John Ward September 22, 2012 BREAKING: Spain on the verge of China syndrome meltdown

EUROBLOWN: Spain’s banks are basket cajas

The Slog has been saying for some time now that Spanish banking instability is as important as its poor sovereign access to the bond markets. I’ve also posted on several occasions to record massive deposit withdrawals in the sector.

Daily Telegraph, 22nd September 2012:

‘A bank-by-bank test of financial stability due next Friday is expected to conclude that Spain’s lenders are dangerously over-burdened with toxic debts and need to be recapitalised, restructured or shut down. The stress test is expected to show a dramatic deterioration since the previous tests were carried out at the beginning of the summer which suggested a €60bn cash injection would be the worst-case scenario.’

The Slog, 3rd September 2012:

‘More support for The Slog’s insistence that a run on the banks has started in Spain, despite the Berlin/Frankfurt/Rome/Reality impasse refusing to pass.’

The Slog, August 29th 2012:

‘Mario Draghi sits anxiously in Frankfurt watching for any signs of crumbling bank foundations in Spain. Reggie Middleton over at Zero Hedge (superb analysis this) agrees with me that the biggest euro-danger at the moment is a bank-run, not a sovereign default…’

When Banking Insolvency Met Madrid Bailout is soon to be a Hollywood movie starring Jim Carrey as Mario Draghi, Meryl Streep as Angela Merkel, John Travolta as the euro, and a special guest cameo from Steven Spielberg as Mariano Rajoy.

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1

John Ward – Spanish Banks : Slog Vindicated As Santander Releases Disastrous Results – 25 October 2012 | Lucas 2012 Infos on October 25, 2012 at 11:44 am

[…] Five weeks ago The Slog opined that ‘Spain’s banking instability is as important as its poor sovereign access to the bond markets’. Over the last ten days, rumours have been circulating about the fortunes (or more accurately, misfortunes) of the giant Santander Bank. I have to date been unable to stand any of them up, but this morning around 6 am, Banco Santander SA’s third-quarter results displayed a 94% profits tumblefor all to see. […]

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2

SPANISH BANKS: Slog vindicated as Santander releases disastrous results. | A diary of deception and distortion on October 25, 2012 at 11:05 am

[…] Five weeks ago The Slog opined that ‘Spain’s banking instability is as important as its poor sovereign access to the bond markets’. Over the last ten days, rumours have been circulating about the fortunes (or more accurately, misfortunes) of the giant Santander Bank. I have to date been unable to stand any of them up, but this morning around 6 am, Banco Santander SA’s third-quarter results displayed a 94% profits tumblefor all to see. […]

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3

Ryck Stout on September 23, 2012 at 3:37 pm

This happens every time. Governments [1] hate markets and [2] will sacrifice all citizen’s wealth to stay in power. Only Sulla and MacArthur willingly stepped down.

Government’s hatred of markets forces distortions in nearly all markets they touch. To think that a fiscal system can exist on interest rates near zero is a farce and such a distortion will certainly force a bond bubble or worse.

Rest assured, and you are betting all you have by the way, that governments will grunt , grab and spend every sou you possess to support their cozy, highly-paid jobs, perks and pensions and they will remain the last persons standing when all wealth has evaporated. QE is their last gasp.

Stagflation and worse–here we come. Social unrest and a tax revolt are probably on the horizon.

Here is why governments cannot handle the gold market:

My View of the Problems of the Gold Standard

http://ryckki.blogspot.com/2012/08/my-view-of-problems-of-gold-standard.html

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4

Carys on September 23, 2012 at 11:58 am

Many people, me included, think the real bank problem in Spain is around 300 bn Euros. If you look at the number of unsold properties and consider the state of the mortgages of those who have them but are not working and will not be working, the number has to be much more than 80bn.

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5

Carys on September 23, 2012 at 11:55 am

The Spanish politicos, along with ours, are desperately hoping that future economic growth will cover the losses that banks are hiding. We know it will not, the numbers are just too big. They know it will not, barring a miracle of enormous proportions or (in the case of Spain) a sudden burst of unprecedented and permanent generosity by the Germans. The few politicians who understand finance are hoping someone else will be elected when the time comes. And that the time will be soon.

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6

savepenrhos.co.uk on September 23, 2012 at 10:39 am

Are these the same Spanish banks that passed the EU stress tests. Twice.

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7

Altergoman on September 23, 2012 at 9:18 am

Some months back I read that ‘an expert on matters Spanish’ said that Spanish property values were safer because the Spanish always prioritised their mortgage payments well is that not unique.

So probably all Spanish ‘case of horrors (caja de ahorras)’ and banks have significantly increased the values of their mortgage portfolios based on their subjective ‘mark to whatever I like valuations’.

All government statistics are estimates and Spanish ones with their dynamic provisioning (whatever that has to do with reality) and property valuations based on ‘the Spanish pay their mortgages (even when 25% are unemployed?) are not even worth discussing other than to say they are rapidly moving from a liquidity to a solvency crisis.

It baffles me why the banks/ financial orgs. have failed to present accurate asset and liability statements since the GFC started and yet the politicos have been willing to dole out Trillions into the black holes.

Would any sane person loan money to an organisation who failed to clearly present how much net collateral they had to enable them to repay the loan?

Invariably Getty’s wise statement is fulfilled, your first loss is always the smallest ie dont throw good money after bad.

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8

John Ward – Euroblown : Spain’s Banks Are Basket Cajas – 23 September 2012 | Lucas 2012 Infos on September 23, 2012 at 8:38 am

[…] link to original article Share this:Share on Tumblr Pin ItDiggPrintEmailLike this:LikeBe the first to like this. This […]

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9

GrahamD on September 23, 2012 at 6:35 am

John Travolta would indeed be a very well cast ‘Euro’….after all, he danced a good dance for a few years before turning to evil ‘world destroying’ gangster roles in more recent times….how very apt.

Do you think that they will ask ‘The Great White Shark’ back to play ‘The Markets’……eating everyone in the cast for breakfast ? ;)

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10

Bone Idle on September 23, 2012 at 12:20 am

[quote]The stress test is expected to show a dramatic deterioration since the previous tests were carried out at the beginning of the summer which suggested a €60bn cash injection would be the worst-case scenario. [/quote]

So when is the next stress test? Next Month? When Spanish banks will need a further hundred Billion?

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11

puncturesafemurcia on September 22, 2012 at 11:30 pm

Bollocks John , 80B€ max.

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12

Salford Lad on September 22, 2012 at 10:57 pm

It will not just be a run on the Spanish banks, it will be a runaway from the Euro and the US$.
Gold and silver have broken out, this indicates a loss of belief in the fiat Euro and dollar. Only peoples confidence in a paper currency gives it credence. Sadly this has been deeply eroded by Draghi and Bernankes printing money policy.
Mervyn King is also included in this rogues gallery.
One may ask ,what is the difference between QE and a Cockney shyster,under a railway arch, printing counterfeit money. Answer, the Cockneys’ money goes directly into the economy and promotes business. QE is churned, by the bankers, many times to make more worthless fiat money .in the hedge and derivative markets.

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