Baltic Dry Index. 877 +05
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
'Humpty Euro sat on a wall:
Humpty Euro had a great fall.
All the King's horses and all the King's men
Couldn't put the Euro in its place again.'
Humpty Euro had a great fall.
All the King's horses and all the King's men
Couldn't put the Euro in its place again.'
With
apologies to Lewis Carroll.
Spain, which all last month its Prime Minister and
Finance Minister were denying a need for a bailout, agreed at the weekend to be
bailed out by Germany with a 100 billion loan for its banks. (Are France, Italy
and the rest, really good for their share of the EFSF?) In reality the final
amount won’t be known until after the Spanish banks are audited, but it’s
believed about a 100 billion euro will do for now. Piling more debt on Spain
will buy time, but it won’t solve Spain or Euroland’s euro problem. Club Med
needs to devalue against the north and reform their economies and lack of tax
paying systems. Neither can happen trapped in the German austerity union. And
so with a relief rally underway in Asia’s stock markets, attention will soon turn
to looking at Italy, although the French election yesterday giving the
Socialists parliamentary control, final results next week, (plus the Greek
election,) will rocket France into vying with Italy as to becoming the next
Spain. At the very least, serious capital flight will now take place from France.
As someone once almost remarked, a hundred billion euro here, a hundred billion
euro there, and pretty soon you’re talking real money, although that was before
the Great Nixonian Error of 1971 ended “real money.”
Mark
Rutte, the Dutch finance minister, said that any plan to issue loans to Spain
via the European Financial Stability Facility (EFSF) would have to subjected to
a parliamentary vote. Finland is also likely to demand a vote of approval.
Below the stranded Costa Europa this morning, with the
Spanish deck now at the waterline, all eyes are on the next deck up.
Interestingly, if the Spanish bailout funds are to come from the EFSF, Finland
wants some Spanish collateral for its contribution. With “operation twist and a
half” ending in America this month, the Bank of England pretending that the UK
doesn’t need more Quantitative Easing to rescue the falling UK economy, France
and Greece still to vote next weekend for anti-austerity fantasy parties, and
China looking like it’s come down with a bad case of European contagion, June
2012 looks like becoming the month that 2008 returns.
'When
I use a word,'
Prime
minister Mario Rajoy
said, in rather a scornful tone, 'it means just what I choose it to mean — neither
more nor less.'
With
apologies to Humpty Dumpty and Lewis Carroll.
Debt crisis: Spain bows to €100bn bank bailout
Spain paved the way for a €100bn (£81bn) bail-out of its stricken banking sector on Saturday night as European leaders moved to bring a halt to the continued economic malaise hurting the eurozone.
The
troubled country – the fourth-largest economy in the eurozone – said it would
ask for a capital injection once the full extent of its banking problems were
known.
In an
early-evening speech in Madrid, finance minister Luis de Guindos said it would
request assistance “for those banks that need it”.
He denied
that it was a rescue of the Spanish economy as a whole, but rather “financial
support” for the banks concerned.
Mr De
Guindos said the amount eventually requested would depend on the capital required
by banks, plus a “significant margin”. Euro area finance ministers confirmed
that the amount could be up to €100bn.
The
Spanish government has hired consultants Oliver Wyman and Roland Berger to
undertake audits of the entire banking system’s capital requirements. Their
reports are due by the end of June.
In
addition, another series of audits – to be conducted by accountants KPMG, PwC,
Ernst & Young and Deloitte – will look at each of the major banks in turn.
Only once the reports are complete will the formal request be made.
------The
funding for the capital injections will come from the European Financial
Stability Facility (EFSF), the eurozone’s rescue fund. However, the
International Monetary Fund (IMF) will have an oversight role.
Spain reaction: 'This is a rescue for the rich. The poor will only get poorer'
It has become a common sight at Bankia branches across Spain since the banking group became the first last month to declare it needed a massive injection of funds to shore it up.
Mobs of
angry citizens storming branches, banging saucepans and chanting slogans in
noisy protests at the plan to rescue Spain's most stricken banking entity while
the population suffers deep austerity measures and struggles against
disappearing credit-lines.
But as
Spaniards woke up today to the news that the EU had given their banks a
lifeline of up to €100bn there was optimism that, at last, something had been
done to stop the rot.
"Spain,
finally, will be rescued," screamed the frontpage of Spain's leading daily
newspaper El Pais.
"Tragedy for the moment has been averted."
Even as
pundits struggled to explain the about turn by the government which had
insisted even hours before the announcement that no such request would be made,
Spain's embattled Prime Minister claimed the agreement as a personal victory.
----While acknowledging that a "line of credit" had been opened up for Spain's financial system, he accepted that the country's deep economic misery would worsen. "This year is going to be a bad one," he said.
That
warning will only add to the public outrage at the disastrous state of Spain's
banking sector which has brought the nation to its knees. Co-ordinated groups
have been taking simultaneous action at bank branches in cities across Spain,
mobilised by social networks, to find a voice against what many view as the
scandal of banking mismanagement.
"Why
should they rescue the banks when our children are starving?" screamed one
placard outside a Bankia branch in Madrid's Plaza de Celenque during a protest
at the weekend.
Many
protestors have already lost their homes due to foreclosures and complain of
the generosity towards the banking system while they are left without aid.
Spaniards are slamming the 'impunity' of the bankers as details of pay-offs to
former senior executives further enrage those struggling to pay their bills and
suffering deep cuts in public spending.
Finland Wants Collateral for Spanish Bank Aid From EFSF
By Kasper Viita - Jun 9, 2012 10:00 PM GMT
Finland will demand collateral for its share of emergency loans to shore up
the Spanish banking system should the money come from the euro-region’s
temporary bailout fund, Finance Minister Jutta Urpilainen said. “It remains undecided whether the bailout will be granted via the temporary facility, in which case Finland will require collateral,” Urpilainen told reporters in Kokkola, Finland, yesterday. The other alternative is to grant the loan through the European Stability Mechanism, the “permanent crisis mechanism, which will provide better security for taxpayers” and won’t result in demands for extra guarantees, Urpilainen said.
Euro-area finance ministers agreed to bail out Spanish banks in a rescue worth as much as 100 billion euros ($125 billion) after the country’s access to market funding narrowed. The exact amount will be decided after an audit of the nation’s banks is complete later this month, Urpilainen said
Finland demands collateral for payments from the European Financial Stability Facility, the temporary rescue fund, because it lacks a preferred creditor status. The ESM’s preferred status and the rules on private-sector burden sharing in case of default mean the permanent fund is less likely to incur losses, Finnish Finance Ministry aide Martti Salmi said yesterday.
More
http://www.bloomberg.com/news/2012-06-09/finland-wants-collateral-for-spanish-bank-aid-from-efsf.html
Debt crisis: €100bn bailout could backfire on Spain
Spain's €100bn bank bailout could backfire on Madrid by destabilising public finances and hampering the country’s access to capital markets, experts have warned.
Prime
minister Mario Rajoy today hailed the deal with Brussels as a “victory” for
Spain and the eurozone, but analysts said it was unlikely to convince financial
markets for long. Mr Rajoy’s claims that Spain’s public finances would not be
impacted were disputed, even though the details of the deal have not been
released.
“A
bail-out is a bail-out, Spain, sorry,” said Steen Jakobsen chief economist of
Saxo Bank, arguing that the liability for cost will be added to Spain’s public
debt, even indirectly.
Open
Europe, the London-based think tank, said if Spanish banks take up Brussels’
offer of €100bn in loans, Spain’s public debt would grow by around 10pc.
“If this
is a victory - finally dealing with a glaring problem after four years - then
we don’t want to see a defeat,” said Raoul Ruparel of Open Europe.
More
Europe's democracies must not subcontract their destiny to the Bundebank
Europe has lit the fuse on an economic and financial bomb. The rescue package for Spain cannot plausibly be contained to €100bn once it begins, given the subordination of private creditors and collapse of global confidence in the governing structure of monetary union.
Italy
must guarantee 22pc of the bail-out funds, even though it cannot raise money
itself at a sustainable rate.
You could hardly design a surer way to pull Italy
into the fire.
Citigroup
warned over the weekend that Italy’s economy will shrink by 2.5pc this year and
another 2pc next year as the fiscal squeeze starts in earnest, with grim
implications for debt dynamics. Public debt will jump from 121pc of GDP to
137pc by 2014.
“The
situation could rapidly become critical, because the country is highly
vulnerable if the sovereign debt crisis persists or intensifies. A significant
further rise in yields would deepen and extend the recession and accelerate the
rise in the debt/GDP ratio, triggering a worsening vicious circle. We expect
that Italy will have to request help,” it said.
The world
is uncomfortably close to a 1931 moment. Italy’s public debt is the world’s
third largest after the US and Japan at €1.9 trillion. There is no margin for
political error.
Economic Worries Euro Crisis Hits German Exports
6/08/2012
The German economy has seemed
surprisingly resistant to the ill effects of Europe's financial crisis. But an
April drop in exports suggests that Europe's largest economy may not be immune
after all.
For much of 2010 and 2011, the German economy seemed immune to the euro crisis raging around it. Now, however, it looks as though those days are over. Several indicators show that dark clouds are gathering over the country's economic output. The latest of those came on Friday.
According to data released on Friday by Germany's Federal
Statistical Office, exports fell by 1.7 percent in April in comparison with
March. The fall, while expected, was twice what most economists had forecast.
It marks the first time in 2012 that German exports have fallen. In total,
Germany exported €81.7 billion ($102 billion) worth of goods in April.
The data revealed that Germany can no longer count on the strength of growth in developing countries to offset the euro crisis. Exports to euro-zone countries mired in debt crises fell by 3.6 percent in April. Even though exports to non-European countries actually grew 10.3 percent in the month, demand from China and India has slowed, and German companies are worried.
"German companies have the feeling that foreign demand is not as dynamic as before and that the global economy is entering a weak phase," Dekabank economist Andreas Scheuerle told the conservative daily Die Welt. Still, he added, the main problem was more local. "The weakness is coming from the euro zone, where the debt crisis is not only taking the form of budget plans and savings programs, but it is also creating more uncertainty about the economic situation that's being reflected in weaker investment."
More
My guess is that the relief rally will be temporary and
soon give way to reality. The Euro is disintegrating before our eyes and this
latest fix fixes little and buys little time.
Either Euroland now quickly goes on to become a real “United States of
Europe,” dropping national sovereignty along the way, (and national football
teams?,) something Europe’s voters are unlikely to embrace, or the never ending
crisis will simply go getting larger and more costly with each botched attempt
at a fix. Eventually it flies apart anyway, destroying a whole lot of European
wealth in the process, and negatively impacting the UK and the rest of the
world economies. Stay long physical precious metals against this eventuality.
June 2012 will probably go down in history as the month that the 2008 crisis
returned, and the Great Nixonian Error of fiat currencies became terminal.
Mario Draghi took the book and looked at it
carefully. 'That seems to be done right —' he began.
'You're holding it upside down!' Alice interrupted.
'To be sure I was!' Mario said gaily as she turned
it round for him. 'I thought it looked a little queer. As I was saying, that seems to be done right — though I
haven't time to look it over thoroughly just now
With
apologies to Lewis Carroll.
At the Comex silver depositories Friday final figures were: Registered 35.74 Moz,
Eligible 107.74 Moz, Total 143.48 Moz.
To
continue reading subscribe to the LIR at Currency Countdown.
http://www.proedgenet.com/Subscribe/Subscription.php?id=LIR2
http://www.proedgenet.com/Subscribe/Subscription.php?id=LIR2
No comments:
Post a Comment