Brussels preparing line of credit for Spain

German newspaper ‘Die Welt’ says today that Brussels has preparing a line of credit for the Spanish banks, and this can be used immediately should the need arise. story ...

The quicker it gets sorted the better so if this works then go for it!

great to see Spain playing hardball.

3rdforum wrote:great to see Spain playing hardball.

It seems they are too good for a bail-out...

Neither they nor Europe can afford it Cam. With a bit of luck it will bring the Germans to their senses and allow the ECB to operate like a proper central bank.

Spain is to ask for help in revitalizing cash-strapped banks...BBC News
and here.

Now the real pain starts.

Let's hope it doesn't hurt for too long.

So in reality it was something like this:

Spanish bond auctions were dismal and many institutional investors were demanding more interest for the risk involved in owning them.
The ECB were not allowed to intervene and purchase them directly to stabilise the market owing to EU fiscal policy and German opposition.

In order to bypass this obstacle, the ECB agrees to give the Spanish national banks 100 Billion who will then in turn hold some of this money in deposits at the ECB to satisfy the lenders but the majority will be used to purchase government bonds (IOU's), to protect against an even bigger collapse......Spanish government debt default.

There is one big flaw in this whole debacle.
The money still doesn't trickle down to the real economy.

It is a cycle between the ECB, Spanish Government and Spanish Banks.
This latest gimmick does not create jobs or produce real income. Nothing has changed except the banks and the Spanish government have been given a little extra time but the economic fundamentals are still intractable.

The banks will either sit on this money out of fear of collapse or use it to purchase bonds where they have some form of return, however bad things get,(Government).

Question: Of all the bailouts that have happened in the EU, how many have actually worked?

Answer: None

This whole monetary system requires the continual expansion of debt for it to work. Once debt is paid down and the monetary supply begins to contract as it has been doing for a couple of years, the whole system begins to implode.

Whatever happens, this system is on the edge of chaos and the only way out is a new monetary system using the guarantee and value of precious metals. Something tangible, unlike worthless paper zeros on a computer screen.

Final questions:

Has any fiat currency ever survived to present day?
With the average life cycle of monetary systems being 30-40 years,and the last manipulation happening back in 1971 when Nixon terminated the Bretton Woods which allowed Gold convertibility to the US Dollar as the reserve, I think we are now due a major systemic change because the present path is simply unsustainable.

And all the while the USA is praying for failure. If those in the Eurozone had been smart they would have all not only joined together but worked together to knock the US off it's pinnacle. They were worried about it, it could have been another China but for too much self self self.

Gypsy wrote:And all the while the USA is praying for failure. If those in the Eurozone had been smart they would have all not only joined together but worked together to knock the US off it's pinnacle. They were worried about it, it could have been another China but for too much self self self.

The difference being USA & China are single countries. Europe is a group of self serving independent countries. Each country is looking after itself, not Europe. Sort of "Feck you Jack! I'm fireproof!".

Gypsy wrote:And all the while the USA is praying for failure. If those in the Eurozone had been smart they would have all not only joined together but worked together to knock the US off it's pinnacle. They were worried about it, it could have been another China but for too much self self self.

You make a very valid point Gypsy.
It always seems odd that whenever there are rising problems with the economic outlook of any EU nation, the ratings agencies ride into town with synchronised downgrades which inevitably accelerates the problem even further.
Being US owned, I guess it says a lot about where interests lie.

JULY 1ST, FAST APPROACHING..................BANG.

NEMESI5 wrote:

Gypsy wrote:And all the while the USA is praying for failure. If those in the Eurozone had been smart they would have all not only joined together but worked together to knock the US off it's pinnacle. They were worried about it, it could have been another China but for too much self self self.

You make a very valid point Gypsy.
It always seems odd that whenever there are rising problems with the economic outlook of any EU nation, the ratings agencies ride into town with synchronised downgrades which inevitably accelerates the problem even further.
Being US owned, I guess it says a lot about where interests lie.

The French ( in particular) have been screaming for a European based rating agency for the last couple of years.

Victory for the Euro says Rajoy...BBC News

Hmmm, when the British government pumped billions into RBS, the EU forced conditions on the bank to flog it's branches outside Scotland. Which is why Santander now own all the English branches of RBS plus others...see here.
I don't see any conditions attached to the Spanish bank loans as yet...How come we're the only country that follows EU rules? I can't wait for a referendum on getting out of this lot!

Well that didn't last long did it.
I see the ratings agencies added some salt again.

http://www.bbc.co.uk/news/business-18391824

Gypsy wrote:And all the while the USA is praying for failure. If those in the Eurozone had been smart they would have all not only joined together but worked together to knock the US off it's pinnacle. They were worried about it, it could have been another China but for too much self self self.

Jeez, exactly my thoughts 10 years ago. I was hoping the Eurozone could put the Yanks into the place they should be. Strangely the Euro is now worth more than 1 dollar, (roughly where it started), but buggered if I can see why. Them yanks must be more useless than even I imagined!

Jimandsi wrote:
Now the real pain starts.

Let's hope it doesn't hurt for too long.

The poo is going to hit the fan now .....

An independent audit of Spain's banks has found that they will need up to 62bn euros (£50bn) in extra funding.

http://www.bbc.co.uk/news/business-18539620

Moody's are to reduce most Spanish bank rankings to 'Junk bond' levels tonight
Here ....

Always refreshing to hear someone speak the truth in politics.

Looks like it's bailout season.

http://www.bbc.co.uk/news/business-18586532

NEMESI5 wrote:Always refreshing to hear someone speak the truth in politics.

Hope Angela was listening!

NEMESI5 wrote:Looks like it's bailout season.

http://www.bbc.co.uk/news/business-18586532

As I have been saying for 3 years now, the ECB should effectively "buy" every indebted bank in Europe and finally call a halt to the banking crisis becoming a sovereign debt crisis. Merkel won't agree because she thinks that the countries that allowed their banks to issue such huge lendings ( the money supplied by German banks in the first place) need to be taught a lesson for being such naughty children. So ein blodsinn!

3rdforum wrote:
As I have been saying for 3 years now, the ECB should effectively "buy" every indebted bank in Europe and finally call a halt to the banking crisis becoming a sovereign debt crisis. Merkel won't agree because she thinks that the countries that allowed their banks to issue such huge lendings ( the money supplied by German banks in the first place) need to be taught a lesson for being such naughty children. So ein blodsinn!

Although I agree with some of what you say 3rd, I don't think the ECB has the money because it gets the collateral from the very sovereign nations it would have to try saving.
Once again, it's back to the "printing presses".

I think by the time this lot are done, monopoly money will hold more value.

Thats true for the moment. The ECB is an anti-inflationary insitution only, as it stands now. Let it act as a normal central bank and print the 700 billion necessary to end the banking crisis. They then take shares in those banks as collateral. If we're worried about the inflationary pressures that printing money brings well the UK hasn't suffered too much from it and the Bank of England has printed roughly the same amount in the last 2 years. Its all a feckin accounting exercise anyway. Just wish the Germans would accept the part their banks played in all of this.

3rdforum wrote:Thats true for the moment. The ECB is an anti-inflationary insitution only, as it stands now. Let it act as a normal central bank and print the 700 billion necessary to end the banking crisis. They then take shares in those banks as collateral. If we're worried about the inflationary pressures that printing money brings well the UK hasn't suffered too much from it and the Bank of England has printed roughly the same amount in the last 2 years. Its all a feckin accounting exercise anyway. Just wish the Germans would accept the part their banks played in all of this.

Fair enough, but the reason why inflation is not as high as it should be is because every country is setting about destroying their currency to stay competitive. It's a race to the bottom or as one economist put it....currency wars.

Inflation is inevitable, whether or not it's hyperinflation is another matter but only time will tell.