Is the EC pushing Spain towards a bailout?

[Captain Con O'Sullivan]

Still betting on tomorrow night after NYC closes for Rajoy to admit the game is up. We have an interesting situation where the IMF and ECB are pushing Spain into a bailout scenario whereas the political actors internationally do not want Spain in a bailout situation- even Germany is beginning to split on this as it simultaneously wants to steady the Euro and at the same time deny the ECB power legally to fund bad banks directly without bailing out sovereign governments.

Heading towards something of a political singularity here- if Rajoy throws in the towel as I think he has to by tomorrrow night will he then have to hand in his resignation? What happens in Spain politically? Elections?

Same as Greece- the government there is wobbling and Merkel and co don't want to see an election in Greece with Tsipras poised to win and tear up the austerity programme.

Merkel's government thus far has been seen to be in the IMF/ECB corner but now that the IMF/ECB shows signs of sidelining even Merkel I suspect there are second thoughts in the German government.

All we need now is an open row in German politics at the top and the singularity takes shape.

[ang]

Taxing the Lottery -

@OwenCallan
*MONTORO SAYS SPAIN TO TAX LOTTERY WINS OVER 2,500 EUROS - then they came for the powerball lotto winners. What next, bingo halls?

[DCon]

Egan Jones rating agency have downgraded Spain to CC

http://www.zerohedge.com/news/2012-0...es-spain-cc-cc

[DCon]

Oops

James Mackintosh ‏@jmackin2

So ESM is finally in force. Next step is for Spain to cough up €9.5bn towards ESM capital. That's a quarter of spending cuts announced today

https://twitter.com/zerohedge

[C. Flower]

Stress test figure announced for the Spanish banks just now is 59.3 billion euro.

[DCon]

Stress test figure announced for the Spanish banks just now is 59.3 billion euro.

summary here

■7 banks need capital, 7 do not
■Taking into account tax credits and mergers, the shortfall is EUR 53.7 bln
■Shortfall for nationalized banks EUR 49 bln
■Bankia capital shortfall is EUR 24.7 bln
■Santander, BBVA pass stress test

http://www.forexlive.com/blog/2012/0...ssed-scenario/

[PaddyJoe]

summary here



http://www.forexlive.com/blog/2012/0...ssed-scenario/

I think it works out as something like 6% to 7% of Spanish GDP.
We were forced to put 64 billion into our banks which is 40% of our GDP.

[MPB]

I think it works out as something like 6% to 7% of Spanish GDP.
We were forced to put 64 billion into our banks which is 40% of our GDP.

Exactly.

Remember our first estimate was zero, that rose to 4 billion, then 10 billion, then 23 billion, then 30 billion, then 34 billion just for Anglo/INBS, then 64 billion to date and that will rise by at least another 15 billion, when mortgage write downs are admitted.

The Spanish estimate of 60 billion is about 350 billion short of what is actually needed.

The Spanish Banking system is no different to the Irish Banking system. It is insolvent and cannot be saved.

The whole EU banking system is insolvent as is the global banking system.

[DCon]

Spain's NAMA is emerging

Bad bank to sell assets over 15 years
Private investors to have majority stake in bad bank. To make up at least 55% of bank
Banks, insurers, other investors to take part
Bad bank to be financed with senior debt
Bad banks’ equity to come from FROB, investors
All details on bad bank to be published in days
Bad bank to set price thresholds for asset transfers
Equity to amount to 10% of value of assets
Bank recap plan to be presented in October

http://www.forexlive.com/blog/2012/1...tate-assets-2/

[PaddyJoe]

Finance Minister Luis de Guindos today assured a packed lecture hall in the London School of Economics that Spain doesn't need a bail out.
Apparently the remark was greeted by laughter by the audience.
Worse was to follow when protestors interrupted his speech
[ame="http://www.youtube.com/watch?v=pU5N_PjoXW4"]LUIS DE GUINDOS LSE 4.10. 2012 - YouTube[/ame]

[DCon]

Finance Minister Luis de Guindos today assured a packed lecture hall in the London School of Economics that Spain doesn't need a bail out.
Apparently the remark was greeted by laughter by the audience.
Worse was to follow when protestors interrupted his speech
LUIS DE GUINDOS LSE 4.10. 2012 - YouTube

Is he the new Lenihan?

Being laughed at whenever he lies

[Captain Con O'Sullivan]

The Spanish banks along with the 'stress testers' are lying their castanets off about the scale of required theft by Spanish banks. Same procedure as in the US, UK, definitely Ireland (cheapest bailout in the world).

It is a piece by piece arrangement. I couldn't figure out why Rajoy was holding off from last Thursday/Friday night but apparently Merkel is behind it demanding that Rajoy hold off until some political fix can be arranged around the legality of the ESM as a vehicle directly intervening to put liquidity into banks.

Seems to be a real push-me pull-you going on here with the IMF/ECB screeching for bailouts for Spain for 'stability' (yeah, right), the Dutch, Finns and increasingly schizophrenic Germany demanding that Spain's bailout be closed off somehow at a level which would prevent further endless calls on the ESM and Rajoy being battered in the middle.

There's no way to analyse this anymore. Nothing around which to build any kind of predictive logic.

[PaddyJoe]

S&P downgrade Spain two notches to BBB-
Familiar territory.

[DCon]

Rajoy has been resisting asking for ESM help as bond yields were sort of kind of not too high

This might force his hand

[PaddyJoe]

Rajoy has been resisting asking for ESM help as bond yields were sort of kind of not too high

This might force his hand

Could be the clincher. He's hanging on desperately until after the 21st and regional elections, though.