Time is almost up for Spain as borrowing costs soar

coolshannagh28

The Germans know that the debt numbers in the eurozone are beyond them . Since the 70 s Europe has been enjoying high mass consumption on the back of debt , this debt is about to overwhelm it . It's about to get very interesting !

darkman2

Sand wrote: »

It'll be intriguing to see if anything is done to solve the Spanish problem. The Euro zone was too principled and dignified to solve the Greek problem. It may too poor and ill-equipped to solve the Spanish problem.

Its interesting how relatively small the amounts required to solve the problem are, but how weak the leadership and solidarity is. Having engaged in a poisonous and incorrect analysis of the Eurozone problem being "lazy" or "feckless" and "greedy" periphery states out to rob ordinary, decent hard working core states the past few years have been wasted on burning down all European solidarity in favor of national narratives. We may be about to reap the whirlwind. Can we truly expect the Germans electorate will accept a sudden shift in Merkel's position - that having been the gatekeeper of Germany's wealth, Merkel will now volunteer a theoretically limitless Marshall aid plan at German expense? And does Merkel even have the credibility to bring along the various peripheral states she's been denouncing for the past 5 years?

I see where you are coming from. Let's look at it from a German point of view - I disagree that we are talking small money - how would you like to be a German facing the frightening prospect of bailing out Italy, Ireland, Spain, Cyprus, Greece, Belgium, Netherlands and Portugal - these are the countries in trouble and by proxy they put Germany's banking system in danger. This is a very serious crisis that could ultimately topple most EU states.That's how serious it is. From a German point of view you would be getting scared around this stage and probably thinking "it's time to cut our losses here and run". "Throw the delinquents a bone to protect our own banking system and let's get the hell out of this nightmare". That is how i'd be thinking. I don't know about you but i'd be very unhappy with the state of affairs in the EU.

The EU, never mind the Euro, might not survive this crisis. It could disintegrate. The situation in these countries is extremely serious. Where I agree with you is that in human history, when we look back on this crisis, never will there have been a period of utter incompetence and buffoonery in dealing with such an economic crisis as the EU and it's member states have conducted themselves and that includes Germany.

And the German's have form in this crisis. The seeds of the hugely damaging contagion effect were sown the day Greece was allowed enter the single currency. That country should never have been allowed into the eurozone for reasons we are all too aware of now.

My own point of view is that the Euro won't survive in it's current form. Once the market is through Italy and Spain you are talking about the core of Europe next up. I don't think the Germans and French will wear that. I really don't. Hope i'm wrong.

coolshannagh28

The Germans know that the debt numbers in the eurozone are beyond them . Since the 70 s Europe has been enjoying high mass consumption on the back of debt , this debt is about to overwhelm it . It's about to get very interesting !

Itsdacraic

Figures released today show a 9.8% drop in retail sales in Spain, compared to the same month (April) last year, this follows on from 3.8% drop in March. Not pretty.

NIMAN

coolshannagh28 wrote: »

The Germans know that the debt numbers in the eurozone are beyond them . Since the 70 s Europe has been enjoying high mass consumption on the back of debt , this debt is about to overwhelm it . It's about to get very interesting !

Strange choice of words.

I'd say it looks like its going to get very messy, and it will impact on every single one of us.

We will all feel pain from this.

BostonB

I don't think the Germans accept/realise that they fuelled that debt mountain, or that when it goes pop that they won't be insulated from it.

NIMAN

We spoilt them (and the French) by giving them back their money when we went bust.

They must be hoping everyone else will as well ........

golden lane

why, does the loss of jobs to the far east....rarely get mentioned in the european aguements. ??????

BostonB

The far east is going to be hit when people can't buy their goods either.

NIMAN

BostonB wrote: »

The far east is going to be hit when people can't buy their goods either.

Their growth is already slowing quickly, as the West are buying less.

If the Euro crisis goes BANG, then the whole world is going to feel the impact. Thats why I can't understand why so many people are being so flippant about the whole debacle.

It will all require some sort of debt forgiveness all across the board. If the West owes hundreds of billions to China, then if they want us to buy their junk, they might have to bite the bullet and let the West off with a pile of debt?

Icepick

BostonB wrote: »

The far east is going to be hit when people can't buy their goods either.

It's already happening.

coolshannagh28

NIMAN wrote: »

coolshannagh28 wrote: »

The Germans know that the debt numbers in the eurozone are beyond them . Since the 70 s Europe has been enjoying high mass consumption on the back of debt , this debt is about to overwhelm it . It's about to get very interesting !

Strange choice of words.

I'd say it looks like its going to get very messy, and it will impact on every single one of us.

We will all feel pain from this.

Obviously it hasn't impacted on you yet , a lot of people out here can't wait for things to get interesting at least then the we will know where we stand and the structural reforms we have been kicking down the road will be imposed on us .

NIMAN

coolshannagh28 wrote: »

Obviously it hasn't impacted on you yet , a lot of people out here can't wait for things to get interesting at least then the we will know where we stand and the structural reforms we have been kicking down the road will be imposed on us .

Of course it has impacted on me. There's very few people in this country it hasn't affected.

kennyb3

'Bank of Spain data shows that a net of €66.2bn was sent abroad last month, the most since records began in 1990. The figure compares to a €5.4bn net entry of funds during the same month a year ago.'

http://www.telegraph.co.uk/finance/debt-crisis-live/9301285/Debt-crisis-live.html

darkman2

Spanish yields rising fast. 10 year over 6.8%. Record crisis high for Spain. Fitch has just cut the credit rating of 18 Spanish banks. The "bailout" last weekend has made thing worse. That will go down as possibly the biggest blunder of this crisis so far. They are going to pay for it now!:eek:


http://www.bloomberg.com/quote/GSPG10YR:IND/chart


Spain needs a full sovereign bailout IMO. Instead they have added another €100bn (minimum) to Spain's national debt!

kennyb3

darkman2 wrote: »

Spanish yields rising fast. 10 year over 6.8%. Record crisis high for Spain. Fitch has just cut the credit rating of 18 Spanish banks. The "bailout" last weekend has made thing worse. That will go down as possibly the biggest blunder of this crisis so far. They are going to pay for it now!:eek:


http://www.bloomberg.com/quote/GSPG10YR:IND/chart


Spain needs a full sovereign bailout IMO. Instead they have added another €100bn (minimum) to Spain's national debt!

The minute they force Spain over the line (7%), the focus will be on Italy.

This whole process has been inevitable for about a year now - it's just accelerating now.

Everybody wants Eurobonds as a solution, that's years down the line, and even if it magically happened overnight I see no reasons the yields on the eurobond wouldn't slowly creep up.

The markets are saying the euro is a dead duck in it's current form.

gold_bull

kennyb3 wrote: »

The minute they force Spain over the line (7%), the focus will be on Italy.

This whole process has been inevitable for about a year now - it's just accelerating now.

Everybody wants Eurobonds as a solution, that's years down the line, and even if it magically happened overnight I see no reasons the yields on the eurobond wouldn't slowly creep up.

The markets are saying the euro is a dead duck in it's current form.

the euro will remain in tact for at least another six months , obama has an election coming up and all the stops will be pulled out in order to prevent a global meltdown , chinal will fess up aswell , more can kicking for another while at least

kennyb3

gold_bull wrote: »

the euro will remain in tact for at least another six months , obama has an election coming up and all the stops will be pulled out in order to prevent a global meltdown , chinal will fess up aswell , more can kicking for another while at least

Don't doubt that for a second, mostly likely time if it was to go would be post the german election next year. Buying time is getting more and more expensive though.

darkman2

Spanish 10 year bond in near 7.3% today. It's nearly surpassing Irish yields now.
http://www.bloomberg.com/quote/GSPG10YR:IND/chart

Voltex

TBH...I think the current market reaction to the spanish siuation is more a symptom of the lack of clarity on the bank bailout and where the funds are coming from. I remenber looking at the immediate rally following the announcement of the funding and saying to myself that there wouldnt be a hope in hell Id hold spanish paper!!

Im very pro european..but I just cant see how the € can stay together without rapid fiscal union and federalising certain nations debts

darkman2

Results of Spanish auction this morning.

3-month treasury bills have leapt to 2.4pc up from 0.8pc last auction.

The yield on the 6-month treasury bills has climbed to 3.2pc from 1.7pc last auction. (The bid to cover ratio halved on 6 month bills to 2.8)

Ouch.

Yield taking off now temporarily on 10 year bonds and markets slumping. Investors don't like that at all. They are in real trouble now. Can't borrow at that sort of rate for a mere 6 months.

Sand

Merkel has gone on record ruling out debt mutualisation. For as long as she lives. When you're hearing stuff like that its no wonder investors are deciding its time to bail out.

Briefing some lawmakers from the Free Democrats (FDP), her junior coalition partner, Merkel said she would not agree to share total debt liability in the 17-nation eurozone "as long as I live" , some participants told the German magazine Spiegel Online and other western media.

The chancellor' s speech has met with applause from the audience and one FDP official then shouted: "We wish you a long life" , some lawmakers confirmed.

Merkel has essentially ruled out every single potential option, and seems to think the Eurozone had 40-50 years to sort out the Euro crisis. The Spanish crisis solution was quite simply monumentally dumb. Loading a sovereign up with 100 billion extra debt and liabilities when its already struggling with debt is incredibly stupid. Merkel is not regarded as being an intellectual or a thinker. It shows.

Merkel has got some stick in the past:

It doesn't help, concedes a German banker in Frankfurt who would rather not be identified, that few Germans, hardly anyone in the German government, and certainly none of Merkel's economic advisers "have ever read Keynes, or even begin to get market economics. To some extent, they're entitled not to, of course: they have the most successful economy in Europe. The trouble is, this thing is a hell of a lot bigger than Germany."

"She's navigating by sight, with no real political vision, and no authority. So much sluggishness, so much incapacity to grasp the gravity of the situation, takes the breath away ... Angela Merkel has now become Europe's principal problem."

But its not just Merkel who fails to grasp the gravity of the situation. Most of the other Eurozone governments completely fail to understand the situation they are in also - they too play to uninformed domestic audiences, playing to the gallery with populist talk about ring fenced spending and stimulus.

Greece is spending more time demanding changes to the deal they agreed a few weeks ago than they are implementing it. When France faces a budgetary shortfall, its Finance Minister immediately and loudly tells the French that he wont hear any talk about austerity.

In Ireland, our government is so feckless and uncommitted that even stopping pay rises to the public sector in the midst of a depression is considered controversial and beyond the pale with ministers like Varadkar being slapped down by fools like Gilmore. It says alot about the sort of austerity that's been practiced in Ireland...

Its one of the reasons I opposed the Fiscal Treaty - for all the talk of stern fiscal discipline, there's not been the slightest iota of change in mindset by the Irish government. If fiscal discipline exists, it will not ever spring from an Irish source in Irish interests commonly understood as being in all our own best interests. Why should it? We have the Fiscal Treaty to do our fiscal discipline for us. Fiscal discipline will be imposed by foreign dictate, resented by all offering populists a chance to showboat against it. An opportunity missed for us to really change how this state is run.

Merkel and the Germans are deluded. The French and Irish are deluded. There's simply too much distance between the various mindsets. Investors are interested in seeing how it all turns out, but they'll be watching from seats in the dollar or the Swiss franc

Sand

Sand wrote: »

Fiscal discipline will be imposed by foreign dictate, resented by all offering populists a chance to showboat against it. An opportunity missed for us to really change how this state is run.

What would you do?

I haven't asked this for about two months, but I thought it was about time I had another go in the forlorn hope of getting an answer.

darkman2

Spain 10 year bond soared further past 7% on Friday to 7.23%.

http://www.bloomberg.com/quote/GSPG10YR:IND/chart


Check out the rise in the shorter 2 year bond in just 1 day

http://www.bloomberg.com/quote/GSPG2YR:IND/chart


Spain is going bankrupt. Catastrophe awaits. Unless they apply for a full bailout this time.

flanzer

Highest ever in the Euro area today. 7.56%

Italy edging up too. It's all going Pete Tong.

Merkel supping a margarita somewhere

Full bail out on the cards. Looking like c€400bn, and with Italy most likely needing similar soon after, the ESM will likely be only be able to afford a couple of packets of crisps, as the fund gets extinguished

Lantus

Really sick of the sentiment that Germany are the cause of all our worries.

Merkel walks a delicate political line back in her own country and most germans, the man on the street are furious that Germany is being asked to help bail out greedy, selfish, ignorant child like countries that have not yet reached a point where they can take responsibility for their own actions. (like Ireland???)

And yet every second post jabs a finger at her as if somehow it's all her fault?

darkman2

It's all coming apart. Check out Spain's 2 year bond




http://www.bloomberg.com/quote/GSPG2YR:IND/chart



Trading on the Italian stock market has been suspended after it tanked more than 7% this morning. Italian yields are now higher than Ireland's making Ireland the best piggy in the class. Spain is at end game unfortunately.

BostonB

Lantus wrote: »

Really sick of the sentiment that Germany are the cause of all our worries.

Merkel walks a delicate political line back in her own country and most germans, the man on the street are furious that Germany is being asked to help bail out greedy, selfish, ignorant child like countries that have not yet reached a point where they can take responsibility for their own actions. (like Ireland???)

And yet every second post jabs a finger at her as if somehow it's all her fault?

I guess you have to look to where all the cheap credit the banks got came from in the first place. Even if you don't accept that, what will happen when no one in Europe can afford German exports anymore. No point making stuff in Germany if your selling 6000 km away. Good luck with that plan. Merkel just inherited this mess.

darkman2

The BBC's Robert Peston in his latest blog gives this impression of todays rout

....What is particularly frightening about what has happened to Spanish debt prices today is not just that they imply Spain would have to pay an unaffordable 7.5% to borrow for ten years - which is the normal litmus of the difficulty being faced by a government when borrowing.

Perhaps more serious is that it would have to pay interest of 7.4% to borrow for five years and more than 6.5% when borrowing for as little as two years.
You, dear reader, would probably pay less than 6.5% when borrowing for two years. And you are not a sovereign government (I presume).

In other words, there is no temporary refuge for Spain in borrowing for shorter periods. Its day of reckoning, in the sense of a decision on whether to become the first really big eurozone economy to subject itself to the humiliation of being run from Brussels and Washington, by the European Commission and IMF, looms....

http://www.bbc.co.uk/news/business-18954862

NIMAN

Greece, Spain and Italy are now making us look relatively normal. I did say relatively.

We are still a basket case, but you have got to think that there is going to be major damage in the EuroZone in the next year or two.

darkman2

And so onwards to the core...

Moody's changes Germany, Netherlands outlooks to negative



NEW YORK | Mon Jul 23, 2012 5:51pm EDT
(Reuters) - Moody's Investors Service on Monday changed its outlook for top-rated Germany, the Netherlands and Luxembourg to negative from stable, warning that they may have to increase support for indebted euro zone states such as Spain and Italy.

Moody's also cited an increased chance of Greece leaving the euro zone, which "would set off a chain of financial sector shocks ... that policymakers could only contain at a very high cost."

The agency affirmed Finland's 'Aaa' rating and stable outlook, but it said all four countries were adversely affected by rising uncertainty about the outcome of the euro area debt crisis and the increasing likelihood that greater support would be needed by other euro area countries, most notably Spain and Italy.

Moody's said the burden of that support would fall most heavily on the euro zone's top-rated states. It said its actions on Germany, the Netherlands and Luxembourg mean it now has negative outlooks on all the countries "whose balance sheets are expected to bear the main financial burden of support."

The agency put France and Austria on negative outlook in February.

Finland escaped a negative outlook partly because of its small and domestically oriented banking system and its limited trade links with the rest of the euro area, Moody's said.

Ratings agency Standard & Poor's has a stable outlook for Germany but negative outlooks for Luxembourg, the Netherlands and Finland. All are rated 'AAA'.

Fitch gives all four the top rating and stable outlooks.

http://www.reuters.com/article/2012/07/23/us-ratings-moodys-germany-idUSBRE86M1D320120723

Sponge Bob

A couple of International Arrest Warrrants on the staff of Moodys and S&P would end the Eurozone Crisis fairly sharpish, most especially if the Greeks with their ****ehole prisons were to issue them.

Diarmuid

Sponge Bob wrote: »

A couple of International Arrest Warrrants on the staff of Moodys and S&P would end the Eurozone Crisis fairly sharpish

darkman2

Spanish yields surging again after falling slightly in early morning trade. Yield curve now appears inverted - i.e 5 year higher than 10 year yield.

An auction of Spanish 3 and 6 month t bills is happening this morning. Normally not a big deal. It's a pretty big deal today. What will it cost Spain to get €3bn of debt away? It may not be pretty!