Spain Bankrupt

‘Bankrupt’ claim heightens Spanish debt fears




By Victor Mallet in Madrid
June 5 2011 17:49
Financial Times


The central Spanish region of Castilla-La Mancha is “totally bankrupt”, according to the incoming administration of the rightwing Popular party (PP), an accusation that will deepen concerns about Spain’s budget deficit.

The claim has prompted angry denials from the Socialist government.

Spain’s 17 autonomous regions and its more than 8,000 municipalities, with €150bn ($220bn) of accumulated debt between them, have become the latest worry for investors in Spain and its sovereign bonds.

Although the amount is less than a quarter of total public sector debt, regional debt has doubled since 2008. The 17 regions collectively exceeded official budget deficit limits in 2010, and appear likely to do so again this year despite repeated demands for compliance from the central government.

Catalonia, an economy the size of Portugal, says its deficit will be double the target.

Vicente Tirado, a senior PP politician in Castilla-La Mancha, said the region was “totally bankrupt”; owed suppliers such as pharmaceutical companies that provide drugs for hospitals a total of €2bn in unpaid bills; and would have trouble finding the money to pay the region’s 76,000 civil servants next month.

Marcial Marín, the PP’s economy co-ordinator in the region, accused the departing Socialist government of “the height of irresponsibility” and alleged that unpaid bills were being destroyed to hide the evidence.

“From the data that the PP has, Castilla-La Mancha is the Greece of Spanish regions,” he said, referring to the bail-out of the Greek economy by the European Union and the International Monetary Fund.

Mr Marín said the PP, which won the region from the Socialists in elections two weeks ago, would shut between half and three-quarters of Castilla-La Mancha’s 95 government owned companies because they duplicated the work of other organisations and were staffed mostly by Socialist party members.

The departing Socialist administration described the PP’s accusations as false and said PP leaders were scaremongering in order to prepare the way for cuts to public services.

[Either you cut public services or you fall off the cliff.  It has to happen or else ... so pretending will not fix anything.]


At the national level, Socialist leaders have accused the PP of undermining Spain’s credibility in financial markets for domestic political ends and have noted that several PP-run fiefdoms have also exceeded their deficit limits.

Official data show, however, that Socialist-run Castilla-La Mancha was the worst-performing region last year, recording a deficit of 6.5 per cent of gross domestic product, compared with the limit for that year of 2.4 per cent.

Spain was able to meet its overall public sector deficit target of 9.3 per cent of GDP in 2010 only because austerity at the centre compensated for regional overspending.

Two opinion polls published on Sunday, meanwhile, predicted that the PP, led by Mariano Rajoy, would win national elections with a 13.8 percentage point advantage over the Socialists, under their leader in waiting Alfredo Pérez Rubalcaba.

Mr Rubalcaba is the hitherto unchallenged party candidate to replace José Luis Rodríguez Zapatero, the prime minister. A national election must be held within a year but the PP wants an early poll.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
spain

EU: I've got that sinking feeling ...

While not to be morbid about death or drowning - imagine 13 or 14, maybe even 20 people, all on a cruise ship and as a consequence of their intransigence on a number of issues, they watch as their ship hits a floating island, ruptures the hull and sinks, leaving the 13-20 people floating and bobbing about on the sea.  Each person connected to the others by a lifeline, each buoyed by a life preserver thrown to them by people on the passing island as it floated away.  Then imagine watching as the first person loses consciousness, while the others fight to take his life preserver off the limp body, watching as the body, half conscious and half lost to a possibility of being saved, sinks beneath the waves, engulfed by the darkness and quickly swallowed up by the abyss below.  Watching as the first person pulled under, slowly begins pulling the next person under, while the remaining bobbing bodies argue about life preservers and how best to use them in the sea.

They cannot cut the line for any such severance ends for all time their precious European Union, so they remain tied to each other despite calls by several German financiers to do just that - sever ties to the sinking states, let them go under. 

Greece is one example.  A state that is in so many ways beyond redemption - it depends on the handouts from other EU states, but the other EU states are having their own share of economic woes only made worse by the billions loaned to Greece.  Greece has gone under.   Under the conditions of the bailout Greece received (or handout) certain requirements were enacted and signed off on - requirements to do and not do certain things.  Greece has just admitted it sort of didn't do what was required by the EU bailout. 

Greece has gone under and unlikely Germany will be willing to dump more billions into a black hole.  Following Greece is Ireland - on the verge of sinking beneath the waves, swallowed up by the darkness ...

But the fun doesn't end there - Portugal (in my example of the survivors floating about on the sea) is tied to Ireland and is signalling it is about ready to surrender to the darkness.   Spain is tied to Portugal.

I've got that sinking feeling ....

Oh oh that sinking feeling

that EU sinking feeling  ...



Contagion hits Portugal as Ireland dithers on Rescue


The EU authorities have begun to vent their fury against Ireland over its refusal to accept a financial rescue, fearing that the crisis will engulf Portugal and Spain unless confidence is restored immediately to eurozone bond markets

November 15, 2010
The Telegraph

By Ambrose Evans-Pritchard



Spain's central bank governor, Miguel Angel Ordonez, lashed out at Dublin on Monday, calling on the Irish government to halt the panic and take the "proper decision" of activating the EU-IMF bail-out mechanism.

"The situation in the markets has been very negative due to the lack of a final decision by Ireland. It is up to Ireland to take that decision, and I hope it does," he said.

The outburst reflected suspicion at the European Central Bank that Dublin is holding the eurozone to ransom, allowing the crisis to fester until it extracts a pledge from EU officials that it will not suffer a loss of economic sovereignty or be forced to give up its 12.5pc corporate tax rate under any deal.

Confused reports continued to swirl as Irish finance minister Brian Lenihan prepared to meet eurozone colleagues over dinner in Brussels on Tuesday night. Dublin has so far admitted to holding talks over "market conditions" with EU partners but insists that it is fully-funded until June and hopes to calm nerves with €6bn (£5.1bn )of budget cuts in early December.


Simon Derrick from the Bank of New York Mellon said the negotiations over Ireland's bail-out have been astonishing. "The creditors say please take the money, and the debtor says 'we don't want it'. It's very odd."

"Still, the EU is doing the right thing to try to create a fire-wall as quickly as possible. They learned from Greece that once bond yields reach this level they have 10 trading days left to avoid a self-feeding crisis. They cannot allow this to spread to a large country because at that point contagion would become uncontainable," he said.

Contagion has already pushed Portugal to the brink, pushing yields on 10-year bonds to the danger level above 6.5pc. Finance minister Fernado Teixeira dos Santos said the country was at the mercy of global forces and may be forced to call for help.

"The risk is high because we are not only facing a national or country problem. It is the problems of Greece, Portugal, and Ireland. Markets look at these economies because we are all in this together in the eurozone. Suppose we were not in the eurozone, the risk of contagion could be lower," he told the Financial Times.

Mr Teixeira made a thinly veiled attack on Germany's Angela Merkel and France's Nicolas Sarkozy, who precipitated the latest crisis by opening the door to sovereign defaults and bondholder "haircuts" for eurozone states in trouble.

"We were like the soccer player running to the goal and ready to kick for the goal, and then someone fouls us, but this time there was no penalty."

A simultaneous bail-out for both Ireland and Portugal might run to €200bn, depleting much of the EU rescue line. The European Financial Stability Facility (EFSF) can raise up to €440bn on the bond markets but only two thirds of this would be available. The IMF is expected to loan a further €3 for every €8 from the EU under the bail-out formula.

The great concern is that the crisis could spread to Spain, which has a far bigger economy that Greece, Portugal, and Ireland combined. Foreign banks have €850bn of exposure to Spanish debt.

David Schautz, credit strategist at Commerzbank, said the EU bail-out fund would come under "severe strain" if Spain needed a rescue. Yet this remains a serious risk since Spain must roll over or raise €175bn of debt next year.

Mr Schautz said funds would become wary if yields on 10-year Spanish bonds rise much above 5pc, compared to 4.5pc at the moment. "Investors are nervous and panic can break out fast," he said.

Jose Manuel Campa, Spain's economy secretary, said his country is "neither Greece, nor Ireland, and never will be". Spain's economy has stalled again but public debt is still just 66pc of GDP, and both budget and current account deficits are falling fast.

The same cannot be said of Greece, where the debt crisis is going from bad to worse despite its €110bn rescue in April. Eurostat has revised Greece's debt from 115pc to 127pc of GDP last year, while the deficit was even worse than thought at 15.4pc. The debt will jump to 144pc of GDP this year, risking a debt-compound trap.

Premier George Papandreou said the country may ask for an extension of its debt repayment schedule, a move interpreted by investors as the start of a slippery slope towards default.

He accused Germany of pushing weaker EMU states over the edge by pressing for bondholder haircuts, saying Mrs Merkel's proposals had "created a spiral of higher interest rates for the countries in a difficult position. This could create a self-fulfilling prophecy. It is like saying to someone, 'since you have a difficulty, I will put an even higher burden on your back.' This could force economies towards bankruptcy," he said.

For Ireland, recourse to the EU or IMF would be traumatic, an unanswerable verdict on a Fianna Fail government that was still basking in glory of the Celtic Tiger just three years ago.

Mr Lenihan appears determined to dress up any rescue as a bail-out for banks rather than for the Irish sovereign state. This may not be easy. The ECB's vice president, Vitor Constancio, said the EFSF "cannot lend directly to banks: the facility lends to governments."






















EU

Greek Bailouts

Euro market meltdown resumes despite Greek deal


Tue, May 4 2010
By Lefteris Papadimas and Kirsten Donovan
Reuters



ATHENS/LONDON (Reuters) - A renewed selling frenzy gripped euro zone financial markets on Tuesday as concern mounted that a record EU/IMF bailout for Greece would not stop a debt crisis spreading in the single currency area.

Spanish Prime Minister Jose Luis Rodriguez Zapatero dismissed as "complete madness" a market rumour that his country would soon ask for 280 billion euros in aid from the euro area.

The euro sank to a one-year low of beneath $1.31 and the risk premium on Greek, Portuguese and Spanish bonds soared amid jitters about a possible Greek debt restructuring and worries over the fiscal health of other southern European countries.

In Athens, striking public workers challenged Greece's 110 billion euro (97 billion pounds) bailout-for-austerity deal, starting a 48-hour national strike that shut down ministries, tax offices, schools, hospitals and public services.

"There is no faith in what the EU and the IMF have proposed for Greece," said Dean Popplewell, chief currency strategist at OANDA, a foreign exchange brokerage in Toronto.

"Capital markets are betting on a Greek default, as Greece's own populace is not going to accept the terms of this rescue, and contagion is a real concern hurting the euro," he said.

News that Greece has appointed debt restructuring specialists Lazard to provide "general financial advice" fuelled speculation that some form of orderly rescheduling or payment moratorium may be likely, despite vehement official denials.

Finance Minister George Papaconstantinou told Reuters after news of the Lazard hire: "Any form of debt restructuring is out of the question."

Lazard recently advised countries like Argentina, Ecuador and Ivory Coast on sovereign debt restructurings.

"NOT FULLY DOUSED"

The main Greek public sector union, ADEDY, rallied thousands of protesters outside parliament to reject planned wage and pension cuts and demand that the rich foot the bill. Police fired teargas at a small group of protesters who threw rocks and bottles.

"We want an end to the freefall of our living standards," said Spyros Papaspyros, the head of ADEDY, which represents about half a million workers in the Aegean nation of 11 million.

The cost of insuring Portuguese, Spanish and Irish debt against default jumped as contagion worries spread, Markit data showed. Investors sought a safe haven in U.S. Treasury bonds.

This is hilarious.

Greek bond yield spreads over benchmark German Bunds spiked above 600 basis points for the first time since Sunday's euro zone rescue deal, and Greek bank shares plunged by 10 percent on the worsening economic outlook.

Jitters about whether the emergency loan package would be enough to stem the euro zone's sovereign debt crisis also hammered Spanish stocks.

"This would suggest that contagion fears have not been fully doused, with the Greece rescue terms not allaying fears of states facing similar challenges," Nomura rate strategist Sean Maloney said.

Worries that the aid package may be insufficient to meet Greece's borrowing needs contributed to market concerns.

Economists at several European financial firms calculated those needs to the end of 2012 at 120 billion euros, based on latest IMF and Greek government figures. Germany's Bild daily cited a government estimate of 150 billion euros given to the parliamentary finance committee.

European Commission officials said they expected Athens to be able to return to markets for funding in the second half of 2011 once it had won back credibility by implementing tough reforms.

But that remains a big "if," given the grim economic outlook and the scale of public opposition.

SOCIAL COHESION

Participation in anti-austerity demonstrations has so far been limited to a few tens of thousands, smaller than riots that paralysed Athens in December 2008 following the police killing of a teenager.

But anger is growing, raising questions about whether Prime Minister George Papandreou's socialist government can successfully implement what it has promised.

"These government measures are destroying my life," said Panagiota Katsagani, a 25-year-old part-time school teacher who was marching in Athens on Tuesday. "I was planning my future, now I have to go back and live with my parents."
[Planning his future meant - I was counting on the government to pay me well, give me a returement package, pay me everything I need, plus allow me some spending money each month.]

"Whether Greece can actually adjust, whether their social cohesion will remain -- that's the key thing to watch," said sovereign ratings analyst Tom Byrne of Moody's.

European policymakers kept up a barrage of soothing comment designed to calm markets and reassure voters that the bailout will work.

"The tough decisions made over the past weekend have eased (the problems). We are going in a better direction," European Central Bank Governing Council member Erkki Liikanen told Finnish public broadcaster YLE.

Deutsche Bank CEO Josef Ackermann, who has been spearheading a drive in Germany to get the private sector to participate in the bailout, said fellow German firms Allianz and Munich Re had responded positively.

German Finance Minister Wolfgang Schaeuble said that Greece may not have to tap the full amount of aid pledged to it because of contributions from the financial sector.

Some newspaper editorials said the bailout was more a rescue for European banks holding Greek debt than one of ordinary Greeks.

 
 
 
 
 
 
 
The end of the euro as we know it, and I feel fine.

Spain in the Whirly Pool with Greece, which one gets sucked under first

Spain downgraded, Europe debt crisis widens






Juergen Baetz, Associated Press Writer
Wednesday April 28, 2010, 12:39 pm EDT



BERLIN (AP) -- Europe's debt crisis mushroomed Wednesday as Spain saw its credit rating lowered, just as Germany sought to reassure nervous investors that Greece would not be allowed to go under, saying Berlin's share of a key aid package could be approved in the next few days.

Stock and bond markets had begun to regain their composure after stinging downgrades of Greece and Portugal the day before, when Standard & Poors delivered more bad news by cutting Spain's rating to AA from AA+ amid concerns about the country's growth prospects following the collapse of a construction bubble.

"We now believe that the Spanish economy's shift away from credit-fuelled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed," Standard & Poor's credit analyst Marko Mrsnik said.

Spain is considered the key to whether Europe's debt crisis can be resolved -- its economy is much larger than that of Greece and Portugal and -- many in the markets postulate -- may be just too big to bail out if it gets into serious trouble.

Though its overall debt burden is fairly modest at around 53 percent of national income, the country is running a high budget deficit and has done less than others to get a handle on its public finances.

"Given its lack of competitiveness and the grim outlook for domestic demand the government will need to announce further fiscal measures if it is to make serious inroads into the deficit," said Ben May, European economist at Capital Economics. "Today's announcement may increase the pressure on it to do this sooner rather than later."

The announcement came after a day of market drops and turmoil following the downgrades of Greece -- to junk status -- and Portugal. Markets had been looking for a clear word from Germany that it would contribute its part of a Greek bailout package.

The clock is ticking -- Greece has to pay off some euro8.5 billion worth of debts by May 19, but cannot raise the money in the markets given current sky-high borrowing costs.

That means it needs its 15 partners in the eurozone and the International Monetary Fund to cough up the money promised earlier this month but Germany has been playing hardball about releasing its euro8.4 billion share of the euro45 billion package largely because of domestic opposition.

Germany's finance minister Wolfgang Schaeuble said Wednesday that Europe's biggest economy could have its contribution approved by parliament by the end of next week -- that's the first solid timeline from Berlin aimed at easing the uncertainty that Greece might not get the money in time.

Schaeuble said that if talks with Greece and the IMF are concluded by this weekend, Germany's support measures could be brought to lawmakers Monday and fast-tracked to be approved by May 7, next Friday.

"The stability of the euro is at stake. And we're determined to defend this stability as a whole," Schaeuble said following talks with IMF chief Dominique Strauss-Kahn and European Central Bank President Jean-Claude Trichet.

Chancellor Angela Merkel stressed that Germany was still insisting Greece commit to cutbacks. German assistance for Greece is unpopular with the German public and Merkel faces key regional elections May 9.

"Germany will make its contribution but Greece has to make its contribution," she said.

Strauss-Kahn would not confirm reports that he had told German lawmakers Greece may need between euro100 and euro120 billion over the next three years, saying he would not comment on any figures as long as negotiations in Athens are still under way.

Speaking during a cabinet meeting Wednesday, Greek Prime Minister George Papandreou said that every EU member must "prevent the fire that intensified through the international crisis from spreading to the entire European and global economy."

Papandreou insisted Greece was determined to bring its economy into order.

"We will show that we do not run away. In difficult times we can perform -- and we are performing -- miracles," he said, adding that "our government is determined to correct a course that has been followed for decades in a very short time."

In the meantime, stocks sagged and markets sold off Greek bonds with a vengeance. Investors appeared to anticipate Athens would eventually have to default or restructure its debt payments at some point even if the bailout gets it past May 19, when it has debt coming due.

A key indicator of risk -- the interest rate gap, or spread between Greek 10-year bonds and the benchmark German equivalent -- narrowed Wednesday afternoon to 5.9 percentage points after hitting an astonishing 9.63 percentage points, a massive jump from around 6.4 percentage points on Tuesday. The bigger the spread, the greater the fear Greece will default.

Authorities in Athens halted short-selling of stocks for two months, helping the exchange finally climb after a five-day losing streak. The ban will remain in force until June 28.

It closed up 0.63 percent at 1,707.35.

In Lisbon, Portugal's Prime Minister Jose Socrates and the leader of the main opposition party agreed on measures to help steer the country out of a financial crisis that threatens to engulf the euro zone's poorest member. The pair held emergency talks Wednesday as the Lisbon stock market recorded steep losses for a second straight day.

Socrates said, after the meeting, that the government and opposition would work together.

"We are ready to do whatever it takes to meet our budget targets," he said.

Still, the specter of the contagion spreading was prevalent.

"There is a very serious risk of contagion, it's something like post-Lehman period. Everybody is panicking and there is a lot of fear in the market," Nicholas Skourias, chief investment officer at Pegasus Securities in Athens told AP Television News. He was referring to the 2008 collapse of U.S. investment bank Lehman Brothers, which sped up the world financial crisis.

"I think that today we will have a lot of pressure as well because there is this fear of contagion."

 
 
 
 
 
 
 
 
Spain

Silly Rabbits, Terrorism isn't for children, it must be dealt with by mature adults.

In March 2004, al-qaeda attacked Spain. Their reasoning / excuse for the murdering of innocents: Spain had troops in Afghanistan and Iraq.

The result: Spain elected a PM who immediately pulled out of Iraq and cowered against the wall publicly telling the world it was done with Iraq and please don't hurt Spaniards.

You see, when you deal with the blood-thirsty, they take your cowering as a sign of weakness, not equality. They cannot permit weakness nor cowardice for that above all else is regarded as worthy of further attacks.

Fast forward to 2008 -

"The Al Qaeda-inspired cell planned to attack the Barcelona metro and other targets in Spain, Germany, France, Portugal and the United Kingdom, said the bomber turned police informant."

Good lord, attack Spain again! Why? Spain pulled out, it left Iraq and never hurt another person. The same with Portugal, France, and Germany. Why one earth - they all left Iraq or never went in the first place. Most have mop up jobs in Afghanistan and or stand around looking like they accomplish various tasks when not otherwise holding buildings up. Europe pulled up its respective skirt, over its head, and ran all the way home. Surprise - al-qaeda wants to kill them again. As a human being the idea of Spain (or anywhere in Europe) being attacked again is repulsive and must be stopped. I have to admit, a small part of me doesn't care.

You do not usually get the opportunity to run away from these people - usually the idiots lie dead. If you do manage, as Spain did, get to run away with the tail between their legs, you do not have the privilege even in your most whacked out delusional dreams to believe that they will leave you alone, like they promised. What level of retardation has set in for you to possibly believe such foolishness and nonsense. Who in their right mind would believe al-qaeda to keep their word. Why would al-qaeda keep their word. They are not like you and I, they do not think like you and I, they do not want to live like you and I, they have utterly no interest in compromise or accommodation, nor should we even ponder the consideration of such - they do have an interest in you being quite dead and or converted to their perverted belief system.

Al-Qaeda believes that by striking at Europe, it will further divide the US from its allies, thereby making it easier to defeat the US later. What al-qaeda fails to understand for its myopic worldview does not permit a real understanding is, further attacks will not weaken Europe, they will embolden Europe. Europe will begin a clampdown on Muslims and Islamic activities that make anything up until now seem downright multicultural. From deportations to secret imprisonment, to police raids every day in every country repeatedly daily, to harassment and wiretapping ... this will be standard protocol. Furthermore, it will push the Europeans back to full support for the US.

Such a move/ attack would be very unwise and quite likely, at this time, causing a deep rift within al qaeda over the benefit of such action.

A part of me says - leave Europe to reap what it has sown. We have enough to do, we are finished with Europe. Let them face al-qaeda alone. I quickly realize that it is our burden to deal with idiots who would rather slap us than pat us on the back, but who cannot possibly fend for themselves, and we will see this play out in the next months.

The King and Chavez

WHY DON'T YOU SHUT UP.

I like it.

The AP: Spanish King Tells Chavez to "Shut Up"