The rumours are strong that Spain will be the fourth eurozone country to ask for a bailout, probably as soon as this weekend.
Although it is also being downplayed a lot, left and right, so it might still be rumours (that's why I've put it in bold).

On saturday there will be a conference call between the 17 eurozone members to discuss the situation in the eurozone.

If there will be a bailout, then it is unknown what the amount will be, although speculations are that it'll be somewhere between 60 and 120 billion euros.

I've read up here an there and this is in short the situation (please correct me if I'm wrong!)

It isn't bad lending behaviour of the state that got Spain this far (contrary to say, Greece), but the the effects of the collapse of the immense housing bubble.
When Spain joined the euro both the state and the people were faced with the lower interest rates. And although the state was very frugal, it's citizens less so and begun a borrowing-spree, which resulted in a massive housing bubble. For instance, between 2004 and 2008 house prices rose 44%.

After the economic meltdown in 2008 the housing market slumped (prices have fallen 25% since then) and with the housing market the construction sector and other sectors in the economy.

The bursting bubble's effects were two-fold. On one hand the banks were faced with massive ammounts of unpayable mortgages and unpayable loans to the construction sector, which led to partial nationalization and extra financial injections.
On the other hand the collapse of the real economy, with the highest unemployment in Europe (I believe under 27 the unemplyment is around 50%?) andsoforth, increased the burden on the state budget immensly, as on one hand the costs rose, because of unemployment benefits, etc. while on the other hand the tax income plummeted.

Now it has become unbearable for the state. This week Spain was able to borrow money on the market, but at very high costs.

What do you think, will Spain be bailed out? Do you think it's a good thing? And what doen tour think will happen after?
I'm especially curious about the point of view of Spanish civfanatics members

Spain and Europe and everyone diligent who has a little sense of economics says that Spain is not to ask for bailout.
Gangleri2001 here would want it though, because, it benefits Catalonia´s hypothetical independence

Spain and Europe and everyone diligent who has a little sense of economics says that Spain is not to ask for bailout.
Gangleri2001 here would want it though, because, it benefits Catalonia´s hypothetical independenceThat's also something I'm curious about.
As far as I know (but I don't know a lot about the Spanish federal system) Bankia is a sort of 'mega merge' of all the bad banks of the Spanish 'substates' (how are they called? Catalonia and such?).
Do some 'substates' feel they need to take the burden of other 'substates'?

Or am I looking at it in the wrong way? (I've got a view of Spain like it's Germany or the US, a federation of 'substates').

Or am I looking at it in the wrong way? (I've got a view of Spain like it's Germany or the US, a federation of 'substates').

On wikipedia Spain is listed as an "Alleged de facto federation". It's a federation but the central government won't admit it, it seems like.

Spain and Europe and everyone diligent who has a little sense of economics says that Spain is not to ask for bailout.
Well, no. The Spaniards don't want a bailout but they sure want someone else to pay for the recapitalisation of their banks.

Spain is like a Germany or, even better, UK, trying to be France. And they are "Autonomous Communities".

And there are some which are like Scotland or Wales or Northern Ireland: they have a culture and a history of their own. And, like Ireland on its time or Scotland now, some of these Autonomous Communities refuse to keep being a part of this centralised federation that is Spain.

As we speak there's a press conference of the Spanish economy minister where he indeed talks about a needed bailout.

I know. Precisely I just logged in again to say that very same thing. I have a local newspaper online and it says that it has been agreed that up to 100 billion euros will be given without policy restrictions. Maybe because we already have them.

http://img267.imageshack.us/img267/8325/failpe.png

:rotfl:

And I haven't said a word it would benefit the independence process. Neither me nor the independentist sphere that's for sure. We all remain skeptical about it. If it benefits, may it be welcome. If it doesn't, that's ok since it's already done and we cannot do anything to change it. But hey, thanks for showing everyone that you really know what you're talking about.

Not acceptable in the Chamber, and the picture would be over the top anywhere.

Spanish minister: details about the loan and the banks on June 17th.

Greek election on June 17th.

The Euro has one more week?

So the Spanish banks get 100 billion euros and the resuscitation of the Eurozone continues. When will it flatline permaneantly?

No idea (and preferably never), but you can be sure you will notice when it happens.

Is this a good thing or bad???

This basically means that Spain is more indebted than before. We'll see how this affects the 10 year spread.

100 billion euros. Good God.

100 billion euros! And then what? Will it actually help spain, or will it, like greece, keep falling and needing even more help months from now?

100 billion euros! And then what? Will it actually help spain, or will it, like greece, keep falling and needing even more help months from now?

If it can help them to get cheaper loans, it might work.

100 billion euros. Good God.

Loose change... ok, not quite that, but not nearly enough to back the spanish banks. It's just another attempt to postpone having to find a solution for a little longer.

So the Spanish banks get 100 billion euros and the resuscitation of the Eurozone continues. When will it flatline permaneantly?

Zombification, you mean? Any solution must involve a wealth transfer from creditors to debtors, there is no other way to re-balance things. Excess debt just means that wealth got too concentrated. It's obvious, because someone's debt is someone elses' asset. Creating more money for the express and single purpose of continuing to pay the interest on the debt just means that the process of concentration is allowed to continue. Meanwhile the real economy keeps being dismantled for lack of demand, because the mass of the people do not have the disposable income necessary to create that demand.

To, the debt must be destroyed. Whether default, devaluation (hidden default), inflation (slow default), confiscation, or the simple high taxation of the wealthy. Governments just have to pick one. The difficulty is in that the wealthy do not any any of those to happen, and the mass of the people, who are mostly debtors, are too scared and too ignorant to see the obvious. The wealthy do see the obvious, but they'll get their governments to postpone it for as long as possible. Why spoil a good thing for themselves, even if spoiling it is inevitable in the long run? :rolleyes: Carry on like that and it won't end well for them either.

Is this a good thing or bad???
Nothing should be worse than it already was. Now we pretty much know the exposure of the Spanish banks, which is in the ballpark of what was expected anyway. No on was really buying the Spanish government's line that this move would be unnecessary. It's not good Spain couldn't do without, but well, no one was really buying it. What's going on is a bunch of "making good" to the firewall against the Greek mess. So in principle this is "good". It's just that we have no way of knowing if it's sufficient yet, and since the situation isn't static but a process, it has a nasty tendency of throwing up new hurdles to overcome. (Just ask the Portugese about doing what they've been told, only to get slammed over doing what they were told they had to do.)

Is this a good thing or bad???
It is good to be a banker in Spain in any case. You can loss/steal people money and you will receive 100 billions more as appreciation award. For me, i will do a run on the bank ASAP and keep my money under my bed, where it should be.

BTW, UK banks debt is much much muuuch larger. However it doesnt seem to be a problem yet. I definitely dont understannd this (financial) world.

Gangleri I said that in a good way, no offense ;)

I wasn't offended. I just didn't want you to speak on my behalf, specially when I'm more than skeptical about what's happening and you claim that I'm happy about it. But I cannot feel offended since your fail has been so epic that it makes me laugh everytime I remember it. Man, you've got to acknowledge that it desereves a place in the annals.

Now we pretty much know the exposure of the Spanish banks, which is in the ballpark of what was expected anyway.

:rotfl:

At least we get some comedy from all this dragging of feet!

Loose change... ok, not quite that, but not nearly enough to back the spanish banks. It's just another attempt to postpone having to find a solution for a little longer.

Yeah, it's on the conservative side that's for sure. It sends a message... but I doubt it'll be strong enough. At a guess, we'll be back in the same boat in the next couple of months.

It is good to be a banker in Spain in any case. You can loss/steal people money and you will receive 100 billions more as appreciation award.

After reading this I have realised that it is not possible to say anything wich is more true than this in this thread.

In any case, keep calm, Spain and Rafa Nadal are playing right now.

Any solution must involve a wealth transfer from creditors to debtors, there is no other way to re-balance things. Excess debt just means that wealth got too concentrated. It's obvious, because someone's debt is someone elses' asset. Creating more money for the express and single purpose of continuing to pay the interest on the debt just means that the process of concentration is allowed to continue. Meanwhile the real economy keeps being dismantled for lack of demand, because the mass of the people do not have the disposable income necessary to create that demand.

To, the debt must be destroyed. Whether default, devaluation (hidden default), inflation (slow default), confiscation, or the simple high taxation of the wealthy. Governments just have to pick one. The difficulty is in that the wealthy do not any any of those to happen, and the mass of the people, who are mostly debtors, are too scared and too ignorant to see the obvious.

Excellent post!

Speaking in general rather than about Spain in particular. I rather think that the mass of the people take the view that they can not individually do anything about it, so they must carry on as best as they can. Some may be in denial, but many realise that the current financial systems cannot be restored and quietly await chaos.

The wealthy do see the obvious, but they'll get their governments to postpone it for as long as possible. Why spoil a good thing for themselves, even if spoiling it is inevitable in the long run? :rolleyes: Carry on like that and it won't end well for them either.

The greedy wealthy let greed rule them. They will likely lose all their wealth.

The very smart wealthy may be preparing and provisioning their rural redoubts on survivalist principles or becoming philanthopists to escape the mob's noose or whatever, and become or be tolerated by the post collapse emergency government.

Maybe in such a situation it would do more good than harm if we just reseted our entire debt count to zero like in ancient Egypt? I bet at first this would just confuse everyone and the investors would be terribly scared and so forth. But on the long run, a nice fresh start? Greece could indept itself like in good times :mischief:
Charming for its familiarity, in ancient Egypt farmers would repeatedly get so indebted to the creditors that unrest would ensue. The solution: All debts were periodically killed.

More seriously: To spread "new" wealth in form of money by borrowing to private institutions so they can borrow to everyone else seems so messed up on an intuitional level that my knee-jerk-reaction can only be: Make the whole dame debt business public! At least when public money is involved in the form of loans given by central banks.
And while at it, kill all this superfluous financial business which serves no higher purpose for the common good but moves giant assets.

Maybe it's an idea for a parallel currency. Like professor Kerber's proposed (http://newdirectionfoundation.org/content/new-plan-b-eurozone-guldenmark-stability-anchor) 'Guldenmark'.
The idea of introducing the Guldenmark as the necessary "stability anchor" in the Eurozone forms part of Professor Kerber’s latest study: "More competition needed: A reformist concept for a new European monetary union". Countries with a current account surplus, i.e. Germany, the Netherlands, Finland, Austria and Luxembourg would introduce a second currency which would function as legal tender alongside the Euro.

Its introduction would have according to Kerber many benefits. The decisive factor is, however, that the Guldenmark would soon to be revalued in relation to the Euro so that repayment of the accumulated Euro debt would be made easier.I'm no economist at all, so I can't really say a lot about the merits of this.
I can also imagine this creating more problems than that it solves.

That actually sounds quit plausible. It is the natural compromise of clinging to the idea of common currencies but accepting that currencies also must in some way reflect national trade surpluses or deficits so you have a natural dynamic which counter-balances such.
But - to reference the thread about generational government - I am afraid our political class lacks the innovative will for such a thing.

The name needs work. We should call it Franc and translate in all languages, just to troll the Spanish ;)

I prefer Guldenmark trolling the French (and I didn't get it)

Franc is Franco in Spanish. Franc was among the original suggestions for the name of the Euro, but was shot down for this reason.

The banks are in a giant circle-jerk of bailouts.

And then, they are going to try to tell the people of the world they have to pay the debts in the end. This bailout is fr Spanish banks, but the agreement says Spanish Taxpayers are still liable for it.

In the end, the debts will be payed in blood.

Next up: Italy.

And that would be hilariously tragic in revealing the absolute helplessness of our political elite.
"Er..well... let's just throw money at the problem and hope for the best. And let's do so again and again and again."
I happened to watch the German late evening talk show "Markus Lanz" where among others an anchorman of the German news show "tagesthemen" attended. He shared an interesting interview experience: At one time some politician was interviewed on the news show on the bail-out for Greece. When the official part of the interview finished, the anchorman asked the politician in private, if this bail-out was anything else than buying time.
The politician - for once truthfully - answered: "It is. What else could we do right now?"

When the official part of the interview finished, the anchorman asked the politician in private, if this bail-out was anything else than buying time.
The politician - for once truthfully - answered: "It is. What else could we do right now?"Indeed that's the only thing it is, we all know that.
As long as Europe isn't a more proper union it'll hang in limbo.

Indeed that's the only thing it is, we all know that.
As long as Europe isn't a more proper union it'll hang in limbo.
The latest at least seems not to have brought much more time as Eurozone government bond yields rise across the board.

OMG, Spain is governed by people living in Happy-Land, in a gumdrop house on Lollipop Lane!!

"With the reforms made by the Government, Spain has regained its credibility" (http://www.lacerca.com/noticias/espana/pp_reformas_gobierno_espana-122807-1.html)

Yep, credibility, yep.

I hear from unreliable sources that Spain's government had to pay a 7 percent interest rate lately to borrow more money. With a sinking economy to try to service that debt with :shake:

I hear from unreliable sources that Spain's government had to pay a 7 percent interest rate lately to borrow more money. With a sinking economy to try to service that debt with :shake:


This is not an unreliable source, last weeks risk premium offerec a 6.7% interest rate. If Spain continues this way, won't be able to pay this debt without asking for more money

Is Bloomberg reliable enough? http://www.bloomberg.com/quote/GSPG10YR:IND