin American investment with open arms,"he said.
Rajoy was speaking at the Iberoamerican summit being held in Spain's southwestern port of Cadiz, once the country's gateway for importing Aztec and Inca treasure.
King Juan Carlos made the same plea Friday, saying "our eyes turn to you, we need more Latin America."
He added that Spain had "seen difficult situations emerge caused by the financial and economic crisis."
A "pat on the back" from the EC is an invitation for Spain to ask for OMT; Rajoy unlikely to budge
The EC today announced that Spain has met its economic and fiscal requirements put in place by the EU.
MNI: - The European Commission said Wednesday that Spain had fulfilled its economic and fiscal obligations under EU rules for this year and next but warned that it could need to take more action to hit targets in 2014 if the economy performs worse than the Spanish government expects.
"We have concluded that for 2012 and 2013 Spain has taken effective action to restore the sustainability of its public finances," EU Economic and Monetary Affairs Commissioner Olli Rehn told a press conference here.
Structural reforms to improve the flexibility of the Spanish labour market and open up closed professions "go a long way" towards meeting objectives set out for Spain by the Commission and EU governments, Rehn said.
This is quite surprising. After all, Spain is widely expected to overshoot its deficit target.
Barclays: - The outlook for the Spanish economy remains very subdued and we have revised our GDP growth forecast for 2013 down accordingly from -1.4% to -1.8%, below consensus, and broadly unchanged with respect to our current growth forecast for this year. We think that given some delay in the implementation of consolidation measures in the first half of this year and a weaker economic environment, the general government deficit will once again overshoot the target (Barclays: 7.0% of GDP this year and 5.0% of GDP in 2013 vs. Government: 6.3% of GDP this year, 4.5% of GDP in 2013).
Apparently the recent "structural reforms" put in place by Spain were enough to satisfy the EC. The arbitrary approach to governance in the EU is strange to say the least. Even the EC's own forecasts for Spain's deficits are far above targets (7.0% vs. 6.3% in 2012, 6.0% vs. 4.5% 2013, 6.4% vs. 2.8% 2014).
Merrill Lynch: - We are a bit puzzled with the conclusion. Despite Spain being compliant with the structural fiscal effort requested they are missing (or lack action) on the rest of recommendations. Headline deficit commission forecasts for 2012, 2013 and 2014 are well above budget deficit targets. Spain has not detailed enough measures for 2013 and, particularly, for 2014. Spain is still to deliver an independent fiscal council ensuring its full institutional and financial independence, something Spain has promised to put in place by Q1 2013.
Merrill's theory is that this strange "pat on the back" from the EC is an invitation for Spain to officially apply for the ECB's OMT Program (and still keeping Portugal out) before markets force Spain's hand. As Spain's economic conditions and deficit worsen, the risk increases that the OMT negotiations will have to be conducted under duress.
Merrill Lynch: - We view the Commission move as a potential invitation to apply for ECB OMT support. Negotiating conditionality of a programme would be easier in the current context, where Spain is delivering large structural fiscal efforts and there is still hope they can deliver on the rest of recommendations (not only those related to excessive deficit procedure but also to the macroeconomic imbalance procedure, i.e. the structural reforms). If Spain had failed to deliver on these by the time it asks for help we would envisage a tougher set of conditions that if Spain applied for help today.
It seems however that in spite of this friendly gesture by the EC, Rajoy is going to hold off on officially requesting OMT. It is a dangerous game played by Spain's government that may end up costing them in the long run.
Mrrill Lynch: - ... we still think that the probability of a voluntary request is low at this point –given the political costs- and a request for help is unlikely without market pressure (see discussion).
Two weeks ago, when Spain unveiled the specifics of the SAREB, also known as the Spanish Bad Bank initiative, which is simply the haphazardly put together chaotic plan to shift toxic assets from Spain's already insolvent banking sector to a bank that is even more insolvent than all others as it is fulled to the brim with "assets" such as land which has already been discounted by 80%, and backed with Spanish government guarantees, which are largely worthless as the entire country has been on the verge of demanding a bailout for 4 months now, we summarized it simply as follows: "it is ugly - far uglier than many had expected. And while the Spanish government expects private interest to take some of this massively discounted 'crap' off their hands, we have three words: 'deleveraging' and 'no bid!" We were right, although one wouldn't get that impression if one reads the official party line. Here is how Reuters summarized the government's party line: "Spain's bad bank is generating a lot of interest amongst international investors, an economy ministry source said. The bad bank would be possible with only domestic participation but non-resident investorsgave the vehicle credibility, the source said." That's a lie. Here is the truth.
The government postponed for a month the launch of the Sareb. The 'bad bank' that will manage real estate assets and real estate loans of nationalized entities not formally ready for December 1, when committed to the European aid program set out in the MOU. To overcome this delay, the Fund for Orderly Bank Restructuring (FROB) will create a society preparatory to meet deadlines and allow time for entering the shareholders, to the difficulties in attracting private investors before 30 November.
In other words, not only was the Spanish government caught lying (hardly notable these days), but just as we expected, over two weeks after the launch of "Sareb" - the latest deus ex which was supposed to offload the need to issue ever more sovereign debt to fund Spain's nationalization of ever more insolvent sectors to private investors, said private investors have taken a long, hard look at the "deal" the Bad Bank offers them and have said "no bid." Oh yes, and so much for "vehicle credibility."
We can't wait to see what other Tim Geithner inspired financial contraptions a broke Spain, and an asset-less Europe, have up their sleeve next.
A spending watchdog has criticised the Treasury for making a series of mistakes in its handling of Northern Rock Credit: John Giles/PA Wire/Press Association Images
More than £66 billion of taxpayers' cash invested in RBS and Lloyds may never be recovered, a spending watchdog warned today.
The public accounts committee criticised the the Treasury for making a series of mistakes in its handling of Northern Rock, saying that officials were slow to react to the banking crisis because they lacked correct skills and understanding.
Margaret Hodge, chair of the committee, said the sale of the bank was handled well but still led to a loss for taxpayers of nearly half a billion pounds.
Submitted by Tyler Durden on 11/18/2012 09:36 -0500
Spanish police officers take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)
MNI: - The European Commission said Wednesday that Spain had fulfilled its economic and fiscal obligations under EU rules for this year and next but warned that it could need to take more action to hit targets in 2014 if the economy performs worse than the Spanish government expects.
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