A Crisis in Full Flight

"For a while, it looked as if the European Central Bank’s €1 trillion credit program to pump liquidity into Europe’s banking system had calmed global financial markets. But now interest rates for Italian and Spanish government bonds are on the rise again, closing in on about 6%..."


at http://www.project-syndicate.org/commentary/a-crisis-in-full-flight

22 Red Flags That Indicate That Very Serious Doom Is Coming For Global Financial Markets

"The following are 22 red flags that indicate that very serious doom is coming for global financial markets....

#1 According to CNN, the level of selling by insiders at corporations listed on the S&P 500 is the highest that it has been in almost a decade.  Do those insiders know something that the rest of us do not?

#2 Home prices in the United States have fallen for six months in a row and are now down 35 percent from the peak of the housing market.  The last time that home prices in the U.S. were this low was back in 2002.

#3 It is now being projected that the Greek economy will shrink by another 5 percent this year.

#4 Despite wave after wave of austerity measures, Greece is still going to have a budget deficit equivalent to about 7 percent of GDP in 2012.

#5 Interest rates on Italian and Spanish sovereign debt are rapidly rising.  The following is from a recent RTE article...."

at http://theeconomiccollapseblog.com/archives/22-red-flags-that-indicate-that-very-serious-doom-is-coming-for-global-financial-markets

Graham Summers: Spain’s Fiscal Problems Will Result in Collapse of European Union! Here’s Why

"On the surface, Spain’s debt woes have many things in common with
 those of Greece – bad age demographics and a toxic bank system - but you’ll note that, as we tackle each of these, Spain is in fact in far worse fiscal shape than Greece..."

 at http://www.munknee.com/2012/04/graham-summers-spains-fiscal-problems-will-result-in-collapse-of-european-union-heres-why/

Campbell Asks: Can Italy Be Far Behind Spain?

"About three months ago, shortly before Greece’s sovereign debt was
restructured, I began to warn about Spain as the next Eurozone country to focus on. That has, indeed, turned out to be ‘all the news’ with reports every day on Spain’s deteriorating financial condition. Given the ongoing world economic uncertainty and volatility, however, I suggest you now begin to pay very careful attention to Italy going forward, but doing so without losing sight of what is transpiring in Spain..."

at http://www.munknee.com/2012/04/campbell-asks-can-italy-be-far-behind-spain/

Nigel Farage: There Are Going to Be Serious Banking Collapses

“Therefore, what is likely, is that at some point, the markets will just overwhelm and engulf the whole thing and short-term, that will lead to chaos. The whole central banking, International Monetary Fund banking system, I mean it just begins to look more and more like the biggest Ponzi scheme we’ve ever seen on earth.

There are going to be some serious banking collapses and the impact of that on some sovereign states, will be serious. I’m afraid we’ve gotten to a point where we really can’t stop this now. We’re beginning to reach a stage where however much false money you create, the problem becomes bigger than the people trying to solve it. We are very close to that point.

When I talk about the threats and the risk that this thing could wind up in some kind of rebellion, some sort of awful social cataclysm, they (other European politicians) are now very worried indeed. They will talk to you in private, but in public, nobody dares utter a word.

I think the deterioration, in the last two or three weeks, in the eurozone is very serious indeed. It’s the bond spreads in Italy and Spain. It’s the fact that youth unemployment is now over 50% in some of these Mediterranean countries. 

It’s riot and disorder on the streets. And yet a month ago I was here and there was Herman Van Rumpuy telling us, ‘We’ve turned the corner. Everything is solved. There are no more problems with the eurozone.’ What a pack of jokers they look like.”

Farage also had this to say about the Italian movement of gold: “It was interesting to see massive bullion movements last month, out of Italian banks and into Swiss banks. So, people who have purchased gold for protection and have kept the gold in Italian bank vaults, now their trust in Italian banks is so bad they have physically moved the bullion to Switzerland. I’m still a believer, buy gold on dips.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/18_Nigel_Farage__There_Are_Going_to_Be_Serious_Banking_Collapses.html

Hopeless Situation in Spain: New Wave of Defaults as Home Prices Crash; Bad Loans Highest Since Oct '94

"Bad news upon bad news keeps piling up in Spain as the government still insists it can meet deficit targets without needing a bailout. Anyone with any common sense knows there is no can left to kick.

Reuters reports Spain banks' bad loans highest since Oct '94

• Non-performing loans rise to 8.2 pct of portfolios
• House prices fall 7.2 pct in Q1
• Defaults to keep rising on back of budget cuts

Spanish banks' bad loans rose to their highest level since Oct. 1994 in February, to 8.2 percent of their credit portfolios, Bank of Spain data showed on Wednesday, as the sector continues to battle sliding house prices and a looming recession..."

at  http://globaleconomicanalysis.blogspot.com/2012/04/hopeless-situation-in-spain-new-wave-of.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Bill Gross: You Can't Trust An Auction In Spain, Or Anywhere In Europe

"The Spanish Treasury auctioned €3.18 billion of 12-month and 18-month Treasury bills this morning. While borrowing costs surged at the auction, demand stayed strong. Markets rallied after the auction and Spanish 10-year yield fell on the news.
But PIMCO's Bill Gross told CNBC that he doesn't trust Spanish auctions because they are just a function of Spanish banks:

"It is an artificially controlled market for the most part. That doesn't mean private investors like PIMCO wouldn't buy Spanish bonds but for the most part the bills offered today, and the twos and tens offered later this week basically are bought by Spanish banks, as a function of the Spanish economy, and the Spanish connectivity in terms of simple banking. So you can't really trust an auction, not only in Spain, but in Portugal, Ireland, anywhere in Europe basically, it's a function of what their banks are doing as opposed to what we are doing from the outside."

Gross also compared Spain to a tumor saying it didn't have to be cancerous, but it would inhibit the "normal function of other organs."

at  http://www.businessinsider.com/bill-gross-spanish-auction-2012-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29#ixzz1sKf1CZ4T

IS SPAIN GOES, WE ALL GO….

"Spain is once again rattling the markets…Just click here to see how often it happens. And the market is right to be concerned. If anything the market is not concerned enough because we think Spain‘s situation is far worse than they’re letting on. The numbers do not add up and analysts are starting to realise it...
And no Spain is not Greece, Spain is too big to fail. The IBEX is in full crash mode, and yet once again, Europe is shooting itself in the foot. We had respite after rumours came around that the ECB would renew its bond buying program but then of course….“ECB’s Knot Says ‘Very Far’ From Resuming Govt Bonds Buying”
The result is that THERE IS NO MORE CORE EUROPE, IT IS ZE GERMANS AND THE OTHERS…The chart below shows how in this latest episode of stress, the market is treating French, Italian and Spanish bond spreads equally….The Italians being the outperformer and we think it is right..."



at http://pragcap.com/is-spain-goes-we-all-go

Massive Jump in Bank of Spain Borrowing from ECB: Bank of Spain Balance Sheet Shows Spain Deep in Trouble, LTRO is Essentially Useless

"CDS rates to protect against default by Spain rose to an all-time high today as Investors brace formore pain in Spain.

Spain was firmly back in the spotlight on Friday, after news of a sharp rise in borrowing by the region’s banks from the European Central Bank triggered losses across European stocks, but especially for the IBEX 35 index XX:IBEX -3.58% , which fell more than 3% to a three-year low.

The yield on the 10-year government bond in Spain ES:10YR_ESP +0.0004% , which had appeared to get some relief in the latter half of the week, resumed a climb upward, rising 15 basis points to around 5.93%..."

at  http://globaleconomicanalysis.blogspot.com/2012/04/massive-jump-in-bank-of-spain-borrowing.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Caesar Bryan - Suspicious $1.5 Billion Gold Dump & Bank Runs

"With continued volatility in gold and silver, today King World News interviewed 25 year veteran Caesar Bryan. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Caesar told KWN the European banking system is stil on fire, and we are now seeing bank runs in both Spain and Italy. He also stated that today’s trading at the end of the day in gold was very “odd.” Here is what Caesar had to say about the situation: “We had been having a recovery in the price of gold recently, but then gold was taken down around 1:15 pm today. There was quite significant volume in the last 15 minutes, before the COMEX closed.”

Caesar Bryan continues:

“There were 10,000 contracts traded, which is something like $1.5 billion, and gold fell precipitously, from about $1,665 to about $1,650. This is very odd trading on a Friday afternoon when there was no other discernible movement in other markets.

This made for a disappointing end to the week, but the backdrop for gold is still very solid. However, for investors, it’s hard to ignore the day-to-day movements.

As you know, we have been talking about what is going on in Europe. The latest news is that tension remains high in places like Spain..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/13_Caesar_Bryan_-_Suspicious_$1.5_Billion_Gold_Dump_%26_Bank_Runs.html

Roubini: Spain Is Free-Falling, No End in Sight

""Spain's industrial production is free falling and the draconian fiscal austerity will make its recession much worse," says Dr Doom Nouriel Roubini, Chairman of Roubini Global Economics"

at http://nourielroubini.blogspot.com/2012/04/roubini-spain-is-free-falling-no-end-in.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

Deja Vue All Over Again; ECB Says Bond Buying Program Available; Sweet Talkin' Guys

"ECB Says Bond-Buying Program Available

The ECB went from loading up on sovereign debt and making a huge mess of it when Greece defaulted, to the LTRO program which has not made a big mess yet but will. Things are about to go full-circle as the ECB threatens once again to make another mess of things with sovereign bond purchases.

The Bundesbank, Germany's central bank protested bond purchases the last time (correctly), and will do so again, likely to no avail, and with the same predictable results.

CNBC reports ECB Official Says Bond-Buying Program Available

ECB Executive Board member Benoit Coeure, the ECB board member in charge of market operations, said the central bank still had the Securities Market program (SMP) in place allowing it to purchase debt of euro zone nations, should the need arise.

"We are seeing today growing signs of normalization on a whole group of market segments ... but the situation in recent days shows that this normalization remains fragile," Coeure told a conference in Paris.

Referring to Spain, where sovereign debt yields have spiked amid concerns over the government's ability to cut its deficit, Coeure said: "The political will is there, which makes me think that what is happening at the moment in the market does not reflect the fundamentals."

at  http://globaleconomicanalysis.blogspot.com/2012/04/deja-vue-all-over-again-ecb-says-bond.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Inconsistencies in Spain's Budget Suggest Deficit will be 7% not 5.3%; Andalucia Regional Government Will Not Agree to Deficit Targets; Only 26% Trust Prime Minister to Overcome Crisis

"Courtesy of Google translate, please consider The inconsistencies of the State Budget for 2012

Much is written these days about the budget submitted by the Government for 2012, which proposes that the deficit be lowered to 5.3% of GDP. In this article we focus not on a comprehensive analysis of these items but in both revenue and expenditure forecasts which seem less realistic.

The first of these items is to transfer the SPEE (State Employment Service, former INEM). The government budgeted a reduction of 15.6% (2,464,000), arguing that many are unemployed benefits are ending.

Since the Government is assuming that unemployment will increase this year over 600,000 people, there is no reason for us to see a turnaround, quite the contrary. In view of the numbers a reasonable assumption would be a 10% increase in unemployment benefits starting in 2012. This means a delay of nearly 4,500 million from the budget, ie 0.4% of GDP..."

at  http://globaleconomicanalysis.blogspot.com/2012/04/inconsistencies-in-spains-budget.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

"Spain Is Not X"... And Why That Is Actually A Bad Thing

"The place that worries Michael Cembalest, of JPMorgan, the most is Spain. Historically, the kind of dismal position it finds itself in currently has not ended well with 13 defaults since 1500 A.D. and he suspects its going to take a lot of bilateral aid and ECB financing to prevent another one."



Source: JPMorgan

at http://www.zerohedge.com/news/spain-not-x-and-why-actually-bad-thing

Spain: The Ultimate Doomsday Presentation

"In summary, here are Carmel's five reasons why Spain's problems are worse than the market anticipates:

1. Spain’s national debt is 50% greater than the headline numbers

Spain’s debt-to-GDP balloons from 60% to 90% of GDP with regional and other debts

2. Spain’s housing prices will fall by an additional 35%

Spain built one house for every additional person added to the population during the past two decades; the fall will decrease GDP by ~2% each of the next two years

3. Spain has “zombie” banks with massive loans to developers and to homeowners

Banks have not begun to realize losses and are vastly undercapitalized

4. Spain’s economy has not stabilized and will continue to deteriorate

Spain has the highest unemployment in the developed world, one of the highest overall debt loads, and the most uncompetitive labor market in Europe

5. The EU will not have the firepower or political will to bail out Spain

Rescue fund headline numbers are misleading and count capital that is not yet committed

And here are the problems that will manifest themselves over the next 12 months:

• Spain’s true debt burden will pass the 90% “tipping point” identified by Rogoff and Reinhart
• Housing prices will fall further and faster than anticipated (consensus is 15%; CAM estimate is 35%)
• Banks underestimate the residential real estate loan defaults (consensus estimate is 2.8% vs. CAM estimate of 11%)
• Expected housing price depreciation and loan defaults will deepen Spain’s recession (additional 2% contraction in 2012 and 2013)
• Spain will need to refinance €186.1 Billion in 2012 alone..."

at http://www.zerohedge.com/news/spain-ultimate-doomsday-presentation

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Greyerz - Gold Bottom, $25 Trillion in Debt, ECB & Swiss Franc

"Today Egon von Greyerz told King World News that around the world, the average debt to GDP is at a staggering 350%. Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. Von Greyerz also stated that even if the number was cut in half, to 175% debt to GDP, it would require the elimination of $25 trillion of debt. But first, here is what Greyerz had to say about what is happening in Europe: “Yesterday the Swiss franc came very close to the 1.20 level versus the euro. This is happening because bad economic news is coming out of Europe. Industrial production is falling and Spanish rates versus German rates, there is now a 4% gap, now people are getting worried about that again. So they are buying the Swiss franc.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/6_Greyerz_-_Gold_Bottom,_$25_Trillion_in_Debt,_ECB_%26_Swiss_Franc.html

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Ongoing European Crisis to Result in Higher Inflation and Higher Gold Prices – Here’s Why

"On the surface things may appear to be calm, but I don’t think the European crisis is anywhere near its conclusion. Losses still have to be taken from Ireland, Spain, Portugal and possibly even Italy…There are a number of ways out of Europe’s problems. One of them is higher inflation…[which] is going to be very positive for gold… because the central banks will be under pressure to print..."

at http://www.munknee.com/2012/04/ongoing-european-crisis-to-result-in-higher-inflation-and-higher-gold-prices-heres-why/

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Europe on brink of another financial crisis, Darling warns

"Europe is in the eye of an economic cyclone, with a fresh storm about to hit vulnerable countries, the former chancellor Alistair Darling has warned.

Mr Darling, who accurately predicted in 2008 that Britain was on the brink of the worst economic downturn for 60 years, said European Union leaders should not be lulled into thinking that the worst of the eurozone crisis is over.
In a lecture to students at Queen Mary, University of London last week, the Labour MP said the situation in Spain, where the centre-right government is imposing severe budget cuts and a general strike wreaked havoc on Thursday, should trigger alarm bells across the EU.
The French President, Nicolas Sarkozy, claimed last month that following agreement on a fresh EU bailout of Greece, the eurozone was out of the woods. And David Cameron and George Osborne have insisted that Britain's strategy to push on with austerity measures has helped stabilise European economies. By contrast, Angela Merkel, the German Chancellor, has warned that Europe remains in a "fragile situation" and that the crisis is far from over.
Mr Darling told the university's New Labour in Government class: "Part of the problem with Europe is that a lot of them took the view that that this crisis is now behind us, therefore this is a time to visit austerity, whereas the countries who are going to be most hit by austerity [like Spain] are not out of the crisis at all."

at http://www.independent.co.uk/news/uk/politics/europe-on-brink-of-another-financial-crisis-darling-warns-7606256.html

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Violence, Firebombings Erupt as Spain Announces €27 Billion Deficit-Cutting Plan; Spanish Economy Will Implode; Spain Headed for Bond Revolt and Bailouts

"My friend Bran who lives in Spain writes ...

Hello Mish

Here are thoughts from the last couple of days on the strikes, protests, and violence in the wake of more austerity plans by Prime Minister Mariano Rajoy.

Pro-government news played down the strike to a virtual non-event, giving much criticism of the unions methods and exaggerations. Reality however, is that there is enough support by strikers to shape future politics, especially as austerity starts to bite.

The unions have promised to step up protests. The Indignado 15 Million Movement also protested, but separately from the unions.

One comment stuck out - German Chancellor Angela Merkel said the protests did not represent Spain. Maybe she was trying to be reassuring, but she is taking sides against maybe a million or so people of a foreign population, not very wise at best and otherwise agitating..."

at  http://globaleconomicanalysis.blogspot.com/2012/03/violence-firebombings-erupt-as-spain.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

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Spiegel Says "Even a 1-Trillion Euro Firewall Wouldn't Be Enough"; Mish Says "The Bigger the Bazooka, the More Money Will be Lost"

"Eurozone bureaucrats keep upping the ante as to how big a "firewall" is needed. And at every critical juncture, German Chancellor Angela Merkel has proven she is nothing but a liar. With every demand for additional firepower, comes an inevitable cave-in from Merkel supporting the move, no matter what she says in advance.

Meanwhile, the entire idea that firewalls can accomplish anything is ludicrous, given the key point that no currency unions in the absence of fiscal unions cannot and will not work.

I suspect Merkel understands this, merely wanting to get Germany so deep into bailouts step by step, that it will be reluctant to leave the Eurozone.

It is high time the German Supreme court step in and stop this nonsense.

However, nothing can stop Greece, Portugal, and Spain from leaving, and eventually they will. In the meantime, rest assured that every increase in firepower will be additional money of German citizens' pockets. The end-game will be a currency or banking crisis at the worst possible time.

For now, please consider 'Even a 1-Trillion Euro Firewall Wouldn't Be Enough'

European finance ministers meeting in Copenhagen on Friday agreed to boost the euro-zone firewall to over 800 billion euros. The move marks another U-turn on the part of the Merkel administration, which recently dropped its opposition to increasing the fund. German commentators warn that even the new firewall may still be too small..."

at  http://globaleconomicanalysis.blogspot.com/2012/03/spiegel-says-even-1-trillion-euro.html

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