The Spanish Bank Bailout: A Complete Walk Thru From Deutsche Bank

Over the past 24 hours, Zero Hedge covered the various key provisions, and open questions, of the Spanish bank bailout. There is, however, much more when one digs into the details. Below, courtesy of Deutsche Bank's Gilles Moec is a far more nuanced analysis of the nuances of what just happened, as well as a model looking at the future of the pro forma Spanish debt load with the now-priming ESM debt, which may very well hit 100% quite soon as we predicted earlier. Furthermore, since the following comprehensive walk-thru appeared in the DB literature on Friday, before the formal announcement, it is quite clear that none other than Deutsche Bank, whose "walk-thru" has been adhered to by the Spanish government and Europe to the dot, was instrumental in defining a "rescue" of Spain's banks, which had it contaged, would have impacted the biggest banking edifice in Europe by order of magnitude: Deutsche Bank itself.

 

German Opposition Threatens To Scuttle ESM, And Spanish Bailout, Ratification

Gradually, the key open items from yesterday's Spanish bailout are getting some closure. First, we learned that Ireland, as speculated, will demand a comparable retroactive bailout renegotiation, an act which also puts the Greek elections a week from today in play. Then, we got definitive confirmation that the Spanish loan, coming at ~3% or half Spanish GGBs, is a priming loan, subordinating existing creditors. Finally, we learn that the ESM - the bailout mechanism at the heart of all current and future European bailout plans, and which still has not been ratified by Germany, is in danger of being scuttled by none other than the German opposition. The reason? According to a Reuters report, "A [Spiegel] report that German Chancellor Angela Merkel is not serious about implementing a European financial transaction tax threatens to undermine an initial deal struck last week with the opposition over the EU's planned fiscal pact... The Social Democrats (SPD) and Greens are insisting on a plan for a transaction tax and measures to boost growth."

Bill Buckler: "It's GIGO Time On Wall Street"

Here is the conclusion of a US study of computer-generated trading recently concluded: “Financial markets are alive, but a model, however beautiful, is an artifice. ...To confuse the model with the world is to embrace future disaster driven by the belief that humans obey mathematical rules.” The powers that be have been embracing future disaster on this belief in a manner which goes far beyond financial markets. But in that shrunken context, individuals everywhere have already abandoned that belief. Wall Street and its global counterparts have been trying to do that too, but their problem is that they have nothing to replace it with. The “belief” that humans can be managed by obeying arbitrary rules of any kind is the last bastion of our rulers. It is waning on the financial markets, just as it is everywhere else, with results that no computer program can predict. That’s why the “market model” no longer “works”.



Germany Makes the Final Push for Control of the EU

Posted by: Phoenix Capital...

Post date: 06/10/2012 - 12:47

  I believe this is Germany’s final push for EU control. If this fails and Germany ceases to offer additional bailout funds in some form then the EU will collapse (as noted earlier, the...

The Subordination in Spain Will Cause Pain 

Posted by : Bruce Krasting

Post date: 06/10/2012 - 11:36

Subordination is a four letter word to bondholders.

It's All About the Fraud: The Silence of the Buy Side 

Posted by: rcwhalen

Post date: 06/10/2012 - 13:36

Nobody on the Buy Side wants to sue JPM, Goldman Sachs, Morgan Stanley et al for securities fraud on the more problematic deals of the past decade.

 

 

SBSS 35. Silver For The Pawn Star Masses

 

What the One World Government’s Skynet Has in Store For Us: Drones Like Nothing The World Has Ever Seen

by Walter Hickey , Business Insider:
Even with drones already dominating the skies, neutralizing adversaries and covertly collecting data, new research is still underway on the generation of pilotless planes to come.
And the United States isn’t the only country interested in developing long-range and lethal drone technology.
Groups of European and Asian nations — allies and former adversaries alike — are busy investing in next-generation unmanned aerial vehicles of their own.
These UAVs — some in development, some testing, and some already in service — are part of a global competition to gain aerial superiority.
Read More @ Business Insider.com

In The News Today

June 9, 2012, at 11:43 am
by Jim Sinclair

Dear CIGAs,

Did you ever see the movie, "Enemy of the State?" If not, see it and learn.

Well, it does not matter as all citizens of the USA are now considered enemies of the state it would seem.

Andrew, sheeple are never outraged. Like my sheep, the grain pellets are all they long for.

The nice thing about Tanzania is the only drones they have are cardboard and come in a plastic wrapper for a few shillings. In fact they do not care about you as long as you do not become too much of a nuisance to the locals.

Where Is the Outrage? by Andrew P. Napolitano
For the past few weeks, I have been writing in this column about the government’s use of drones and challenging their constitutionality on Fox News Channel where I work. I once asked on air what Thomas Jefferson would have done if – had drones existed at the time – King George III had sent drones to peer inside the bedroom windows of Monticello. I suspect that Jefferson and his household would have trained their muskets on the drones and taken them down. I offer this historical anachronism as a hypothetical only, not as one who is urging the use of violence against the government.
Nevertheless, what Jeffersonians are among us today? When drones take pictures of us on our private property and in our homes, and the government uses the photos as it wishes, what will we do about it? Jefferson understood that when the government assaults our privacy and dignity, it is the moral equivalent of violence against us. The folks who hear about this, who either laugh or groan, cannot find it humorous or boring that their every move will be monitored and photographed by the government.
Don’t believe me that this is coming? The photos that the drones will take may be retained and used or even distributed to others in the government so long as the "recipient is reasonably perceived to have a specific, lawful governmental function" in requiring them. And for the first time since the Civil War, the federal government will deploy military personnel inside the United States and publicly acknowledge that it is deploying them "to collect information about U.S. persons."
It gets worse. If the military personnel see something of interest from a drone, they may apply to a military judge or "military commander" for permission to conduct a physical search of the private property that intrigues them. And, any "incidentally acquired information" can be retained or turned over to local law enforcement. What’s next? Prosecutions before military tribunals in the U.S.?
More…




As Europe peers into economic chasm, Africa’s economy is rising
Reports by the African Development Bank, World Bank, and McKinsey show how Africa continues to offer a bright spot in the global economy. By Scott Baldauf, Staff writer / June 9, 2012
It’s a continent with a long history of war, famine, disease, and recently, a penchant for political instability due to economic mismanagement.
But enough about Europe. Let’s talk about a continent with some hope: Africa.
In 2012, as the rest of the world slows down because past exuberant consumerism and speculative investment – or debt, as they used to call it – Africa is expected to grow by 4.5 percent or 4.9 percent, depending on whether you believe the African Development Bank or the World Bank, respectively.
This growth is due, in part, to African natural resources being dug up, chopped down, or pumped out and sold to global consumers who still have cash – mainly China, India, Brazil, and Russia – and it is also due to the growth of African middle-class consumption. Yes, read that again: African middle-class consumption. According to McKinsey & Company, there is an African middle class; and although they are scattered over 54 different countries, and speak many different languages, they are at least as large as the Indian middle class, and they spend money like middle-class people everywhere do.
More…




Jim Sinclair’s Commentary

Part of getting things back together is getting rid of the bankster’s influence.

There is no future as long as the economic vampires continue to feed on Main Street. They do not want a part, they intend to take it all.

Iceland economy grows at fastest pace in four years By Niklas Pollard
Fri Jun 8, 2012 10:54am EDT
(Reuters) – Iceland’s economy expanded in the first quarter at its fastest pace since its near-meltdown, powered by a surge in exports, tourism and domestic consumption.
Gross domestic product (GDP) grew 2.4 percent quarter-on-quarter in the first three months of the year to put annual economic growth at 4.5 percent in the period, the highest since the first quarter of 2008, data from the statistics office showed on Friday.
"It shows that the economy is growing rather rapidly, at least in an international comparison, at the moment," Islandsbanki Chief Economist Ingolfur Bender said.
"The increase is broad-based, driven by consumption, investment and exports."
Growth for the fourth quarter of 2011 was 1.9 percent on the quarter and 2.7 percent on the year.
The recovery has gathered momentum more quickly than expected after the small nation became a byword for the excesses of the liquidity boom which preceded the 2008 meltdown.
More…




Jim Sinclair’s Commentary

Whatever is required will be provided with the Fed as part of the "QE to infinity" package.

As the Administration said on a major TV presentation yesterday morning, all Europe has to do is what was done in 2008 by the Fed. That was QE, if you recall.

Spain to Accept Rescue From Europe for Its Ailing Banks By RAPHAEL MINDER, NICHOLAS KULISH and PAUL GEITNER
MADRID — Responding to increasingly urgent calls from across Europe and the United States, Spain on Saturday requested assistance for its cash-starved banks. European finance ministers in turn promised up to $125 billion in aid, which they hope will quell rising financial turmoil ahead of elections in Greece that could roil world markets.
The decision made Spain the fourth and largest European country to agree to accept emergency assistance as part of the ongoing euro crisis. The aid offered was nearly three times the $46 billion in extra capital the International Monetary Fund said was the minimum that the wobbly Spanish banking sector needed to guard against a deepening of the country’s economic crisis, but it is unclear if Spain will accept the full amount.
The move came after the finance ministers from the 17 nations that use the euro convened an hours-long conference call Saturday, amid growing fears that instability in Spain could drag down an already-sputtering world economy. The escalating tension prompted President Barack Obama to push Friday, in unusually explicit terms, for quick European action.
European officials have said they wanted to go well beyond the immediate needs to shield Spain from any destabilizing effect from next weekend’s Greek parliamentary election. Spain fought to avoid the stigma of a bailout and tried to portray the Europeans’ offer as coming with few strings attached. Rather than calling for new austerity measures, the conditions of the agreement were focused instead on bank reforms, as Spain had requested.
More…



Jim Sinclair’s Commentary

Why Ron Paul is a non-entity to MSM.

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