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/

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

EXPECT MORE BAILOUTS & SELF IMPOSED DEPRESSION AS THE EURO CRISIS CONTINUES…

"You’ve probably seen the math by now….There is just no way Italy is going to grow their way out of what some are (incorrectly) calling a debt crisis. And the other peripheral countries are in similar positions. These two headlines from Reuters pretty much sum up the situation in Italy:

“Italy to raise 2012 debt/GDP target to 123.4pct from 119.5pct, hikes 2013 to 121.6pct from 116.1 pct
Italy CUTS 2012 GDP forecast to -1.2pct from -0.4pct, raises 2013 to +0.5pct from +0.3pct”

And we should expect that 2013 forecast to get slashed when they try to balance the budget and growth continues to sink just like we’ve seen in Greece.
So the story has become simple. As long as the ECB is willing to write the check then they can hold the line. The big risk now are civil unrest leading to political upheaval and potential defections/defaults. How long can these countries impose depression on their citizens before they finally realize that this currency system is simply not working? The core must either move more quickly towards unification and a true resolution of the currency crisis or risk increasing turmoil and eventual combustion…"

at http://pragcap.com/expect-more-bailouts-self-imposed-depression-as-the-euro-crisis-continues

Santelli On The Chain Of Insolvency

"While it is not unusual for everyone's favorite truth-seeker in Chicago to cut to the chase and simplify the over-complex world of data and nuance that is thrust upon us day after day, CNBC's Rick Santelli outdoes himself today. Initially addressing the retail sales and housing data dichotomy, Rick jumps above the noise of day-to-day data and focuses on what is critical - in his view - the weather and the debt. If only he had used the term "It's the debt stupid" as it would have made for better headlines but the clip below should help anyone and everyone decide on whether this dip is for buying or fading/waiting. In the end, Santelli notes, "It is simple. There are questions about weather and questions about debt. First one we'll know more about in the next two or three months. [For the] latter, we'll have to look toward our neighbors in Europe to see how it ultimately turns out and see if our political class is going to do a better job than the European bureaucracies."

at http://www.zerohedge.com/news/santelli-chain-insolvency

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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Trichet Warns of "Behavioral Contagion" and Nontraditional Steps That He Personally Started

"Please consider Trichet warns of "behavioral contagion"

Jean-Claude Trichet, the former president of the European Central Bank, said Saturday that he is worried that controversial quantitative easing and other nontraditional steps that global central banks have taken since the financial crisis could be here to stay.

The Fed has purchased $2.3 trillion of securities since it cut interest rates to zero in December 2008 in a bid to bring down long-term interest rates and boost economic growth.

These actions have led to criticism, especially during the early days of the Republican contest for the 2012 presidential nomination, that Fed Chairman Ben Bernanke was undermining the dollar and creating conditions for a sharp rise in inflation.

Speaking to a conference of influential central bankers from around the world and leading academic experts on monetary policy, Trichet said it could still turn out that the bond-buying, asset purchases and liquidity injections by global central banks might go away after the financial system gets back on its feet.

That is the optimistic scenario, he said.

But Trichet said there was a “less flattering conjecture” that the extraordinary actions will be part of a new “permanent regime.”

Those factors may have created the permanent risk of “behavioral contagion” or a grave and immediate threat to the systemic functioning of the financial system, similar to the market meltdown in the wake of the collapse of Lehman Brothers.
“Nobody would have expected such a long time after Lehman Brothers, [central banks] would continue to have this level of expansion of our balance sheets,” he said. “We are all still in crisis.”

at http://globaleconomicanalysis.blogspot.com/2012/03/trichet-warns-of-behavioral-contagion.html

Portugal will be the next Greece, predicts Mohamed El-Erian

"Portugal will follow Greece to be the next eurozone country to falter, according the boss of the world's largest private sector bond fund.
Like Greece, it will need extra cash from Brussels to stop the country going bust, Pimco chief executive Mohamed El-Erian told the German magazine Der Spiegel.
Asked whether he expected Portugal to have become the next Greece by the end of this year, he said: "Yes, unfortunately that will be the case."
Portugal's economy is forecast to contract 3.3% this year as the government implements austerity measures under a €78bn (£65bn) bailout from the European Union and International Monetary Fund.
El-Erian, who is also co-chief investment officer of Pimco, said he expected Portugal's first bailout package to be insufficient, prompting it to ask the EU and IMF for more money.
"Then there will be a big debate about how to split the burden between the EU, creditors, the IMF and the European Central Bank. And then financial markets will become nervous because they are worried about private sector participation," he said..."

at http://www.guardian.co.uk/business/2012/mar/18/portugal-next-greece-mohamed-el-erian