vineri, 2 septembrie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Is it Acceptable to Present a $196 Billion Sac-O'-Sheet to Sophisticated Investors as Diamonds-in-the-Rough?

Posted: 02 Sep 2011 10:42 PM PDT

The FHA has filed a $196 Billion lawsuit against 17 banks accusing said banks of "misleading Fannie Mae and Freddie Mac about the soundness of the mortgages underlying the securities".

Inquiring minds note BofA, JPMorgan Among 17 Banks Sued by U.S. for $196 Billion.
Bank of America Corp. and JPMorgan Chase & Co. (JPM) were among 17 banks sued by the U.S. to recoup $196 billion spent on mortgage-backed securities bought by Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency, on behalf of Fannie Mae and Freddie Mac, filed 17 lawsuits yesterday in New York state and federal courts and in federal court in Connecticut. The FHFA accuses the banks of misleading Fannie Mae and Freddie Mac about the soundness of the mortgages underlying the securities.

"The loans had different and more risky characteristics than the descriptions contained in the marketing and sales materials provided to the enterprises for those securities," the FHFA said in a statement.

"The claims brought by the FHFA are unfounded," said Frank Kelly, a spokesman for Frankfurt-based Deutsche Bank. "Fannie Mae and Freddie Mac are the epitome of a sophisticated investor."
Lawsuit Claims

Please consider FHFA Sues 17 Firms to Recover Losses to Fannie Mae and Freddie Mac
The Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac (the Enterprises), today filed lawsuits against 17 financial institutions, certain of their officers and various unaffiliated lead underwriters. The suits allege violations of federal securities laws and common law in the sale of residential private-label mortgage-backed securities (PLS) to the Enterprises.

Complaints have been filed against the following lead defendants, in alphabetical order:

1. Ally Financial Inc. f/k/a GMAC, LLC - $6 billion
2. Bank of America Corporation - $6 billion
3. Barclays Bank PLC - $4.9 billion
4. Citigroup, Inc. - $3.5 billion
5. Countrywide Financial Corporation -$26.6 billion
6. Credit Suisse Holdings (USA), Inc. - $14.1 billion
7. Deutsche Bank AG - $14.2 billion
8. First Horizon National Corporation - $883 million
9. General Electric Company - $549 million
10. Goldman Sachs & Co. - $11.1 billion
11. HSBC North America Holdings, Inc. - $6.2 billion
12. JPMorgan Chase & Co. - $33 billion
13. Merrill Lynch & Co. / First Franklin Financial Corp. - $24.8 billion
14. Morgan Stanley - $10.6 billion
15. Nomura Holding America Inc. - $2 billion
16. The Royal Bank of Scotland Group PLC - $30.4 billion
17. Société Générale - $1.3 billion

These complaints were filed in federal or state court in New York or the federal court in Connecticut. The complaints seek damages and civil penalties under the Securities Act of 1933, similar in content to the complaint FHFA filed against UBS Americas, Inc. on July 27, 2011. In addition, each complaint seeks compensatory damages for negligent misrepresentation. Certain complaints also allege state securities law violations or common law fraud.
$196 Billion Sac-O'-Sheet

The 17 banks are from the FHA filing, the amounts above are from the Bloomberg article.

Please note the Deutsche Bank defense: "Fannie Mae and Freddie Mac are the epitome of a sophisticated investor."

The DB defense has me asking a pair of questions

  1. "Should Gannie and Freddie have known better?"

  2. "Is it Acceptable to Present a $196 Billion Sac-O'-Sheet to Sophisticated Investors as Diamonds-in-the-Rough?"

The answer to question number 1 is "of course".

I am not a lawyer, but I believe the heart of the matter is question number 2. More explicitly, did the banks violate disclosure laws in submitting loans to Fannie and Freddie.

I believe the banks not only did so, but purposely and blatantly did so.

Bank of America Extremely Exposed

Note the Bank of America exposures, and the accompanying Bank of America stock weakness.

2. Bank of America Corporation - $6 billion
5. Countrywide Financial Corporation -$26.6 billion
13. Merrill Lynch & Co. / First Franklin Financial Corp. - $24.8 billion

Where is Wells Fargo?

By the way, where is Wells Fargo?

Is Wells Fargo lily white and if so was is it because they were stupid enough to hold all the mortgage paper themselves?

Final Thoughts

The FHA took its sweet time filing this lawsuit. I believe purposely so. They have had all the time in the world to gather evidence and make a case. This is a serious case, and Fannie and Freddie have subpoena power. That subpoena power gives the FHFA a big advantage over private investors notes the Wall Street Journal in Big Banks Face Suits on Mortgage Bond Losses

Bank of America is scared to death and rightfully so.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


2-Year, 10-Year Treasury Yields at Record Lows; Greek 1-Year Yield Tops 72%; Gold Soars $56 to $1882; Bill Gross Anticipates "Twist Again"

Posted: 02 Sep 2011 03:35 PM PDT

Curve Watchers Anonymous is watching the US Yield Curve once again. Treasuries soared today (yields plunged) on the "unexpected" news the economy created no jobs.

Yield Curve as of 2011-09-02



click on chart for sharper image

$TYX : 30-Yr Treasuries
$TNX : 10-Yr Treasuries
$FVX : 05-Yr Treasuries
$IRX : 03-Mo Treasuries

10-yr treasuries touched a record low on Friday. The entire yield curve from 3 months to 10 year is at or near record lows. The 30-year long bond is lowest since January 2009.

Greek One-Year Yield Soars to 72%



One year yield in Greece is pricing in a certain default with a big haircut to boot.

Bill Gross Anticipates "Twist Again"

Having missed nearly the entire treasury rally (see Recession Looms in Brazil and Canada; Asia Exports Sink; Global Economy Deteriorates Rapidly led by BRICs; Asia Stagflation; PIMCO Admits Mistake), Bill Gross now likes "longer harder duration".

Please consider Gross Extends Maturities on Bet Fed to Embrace Operation Twist
Pacific Investment Management Co.'s Bill Gross said he favors longer-maturity debt with the Federal Reserve likely to seek to narrow the difference between short- and long-term borrowing rates as employment growth stagnates.

"We've advocated hard duration; that basically means something beyond five years," Gross, manager of the world's biggest bond fund, said in a radio interview on "Bloomberg Surveillance" with Tom Keene and Ken Prewitt. "The front end of the curve, in the U.S. at least, is inert. You have to move out into longer duration, harder duration."

A government report today showing job growth was flat in August bolstered the view that Fed Chairman Ben S. Bernanke will be inclined to take additional steps beyond the two previous rounds of debt buying, known as quantitative easing, or QE. The central bank will likely extend the maturities of its portfolio by buying five- to 10-year Treasuries while shedding shorter- maturity debt, Gross said, in what has been referred to as "Operation Twist" after a similar program in the 1960s.

"I don't know what form it will take and whether you call it a QE, there's certainly opposition from the hawks in terms of the Fed," Gross said. "We would stick in the 5- to 10-year area and I think that will be the focus for the Fed in terms of policy change come September."

Stimulus Risk

More stimulus from the Fed may not be beneficial because it risks a political backlash that could threaten to undermine the central bank and weaken the economy by driving up commodity prices, Mohamed A. El-Erian, Pimco's chief executive officer and co-chief investment officer with Gross, said today on Bloomberg Television's "In The Loop" with Betty Liu.

"The balance between the benefits and cost and risks has changed in an adverse manner," El-Erian said. "At the end of the day we will not be solving anything. We'll just be undermining the economy and a critical institution for the well being for America."
Twist Again Useless at Best

I frequently disagree with El-Erian but not this time.

The 10-Year yield is under 2%. What practical reason can their possibly be and what practical benefit could possibly result from the Fed attempting to drive yields lower?

The answer is none, but monetarist clowns still call for the Fed to do just that.

Gold Approaches Record High



It's time to face the facts Fed monetary stimulus is now useless at best. It's also time to face the facts the rally in gold has little if anything to do with inflation.

Gold is clearly reacting to further stimulus efforts by the Fed, Eurozone bank stress, or US bank stress. It is always difficult to say "why" something is happening but in this case, bank stress in both the Eurozone and the US is the likely reason for the renewed push higher.

Gold may become even more volatile as the ECB and IMF attempt more futile efforts to "save the Euro". These foolish efforts to "save Greece" (in reality save stupid European banks that made foolish loans to Greece) has tripled or quadrupled the pain those banks are going to feel.

What may initially have been a 40 billion Euro boondoggle now likely approaches a 150 billion Euro boondoggle and the EU wants to throw yet another 100 billion Euros at it. In the meantime, Italy looks prepared to blow again.

How much more of this will citizens of Germany, Finland, and Austria put up with? How much austerity can citizens of Greece, Spain, Portugal, and Italy take?

This can easily come to a crisis head as soon as next month, or even next week.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Global Recession, Right Here, Right Now: Japan's Capital Spending Plummets; Eurozone PMI, UK PMI, US ISM ex-Inventory, China Exports in Contraction

Posted: 02 Sep 2011 10:41 AM PDT

It's time to stop debating whether or not the US or Europe is headed into recession. The facts show the entire global economy is in recession.

Global Recession Supporting Data-Points

  • Euro zone's manufacturing purchasing managers' index fell to a two-year low of 49.0 in August, down from a preliminary reading of 49.7. (Business Insider)
  • PMI's contractions in Ireland, France, Italy, Spain and Greece. (Business Insider)
  • Germany's manufacturing PMI slowed to its lowest level since September 2009, slumping to 50.9, well below an initial estimate of 52.0. (Business Insider)
  • US Manufacturing ISM ex-inventory Growth in contraction (Mish)
  • Japan's PMI fell at three-month low (Financial Times)
  • PMI Readings in Switzerland, Sweden Drop (Financial Times)
  • British manufacturing PMI falls 49, a 26-month low, in contraction (MarketWatch)
  • Germany private consumption fell for first time since Q4 2009, Manufacturing growth slowest in 23 months (Reuters)
  • Japan Capital Spending Plummets 7.8% In Q2, Expectations were 1% Increase (RTT)
  • US Construction Declines 3.5% vs. Same period in 2010 (US Census Bureau)
  • China exports to US contract, PMI barely above contraction (Reuters)
  • Container traffic at Port of Long Beach drops 3.17% smack in face of normal Christmas season ramp-up (Bloomberg)
  • Canada GDP unexpectedly declines led by a 2.1% drop in exports(Bloomberg)
  • Brazil Unexpectedly cuts interest rates .5% to combat recession.62 of 62 Analysts Miss Call on rate cut (Mish)
  • Taiwan's PMI dropped to 45.2 in August, the lowest reading since January 2009 (Reuters)
  • German economy grew just 0.1 percent in the second quarter (Reuters)
  • Switzerland, economy grew at its slowest pace since 2009, as a record strong Swiss franc also bites into exports. (Reuters)
  • Retail Giant in Australia Warns of Massive Price Deflation and Falling Sales, "Hardest Christmas in Retailer Lives" Coming Up (Mish)
  • US Zero Jobs Growth, Unemployment Rate Flat at 9.1%; Charts, Graphs, Details (Mish)

Ten Things to Remember


  1. Prior stimulus in the US is dead, having run its full course
  2. There is no incentive in the US Congress for more stimulus
  3. Austerity measures have yet to hit Italy and France
  4. Austerity measures will continue to bite Spain, Greece, Ireland
  5. Germany export machine will die without the rest of Europe
  6. QE3 will fail much sooner than QE2 as interest rates already extremely accommodating
  7. Gold may respond well to competitive currency devaluation schemes
  8. The Eurozone is highly likely to breakup although timing is unknown
  9. Global equities and commodities are priced for perfection.
  10. Perfection is not happening.

Additional Reads

Talk of avoiding recession when the global economy is clearly in one and fundamentals are horrendous is sheer lunacy.

In case you missed them, please consider ....

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Italy Backs Down on Austerity Measures; Bank of Italy Warns Tax Hikes Needed; German Central Bank Complains EU Treaty "Completely Gutted"

Posted: 02 Sep 2011 10:28 AM PDT

In the wake of fresh sex and bribe scandals of Italian Prime Minister Silvio Berlusconi as well as Italy's backing down on austerity measures, interest rates are once again creeping back up on Italy.

10-Year Italian Government Bond Yields



Italy Drops Plan to Tax Higher Earners From Austerity Bill

Bloomberg reports Italy Drops Plan to Tax Higher Earners From Austerity Bill
Prime Minister Silvio Berlusconi's government has dropped a planned bonus tax on Italians earning more than 90,000 euros ($131,000) a year from a package of austerity measures that aims to balance the budget in 2013.

The levy will be replaced with other measures that aim to target tax evaders, Berlusconi's office said in an e-mailed statement. The decision came after Berlusconi and Finance Minister Giulio Tremonti met with Northern League leader Umberto Bossi, a coalition ally that opposed some of the key aspects of the austerity plan passed by Berlusconi's Cabinet on Aug. 12.

As a result of today's agreement, the plan will also be modified to reduce the cuts in transfers to regional and local governments. The note did not give details of how the government would compensate for the lost deficit reduction from today's changes.
Revenue Replaced in Unknown Way

Allegedly the revenue will be replaced in an unannounced, unknown way. Does anyone believe that?

Bank of Italy Warns Tax Hikes Needed

The Washington Post reports Bank of Italy warns government's new austerity measures must raise taxes, cut spending
The Bank of Italy warned Tuesday that the government's revamped austerity plan must not cut back on its original €45.5 billion ($65.9 billion) proposal to raise taxes and cut spending — and said even with the plan Italy risked economic stagnation.

Premier Silvio Berlusconi and his allies late Monday issued a revision of the proposed austerity measures after widespread public anger, deciding to scrap special tax on high earners and spare small town governments. The new measures tinker with retirement age and call for a reduction in the number of lawmakers.

The Bank of Italy's deputy chief Ignazio Visco told parliament committees Tuesday that he hoped the market's response to the revision "isn't too penalizing." He said the overall austerity measures "cannot be reduced" and will be monitored to ensure they're being followed.

He warned that regardless of the measures, Italy still risked "a phase" of economic stagnation. Growth might be less than one percent this year and even less in 2012, making aims for a balanced budget more difficult, he warned.
Phase of Recession Not Stagnation

I remain in awe of cental bank ability to tell bald-faced lies. The idea that Italy will grow in 2011 and 2012 in the face of a global recession with additional austerity measures is nonsensical.

German Central Bank Complains EU Treaty "Completely Gutted"

The Telegraph reports EU law "gutted" by bail-outs, growls Bundesbank

Jens Weidmann, the bank's president, said monetary union risks losing its democratic legitimacy as EU leaders take a "large step" towards a debt union without legal authority, and sever the crucial link between budget policy and elected parliaments.

He said mass bond purchases by the European Central Bank had "strained the existing framework of the currency union and blurred the boundaries between monetary policy and fiscal policy. Decisions on further risk-taking should be made by governments and parliaments, as only they have democratic legitimacy."

Mr Weidmanm said that if Europe is unwilling to accept a genuine fiscal union backed by a European tax system, it must strengthen the existing 'no bail-out' clause in the EU Treaties "instead of letting it be completely gutted."

The escalating protest from the Bundesbank leaves the ECB in an invidious situation as it tries to shore up Italy and Spain, holding yields on their 10-year bonds at 5pc by intervening on the secondary market.

Julian Callow said Italy must redeem a record €62bn (£55bn) of debt by the end of September yet the government of Silvio Berlusconi is blacksliding on its austerity package and cavilling over details.

"This is a very large sum of money. The situation is extremely serious, and this is no time to be rearranging deck chairs," Mr Callow said, suggesting that ECB chief Jean-Claude Trichet may have to go to Rome to read the riot act.

Mr Callow said the eurozone is already in an industrial recession and needs stimulus to head off a possible credit crunch and stabilise the debt crisis. He said the ECB should cut interest rates to cushion the effect of fiscal tightening in a string of EMU states and halt accelerating capital flight from the eurozone.

Holger Schmieding from Berenberg Bank said there is a "significant risk" of recession across Europe and the UK but insisted it would be a mistake for the authorites to relax on either the fiscal or monetary front. "They must tough it out," he said.

Europe's sharp downturn will make it even harder for Italy and Spain to meet budget targets and grow their way out of debt traps. It may doom Greece's rescue programme.

Barclays Capital said the Greek economy is in the grip of debt-deflation and is likely to contract a further 5.7pc this year. The deficit remains stuck at 8pc of GDP. The parliament's own watchdog said debt dynamics are "out of control".
Riot Act

Julian Callow, Managing Director and Chief European Economist for Barclays Capital suggests
"Trichet to go to Rome to read the riot act."

There will be a riot act alright, and it will come when the people of Greece, Spain, Italy, and Ireland have had enough of austerity measures aimed at bailing out foreign banks.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Zero Jobs Growth, Unemployment Rate Flat at 9.1%; Charts, Graphs, Details

Posted: 02 Sep 2011 08:27 AM PDT

Jobs Report at a Glance

Here is an overview of today's numbers.

  • US Payrolls +0
  • US Unemployment Rate Flat at 9.1%
  • Participation Rate +.1 to 64.0%
  • Actual number of Employed (by Household Survey) rose by 331,000
  • Unemployment rose by 36,000
  • Those not in the labor force dropped by 165,000
  • Civilian population rose by 200,000, Labor Force rose by 366,000
  • Average Weekly Workweek Fell .1 hours to 34.2 hours
  • Average Private Hourly Earnings Fell 3 Cents
  • Government employment decreased by 17,000 - Not Enough

Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data.

For a change, the labor force actually rose today. This is a welcome sign. However, were it not for people dropping out of the labor force for the past two years, the unemployment rate would be well over 11%.

August 2011 Jobs Report

Please consider the Bureau of Labor Statistics (BLS) August 2011 Employment Report.

Nonfarm payroll employment was unchanged (0) in August, and the unemployment rate held at 9.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment in most major industries changed little over the month. Health care continued to add jobs, and a decline in information employment reflected a strike. Government employment continued to trend down, despite the return of workers from a partial government shutdown in Minnesota.

Unemployment Rate - Seasonally Adjusted



Nonfarm Employment - Payroll Survey - Annual Look - Seasonally Adjusted



Notice that employment is lower than it was 10 years ago.

Nonfarm Employment - Payroll Survey - Monthly Look - Seasonally Adjusted



click on chart for sharper image

Between January 2008 and February 2010, the U.S. economy lost 8.8 million jobs.

Ignoring the effects of the census, in the last 11 months of a recovery 2+ years old, the economy averaged about 117,000 jobs a month. That is very poor as recoveries go.

In the last 4 months the economy has averaged 40,000 jobs a month, a downright pathetic number.

Statistically, 127,000 jobs a month is enough to keep the unemployment rate flat.

Nonfarm Employment - Payroll Survey Details - Seasonally Adjusted



Average Weekly Hours



Index of Aggregate Weekly Hours



Average Hourly Earnings vs. CPI



"Success" of QE2

Over the past 12 months, average hourly earnings have increased by 1.9 percent. The Consumer Price Index for All Urban Consumers (CPI-U) was up 3.6 percent over the year ending in July.

Not only are wages rising slower than the CPI, there is also a concern as to how those wage gains are distributed.

BLS Birth-Death Model Black Box

The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.

The BLS has moved to quarterly rather than annual adjustments to smooth out the numbers.

For more details please see Introduction of Quarterly Birth/Death Model Updates in the Establishment Survey

In recent years Birth/Death methodology has been so screwed up and there have been so many revisions that it has been painful to watch.

The Birth-Death numbers are not seasonally adjusted while the reported headline number is. In the black box the BLS combines the two coming out with a total.

The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.

Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.

Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.

Birth Death Model Adjustments For 2011



BLS Back in Outer-Space

Do NOT subtract the Birth-Death number from the reported headline number. That is statistically invalid. However, in my estimation the BLS is back in outer-space.

It is clear the economy is slowing and the BLS model has not picked it up. The model is horrendously wrong at economic turns.

-18,000 may look reasonable but bear in mind that January and July are revision months where the BLS adjusts for prior errors. I believe the BLS has missed another economic turn, and the BLS is terribly wrong following turns.

Household Data



click on chart for sharper image

In the last year, the civilian population rose by 1,772,000. Yet the labor force dropped by 523,000. Those not in the labor force rose by 2,295,000.

Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Table A-8 Part Time Status



click on chart for sharper image

There has been no improvement in part-time employment in a full year. 8.8+ million workers want a full time job and cannot find one.

Table A-15

Table A-15 is where one can find a better approximation of what the unemployment rate really is.



click on chart for sharper image

Distorted Statistics

Given the total distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is hard to discuss the numbers.

The official unemployment rate is 9.1%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

While the "official" unemployment rate is an unacceptable 9.1%, U-6 is much higher at 16.2%.

Things are much worse than the reported numbers would have you believe. Moreover, the unemployment rate is barely better than it was a year ago. It would actually be worse than a year ago were it not for people dropping out of the labor force.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Damn Cool Pics

Damn Cool Pics


Muammar Qaddafi’s Family Photo Album

Posted: 02 Sep 2011 06:03 PM PDT

Tyler Hicks of the New York Times found family pictures at the the Qaddafi residence in Tripoli, and they're amazing. How often do images of a Third World dictator make you irresistibly nostalgic for childhood?

The Qaddafis playing soccer. Baby photos. Colonel Qaddafi as a young lieutenant in the late 1960s. Later, as a father. And finally, a bizarre figure; something of an object of ridicule.



Muammar Gaddafi's daughter, Eisha, his second wife, Safia Farkash, and Seif al-Islam, his son, in an undated photo from a collection of photos taken from Gadhafi's home, in Tripoli, Libya.




Muammar Gaddafi and his wife, Safia Farkash.




Muammar Gaddafi with Hannibal Gaddafi, Safia Farkash, center, and unidentified family members.










Gaddafi, right, with Leonid Brezhnev, of Russia.








Muammar Gaddafi with former Egyptian president Hosni Mubarak.




Seif al-Islam


Labor Day Travel and the Impact of the Economic Climate [Infographics]

Posted: 02 Sep 2011 02:19 PM PDT

As we prepare for our upcoming holiday travel, we turned to social media and the data we gather from it, and took a deeper look at people's travel plans this holiday season and if there was a perceived impact due to our rocky economic climate. Using Visible Intelligence, our social media monitoring and analytics platform, here's what we found:

Click on Image to Enlarge.

Source: visibletechnologies


100 Years of London Fashion in 100 Seconds

Posted: 01 Sep 2011 10:28 PM PDT



This film is a 100 year countdown to the grand opening of Westfield Stratford City on September 13th 2011, and celebrates a century of East London fashion, dance and music. It was shot over 4 days in east London locations with hundreds of costume changes.


Tomatina Festival 2011 in Bunol, Spain

Posted: 01 Sep 2011 09:41 PM PDT

Every year on the last Wednesday of August, the townfolk of Bunol, Spain and tourists alike gather together to throw tomatoes. Over 100 metric tons of ripened tomatoes are hurled, lobbed, smashed, and flung in the streets which turn the town into a crimson saucy mess. Bunol has a population of 9,000 local citizens but when the Tomatina festival begins, the population swells by another 20,000 to 40,000 visitors who enjoy the week-long festival and of course, the tomato throwing carnage.

The history of this crazy festival goes way back in 1944. During that year some young men who wished to participate in the parade of gigantes y cabenzudos throwed the tomatoes at the people. They did the same thing in next few years that unofficially established the festival.

It was in 1959 when the town officially approved the festival. Since then La Tomatina has become one of the most popular and attractive event of the year. Thousands of tourists travel to Spain for the annual La Tomatina festival.

Related Posts:
Tomatina - Tomato Fighting Festival 2008
Tomatina Tomato Fight 2010