BIG FAT SPANISH THREAD

[Hyperduck Quack Quack]

Funny how the Euro is still intact.

Not really. The cost of going back to national currencies would be huge. Greece, Ireland, Portugal or even Spain are in a poor position to return to individual currencies at a time when their economies are so weak. More likely is a more uniform taxation system throughout the Eurozone. Edited December 17, 2010 by Hyperduck Quack Quack

[Realistbear]

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8209205/Portugal-and-Spain-bond-yields-rise-after-Irish-downgrade.html

Financial Crisis

Portugal and Spain bond yields rise after Irish downgrade

German debt prices rose today, while other euro zone countries' bond prices fell, after Moody's slashed Ireland's credit rating and

European leaders took no new immediate steps to deal with a still-broadening debt crisis

.

"The market's very much got Portugal and Spain in its sights," Stamenkovic said. "The market's in a pretty jittery mood."

Irish 10-year government bond yields rose 25.5 basis points (bps) to 8.696pc, pushing the yield spread over German Bunds to 567 bps, about 25 bps wider on the day. The Portuguese/German spread widened about nine bps to 364 bps.

Bond markets beginning to lay the PIIGSB to waste while the ECB leaders do nothing because there is really not a lot they can do.

They will be relieved the weekend is coming up as it will give them 2 days to do some behind closed doors emergency maneuvers.

$=

1.31633 1.54892

Closing on 1.30 again but pretty stable given the horrendous news and bond market threat.

[Democorruptcy]

We are going to let those Europeans have some proper currency in exchange for their funny money.

17 December 2010

The Bank of England and European Central Bank (ECB) are today announcing a temporary reciprocal swap agreement (swap line). This precautionary measure would enable the ECB to provide sterling liquidity to its counterparties. If requested, the Bank of England will provide the ECB with sterling in exchange for euro up to a limit of £10bn. The agreement expires on 30th September 2011.

http://www.bankofengland.co.uk/publications/news/2010/148.htm

[ParticleMan]

We are going to let those Europeans have some proper currency in exchange for their funny money.

A swap is the simultaneous sale and repurchase of an asset.

We're not "letting" anyone "have" anything.

I'd wager the BOE actually nets a profit from this - the Irish government have made some rather foolhardy promises regarding underwriting private sector credit risk, and a goodly proportion of the deposits concerned are "I can't believe it's not hot money" from these very shores.

Repatriation at default will require the swap lines to be exercised - and in turn require the ECB to pay whatever premium is being charged for the facility.

If anything that these facilities have finally been approved within the corridoors of the EC (who are now notorious for being unable to decide what the weather was yesterday) are a tacit acknowledgement that some entity far larger than the Irish government's current account is sinking - and fast.

[Democorruptcy]

A swap is the simultaneous sale and repurchase of an asset.

We're not "letting" anyone "have" anything.

I'd wager the BOE actually nets a profit from this - the Irish government have made some rather foolhardy promises regarding underwriting private sector credit risk, and a goodly proportion of the deposits concerned are "I can't believe it's not hot money" from these very shores.

Repatriation at default will require the swap lines to be exercised - and in turn require the ECB to pay whatever premium is being charged for the facility.

If anything that these facilities have finally been approved within the corridoors of the EC (who are now notorious for being unable to decide what the weather was yesterday) are a tacit acknowledgement that some entity far larger than the Irish government's current account is sinking - and fast.

I didn't mean they were going to give it away. I'd seen the word swap. I just meant letting them have it via the new facility.

[Venger]

Just been watching Russia Today channel on tv. They were reporting on the protests in Madrid against the austerity measures and time-limited unemployment benefits coming to an end. On elderly 'local politician type' was getting repeatedly punched in the head as he was trying to leave some public building. I was always told that protests are much more likely to kick-off violently in Spring and Summer times as tempers flare with the heat, but a few people there were getting angry despite the colder weather.

You can see him getting hit, and street protests with fire bombs being thrown, by click in at 2:27 on the video at the bottom of this Russia Today story. The anchor is interviewing some Irish guy, a musician, over those Spanish scenes, saying about Ireland, "We are actually a very very rich nation" blaming Rothschilds, and saying Ireland needs to print its own debt free money, and that Ireland has a trillion euros of oil and gas reserves in the sea.

'Ordinary people' is a phrase being used more and more by people being interviewed who are beginning to feel the end of boom. A bit like Labour politicians type who were positioning themselves as guardians and protectors of 'hardworking families' but now coming from the mouths of those beginning to run out of money.

[Bloo Loo]

just wondering, and its probably a silly question, but how does a central bank, that produces nothing, nada, zilch, reapitalise itself in preparation for an incoming insolvency crisis from one of its members...or 5 of its members?

can it make the insolvency go away?

[ParticleMan]

If anything that these facilities have finally been approved within the corridoors of the EC (who are now notorious for being unable to decide what the weather was yesterday) are a tacit acknowledgement that some entity far larger than the Irish government's current account is sinking - and fast.

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=azJk3T9nFIFA

Regulators signalled the requirement as they granted temporary approvals to Allied Irish, Anglo Irish Bank Corp. and Irish Nationwide Building Society for recapitalizations. Today’s announcement from the Brussels-based European Commission encompasses two capital injections for Allied Irish totalling about 9.8 billion euros ($12.9 billion).

Allied Irish will have to revise a restructuring plan that proposes measures to satisfy the EU’s requirement for a “significant contribution by the bank’s shareholders and subordinated debt holders to the restructuring costs,” the commission said in an e-mailed statement today.

The Irish government said in September it expected to take a majority stake in Allied Irish, the country’s second- biggest lender, as bad debts surged amid the country’s worst recession on record. Ireland is pumping money into its banks to meet capital requirements after the European Union and the International Monetary Fund approved an 85 billion-euro bailout for the country.

Regulators also temporarily approved Anglo Irish Bank’s recapitalization of 4.9 billion euros and a state guarantee for off-balance sheet transactions and Irish Nationwide’s 2.7 billion-euro recapitalization.

‘Profound Difficulties’

“The Irish banking sector is experiencing profound difficulties at the moment,” EU Competition Commissioner Joaquin Almunia said in the statement. He said the state aid was “necessary to ensure that these institutions meet their respective obligations and will help to preserve financial stability in Ireland.”

So not too far off the mark* then.

(* the Drachmark, that is)

[moneyscam]

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=azJk3T9nFIFA

So not too far off the mark* then.

(* the Drachmark, that is)

looks like CHF is taking up the mantle of the old dmark for the moment in reaction to this - record lows vs EUR and GBP - SNB's Hildebrand is worrying about a 50 centimes Euro - it would be nice for me but can't see it going that far. See 1.10 eur and 1.20 gbp as the extremes, do you think this is not pessimistic enough?

[bogbrush]

Everyone is calling the demise of the Euro, but just as likely is the accelerated political union. After all, if Germany is going to swallow the job of paying for this lot (which it will), it'll want final say over the future political direction.

Bottom line, the EU as a whole entire entity is healthy; it's just the regions that are carp.

[Griptool]

Just been watching Russia Today channel on tv. They were reporting on the protests in Madrid against the austerity measures and time-limited unemployment benefits coming to an end. On elderly 'local politician type' was getting repeatedly punched in the head as he was trying to leave some public building. I was always told that protests are much more likely to kick-off violently in Spring and Summer times as tempers flare with the heat, but a few people there were getting angry despite the colder weather.

You can see him getting hit, and street protests with fire bombs being thrown, by click in at 2:27 on the video at the bottom of this Russia Today story. The anchor is interviewing some Irish guy, a musician, over those Spanish scenes, saying about Ireland, "We are actually a very very rich nation" blaming Rothschilds, and saying Ireland needs to print its own debt free money, and that Ireland has a trillion euros of oil and gas reserves in the sea.

'Ordinary people' is a phrase being used more and more by people being interviewed who are beginning to feel the end of boom. A bit like Labour politicians type who were positioning themselves as guardians and protectors of 'hardworking families' but now coming from the mouths of those beginning to run out of money.

Wrong end of the stick I think...

The background VT is the recent Greek Riots (like the French the Greeks know how to party! (go Greek riot dog))

The "local politician" type you refer to is Κωστής Χατζηδάκης a member of the Greek parliament.

Who would believe it .... those trustworthy Russians trying to stir it up - - Its worth keeping it accurate tho

[ParticleMan]

looks like CHF is taking up the mantle of the old dmark for the moment in reaction to this - record lows vs EUR and GBP - SNB's Hildebrand is worrying about a 50 centimes Euro - it would be nice for me but can't see it going that far. See 1.10 eur and 1.20 gbp as the extremes, do you think this is not pessimistic enough?

Back in February I reasoned the ECB would need to (perhaps temporarily) weaken the Euro by about 15% to burn out the shorts.

Unfortunately the policy-making structure of the EC does not at this time allow the ECB to really give the market a solid spanking (policy change, even temporary, requires consensus between national heads of state and must remain on the correct side of the member constitutions) - so both fixed income and now spot speculators have the ECB on the back foot, and I reason the final price will be higher as a result (the ECB still has the capacity to crush positions in either market and would in my view "merely" need to move price by 2-5% or so from current levels in either direction with no warning).

Combine the above with typically poor liquidity at year end (it's not called the silly season for nothing) and again in my view further gyrations in either direction are both equally likely and also equally dangerous to use as the basis of any further positions.

At a personal level I'm unlikely to increase my own short EUR/ long CHF play further - I'm happy enough with the exposure I have and positively ecstatic with the performance extracted to date (I'm simply moving my knockout broadly in line with the market rate and implied volatility).

What I am presently increasing my exposure to is the (rather obvious) vega play on the bund future verses other "emerging" euro reserve notes which I've outlined previously (and won't bore this thread with).

Edited December 21, 2010 by ParticleMan

[Alan B'Stard MP]

Just been watching Russia Today channel on tv.

RT strikes me as a physops gig. They seem to give succor and legitimacy to every western internet nut out there.

I'm mean seriously.....Jim Corr !!

[SNACR]

http://uk.finance.yahoo.com/news/UPDATE-1-UK-raises-state-targetukfocus-1189829607.html?x=0&.v=1

LONDON, Dec 17 (Reuters) - Britain will raise its state guarantee on bank deposits to 85,000 pounds ($132,800) at the end of the year, bringing it into line with a new European compensation limit, the country's financial regulator said.

The new guarantee, up from 50,000 pounds per person currently, takes effect from Dec 31, the Financial Services Authority said on Friday.

The higher limit matches a new 100,000 euro ($133,100) compensation ceiling that comes into force on the same date across the European Economic Area, which covers most of Europe (news) .

"The need to maintain customer confidence in the banking system is one of the key lessons from the financial crisis," FSA Director of Conduct Policy Sheila Nicoll said in a statement.

She (news) added that the new guarantee would protect "the vast majority of depositors."

Britain raised its deposit guarantee from 35,000 pounds per person at the height of the banking crisis two years ago after the near-collapse of Northern Rock prompted thousands of savers to withdraw their cash from the troubled bank.

The FSA added that the majority of claimants under the new scheme would get their money back within 7 days in the event of a bank failure, and all would be compensated within 7 days.

Claimants would also be repaid their bank deposits in full, in contrast to the current approach, where deposits are repaid minus any outstanding loans held with the same institution. ($1=.6400 Pound) ($1=.7513 Euro

Why was this announced with so little fanfare and just slipped out ?

New Year Santander failure? - it would be politically unviable to start bailing out Spanish banks with UK taxpayer's cash even if a huge number of British depositors were affected - they managed to spunk it on Irish banks with minimal muttering so who knows'

[Bloo Loo]

http://uk.finance.ya...7.html?x=0&.v=1

Why was this announced with so little fanfare and just slipped out ?

New Year Santander failure? - it would be politically unviable to start bailing out Spanish banks with UK taxpayer's cash even if a huge number of British depositors were affected - they managed to spunk it on Irish banks with minimal muttering so who knows'

I cant see where the Actual total compensation has been increased, maybe it hasnt.

here is the current limit on total compensation per year from the FSCS website;

A layer of cross-subsidy is then available from the general retail pool, through which firms in the other broad classes support any other broad class which has reached its overall threshold, up to the overall limit of £4.03bn.

Thats LESS than the money needed by UK to Bail out the Irish Banks....and there were other countries money needed too.

rest in bed safe in the knowledge that if a big one was to go, the payout will be pence in the pound. Instant deflation.

[interestrateripoff]

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8317288/Spain-orders-drastic-caja-clean-up-to-win-confidence-and-fight-off-EMU-debt-contagion.html

Spain has imposed draconian rules on its saving banks and is preparing for part-nationalisation of the industry to restore confidence and boost the country’s defences against contagion from the debt crisis in Portugal.

The weaker banks, or "cajas", must raise Tier 1 core capital to 10pc by September if they depend on wholesale capital markets for more than a fifth of their funding or if less than a fifth of their shares are in private hands. If they fail to do so, the government will seize control through the state bailout fund (FROB).

The demands are even tougher than the broad-brush plans unveiled last month and shows the determination of the authorites to cut out any cancers rather than allowing the sort of drift that bedevilled Japan in the 1990s.

The move comes after yields on Portuguese 10-year bonds punched to a post-EMU high of 7.66pc, renewing fears of a spill-over into Spain. The European Central Bank intervened on Thursday to restore calm but it is clear that Euroland euphoria over Chinese purchases of Portuguese debt has not lasted long.

Jose Manuel Campa, Spain’s economy secretary and the architect of the financial overhaul, acknowledged that the most vulnerable cajas are unlikely to find private investors. "It will be a challenge. They have not taken part in the equity markets for some time," he told The Telegraph.

Only five of the 17 cajas meet the 10pc rule. Caixa Nova is 6.0, Unnim is 6.22, Caixa Galicia 6.43 and Catalyunia Caixa 6.6. Even the giant Caja Madrid with €328bn (£277bn) of assets has core capital of just 7.1, though it is already preparing a stock listing.

Mr Campa is hopeful that cajas will be able to raise "a big chunk" from investors given the strides made in cleaning up their books. He said fresh capital of €20bn will be enough to restore the caja industry to health, disputing claims by City analysts that €40bn to €80bn will be needed. "These high numbers are based on very stretched scenarios, with a fall in house prices by 50pc and land prices by 70pc," he said.

Madrid is basing its estimates on bank stress tests last July that included a severe double-dip recession, with a 3pc fall in GDP over the two years of 2010 and 2011. Since the economy in fact contracted by just 0.1pc last year, it would take a dire relapse at this point to exhaust the safety buffer.

However, there is a risk that Spain may have missed a chance once again to "get ahead" of the crisis. A report this week by the world’s Financial Stability Board (FSB) said the sheer scale of Spain’s property bubble had overwhlemed the country's seemingly tough rules on loss provisions.

You get the impression the Spanish are setting very robust capital levels to calm the markets the problem is who's going to invest in them and if they don't attract the investment what then? Panic stations?

Will the Cajas and Spain get to September? There seems a big dislocation as to the funding numbers from what the govt thinks and what analysts think. Usually govts hugely underestimate big projects, if they have the implications could be dire.

Still I'm sure the problem is contained and it's nothing a bit of secret buying by the ECB can't fix.

[Deckard]

From the comments:

Caja Mediterráneo are offering their houses at 60% discount and 100% finance this month

Is this true? can any of the Spain-based posters confirm?

From the article:

Mr Campa [...] advises astute investors that right now may prove to be the optimal moment to buy a house in Spain. "The Germans are coming back. We need the English, too," he said.

Are you feeling lucky?

[Deckard]

Phuck me, it's true

http://www.oportunidadescam.es/home.asp

Click on today's date to check out the latest offers

Discounts ranging from 30% to 60%, although most properties look like absolute cr@pholes, still way overpriced, particularly considering the current strength of the Euro.

Just as well the ECB is ready to bail Spain out, just like Greece, Ireland and now Portugal...

The Germans are coming back

Oh yes, they are

Edited February 10, 2011 by Greener Pastures

[Trampa501]

Well, this news is a little old now, but unsurprising as the other indicators lately (rise in gdp, rise in tourist numbers, rise in AVE numbers making an operating profit for first time etc) aren't really for a gloom thread.

Mr Campa [...] advises astute investors that right now may prove to be the optimal moment to buy a house in Spain. "The Germans are coming back. We need the English, too," he said.

Well it'll be a surprise if prices start to rise again anytime soon. However it is true that tourist numbers rose last year, including Germans. It is also true that UK numbers fell at the same time last year; however it seems that the latest uprisings in Tunisia and Egypt are proving a major blessing for the Spanish tourist industry. The Canaries are expecting an extra 300,000 bookings this winter as travellers divert from volatile areas.

[interestrateripoff]

Well it'll be a surprise if prices start to rise again anytime soon. However it is true that tourist numbers rose last year, including Germans. It is also true that UK numbers fell at the same time last year; however it seems that the latest uprisings in Tunisia and Egypt are proving a major blessing for the Spanish tourist industry. The Canaries are expecting an extra 300,000 bookings this winter as travellers divert from volatile areas.

Germany economy doing well, the UK recovery appears somewhat flimsy. Are German numbers making up for the lost British ones?

[Shrink Proof]

Phuck me, it's true

http://www.oportunidadescam.es/home.asp

Click on today's date to check out the latest offers

They look like Warsaw Pact prisons.

[fluffy666]

They look like Warsaw Pact prisons.

I remember a holiday on the Costa Blanca in 2006 (Friend of wife's had a holiday home that they let out).

It was early may, but the place was deserted; we are talking tumbleweed through the streets. Some construction sites hard at work building yet more 'casas'. A small number of ex-pats 'living the dream' (aka 'will do anything for cash'); the vast majority of these dream retirement properties locked up and heavily shuttered, due to the problem of break ins.

Problem is, even at £30-40k, you are talking about 10 year's worth of all-inclusive family holidays wherever you want. I suppose if you want to retire a long, long way from family, have nothing to do but drink and hope you don't get ill it'd be great..

[ralphmalph]

Germany economy doing well, the UK recovery appears somewhat flimsy. Are German numbers making up for the lost British ones?

The Spanish are making the numbers up.

[stuckmojo]

I remember a holiday on the Costa Blanca in 2006 (Friend of wife's had a holiday home that they let out).

It was early may, but the place was deserted; we are talking tumbleweed through the streets. Some construction sites hard at work building yet more 'casas'. A small number of ex-pats 'living the dream' (aka 'will do anything for cash'); the vast majority of these dream retirement properties locked up and heavily shuttered, due to the problem of break ins.

Problem is, even at £30-40k, you are talking about 10 year's worth of all-inclusive family holidays wherever you want. I suppose if you want to retire a long, long way from family, have nothing to do but drink and hope you don't get ill it'd be great..

Agreed. The good places are still far too expensive and the bad ones are, well, bad. I sometimes fly into Malaga for business and shudder as I look at what they built on the hills there. They look like Luton-style council terraces, only in the middle of the desert.

[Realistbear]

http://uk.finance.yahoo.com/news/Spain-says-next-fall-euro-reuters_molt-3486986629.html?x=0

Elisabeth "Liz" O'Leary, 8:04, Thursday 7 April 2011

MADRID (Reuters) - Spain will not follow ailing neighbour Portugal in seeking a European bailout, Spain's Economy Minister said on Thursday, hoping Lisbon's move will draw a line under Europe (Chicago Options: ^REURTRUSD - news) 's debt crisis..../

Spain on Wednesday cut its forecasts for growth for the next two years on the likely impact of higher interest rates and oil prices, ahead of an expected European Central Bank rate hike on Thursday.

Salgado argued that a quarter point move by the ECB would not endanger Spain's economy, which is already dealing with harsh public spending cutbacks and labour market reforms.

They all denied it in the beginning and then the bailout request came. What do you think? End of summer or sooner?

If the ECB hike it will speed up the process somewhat IMO.