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  1. #1
    Freaking Ratchet Rail Tracer's Avatar
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    Default Spanish Bank Bailout

    While the European nations are more worried about the games, this is what is transpiring at the moment.

    Essentially, this is only a financial sector bailout and nothing else.

    Nada for the 24.4% unemployment in Spain.

    I sense a storm is brewing.

    According to the wires, the Eurogroup phone call on a Spanish bank recap has now concluded.

    The Spanish economy minister will be making a press conference at 1:30 PM ET, and he's expected to announce a massive bailout.

    What we (think we) know is that Spain will be getting 100 billion EUR or more to recapitalize its banks. The money will come from Europe's bailout funds: The EFSF and/or ESM.

    There are two things to think about:

    1. Does the market think it's enough?

    2. Do people feel comfortable that Spain is still a country with market access even after its banks have been bailed out?

    We'll have full coverage here.

    UPDATE: The bailout announcement is happening. We'll have details as they're available.

    The gist is basically, as Bloomberg's Linda Yueh confirms, that Spain WILL ask for aid for the banks from the rest of Europe.

    The vehicle for the bailout will be the FROB (Spain's entity for recapping banks) and it will not be used for anything else but the financial sector.

    As the government is making very clear, this is a bank bailout, not a sovereign bailout.

    No dollar amount has been mentioned yet, though the government insists that it will banish any doubts.

    Here's the full Eurogroup statement on the deal (.pdf).

    The Eurogroup supports the efforts of the Spanish authorities to resolutely address the restructuring of its financial sector and it welcomes their intention to seek financial assistance from euro area Member States to this effect.

    The Eurogroup has been informed that the Spanish authorities will present a formal request shortly and is willing to respond favourably to such a request. The financial assistance would be provided by the EFSF/ESM for recapitalisation of financial institutions. The loan will be scaled to provide an effective backstop covering for all possible capital requirements estimated by the diagnostic exercise which the Spanish authorities have commissioned to the external evaluators and the international auditors. The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to EUR 100 billion in total.

    Following the formal request, an assessment should be provided by the Commission, in liaison with the ECB, EBA and the IMF, as well as a proposal for the necessary policy conditionality for the financial sector that shall accompany the assistance.

    The Eurogroup considers that the Fund for Orderly Bank Restructuring (F.R.O.B.), acting as agent of the Spanish government, could receive the funds and channel them to the financial institutions concerned. The Spanish government will retain the full responsibility of the financial assistance and will sign the MoU.

    The Eurogroup notes that Spain has already implemented significant fiscal and labour market reforms and measures to strengthen the capital base of the Spanish banks. The Eurogroup is confident that Spain will honour its commitments under the excessive deficit procedure and with regard to structural reforms, with a view to correcting macroeconomic imbalances in the framework of the European semester. Progress in these areas will be closely and regularly reviewed also in parallel with the financial assistance.

    Beyond the determined implementation of these commitments, the Eurogroup considers that the policy conditionality of the financial assistance should be focused on specific reforms targeting the financial sector, including restructuring plans in line with EU state-aid rules and horizontal structural reforms of the domestic financial sector.


    We invite the IMF to support the implementation and monitoring of the financial assistance with regular reporting.

    Read more: http://www.businessinsider.com/spani...#ixzz1xKMYZqvE

  2. #2
    meinmeinmein! mmhmm's Avatar
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    Default

    jeez was just in spain this march,
    all the unfinished buildings, unused
    airports, the public spendiing by
    the autonomous regions is just out
    of control.

    it's as if during the boom they had
    like building envy... starting from
    the guggenheim in bilbao.

    terrible, there were protests everyday
    i was there, from pensioners to students.
    nuts.
    every normal man must be tempted, at times,
    to spit on his hands, hoist the black flag,
    and begin slitting throats.
    h.l. mencken

  3. #3
    Senior Member Survive & Stay Free's Avatar
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    Well I do think that a bank bailout cost the European, specifically German, taxpayers less than a sovereign bailout would have, so its reasonable from that respect but I do also appreciate the German concern that this could be repeated and the capitalists in Spain and elsewhere will begin to think of the German taxpayer as someone they can repeatedly hit up for free money.

  4. #4
    Superwoman Red Herring's Avatar
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    Quote Originally Posted by mmhmm View Post
    jeez was just in spain this march,
    all the unfinished buildings, unused
    airports, the public spendiing by
    the autonomous regions is just out
    of control.

    it's as if during the boom they had
    like building envy... starting from
    the guggenheim in bilbao.

    terrible, there were protests everyday
    i was there, from pensioners to students.
    nuts.
    That is true. And few Spaniards will deny it. The building boom was ridiculous. However, the protesters still have good reason to protest as the cuts made by the Spanish government hit especially the poor and the young. A lot of those building deals were soaked with corruption. It has a lot to do with the competition between the individual autononous regions and sometimes even smaller towns urge to gain prestige through building projects. It's not like the people specifically voted on these projects, it was a widespread practice all over the place.

    On the other hand, there also was a nation wide culture of "why worry". I know a young man who never learned a profession and worked as a movie projector in the local cinema while living with his parents...he bought a brand new BMW capriolet on credit. Another couple I know decided to move out of their parent's place and buy an apartment of their own. Credits were so cheap that most Spaniards would buy rather than rent and it was and is nornmal to stay with your parents until you own a place to stay with your spouce-to-be rather than rent a small place. There was so much money in building that some young people dropped out of college to make good money on construction sites instead. Now with the crises people are losing everything they own because the interest rates have gone through the roof (and half of the younger generation is unemployed anyway, so fat chance at paying back anything). The shit has hit the fan and people are very angry and very desperate - understandable so.


    Quote Originally Posted by Lark View Post
    Well I do think that a bank bailout cost the European, specifically German, taxpayers less than a sovereign bailout would have, so its reasonable from that respect but I do also appreciate the German concern that this could be repeated and the capitalists in Spain and elsewhere will begin to think of the German taxpayer as someone they can repeatedly hit up for free money.
    Amen. I'm all for European solidarity but cheap credits at the cost of the German tax payer and to the profit of German banks is something that has happened before and keeps happening.
    The good life is one inspired by love and guided by knowledge. Neither love without knowledge, nor knowledge without love can produce a good life. - Bertrand Russell
    A herring's blog
    Johari / Nohari

  5. #5
    Freaking Ratchet Rail Tracer's Avatar
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    Quote Originally Posted by Lark View Post
    Well I do think that a bank bailout cost the European, specifically German, taxpayers less than a sovereign bailout would have, so its reasonable from that respect but I do also appreciate the German concern that this could be repeated and the capitalists in Spain and elsewhere will begin to think of the German taxpayer as someone they can repeatedly hit up for free money.
    Quote Originally Posted by Red Herring View Post
    Amen. I'm all for European solidarity but cheap credits at the cost of the German tax payer and to the profit of German banks is something that has happened before and keeps happening.
    My main concern at this point is Germany deciding to leave the Euro. Not only because Germany is one of the few nations with the lowest unemployment rate, but also because it is one of the few nations not living in a giant chunk of debt.

    Paying for all these bank bail outs is an insult to injury, which is very much like having the American people paying for the failure that the banks created (1.2m foreclosures and counting.)

    The amount that was given to the Banks of Spain is hardly enough to cover the bank debt, from the estimates I've read we would need 5x the amount that was lent to them.

    More reason to end the fed/monetary system and go back to credit instead. In other words? This system they keep throwing money on is going to implode soon... and it is going implode big.

  6. #6
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Red Herring View Post
    Amen. I'm all for European solidarity but cheap credits at the cost of the German tax payer and to the profit of German banks is something that has happened before and keeps happening.
    I dont believe that the banks are even making that much profit, not the German ones anyway, I think that the English banks are engaged in some real economic warfare and have pretty much carved themselves out a niche as the European financial district.

    Its interesting to see how they would handle greater fiscal and political union, the English will want to remain a sattellite or independence, if they do the Germans or French could develop as financial rivals. I dont know how the English would handle that but they have a seriously myopic attitude to politics and the economy, their agenda since shortly after Thatcher has pretty much beend defending the shrinking wealth of the uber rich elites, the lack of any concern at all about the prospects of Scottish independence is pretty telling, basically london could care less about anyone or anything outside the city limits.

  7. #7
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Rail Tracer View Post
    My main concern at this point is Germany deciding to leave the Euro. Not only because Germany is one of the few nations with the lowest unemployment rate, but also because it is one of the few nations not living in a giant chunk of debt.

    Paying for all these bank bail outs is an insult to injury, which is very much like having the American people paying for the failure that the banks created (1.2m foreclosures and counting.)

    The amount that was given to the Banks of Spain is hardly enough to cover the bank debt, from the estimates I've read we would need 5x the amount that was lent to them.

    More reason to end the fed/monetary system and go back to credit instead. In other words? This system they keep throwing money on is going to implode soon... and it is going implode big.
    If it does implode its only because the elites are likely to profit by it, its really a shame that there's no intelligent opposition to the extent to which finance has managed to hijack the economies and political future of the world's peoples. With the only popular ideologies being those which will strengthen and not weaken those same elites.

  8. #8
    Freaking Ratchet Rail Tracer's Avatar
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    Quote Originally Posted by Lark View Post
    If it does implode its only because the elites are likely to profit by it, its really a shame that there's no intelligent opposition to the extent to which finance has managed to hijack the economies and political future of the world's peoples. With the only popular ideologies being those which will strengthen and not weaken those same elites.
    Actually, if we move to a credit system, all those banks with those risky limits will be downsized like heck and their risky trading ways completely disappear.

    However, this does adversely affect the world economies because every other institution depends on these banks... if those risky banks implode, every other sector implodes. Every one thinking of buying gold and silver? People won't really need to buy gold and silver. All the banks trying to bring the world to its knees are doomed if the politicians are so willing to implement the credit system back.

    They've already hijacked the Glass-Steagall act far beyond recognition to go back to it (with all the money lent and the debt accumulated.)

    It is just, everyone who has accumulated wealth DO NOT want this to happen.

  9. #9
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Rail Tracer View Post
    Actually, if we move to a credit system, all those banks with those risky limits will be downsized like heck and their risky trading ways completely disappear.

    However, this does adversely affect the world economies because every other institution depends on these banks... if those risky banks implode, every other sector implodes. Every one thinking of buying gold and silver? People won't really need to buy gold and silver. All the banks trying to bring the world to its knees are doomed if the politicians are so willing to implement the credit system back.

    They've already hijacked the Glass-Steagall act far beyond recognition to go back to it. (with all the money lent and the debt accumulated.)
    I'm not sure what you mean by a credit system.

    The present value of currencies are linked to commodities (and often the strength states and confidence in them) and the alternative that I know about is gold standards, celebrated by libertarians because they are scarce commodities, tangible and limited and will prevent public spending on either welfare or warfare.

  10. #10
    Freaking Ratchet Rail Tracer's Avatar
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    Quote Originally Posted by Lark View Post
    I'm not sure what you mean by a credit system.

    The present value of currencies are linked to commodities (and often the strength states and confidence in them) and the alternative that I know about is gold standards, celebrated by libertarians because they are scarce commodities, tangible and limited and will prevent public spending on either welfare or warfare.
    Have you heard of credit unions?

    The Gold standard is a hoax, the only people who can afford those, are.., you guessed it... the rich. I don't think most of us can afford to spend thousands upon thousand just to get 100 shares of gold.

    The system we currently live in (for a century now when it really began to take off,) at least when it comes to the U.S. is a Federal/Monetary system. It is currently the system that got us into this mess(along with the repeal of a provision in the Glass-Steagall act that would of prevented risky procedures.) It continues "pumping" money to the economy in the hopes of making it stable. The fact of the matter is... it really hasn't been stable and the only people it is currently benefiting are the bankers that use it as a leverage for more risky spending. At the same time, while they are continually pumping money out, they are continually devaluing the dollar currency we currently have (thus the people fleeing to the gold standard... AKA rich people.)

    In other words, break the Fed/Monetary system.

    The credit unions, on the other hand, tend to play it a lot safer than the banks/lenders (BOfA, Goldman Sachs, Chase, Wells Fargo, etc) because they are more "democratically run" that means that credit unions are funded by the people that use them.

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