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EUROGROUP PRESIDENT SPOOKS MARKETS: Says Cyprus Deal Is A Template For The Rest Of The Euro Area
Today, in an interview with Reuters and the Financial Times, Dutch Finance Minister and President of the Eurogroup of euro zone finance ministers Jeroen Dijsselbloem said that the Cyprus deal will serve as a template for future bank restructurings in the euro zone.
http://www.businessinsider.com/dijsselbloem-cyprus-deal-is-a-template-2013-3#ixzz2OZ6HyuQR
Faisal Islam‏@faisalislam4 min
Farmer Dijsselbloem reapeth what he sows. Never served on €group. Became President. [...]
Germany and Spain’s biggest banks report stunning losses
Deutsche Bank Reported An Unexpected $3 Billion Loss
FRANKFURT, Germany (AP) — Reducing the value of assets and lawsuit expenses pushed Deutsche Bank into a big and unexpected fourth quarter loss of €2.15 billion ($2.91 billion).
The net loss for the October-December period compared to a €186 million profit a year ago. Analysts surveyed by FactSet expected a bare profit of €62 million.
Deutsche Bank is [...]
globaleconomicanalysis.blogspot.com / By Mike “Mish” Shedlock / Monday, January 21, 2013 11:52 AM
Spanish banks have already shed 30,000 jobs in its banking crisis. Another 20,000 cuts are due in 2013, along with pay cuts and reduced pension contribution. In response Spain’s Banking Unions Announce Strikes.
Workers at three of Spain’s bailed-out banks will stage strikes in coming weeks as they fight mass layoffs, unions said on Monday, spreading industrial unrest to a sector where [...]
by Phoenix Capital Research
By the look of things, Europe’s banking system is breaking down again.
Bankia’s shareholders have received a nasty new year’s surprise. They may lose most of their investments or even all of them says the Spanish bank rescue fund in its latest report.
According to FROB, the Fund for Orderly Bank Restructuring, Bankia has a negative value of 4.2 billion euros, and its parent group BFA is 10.4 bn in the red.
Valuation [...]
by Phoenix Capital Research
The markets in Europe continue to rally hard despite the fact that Europe’s financial system is totally insolvent.
At the center of this mess is Spain, which now barely functions as a country. Spanish pharmacies, owed $500 million by the government, are running out of medicine in Valencia. Strikes have resulted in trash not being collected for 20 days in Jerez. Over 2.2 million children live in poverty [...]
by Phoenix Capital Research
As I noted previous articles, Spain has essentially three options:
1) Spain goes the “Greek route” of agreeing to austerity measures in exchange for bailouts (which will implode the economy).
2) Prime Minister Rajoy refuses to impose austerity measures and is removed/ replaced by an EU technocrat who is pro-austerity measures (like Italy experienced last year)
3) Spain defaults/ leaves the EU.
Thus far Spanish Prime Minister Rajoy has opted to [...]
 Greece, Spain ‘in depression’: Nobel winner Stiglitz
AFP - Greece and Spain are in “depression, not recession”, Nobel prize-winning economist Joseph Stiglitz said on Wednesday, blaming tough austerity measures for their downward economic spiral.
Stiglitz also maintained that the International Monetary Fund was “a little too optimistic” in its forecast last week that the eurozone economy would shrink by 0.4 percent in 2012 and rise by 0.2 percent next year.
“I’m more pessimistic than [...]
The Horrific, Worst-Case Scenario For Spain
Spain is in trouble.
The macroeconomic outlook continues to deteriorate as unemployment rises. Angry citizens are protesting austerity in the streets.
At the same time, Spain has just unveiled its 2013 austerity budget, but the overly-optimistic macroeconomic assumptions underlying the plan foreshadow missed deficit targets in the coming quarters, which will likely force a new round of austerity measures, further worsening the economic contraction.
Meanwhile, the Spanish region [...]
Interesting analysis of deposit outflows in Spain. In July, a record 5% deposit (€74bn) left the country. In August, 1.1% of total deposits, or €17bn left the country. Overall this year close to €200bn have left the Spanish banking system.
http://www.zerohedge.com/news/2012-09-27/spanish-bank-deposit-outflow-surge-continues-august
The crux of the “pain for Spain” was exposed in August, when the world learned that despite all attempts to the contrary, Spanish banks are no longer perceived as safe by the locals, and the result was a record 5% deposit outflow in one month from local banks: cash that was promptly redeposited elsewhere in the Eurozone. And as money flow theorists know all too well, if cash is exiting the Spanish [...]
MADRID–Spanish banks’ level of borrowing from the European Central Bank rose to a record high in July as tensions mounted in the weeks following the announcement of a 100 billion euro ($122 billion) bailout for the country’s financial industry.
Data released Tuesday by the Bank of Spain showed that net borrowing rose to EUR375.55 billion, up from EUR337.21 billion in June. It was the tenth month in a row [...]
Harvard economic historian Niall Ferguson went on Fareed Zakaria GPS on Sunday to discuss the euro crisis and how a Greek exit from the common currency would play out.
Ferguson told Zakaria it would go down on a Sunday night:
So, what you would be talking about would be an announcement, presumably on a Sunday night, along the lines of “news just in, those euros that you have in your bank from tomorrow, will [...]
Critical point here from Jefferies David Zervos. People have stopped talking about Europe. All they want to talk about is the US:
I was then in NYC for meetings Tuesday where there was a continued lack of interest in the European situation. As we went through May and June, the Greek election, the Spanish bank bailout and the EU leaders meeting were the only topics up for discussion at client meetings. [...]
While European and US equity and credit market seem somewhat asleep this morning (despite quite significant moves in FX, Treasury, and Commodity markets), there is some stirrings in Italian and Spanish Senior and Subordinated debt markets. No matter how much de Guindos denies-denies-denies, the fact is the market has been increasingly pricing in subordinated bank debt impairment and now senior bank debt is inching wider also after the ECB’s ‘suggestions’ [...]
Contrary to popular delusions, money flows in Spain are once again deteriorating rapidly, with the country’s bank borrowings from the ECB soaring by €50 billion in June according to the Bank of Spain, the second highest ever, to a record €337 billion. While this is bad for Spain, it is good for Italy, which saw its June ECB borrowings rise by only €9 billion, to a record €281 billion, although [...]
Germany ensures that the direct aid to the Spanish bank will not reach this year
The German Finance Minister, Wolfgang Schäuble, believed that direct aid to the Spanish banking sector may not be in 2012 because before we need to create a common banking supervisor, a body which will not come into operation this year.
In an interview with El Pais, Shauble ensures that those who think that aid to the banking [...]
Despite the easing of collateral standards, ECB Margin Calls surged last week by their most in over 9 months (ex-Greece). As yields rose (and prices fell) pre-summit, so the collateral that European banks have lodged with the ECB fell in value and thus, the banks had to find cash to cover those margin calls. The rally from Friday may have eased that strain a little but today’s give-back of all those [...]
German lenders will be among the biggest beneficiaries of a Spanish bank bailout, with rescue funds helping to ensure they get paid back in full for poor lending decisions made in the run-up to the financial crisis, and helping politicians in Berlin avoid a politically sensitive bank bailout of their own.
German lenders were among Europe’s most profligate before 2008, channelling the country’s savings to the European periphery in search of [...]
June 26 (Bloomberg) — Spain is poised for a downgrade to junk by Moody’s Investors Service, according to investors who sent the cost of default insurance for the nation’s biggest banks and companies close to record highs.
Credit-default swaps on Banco Santander SA, the country’s biggest bank, jumped 23 percent this quarter to 454 basis points, compared with an all-time high of 474 in November. Banco Bilbao Vizcaya Argentaria SA rose 26 percent to 477, approaching [...]
Moody’s cuts long-term debt and deposit ratings for 28 Spanish banks between one and four notches. The move comes in the wake of this month’s downgrade of the country’s sovereign debt. The only banks rated above the sovereign: Banco Santander (SAN) and Santander Consumer Finance, for diversification and sufficient Tier 1 capital.
via Zerohedge:
The long anticipated downgrade of the recently bailed out Spanish banking sector has arrived. Moody’s just brought the [...]
by Peter Tchir of TF Market Advisors,
Do we finally get details out of Europe?
Spain has finally made the “formal” request for aid [ZH: and Italy is right behind them this morning]. There is another summit. Expectations for anything positive seem incredibly low. There seems to be a scramble to shoot down anything that is said out of Europe. It really doesn’t matter what is said, the negatives and potential negatives, and imagined [...]
Even as Moody is now about a week late on its Spanish bank downgrade where the banks are rated higher than the sovereign (which obviously is kept in check to prevent yields on bonds from soaring even more), here comes the next wholesale bank downgrade:
Moody’s expected to announce ratings downgrade for UK banks this evening - Sky Sources
Exclusive: Big news – I’m told Moody’s will announce downgrades of some of world’s biggest [...]
• Spanish borrowing costs almost double at bond auction
• David Cameron urges French to come to UK for lower tax
• IMF wins pledges of $456bn for crisis fund
• UK inflation slows to 2.8pc in May
• Merkel expects Spanish bank aid request soon
• Auditors agree to delay release of reports into Spanish banks
Latest
16.08 Number 10 backs David Cameron over call for French to come to UK for better tax deal.
PM was answering a question partly in jest [...]
If there is anything positive that can come out of the “Spanish fiasco” it is that EU leaders may approach their crucial June 28 summit meeting with their eyes finally open.
Spanish bond yields, at 6.09% just before the Eurozone stepped in to save the country’s banks, mounted to 6.95% heading into this weekend’s crucial make-or-break Greek parliamentary elections
The market’s lightening-fast rejection of the E100 billion Spanish bank bailout clearly showed [...]
Despite the fact that investors got much of what they had wanted in a Spanish bank bailout over the weekend, they have been betting strongly against Spain and now Italy in the wake of the bailout announcement.
Lombard Street Research’s Charles Dumas provides the best summary we’ve seen so far of why many believe that the bailout is a failing proposition:
The Spanish bail-out was a typical example of half-measures. It seemed clever to insulate Spain [...]
KWN
Today top Citibank analyst, Tom Fitzpatrick, warned that despite the initial enthusiasm surrounding the Spanish bank bailout, “this is yet another over-promise, under-deliver dynamic coming out of Europe.” Fitzpatrick, a 28 year veteran and top analyst at Citibank, which has $1.3 trillion in assets, also said, “we are moving to the point where we’re no longer going to be able to see the stabilization on false promises and under-deliveries.” He also [...]
UPDATE
According to FT’s Chris Adams and CNBC’s Ross Westgate, the Spanish 10-year yield just broke through 7.0 percent on Tradeweb.
SEE ALSO: 14 Reasons Spain Is Turning Into A Disaster >
ORIGINAL (3:48 AM EST)
This is getting scary.
The cost for the Spanish government to borrow for 10 years hit a euro-era, all-time high of 6.90 percent this morning. They’ve pulled back ever so slightly.
Still, this goes to show that despite this weekend’s announced Spanish bank bailout, the [...]
As is well-known in the ratings world, sovereign downgrades never come alone: first the sovereign is cut, then sovereign-supported domestic banks (the sovereign is the threshold rating), then general financial companies like insurance firms and specialty fins. Such downgrades are particularly painful when they go through a major threshold such from A to B as they spring various collateral and margin calls into action. One thing we do know is [...]
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