Can Spain Be Saved?

[Aussiejeff]

This just in after close of US markets...

Bankia Group to Seek EU19 Billion From Government to Restructure

By Charles Penty - May 26, 2012 5:22 AM GMT+1000

The Bankia (BKIA) group, a Spanish lender nationalized earlier this month, will seek 19 billion euros ($23.8 billion) of government funds as it provisions against real estate and non-property loans.

The group will ask the state’s bank rescue fund to provide the money by buying shares in its parent company, Banco Financiero y de Ahorros, it said in a filing to regulators today after a meeting of the board of Bankia SA, its listed arm. The group needs a further 4 billion euros to cover real estate on top of provisions already ordered by the government, and 5.5 billion euros for the rest of its loan book, it said.

The unraveling of Bankia has deepened concern about the health of Spain’s banks and increased the government’s financing costs as it struggles with the debt crisis. The restructuring costs for BFA, which come on top of 4.5 billion euros from a first government bailout in 2010, compare with a May 11 estimate from Economy Minister Luis de Guindos that less than 15 billion euros of public funds would be needed to support the whole industry.


“Bankia is the tip of an iceberg as we’ve been saying all along,” said Tobias Blattner, an economist at Daiwa Capital Markets in London, in a phone interview today. “It’s a very large institution, it’s systemically important and it needs to be dealt with properly.”

http://www.bloomberg.com/news/2012-...-billion-in-state-backing-to-restructure.html

So, a little over a week ago, Spain's Finance Minister is stating categorically that ALL the banks in Spain will require less than 15 billion euros of public funds to bail them out.

Now, a few days later ONE big bank is putting it's hands out for 19 billion euros. One can only imagine what the total cost of Spain's banking bailout might really be....let alone the bailouts for the rest of the economy.

So, the question is, given the looming scale of this, can Spain be saved?



P.S. I guess we could stop being so selfish and loan them our World's Greatest Treasurer for a year or two? It's only fair...

 

[tech/a]

I was over there this time last year.

Frankly they are stuffed for at least a generation.
Their boom has completely busted.
Friends have 2 beach villa's paid €390,000
for one and €279,000 for the other.
They literally cannot sell them at ANY price.
There are similar properties to € 60,000 and can't be sold.
There are square mies of buildings half built with cranes and
Materials left on site and people walked away.

Corruption in government was so rife that most properties are not built to any
Building code.
The roaring employment of he boom has completely gone
Shopping centers are like big hippos with one or two food shops and 150 vacant shops.
Really un nerving to walk through.

I travelled by Wynabago and saw massive permanent caravan communities.

 

[Calliope]

Piensa mal, y acertarás

 

[StumpyPhantom]

This link:

http://spaineconomy.blogspot.com.au/

and the article:

It's Time to Stop Using Chewing Gum And Chicken Wire In Spain​

dated 13 May 2012 is compelling reading.

It's made me realise that our focus on how the Greek drama plays out has been misplaced (serious as that is).

The Spanish banking fiasco, once it gets rolling, will be too big for anybody to stop so there won't be any of the see-sawing pro/anti austerity debate we're seeing about Greece. And the under-reported problems, combined with a possible panicky run on banks, means that it is operating to its own schedule and may be upon us even before the June 17 elections in Greece.

 

[young-gun]

can spain be saved - probably in the very short term. can spain be stopped - no.

 

[Joules MM1]

Spain bank deal may not work, bolder reforms needed: Stiglitz


By Tiziana Barghini

NEW YORK | Sun Jun 10, 2012 10:17pm EDT

the bailout would add another 10 percent to Spain's debt-to-gross domestic product ratio, which was already expected to hit nearly 80 percent at the end of 2012, up from 68.5 at the end of 2011. That could make it harder and more expensive for the government to sell bonds to international investors.

"It's voodoo economics," Stiglitz said in an interview on Friday, before the weekend deal to help Spain and its banks was sealed. "It is not going to work and it's not working."

http://www.reuters.com/article/2012...ource=dlvr.it&utm_medium=twitter&dlvrit=56943

 

[Calliope]

Spain bank deal may not work, bolder reforms needed: Stiglitz

Then the pain in Spain is not on the wane?

 

[Tyler Durden]

It seems like even an amateur would know that printing more money is not the answer - so I wonder, why do markets react positively whenever something is 'bailed out'?

 

[Julia]

It seems like even an amateur would know that printing more money is not the answer - so I wonder, why do markets react positively whenever something is 'bailed out'?

I've wondered the same. The temporary fix for Spain is just that. So why is there such a global positive reaction?

"Four Corners" tonight had a pretty candid assessment of all the problems in Europe.
It is absolutely not a reassuring picture.

 

[qldfrog]

I've wondered the same. The temporary fix for Spain is just that. So why is there such a global positive reaction?

"Four Corners" tonight had a pretty candid assessment of all the problems in Europe.
It is absolutely not a reassuring picture.

+1
The market is supposed to jump of joy at this news..Why?
And actually wall street is not that happy:
so I guess there is still hope that market is not 100% dumb...
We will see tomorrow
might be a good time to offload...if you still have something to offload...

 

[qldfrog]

And at 5:30AM today: Down at -0.75%...

 

[drsmith]

Then the pain in Spain is not on the wane?

It's still the same, that much is plain. Confidence continues to drain as there is little net gain.

 

[Tyler Durden]

It's still the same, that much is plain. Confidence continues to drain as there is little net gain.

I hope in vain, but to the screen my eyes are chained.

 

[Calliope]

I hope in vain, but to the screen my eyes are chained.

There was an old lady from Spain
Who liked to live in the fast lane
She borrowed so much
To gamble and such
And now it's all gone down the drain.

There was another old lady from Spain - but that's another story!

 

[Spongle]

Spain is the Mecca of electro breakbeat music

It dosent need saving

 

[Joules MM1]

Deposit flight from Spanish banks smashes record in July

Spain has suffered the worst haemorrhaging of bank deposits since the launch of the euro, losing funds equal to 7pc of GDP in a single month.


By Ambrose Evans-Pritchard

9:36PM BST 28 Aug 2012

http://www.telegraph.co.uk/finance/...rom-Spanish-banks-smashes-record-in-July.html

excerpt

Julian Callow from Barclays Capital said the deposit loss is €65bn even when adjusted for the season: “This is highly significant. Deposit outflows are clearly picking up and the balance sheet of the Spanish banking system is contracting.”

 

[Joules MM1]

....and ....... with piccies

http://www.zerohedge.com/news/chart-day-spain-real-pain-may-be-just-beginning

Up until now, the title of "Spain's scariest chart" belonged to one depicting ......we have a contender for joint ownership of said title - Spain's monthly deposit outflows, which in July hit the highest amount ever, and where the YTD deposit outflow is now the highest on record. One look at the chart below confirms that nobody in Spain got the June 29 Euro summit memo that "Europe is fixed"...

 

[Uncle Festivus]

MADRID (MarketWatch) -- The decline of Spanish housing prices accelerated in the second quarter, posting the steepest drop on record as a housing bust undermines the country's fragile banking industry amid weak domestic demand and rising unemployment.

Spanish housing prices fell at a 14.4% annual rate in the second quarter, after declining 12.6% in the first three months of 2012 and 11.2% in the fourth quarter, the country's statistics agency INE said Friday.

The European recession, which continues to steepen, has already caused the ECB's Mario Draghi to promise to purchase unlimited quantities of bonds with duration of 1-3 years on the secondary market.

Start buying unlimited quantities of Spanish bonds Mario for bottomless Spanish RE......

 

[nulla nulla]

In the past the English have been buying Spanish villa's for their retirement homes, is now the time for Aussies to start buying Spanish hacienda's?

 

[notting]

MADRID (MarketWatch)
Start buying unlimited quantities of Spanish bonds Mario for bottomless Spanish RE......

You first have to be a man and say pretty please with sugar on top.