Spain – Page 20 – Infinite Unknown

ECB Buying Up Greek Bonds; German Central Bankers Suspect French Intrigue

May 31, 2010May 31, 2010 by Infinite

The bailout for Greece was never about helping the people. Instead it was a bailout for the banksters with taxpayer money, looting the people.

And the ECB buying up Greek bonds is pure quantitative easing (=printing money=inflation=tax on monetary assets), which will not stabilize, but devalue the euro.

In this case things are a little more complicated because the credit line for the ECB quantitative easing policy comes directly from the US Federal Reserve.

European Central Bank President Jean-Claude Trichet: German central bankers are skeptical about the ECB’s buying-up of Greek bonds.

The European Central Bank has been buying up Greek bonds by the bucketload, even though Athens is already getting money from an EU rescue fund. German central bankers suspect a French plot behind the massive buy-up — after all, it gives French banks the perfect opportunity to get rid of their Greek assets.

The senior members of the German central bank, the Bundesbank, regarded Axel Weber with a look of anticipation. What would Weber, the Bundesbank president, say about the serious crisis that had them all so worried, they wondered? And what did he intend to do about it?

Weber said nothing and, as some who attended the meeting report, even his facial expression was inscrutable. The Bundesbank president remained stone-faced as he acknowledged the latest figures, which indicated that by the end of last week the European Central Bank (ECB) had already spent close to €40 billion ($50 billion) on buying up government bonds from Spain, Portugal, Ireland and, in particular, Greece.

The ECB already has about €25 billion of Greece’s mountain of debt on its books, and it is adding another €2 billion a day, on average. The Bundesbank, which has a 27 percent stake in the ECB, is responsible for €7 billion of the ECB’s Greek government bonds.

Many Bundesbank members are wondering why the ECB is buying Greek bonds in the first place, particularly on this scale, now that the euro-zone countries’ €110 billion bailout package for Greece has been approved, and the first tranche of the funds has already been disbursed.

The general €750 billion rescue fund for the remaining highly indebted countries has been approved but not yet set up. For this reason, it certainly makes sense to stabilize the prices of Spanish, Portuguese and Irish bonds. Nevertheless, some of the central bankers have a sneaking suspicion that there is a French conspiracy at work.

Helping French Banks

Fitch Downgrades Spain’s Credit Rating as Europe Battles Debt Crisis

May 29, 2010May 29, 2010 by Infinite

May 29 (Bloomberg) — Spain lost its AAA credit grade at Fitch Ratings as Europe battles a debt crisis that’s prompted policy makers to forge an almost $1 trillion bailout package for the region’s weakest economies.

The ratings company cut the grade one step yesterday to AA+ and assigned it a “stable” outlook, according to a statement from London. Spain has held the top rating at Fitch since 2003. Standard & Poor’s lowered Spain’s ratings to AA on April 28.

“The process of adjustment to a lower level of private sector and external indebtedness will materially reduce the rate of growth of the Spanish economy over the medium-term,” Brian Coulton, Fitch’s head of Europe, Middle East and Africa sovereign ratings in London, said in the statement.

Greek Bailout: Two Secret Exit Clauses – Why Europe Is Now Cheering For Its Own Demise

May 26, 2010 by Infinite

– Greek Central Bank Accused of Encouraging Naked Short Selling of Greek Bonds

– ECB Resorts to ‘Nuclear Option,’ Intervenes in Bond Market to Fight Euro Crisis

When all of Europe rushed into its rescue package two weeks ago (first half a trillion, market red, then a full trillion, market green), the one thing that struck us as odd was the conflicting data on the conditionality of the package, with various sources both confirming and denying that the “package” was revocable. It did seem somewhat shortsighted of the Germans, whose political leadership would soon be on the verge of a series of electoral routs, to tie its fate without even one exit hatch, to a country that is a financial toxic spiral. Sure enough, the Telegraph’s Evans-Pritchard has uncovered what may be the two loopholes in the European bailout agreement. While the first one is not surprising, the second one explains why the biggest sellers of European government debt (and/or buyers of Euro sovereign CDS), are likely the governments of the distressed, and core, countries themselves.

Markets have been rattled by reports in the German media that the Greek rescue deal contains two secret clauses. The package will be “immediately and irrevocably cancelled” if it is found to breach the EU Treaty’s “no bail-out” clause, either in a ruling by the European court or the constitutional courts of any eurozone state. While such an event is unlikely, it is not impossible. There are two cases already pending at Germany’s top court in Karlsruhe, perhaps Europe’s most “eurosceptic” tribunal.

The second clause said that if any country finds it cannot raise funding for the rescue at interest rates below the 5pc charge agreed for Greece, it may opt out of the bail-out. BNP Paribas said this would escalate quickly into a systemic crisis if Spain were in such a position, because the other countries cannot carry an ever-rising burden. The bank warned the euro project itself may start to disintegrate rapidly if these rescue provisions are ever seriously put to the test.

The European Debt Crisis: John Clarke And Bryan Dawe Ask The Million Dollar Questions

May 26, 2010May 26, 2010 by Infinite

🙂 ROFL!

Added: 24. Mai 2010

House Committee on Homeland Security Seeks Cooperation from Max Keiser on Financial Terrorism

May 22, 2010 by Infinite

Can’t make this up!

Here is an email from a member of the House Committee on Homeland Security to Max Keiser regarding Financial Terrorism. Both the email and Max Keiser’s response had me laughing my head off.

Hi Mr. Keiser,

My name is Chris Beck and I work on the staff of the House Committee on Homeland Security in Washington, DC. I have been reading and listening to you regarding the May 6 stock market plunge and the likelihood that this was an act of financial terrorism. I think this is a huge issue that has not been given enough attention, and may warrant oversight by our committee. I would greatly appreciate the chance to talk to you to make sure I understand the nuts and bolts, and to figure out what avenues may be available to correct what appears to be a massive fraud that could undermine U.S. National Security. Can you please contact me and let me know if you are available to talk?
Thank you,
Chris

Chris Beck, Ph.D.
Senior Advisor for Science and Technology
House Committee on Homeland Security

I asked Max Keiser how he responded.

Max Replied “I told him to investigate this financial terrorist crime happening right now! in real time!”

Max went on to say …

I think it’s really incredible how clueless these people are.

Given the recent track record of corrupt regulators in D.C. it’s not hard to imagine that Chris Beck is wittingly or unwittingly just bird dogging intelligence that will be fed to Goldman and used to package ever more exotic Financial Terrorist weapons.

My position is the government IS Goldman and any info gleaned by this type of thing will end up helping no one BUT Goldman.

Here is the video that Chris Beck was responding to. Play the first few minutes of it. It will have you rolling on the floor.

I am also told that homeland security was interested in talking with David DeGraw about his post on Market Oracle Financial Terrorism Operations: 9/29/08 & 5/6/10.

This reads like a spoof straight out of The Onion, but I have phone numbers and email address and a chain of emails to verify.

EU Bids For Unprecedented Power Over National Budgets

May 14, 2010 by Infinite

Related information:

The elite has created the entire global financial crisis (looting/stealing the wealth from the people and destroying their children’s future) and now as I said before they present you their New World Order as the one and only solution to all the problems that they have created. The New World Order will rape the people of all their freedoms and wealth left, turning them into slaves. The New world Order is now here.

– ECB President Jean-Claude Trichet calls for ‘Global Governance’ at the Council on Foreign Relations

– EU Draws Up Plans For Single ‘Economic Government’

– EU Chief Vows To Run The Economies Of All EU Members From Brussels

– Lisbon Treaty: Now EU Takes Charge Of Britain

– Unelected EU President Herman Van Rompuy Announces 2009 as ‘First Year of Global Governance’

– Climategate: Hacked emails include calls for ‘Earth Government’ as foundation of new world order, splitting of America

– New World Order Gordon Brown wants to police the entire world – how controlling can a freak get?

‘The New World Order is emerging’ 1:47

The elite will stop at nothing to press through with their agenda. They will even create a massive terror attack:

– The No.1 Trend Forecaster Gerald Celente: The Terror And The Crash of 2010

I will add more recent info from Gerald Celente at the end of the following article.

Rise up (peacefully) or fall.

Move comes as Spain, U.K. target deficits

EU Commission president Jose Manuel Barroso, left, at a news conference with EU commissioner for economic affairs Olli Rehn in Brussels on Wednesday. (AP)

Senior administrators of the European Union proposed on Wednesday that they be given unprecedented power to scrutinize the spending plans of countries before national parliaments vote on those budgets.

The EU’s executive commission’s bid was a move to crack down on widespread government overspending and to begin to deal with the debt crisis that threatens the exchange value of the euro.

The commission is the administrative arm of the European Parliament and is independent of national governments.

It also proposed serious financial penalties for countries that break the rules – essentially forcing governments to pay a financial penalty that could eventually be returned to them.

The move came as European governments scramble to deal with their deficits.

Spain announced Wednesday it will cut civil servants’ salaries this year by an average of five per cent starting in June.

Prime Minister Jose Luis Rodriguez Zapatero also told parliament his government would suspend automatic inflation adjustments for civil service pensions, cut foreign aid and domestic spending by $7.6 billion US and eliminate a tax break for couples that have babies or adopt a child.

Britain’s newly formed coalition government pledged to begin tackling the U.K.’s record $236 billion US deficit, beginning with an immediate cut in government spending of $9 billion.

More Greek strikes planned

At the same time, Greece’s two main public and private sector unions announced a new general strike to protest pension reforms for May 20.

The proposal by the EU commission would deepen the ties that bind Europe’s currency union just when some analysts predict the debt crisis will eventually cause its disintegration.

Olli Rehn, the EU commissioner for economic affairs, said the EU’s moves would ensure that national governments’ spending plans were “consistent with European objectives.”

The commission would need the backing of EU governments before it can draft more detailed rules for them to vote on and put in place.

Last Updated: Wednesday, May 12, 2010 | 12:50 PM ET

Source: CBC NEWS

More from Gerald Celente:

If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente.
– New York Post

When CNN wants to know about the Top Trends, we ask Gerald Celente.
– CNN Headline News

There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about.
– CNBC

Those who take their predictions seriously … consider the Trends Research Institute.
– The Wall Street Journal

A network of 25 experts whose range of specialties would rival many university faculties.
– The Economist

– The No.1 Trend Forecaster Gerald Celente: Greece Only The Beginning; Wall Street Plunge; Bailout Bubble Bursting; 2010 Global Crash; Gold

– Gerald Celente: Obama’s Financial Reform Is Just A Show

– The No.1 Trend Forecaster Gerald Celente on ObamaCare, Dollar Devaluation And Gold

– Gerald Celente: This time they will close the Banks & Wall Street (03/27/10)

– Gerald Celente: ‘It’s the greatest bank robbery in world history and the banks are doing the robbing.’

– Gerald Celente: ‘The Crash is Coming in 2010.’

– The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street

– Survivor, America: ‘It’s Only Going to Get Worse,’ Gerald Celente Says

Germany, France May Hurt AAA Ratings in ‘Ponzi Game at The Highest Level’

May 11, 2010 by Infinite

This bailout is a Ponzi scheme and the people will foot the bill:

– Here Is Who Just Got Their A$$ Saved By The Huge Euro Bailout (Business Insider)

– Federal Reserve Opens Line Of Credit To Europe (AP)

– Stephen Pope of Cantor Fitzgerald on ECB buying government bonds: ‘This is total, undiluted quantitative easing.’ (Forbes)

– ECB Resorts to ‘Nuclear Option,’ Intervenes in Bond Market to Fight Euro Crisis (Bloomberg)

The Deutsche Bundesbank. (Bloomberg)

May 11 (Bloomberg) — Germany and France are among top- rated euro-area states that may compromise their AAA grades by standing behind the debts of weaker members with their 750 billion-euro ($955 billion) stabilization fund.

The package is “making debt profiles deteriorate, potentially damaging the ratings of core sovereigns,” said Stefan Kolek, a strategist at UniCredit SpA in Munich. “It’s a kind of Ponzi game at the highest level.”

The unprecedented loan package was designed by the European Union and the International Monetary Fund to halt a sovereign- debt crisis that threatened to push Greece, Portugal and Spain into default and shatter confidence in the euro. As part of the support plan, Germany’s Bundesbank, the Bank of France and the Bank of Italy started buying government bonds yesterday.

Bonds of Portugal, Spain and other deficit-plagued nations on Europe’s periphery soared yesterday and bunds — the safe haven for holders of European government bonds — weakened as the threat of a Greek default receded. The cost of insuring against sovereign losses using credit-default swaps tumbled yesterday, with contracts on Greece sliding 370 basis points, their biggest one-day decline, to 577, according to CMA DataVision.

Credit Markets: Bank Swaps, Libor Show Doubts on Europe Bailout

May 11, 2010May 11, 2010 by Infinite

May 11 (Bloomberg) — Money markets and the cost of protecting bank bonds from losses show investors are concerned Europe’s almost $1 trillion rescue plan may not be enough to contain the region’s sovereign debt crisis.

The Markit iTraxx Financial Index of credit-default swaps on European banks and insurers rose to 38 basis points more than the Markit iTraxx Europe Index tied to investment-grade companies from 31 yesterday. While the gap narrowed from 58 basis points before European leaders agreed to the rescue plan, the bank index on average has traded 10 basis points less the past three years. A measure of banks’ reluctance to lend also rose to more than three times the level from March.

The loan package for debt-laden nations including Greece is part of an attempt to stop a decline in the euro and stave off a sovereign default that would threaten recovery from the worst global recession since the 1930s. European financial companies, which hold more than 134 billion euros ($170 billion) in Greek, Portuguese and Spanish sovereign debt, are under scrutiny by investors concerned that they’re owed too much by Europe’s most- indebted countries.

UK budget deficit to surpass Greece’s as worst in EU

May 5, 2010 by Infinite

European commission’s spring forecasts put UK budget deficit this year at 12% of GDP – the highest in the European Union and worse than Treasury estimates

The European commission forecast for the UK budget deficit is higher than Alistair Darling’s. Photograph: David Levene

Whoever wins the election must make sorting out the public finances the top priority, the European commission warned on the eve of the poll, as it predicted the British budget deficit would swell this year to become the biggest in the European Union, overtaking even Greece.

The commission’s spring economic forecasts put the UK deficit for this calendar year at 12% of GDP, the highest of all 27 EU nations and worse than the Treasury’s own forecasts.

The country’s budget shortfall was the third largest in the EU last year but will overtake both Greece and Ireland this year, according to the forecasts. Greece’s measures to tackle its public finances problems are projected to cut its deficit to 9.3% of GDP.

Spain: Jobless Rate Tops 20 Percent

May 1, 2010 by Infinite

MADRID (AFP) – Spain’s jobless rate topped 20 percent in the first quarter, national statistics institute INE said Friday, fueling fears over the country’s public finances which have rattled global financial markets.

The number of unemployed jumped by 280,200 to 4.61 million, more than in Germany which has nearly twice Spain’s population, for a jobless rate of 20.05 percent. The unemployment rate rose from 18.83 percent in the fourth quarter.

The last time the unemployment rate topped 20 percent in Spain was in the fourth quarter of 1997 when it hit 20.11 percent.

Spain’s jobless rate has soared since the global credit crisis hastened the collapse of its labour-intensive construction industry at the end of 2008.

Warning For Britain As Financial Chaos Spreads to Spain

April 30, 2010 by Infinite

Spain’s economy was thrown into chaos on Thursday when its credit rating was cut, sharpening fears that Britain may suffer a similar fate.

The turmoil came just a day after Greece’s rating was cut, increasing concerns of a Europe-wide financial crisis.

The euro fell sharply and the interest rates European governments pay to borrow money jumped after Standard and Poor’s, a credit ratings agency, downgraded Spain.

Last night the government in Madrid appealed for calm, promising an “austerity programme” to cut spending.

But economists fear that events in Spain show that financial “contagion” is spreading from Greece, as investors are scared off investing in any European country with significant government deficits.

Britain’s government deficit this year will be bigger than that of either Greece or Spain, and some City analysts believe the UK’s AAA credit rating could be cut, driving up interest rates and raising the prospect of Britain being bailed out by the International Monetary Fund.

Yesterday David Cameron, the Conservative leader, suggested Britain could follow Greece into crisis. “Greece stands as a warning to what happens if you don’t pay back your debt,” he said.

Prof. Nouriel Roubini: ‘In A Few Days Time, There Might Not Be A Eurozone For Us To Discuss’

April 28, 2010 by Infinite

‘Spain is worse than Greece.’

Prof. Nouriel Roubini

– Roubini on Greece (Reuters):

Meanwhile, Tony Barber has already come to the conclusion that as far as Greece is concerned, “the political conditions for extra financial help from Germany just do not exist”.

Nouriel, of course, takes that kind of thinking to its logical conclusion, and kicked off the panel by announcing that it was just in time: “in a few days,” he said, “there might not be a eurozone for us to discuss.” There’s no way that Greece can implement the 10% spending cut it needs to do in order to stop its debt spiralling out of control at current interest rates — and even if it did, the economic effects would be disastrous.

Nouriel’s base case, then, is Argentina 2001: after all, Greece has a much higher debt-to-GDP ratio, much higher deficit-to-GDP ratio, and much higher current-account deficit than Argentina had back then. And if that’s the base case, there’s no way that Greek debt should be trading anywhere near its current levels.

Of course, this being Nouriel, it goes downhill from there: if Greece is worse than Argentina, he says, then Spain is worse than Greece. Its housing bubble and bust has left the banking sector much weaker than Greece’s; its unemployment situation, especially with the under-30 crowd, is much worse than Greece’s; and the cost of any Spain bailout would be so much more enormous than the cost of a Greek bailout as to be almost unthinkable. The only thing that Spain has going for it is that it isn’t quite at the edge of the abyss yet; if it gets its political act together and implements tough fiscal and structural reforms now, it can save itself. But clearly no one saw that happening, given Spain’s political history over the past 20 years.

Apr 27, 2010 22:14 EDT

– Standard & Poor’s Downgrades Greece’s Credit Rating to Junk (Bloomberg)

CDS Traders Are Betting That France Is Next Up For A Sovereign Shakedown (As Are Spain And Portugal)

April 18, 2010 by Infinite

CDS traders were prescient in snapping up Greek and Dubai CDS long before anyone else realized the risk these countries are in (well, more like Goldman selling CDS to some very close clients, wink wink).

In exchange for figuring out what it took cash bond holders months to understand, these ‘speculators’ made a lot of money and in the process got branded as quasi-sovereign terrorists.

Well, Greece can sleep well: according to the latest DTCC CDS data (for the week ended April 9), CDS specs have completely deserted Greece, which saw the single biggest amount of Net Notional CDS decrease, to just over $8 billion, a reduction of $367 million in the prior week (which means all the widening in Greek spreads is now, and has been, just cash bond sales, precisely what Zero Hedge has claimed all along).

CDS traders are now focusing their attention on the one country which has so far slipped under everyone’s radar, yet which we disclosed is more on the hook in terms of Southern European exposure than even Germany: France, with $781 billion in total claims.

Should Greece topple the PIIGS dominoes, France will implode. And this is precisely what CDS traders are betting on now, taking advantage of absurdly tight France CDS levels.

Also, just in case they are wrong on France, Spain and Portugal, not surprisingly, round out the top three names in which Net Notional saw the largest increase. Also not surprisingly, Japan rounds out the top 5 deriskers.

Top 10 deriskers:

(Click on images to enlarge.)

Spain: Heaviest Snowfall in Decades Leaves 250,000 Without Power

March 10, 2010 by Infinite

A metre of snow fell in the Pyrenees leaving 6,000 travellers stranded and blocking up to 40 roads

A couple walk on the beach during a snow storm in Barcelona, Spain. (AP)

Nearly a quarter of a million people in north-eastern Spain were without power yesterday after the heaviest snowfall in decades brought major disruption to the region.

A metre of snow fell in the Pyrenees leaving 6,000 travellers stranded and blocking up to 40 roads on the border between Spain and France. Barcelona recorded its heaviest snowfall since 1962 causing road, rail and flight chaos.

Catalonia’s interior minister, Joan Boada, said the power cuts, caused by a fault in a high-tension cable, were affecting the area around Girona, 60 miles north of Barcelona.

Spain’s border with France at La Junquera was closed causing 30-mile traffic jams while 170,000 pupils had the day off as schools were shut, local newspapers reported. About 3,000 people were put up in a town hall overnight and many others stranded in their cars as railway lines and roads became impassable, Boada said.

Tens of thousands more were unable to get home after snow fell at lunchtime and many left their offices to photograph the rare scenes of central Barcelona and its beach lying under a blanket of snow.

“I’ve never seen anything like this here in all my life,” said Barcelona resident Raquel Lasmarias, 35.

Marc Faber: It’s Dead Simple, The Supply Of Dollars Will Grow Way Faster Than The Supply Of Gold

March 6, 2010 by Infinite

The Fed, creating the US dollar out of thin air, is the real Ponzi scheme here and not gold.

Marc Faber’s recommendation to continue buying gold every month, forever, received a full broadside on CNBC.

[At 3:45 in the video]:

“You see sir, I am a huge fan of yours, but I have a real difficulty here that I’d like you to help me out with. If I’m looking to invest in my retirement, I have a choice of investing in the American stock market, which is basically a play on change, bright people, working internationally in teams, around the world, and chasing the margin every day of their lives… OR… I can do what you’re suggesting and buy an inanimate object that sits in a dark, damp cellar somewhere, that may or may not be in short supply, may or may not glitter in the correct light, but really has no productive power. Isn’t gold the ultimate Ponzi scheme?”

Faber’s response:

“No, I don’t think it’s a Ponzi scheme, and it’s not a liability of someone else… it’s quantity cannot be increased at the same rate as you can print money… I’m not saying that the dollar will go straight away down because other currencies like the euro are even worse at the present time. But eventually if you print money, the purchasing power will lose.”

Tens of thousands protest across Spain at PM Zapatero’s pension reforms

February 24, 2010 by Infinite

People in Barcelona protest against government plans to increase the retirement age

Tens of thousands of protesters took to the streets across Spain last night in the biggest test of the country’s Socialist Government, which is under pressure.

With a general strike threatened in the summer, the two biggest Spanish unions staged protests in Madrid, Barcelona, Valencia and Alicante.

The Union General de Trabajadores (UGT) and the Confederación Sindical de Comisiones Obreras (CCOO), are planning to stage 57 protests in other parts of the country until next week.

Unions are angry about the Government’s proposed pensions reforms which would extend the legal retirement age from 65 to 67.

José Luis Rodríguez Zapatero, the Spanish Prime Minister who recently came under pressure from financial markets to introduce measures to bring the country out of recession, now finds himself threatened by his political allies in the unions.

The protests are the first time that Mr Zapatero has faced street unrest since he came to power in 2004. Leading members of the Prime Minister’s party took part in the protests, a sign that his popularity is dwindling.

Spanish intelligence probing debt ‘attacks’-report

February 15, 2010 by Infinite

MADRID, Feb 14 (Reuters) – Spain’s intelligence services are investigating the role of investors and media in debt market turbulence over the last few weeks, El Pais reported on Sunday.

Currencies

Citing unnamed sources, El Pais said the National Intelligence Centre (CNI) was looking into “speculative attacks” on Spain following the Greek debt crisis.

“The (CNI’s) Economic Intelligence division…is investigating whether investors’ attacks and the aggressiveness of some Anglo-Saxon media are driven by market forces and challenges facing the Spanish economy, or whether there is something more behind this campaign,” El Pais said.

Officials at the CNI were not available for comment.

The report comes days after Public Works Minister Jose Blanco protested “somewhat murky manoeuvres” were behind financial market pressure on Spain.

“None of what is happening in the world, including the editorials of foreign newspapers, is coincidental or innocent,” Blanco said.

The CDS Puppetmaster Behind It All And The Ever Increasing Parallels Between AIG And Greece

February 9, 2010 by Infinite

Goldman Sachs

David Fiderer’s below piece, originally published on the Huffington Post, continues probing the topic of Goldman and AIG. For all intents and purposes the debate has been pretty much exhausted and if there was a functioning legal system, Goldman would have been forced long ago to pay back the cash it received from ML-3 (which in itself should have been long unwound now that plans to liquidate AIG have been scrapped) and to have the original arrangement reestablished (including the profitless unwind of AIG CDS the firm made improper billions on, by trading on non-public, pre-March 2009, information), and now that AIG is solvent courtesy of the government, so too its counterparties can continue experiencing some, albeit marginal, risk, instead of enjoying the possession of cold hard cash. Oh, and Tim Geithner would be facing civil and criminal charges.

Yet as we look forward, we ask, who now determines the variation margin on Greek CDS (and Portugal, and Dubai, and Spain, and, pretty soon, Japan and the US), the associated recovery rate, and how much collateral should be posted by sellers of Greek protection? If Greek banks, as the rumors goes, indeed sold Greek protection, and, as the rumor also goes, Goldman was the bulk buyer, either in prop or flow capacity, it is precisely Goldman, just like in the AIG case, that can now dictate what the collateral margin that Greek counterparties, and by extension the very nation of Greece, have to post on billions of dollars of Greek insurance. Let’s say Goldman thinks Greece’s debt recovery is 75 cents and the CDS should be trading at 700 bps, instead of the “prevailing” consensus of a 90 recovery and 450 spread, then it will very likely get its way when demanding extra capital to cover potential shortfalls, since Goldman itself has been instrumental in covering up Greece’s catastrophic financial state and continues to be a critical factor in any future refinancing efforts on behalf of Greece. Obviously this incremental margin, which only Goldman will ever see, even if the CDS was purchased on a flow basis, will never be downstreamed on behalf of its clients, and instead will be used to [buy futures|buy steepeners|prepay 2011 bonuses|buy more treasuries for the BONY $60 billion Treasury rainy day fund].

In essence, through its conflict of interest, its unshakable negotiating position, and its facility to determine collateral requirements and variation margin, Goldman can expand its previous position of strength from dictating merely AIG and Federal Reserve decision making, to one which determines sovereign policy! This is unmitigated lunacy and a recipe for financial collapse at the global level.

This is yet another AIG in the making, with Goldman this time likely threatening to accelerate the collapse not merely of the US financial system, but of the global one, in order to attain virtually infinite negotiating leverage. Of course, the world will not allow a Greece-initiated domino, allowing Goldman to call everyone’s bluff once again.

Greece: ‘Ouzo crisis’ escalates into global margin call as confidence ebbs

February 9, 2010 by Infinite

For the third time in 18 months the global financial system risks spinning out of control unless political leaders take immediate and radical action.

A driver stands near parked trucks on the road leading to the Kulata border crossing between Bulgaria and Greece. The roadblock was set up by farmes protesting higher taxes.

Flow data shows an abrupt withdrawal of German and Asian capital from Club Med debt markets. The EU’s refusal to offer Greece anything beyond stern words and a one-month deadline for harsher austerity – while admirable in one sense – is to misjudge how fast confidence is ebbing. Greece’s drama has already metastasised into a wider systemic crisis. The world risks a replay of the Lehman collapse if this runs unchecked, this time involving sovereign dominoes.

Barclays Capital says the net external liabilities of Greece are 87pc of GDP, or €208bn (£182bn). Spain is worse at 91pc (€950bn), and Portugal worse yet at 108pc (€177bn); Ireland is 68pc (€123bn), Italy is 23pc, (€347bn). Add East Europe’s bubble and foreign debts top €2 trillion.

The scale matches America’s sub-prime/Alt-A adventure and assorted CDOs and SIVS of the Greenspan fling. The parallels are closer than Europe cares to admit. Just as Benelux funds and German Landesbanken bought subprime debt for high yield with AAA gloss, they bought Spanish Cedulas because these too had a safe gloss – even though Spain’s property boom broke world records. They thought EMU had eliminated risk: it merely switched exchange risk into credit risk.

A fat chunk of Club Med debt has to be rolled over soon. Capital Economics said the share of state debt maturing this year is even higher in Spain (17pc) than in Greece (12pc), though Spain’s Achilles’ Heel is mortgage debt.

The risk is the EMU version of Mexico’s Tequila crisis or Asia’s crisis in 1998. This Ouzo crisis is coming to a head just as tougher bank rules cause German lenders to restrict loans, and it touches on the most neuralgic issue of our day: that governments themselves are running low. Britain, France, Japan, and the US are all vulnerable. All must retrench. The great “reflation trade” of 2009 is over.

Fears Rise of Euro Government Default, Euro And Stock Markets Slump

February 5, 2010 by Infinite

– Germany Warns of ‘Fatal’ Eurozone Crisis, Funds Flee Greece (Telegraph):

Germany has triggered a near-panic flight from southern European debt markets by warning that there will be no EU bail-outs, even though it fears the region’s economic crisis has turned dangerous and could prove “fatal” for the entire eurozone.

Financial markets swooned Thursday amid rising fears of a government debt default in Europe, highlighting the seriousness of the challenges facing the euro currency as fiscally challenged countries like Greece, Portugal and Spain dig themselves out of debt.

After a brief respite early this week, the cost of insuring against default the debt of euro-zone members with large budget deficits jumped late Wednesday and rattled investors more broadly on Thursday.

While Greece and Portugal have felt investors’ fire in recent days, now even larger economies like Spain are starting to come under pressure from worries about their weakened public finances.

Blue-chip stock indexes in Spain and Portugal slumped nearly 6% and 5%, respectively, while an index of Europe’s 600 biggest companies dropped 2.7%. The euro sank more than 1% against the U.S. dollar to an eight-month low of $1.3727 and lost 3% of its value against the Japanese yen.

The global economic downturn, and extensive government spending to fight it, have led to major fiscal problems in Europe, especially for less-dynamic economies like Greece, Portugal, Ireland and Spain. Such countries took advantage of their membership in the 16-nation euro bloc during the boom by borrowing at unusually low interest rates. But now, investors are worried about how they will reduce yawning budget deficits that exceed 12% of their economic output in the case of Greece and Ireland.

Marc Faber on Coming Sovereign Debt Crisis: Next Countries to Default are the US, Japan and the ‘PIIGS’

January 14, 2010January 14, 2010 by Infinite

Listen to what Marc Faber exactly says in the beginning of the video.

Spanish Unemployment Hits New Record High: 19.3% and 40% for the young

January 7, 2010 by Infinite

– Mr Bean stumbles on to EU website (Financial Times):

The Spanish presidency of the European Union got off to an inauspicious start on Monday after part of its official website was hijacked by a fan of Mr Bean, the hapless British comedy character.

A picture of the anti-hero played by Rowan Atkinson, popped up on the site’s search page, according to several blogs, in an apparent hacking attack that disabled the site for several hours on Monday.

– Mr. Bean Replaces Spanish PM On EU Website (PHOTOS) (Huffington Post)

– Mr Bean ousts Zapatero from Spain’s EU website (The Guardian)

Spanish unemployment rose to the highest in more than a decade in December, 19.3%, capping a year that saw the nation’s jobless rate soar to double the Euro- zone average. The number of people registering for unemployment benefits increased by 54,657, or 1.41 percentage points from November to 3.92 million.

From a year earlier, unemployment climbed by 25%, admitted the Spanish Labour Ministry on Tuesday. The only good piece of news this year was that the number of jobs destroyed in 2009 was 200.000 less than in 2008.

European Union data said Spain’s jobless rate jumped to 19.3% in December and the International Monetary Fund forecasts that it will rise above 20% by the end of 2010. While the Euro-area economy will probably expand in 2010, Spain’s government expects a full-year contraction as the real-estate market works through an excess of at least one million unsold homes and households pay down debt.

Famous Investor Jim Rogers: Incompetence In Washington, Abolish The Fed And The Treasury

December 13, 2009 by Infinite

“Mr. Geithner has been wrong about everything for the last 15 years.”

Added: 12. December 2009

Spain tips into a full-blown economic depression

September 25, 2009 by Infinite

Spain is sliding into a full-blown economic depression with unemployment approaching levels not seen since the Second Republic of the 1930s and little chance of recovery until well into the next decade, according to a clutch of reports over recent days.

Two Miura fighting bulls are silhouetted against the sky at the Miura ranch near Lora del Rio, southern Spain
Bull run is over: Spain is sliding into a full-blown economic depression akin to that seen in the 1930s Photo: AP

The Madrid research group RR de Acuña & Asociados said the collapse of Spain’s building industry will cause the economy to contract for the next three years, with a peak to trough loss of over 11pc of GDP. The grim forecast is starkly at odds with claims by premier Jose Luis Zapatero, who still says Spain’s recession will be milder than elsewhere in Europe.

RR de Acuña said the overhang of unsold properties on the market, or still being built, has reached 1,623,000 . This dwarfs annual demand of 218,000, and will take six or seven years to clear. The group said Spain’s unemployment will peak at around 25pc, comparable to the worst chapter of the Great Depression.

Spanish workers typically receive 50pc to 60pc of their former pay for eighteen months after losing their job. Then the guillotine falls. Spain’s parliament has rushed through a law guaranteeing €420 a month for long-term unemployed, but this will not prevent a social crisis if the slump drags on.

Separately, UBS said unemployment will reach 4.8m and may go as high as 5.4m if the job purge in the service sector gathers pace. There is the growing risk of a “Lost Decade” akin to Japan’s malaise after the Nikkei bubble.

Roberto Ruiz, the bank’s Spain strategist, said salaries must fall by 10pc in real terms to regain lost competitiveness, replicating the sort of wage squeeze seen in Germany after reunification.