EUROZONE UNRAVELLING: Blue Skies in the media, rain heading for Spain

‘U.S. money-market funds sharply increased the amount of euro-zone bank debt they held last month, according to Fitch Ratings, a sign they believe the worst of the debt troubles are over.’ (WSJ)

‘The European Central Bank is falling behind on a €40bn asset purchase programme launched at the height of eurozone crisis, in a sign it could be dropped as a first step towards unwinding huge emergency support for the region’s financial system.’ (FT)

So much for the bollocks. Now, the view from the Blogosphere…

‘Spain is already in as bad a shape as Greece. And it hasn’t begun any significant austerity measures yet. Having seen what austerity has done to Greece (Greek GDP shrank 6.8% in 2011 AFTER Greece received bailouts equal to 57% of its GDP), Spain is much less likely to opt for the bailout/ austerity measure program.The significance of this is HUGE. According to the Bank of International Settlements worldwide exposure to Spain is north of $1 TRILLION with Great Britain on the hook for $51 billion, the US on the hook for $187 billion, France on the hook for $224 billion and Germany on the hook for a whopping $244 billion…’ (ZH)

Yesterday, I posted about Berlin’s exit preparations. People on the whole saw it as old news. I see it as interesting in the context of an obviously unravelling eurozone. Spain is not only going to go its own way, it is going to defy Brussels. Germany is in turn drifting further and further away from the machinations of Mario Draghi.

There isn’t enough money on the planet to rescue Spain.

Let’s see what happens to Greece tomorrow – if anything. I’m going to do some digging around in Berlin.

I may have very limited access to the internet over the next few days. That and some research may mean I don’t post much. So have a good weekend…and ignore the budget, it doesn’t matter.

80 thoughts on “EUROZONE UNRAVELLING: Blue Skies in the media, rain heading for Spain

  1. That’s a bit of cop out John. You’ve been telling us for weeks that the world is going to end on 23rd March and now you’re going AWOL. Shurely shome mishtake?

    • …awol or not, I, too, will be ‘bunkering down’ the next few days here in France – that is after I pay a quick visit to Super U in order to grab a few more Euros from the ATM. You know, just in case the cash machines seize up over the weekend. Yeah, toilet paper it may be, but it will still be wanted to wipe for a while.

    • Dear Kilthead
      Gratuitous insult yesterday, followed by clear evidence of inability to read today.
      But for your benefit, I did not ‘predict’ anything: I said a plan had been formulated, then the various parties had fallen out. Then I posted several times to say Washington was pissed off that Berlin was playing silly games. Then I posted to say the White House was worried about allowing the Greek election to go forward.
      Now go and have a lie down somewhere.

      • I must have misunderstood all those impeccably sourced references and posts starting at 2.35AM on 19th Feb. The mishtake ish mine, obvioushly.

        And in what way was my post about your lack of satirical writing ability gratuitously insulting when your daily invective against pretty much everyone you write about is not?

        Off out for a run now. I’ll have a lie down later.

  2. Thank you, John and enjoy the digging! I can’t wait for the downfall of this ugly monster called the EU, even although, in its fall we will all suffer some of the consequences, I say, bring it on!

  3. Surely there must come a point when the markets (whatever/whoever they are) see it as a good thing that the Euro dies?
    I don’t think any of these countries can begin to revive until they’re back on their own currencies.
    The Euro is like all being roped together, when one slips everyone gets dragged. There’s no flexibility in the current system.

    • ….till they cut the rope or it “rubs through” after having been dragged backwards and forwards over the edge numerous times

    • Exactly. Spread the load, stuff the taxpayers and especially any stupid enough to hold financial assets. Someone will have to pay for Spain and Portugal as both are complete basket cases. So, btw, is the UK but our case is a little more urgent.

  4. German troops in Spain soon, then Portugal, maybe Italy next, wow, it’s beginning to look like the old days of ’39-’45 only different places now…

    • @kfc

      German troops in Spain – I doubt it. The Bundeswehr has been all but done away with, and what’s left of it ain’t up to much either.

      The real danger will be the commencement of the holiday season. I can see it now, potted training sessions for the tourists before departure.

      In the future towels will no longer be draped over sun-loungers to annoy the Tommies, they will be thoroughly wetted, a hefty knot tied in one corner, and then the Hermanns are to rampage through the street twatting every Pedro in sight with it. That’ll show ‘em!

      Meanwhile, the Pedros have been in contact with Montezuma across the pond in regard to retaliatory measures. Henceforth, anyone who eats the meals served at their full-board hotel is one less on the streets with a knotted towel – for a few days at least.

      The Hermanns will eventually return home and boast that they went on holiday to Spain, but it was just like being in Mexico.

    • Forget the WWII Wehrmacht fantasies. Germany would be hard-pressed to invade Luxembourg, not even if the entire Luxembourgeois army were on smoke-break.

  5. Perhaps the wiser heads in Spain have had a bit of a squint at Iceland and seen how they are faring since the people were asked their opinion … and gave an unmistakeable Vs-up to the banks.

    I would be greatly encouraged if we were to witness a similarly robust response from the Castilians should they be asked, and, more importantly, heeded. Reading this, Cameron? Where the people are consulted and their decision respected?

    • Caratacus

      Those that frequent Spain have been posting for some time that it is a magma chamber waiting for chance to erupt. I have no idea whether Spain itself (Country of) is brassic, but most of the population and banks certainly are. As John says; there is not enough money on the planet to rescue Spain – I would suggest that the same applies to Italy – but you might kick the can along a little longer if you don’t mind increasing the damage done by hitting the print button.

      M.

    • I know this is not quite what you wrote, but it does not matter what the masses in Spain think about the Icelandic path – what matters is what the Euroelites in Euroland think, and they are into the Europroject up to all the way their Euronecks.

      What is more, the Euroelites have been in so deep and for so long, across all party lines and ideologies outside the nut fringe, not to mention national boundaries, insisting loudly all these years to all and sundry that the Emperor was wearing a Zegna suit of a conservative stripe and that anyone who dared voice the slightest doubts on the issue was an upland Tennessee aborigine – they have invested so much of their Eurocredibility in this Europroject that to do an about-face now would be impossible.

      It would be like the Pope admitting in public that the official Catholic stance on contraception is largely ignored in any First World country, or G.W. Bush confessing that the evidence for the Iraq War was flimsy and sexed up beforehand, and the war itself turned out to be an expensive, bloody and destabilizing disaster.

      It would basically torpedo any remaining Eurocredibility the Euroelites have. They will have to go down with the Bad Ship Euro, as they are really married to this turd.

  6. I assume that lack of internet access means that you’re heading south. I do hope that the winter has been kind to you. The chap who replaced our blown controlleur had replaced another 100 in this area. And many of the secondaires are not yet open. Mind you it did get down to -18 to -25 here.

    • Jon, it is unwise to make presumptions about foot slogging investigative journalists and in this case you couldn’t be more wrong. In the meantime you would be better rewarded by following Caratacus and turning your attentions to Barcelona where a great black glass citadel houses the HQ of Spain’s richest savings bank La Caixa. Formerly Caja de Ahorros y Pensiones de Barcelona, it recently transformed into a full blown bank. Its Chairman is Isidro Faine Casas who also holds the reins at Repsol Oil and Telefonica. Now link those words, oil, banking and communications and imagine who might be calling some pretty high powered shots from a city which has little or no love for Madrid.

  7. “…people as a whole considered it old news…”

    Don´t feel bad, John, from my perspective you have put quite some meat to the bone that was the persistent rumor of our (Germanys) departure from the common currency. Your info coupled with the recent bluntness of Mr. Weidmann regarding ECB and german fiscal policies (latest here: http://www.faz.net/aktuell/wirtschaft/weidmann-zum-bundeshaushalt-nicht-gerade-ambitioniert-11693433.html) are slowly turning the euroexit-theory from woowoo to reasonable.
    The assessments of your Bankfurt contact are usually spot on imo, I really hope we are not suffering a case of wishful thinking there, all I know is the german populace will not accept a devaluation of our currency via monetization of debt.
    There are quite a few lawsuits filed with our constitutional court about this that have been left hanging in the air for now, but will have to be decided at some point.
    Merkel knows how the court will decide if its forced to…
    I´m looking out for your updiggings…

    • I would be very surprised if the German people were told the real situation-and astounded if they actually got to have any say about it.
      Certainly the British people are not being allowed to have any real say on the EU-and are unlikely to be given the chance to do so.
      Whilst what JW says is sound and well based, IMHO, I still think the can will be kicked down the road until there is nothing left of it-at which point the elite will congratulate themselves on having solved the problem.

      • Well, we might not have any real say about how our country is run via our sham elections, but once working folks really see their money being rendered worthless and the welfare crowd sees their handouts reduced to food stamps, there will be a lot of unhappy campers.
        Try only a fraction of greek style austerity here under the EU banner and the sheep will set the barn on fire, under the pretense of a renewed national currency they just might go for it if neccessary.

      • @Kit: I’ve always seen the British system as a benign-kleptocracy going back many centuries. As the going gets tough for them, they’re fast becoming a fascist kleptocracy. General elections exist for them to fight over who gets control of the spoils. The pomp and ceremony exists to fool people into believing that they’re something else.

    • I am really confused by posters here and JW constantly stsing how the German people are opposed to the bailouts and are against monetization of debt.
      The reason I say this is because every time the same “German People’ are asked to vote at regional or by-elections they vote for the very people who have publicly proclaimed that they will monetize the debt and support bail-outs.
      The recent collapse of the North Rhine-Westphalia regional goverment, a minority government of the Socialists and Greens, was cused by the FDP refusing to support a budget that would increase borrowing.
      The consensus is that the Socialists and Greens will win a majority in the new Government and the FDP will disappear.
      The evidence therefore shows that Herr und Frua Schmidt are happy to support the bailouts and monetization of debt!

      • Obviously Germany is like the UK; people vote for whichever political party offers them the most largesse from the treasury, and they don’t give a damn where the money comes from.

  8. Spain is certainly looking a riskier proposition than Italy right now but Italian bond yields are also rising again. If this correlation continues things might get really out of hand.

  9. “There isn’t enough money on the planet to rescue Spain”

    Of course there is. Pay it off with Euros and issue improved Neo-Euros!

    • @Stevie

      perhaps the race to back up CDSs has finally run out of steam?

      Complain to WordPress about having to login to post comments every time. It is an infringement of your rights and liberties. They won’t listen, but perhaps next time someone wants to do this, they will think twice. Google will have you signing in to do a search next! It is not as if you can edit your comments afterwards as you can with Disqus (an altogether better commenting system for all its faults).

  10. Pingback: John Ward – Eurozone Unravelling : Blue Skies In The Media, Rain Heading For Spain – 22 March 2012 | Lucas 2012 Infos

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  12. Re housing in Spain. I live there, and can tell you that the bank/housing bubble must burst soon. In my very small ‘pueblo’ (of 40 houses) where I keep my ear close to the ground (AKA nosy b******) 3 houses have been repossed by banks in the last 2 years. All have now been pillaged beyond belief-doors,windows,metalwork and electrics-all gone! Values of these houses varied from E200k to E350K. My friend contacted one of the banks to make an offer on one, The bank wanted E240K-the same price that it was bought for 5 years ago. Interestingly not one property has ‘for sale’ signs. my friend said the house was a wreck and worth perhaps E40-60K tops and he knows the market. Methinks that this is the tip of the iceberg regarding Spanish banks and property (book) values.That apart, another friend has recently had to sell his house for E89K reduced from E280K-it had been on the market for 3 years. Evan allowing for overvaluation thats a hell of a drop.

    • @Captain

      that is very, very interesting. This is a phenomenon across Europe – though less so in Germany/NL/Scandinavia where there is masses of social housing which buffers the impact – – – a little!

      The problem you rightly allude to is that of keeping things running as long as possible. An example from where I live. Labour laws are really strict here. Firing anyone is virtually impossible unless you have the tenacity of a terrier. What is the effect of this? It clicked the other day when there were some complaints that the system needed serious overhaul. Well of course, it comes down to housing. If you have a job, the loans get paid. Lose the job, the loans stop.

      Geddit?

      Where I live – which is really expensive. I mean it is almost Berkshire here. We are ¾hr from Amsterdam with trains on the half hour and busses too. People do not like driving to work, in any case the boss picks up the tab for your season ticket. All this adds up to commuter belt for Arnhem/Amsterdam/Amersfoort/Utrecht and a few other big cities too. Yet there are houses unsold. They have not sold in six months, I know because I have been watching them.

      I don’t think the drop will be as devastating as a Spanish one, but a re-alignment will do something to the banks here. It isn’t looking pretty.

      • I honestly think the danger of a US/Irish/Spanish style housing crash is remote both here and the Netherlands.
        The massive housing crash countries were marked by a huge overbuilding boom, which is the one unsustainable boom we didn’t indulge in. By contrast, at least in the UK, there’s an undersupply. Are there lots of recently built, unoccupied houses in your neck of the woods?

        Assuming the bottom doesn’t fall out of the economy again ( a risky assumption i know), prices are at least unlikelly to plummet.

      • @Paul

        very reasonable point. However, the houses that are there – and this goes for most of Europe – are either somewhat overpriced or greatly overpriced. The bottom line is that people cannot afford them, and do not want to since the prices ought to come down.

        Okay: the Netherlands would be fine (thumbs crossed) with a 30% deflation, as would Germany. The bigger question is whether Britain, Spain (et al) could withstand the same sort of deflation.

        I am extremely fed up of having to sign into WordPress each time I visit in order to post comments. I know it makes things easier for WordPress to keep tabs on us, but I see it as an infringement of liberty.

        I will add that in complaining I get a meekly worded message that effectively tells me that WordPress thinks it is better for me (= they make more money). Every email I reply to is ignored. It is most annoying.

      • @Gemz: I take it you have to sign in because you use an avatar. Right?
        I don’t use one and have never signed in.

      • @BT

        I have to sign in to post a comment with or without an avatar. If you remember I tested this the other day, and got to test 7 before I had worked out what they wanted of me. Perhaps they have a cookie on my browser, but I do use Ghostery and a few other things just like you do.

        I happen to enjoy using a Gravatar, I do not like having to sign in every time just so that WordPress has it easy with surveillance. If I could edit comments it would be worth the effort, but they give nothing in return. That is a corporation for you.

        Complain to WordPress about having to login to post comments every time. It is an infringement of your rights and liberties. They won’t listen, but perhaps next time someone wants to do this, they will think twice. Google will have you signing in to do a search next! It is not as if you can edit your comments afterwards as you can with Disqus (an altogether better commenting system for all its faults).

      • @Gemz: Then I’m completely puzzled. It may be the cookie they’ve dropped onto your system …if so, delete it. I disallow all cookies from all websites except those necessary to perform certain actions (eg online banking https) but even they get deleted when I shut the browser down. That’s how I have Firefox-Palemoon configured…

      • @BT

        well, when I set up an email without a Gravatar, it simply would not let me post. Final.

        Add this the injury of having to have this “useful toolbar from WordPress” at the top of the screen – which tells me nothing I could not have worked out for myself – and blocks useful things that I would like to see. On the WordPress complaints/support forum they simply say “there is nothing we can do about it”. Which is like a carpenter saying that he can’t cut wood shorter. They can only “not do anything” because they do not want to.

        Complain to WordPress about having to login to post comments every time. They won’t listen, but perhaps next time someone wants to do this, they will think twice. Google will have you signing in to do a search next – they already keep all your searches booked. It is not as if you can edit your WordPress comments afterwards as you can with Disqus (an altogether better commenting system for all its faults).

  13. Gem/Paul.J. I live in Valencia province, To give you the flavour,the mayor of my local town recently put a notice in the local paper proudly stating that the coucil had now paid its outstanding bills for the years 2006/7/8. Quite what happens about the bills for 2009/10/11 remains to be seen!!
    My local town is skint. The local police are out in force slapping tickets on anything that moves to raise ‘dinero’, if the traffic police stop you you can count on a min of E150 for all sorts of niff naff traffic violations. I have money transferred from the UK every month(to buy my gin and a little food) It now takes 10-12 days for the money to
    get to my account, having left my uk account on the last working day of the previous month-it used to take 5/6 days. I can take you to 2 large blocks of
    flats minutes from my house which are virtually empty(building completed 2/3 years ago) . It appears the trick the banks and developers employ is to cut the workforce down the minimum number of workers to drag the build out, thus its business as usual as they know that there is no chance of selling in the near future. The bank keeps the developer on life support and the bank does,nt have to repo-yet. Have a nice day- from Spain

      • @BT

        and look at the charges they will make! When I was last in Spain I withdrew €100 and it cost me … €100. My friend from England withdrew €100 was surcharged 10% plus a GBP10 one-time charge ADDED to a rubbish exchange rate.

        Had I known I would have taken the money out for her and she could have put some money in the post next time. I am in England often enough to need the odd pound or two.

        Complain to WordPress about having to login to post comments every time. It is an infringement of your rights and liberties. They won’t listen, but perhaps next time someone wants to do this, they will think twice. Google will have you signing in to do a search next!

      • @Gemz: Charges? I pull cash out of Brazilian ATMs and I’m not charged any transaction fee by HSBC nor by the local Brazilian bank (using VISA Intl or Banco24Horas network or HSBC’s own network). Even if I use an HBOS/Lloyds card they only charge £1.50 per transaction back home. Most other UK banks have similar fees for foreign usage. However I can say that two years ago, Thai banks began charging a fat THB 300 (about £6) to pull cash using national or forrin debit cards!

        I can’t comment on your personal or English friend’s experience in Spain. Maybe Spanish banks make a charge or maybe you’re with the wrong bank?

    • Captain Billy

      I agree that the UK banks are the tortoises in Europe. It is the same going the other way, it can take 10 days for a payment to arrive in Britain. With a European bank (eurozone) it is transacted by the end of the day, even at 16H30.

      While we are at it, I had a countercharge for going overdrawn on my bank last year:

      Bedrag (euro) €0,25 Af
      Rekening 2*******4 – Mw G R Laming MAARN
      Tegenrekening
      Datum 27-09-2011
      Mutatiesoort Diversen
      Naam / Omschrijving
      Mededelingen DEBETRENTE 15,0% PER JAAR,
      PERIODE 21/08 – 20/09

      And that was it. No fuss, no extras for payments and so-on. I don’t even have an overdraught agreement. I know that when in the UK our business started to slide, one of our biggest burdens was the charges made by the bank for every single thing we did.

      Yes, you have to pay a subscription (€25/year) but what would you prefer? A charge every time someone makes a withdrawal on your bank account, or a monthly payment of €2?

      This reasonableness permeates the whole of Dutch society – and this includes their politicians. It is a very pleasant change to the way the British pirates operated.

      Complain to WordPress about having to login to post comments every time. It is an infringement of your rights and liberties. They won’t listen, but perhaps next time someone wants to do this, they will think twice. Google will have you signing in to do a search next!

      • @Gemz: I maybe wrong but IME it isn’t the UK banks that take so long to move his money, it’s the Spanish banks. They hold onto his money before releasing it to his local account. AIR all incoming monies into Spain come through Madrid. (Similar problems in Brazil).

      • @BT

        well in my experience, drawing money in the above example it took place immediately. The withdrawal my friend made appeared on her account the next week along with all the added extras.

        Transferring money within europe is pretty well instantaneous. With the exception of Britain. That is from hard experience where a British bank will charge you for being late with a payment because their system is too slow.

        Complain to WordPress about having to login to post comments every time. It is an infringement of your rights and liberties. They won’t listen, but perhaps next time someone wants to do this, they will think twice. Google will have you signing in to do a search next! It is not as if you can edit your comments afterwards as you can with Disqus (an altogether better commenting system for all its faults).

    • @Captain

      replying to posts: if there is no reply button, use the one immediately above the string of comments. Your comment will appear at the bottom of the list. I know this is illogical, but this is WordPress. Communications is something they sell. I learned this the hard way.

      Complain to WordPress about having to login to post comments every time. It is an infringement of your rights and liberties. They won’t listen, but perhaps next time someone wants to do this, they will think twice. Google will have you signing in to do a search next! It is not as if you can edit your comments afterwards as you can with Disqus (an altogether better commenting system for all its faults).

      • To Gem,Thanks for the tip. forgive the typo,s I go weaknee’ d when communicating with intelligent women. If I was to use my UK card I take a hit of 2%-in some instances higher. Regarding money moving,the delay is in Spain moving the money from Madrid to Valencia. As an aside this blog now comes before AEP in the Torygraph. JW provides the pizza base and the likes of you,KFC,BT-et al provide the topping,.and I have to say its D-e-l-i-c-i-o-u-s to sit on my naya in the morning sun(whilst the peasants go off to work on their burros) reading the Slog

  14. Pingback: Eurozone Unravelling: Blue Skies in the Media, Rain Heading for Spain | so far so good

  15. Pingback: Forex Crunches for the Weekend - March 24 2012 | Forex Crunch

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