Central Perk: 9 iun. 2012

sâmbătă, 9 iunie 2012

Mish's Global Economic Trend Analysis

Spain Blinks: Accepts €100 Billion Bailout Via EFSF/ESM; FROB to Receive the Money

Posted: 09 Jun 2012 03:02 PM PDT

After months of denials, a short Eurogroup Statement shows Spain will submit a formal request to Brussels for a bailout. Here is the statement in full.

The Eurogroup supports the efforts of the Spanish authorities to resolutely address the restructuring of its financial sector and it welcomes their intention to seek financial assistance from euro area Member States to this effect.

The Eurogroup has been informed that the Spanish authorities will present a formal request shortly and is willing to respond favourably to such a request. The financial assistance would be provided by the EFSF/ESM for recapitalisation of financial institutions. The loan will be scaled to provide an effective backstop covering for all possible capital requirements estimated by the diagnostic exercise which the Spanish authorities have commissioned to the external evaluators and the international auditors. The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to EUR 100 billion in total.

Following the formal request, an assessment should be provided by the Commission, in liaison with the ECB, EBA and the IMF, as well as a proposal for the necessary policy conditionality for the financial sector that shall accompany the assistance.

The Eurogroup considers that the Fund for Orderly Bank Restructuring (F.R.O.B.), acting as agent of the Spanish government, could receive the funds and channel them to the financial institutions concerned. The Spanish government will retain the full responsibility of the financial assistance and will sign the MoU.

The Eurogroup notes that Spain has already implemented significant fiscal and labour market reforms and measures to strengthen the capital base of the Spanish banks. The Eurogroup is confident that Spain will honour its commitments under the excessive deficit procedure and with regard to structural reforms, with a view to correcting macroeconomic imbalances in the framework of the European semester. Progress in these areas will be closely and regularly reviewed also in parallel with the financial assistance. Beyond the determined implementation of these commitments, the Eurogroup considers that the policy conditionality of the financial assistance should be focused on specific reforms targeting the financial sector, including restructuring plans in line with EU state-aid rules and horizontal structural reforms of the domestic financial sector.

We invite the IMF to support the implementation and monitoring of the financial assistance with regular reporting.

Treasury Secretary Tim Geithner issued this meaningless statement on Spain following the Eurogroup announcement.

We welcome Spain's action to recapitalize its banking system and the commitment by its European partners to provide support. These are important for the health of Spain's economy and as concrete steps on the path to financial union, which is vital to the resilience of the euro area.

Lip Service to Reforms

In the Eurogroup statement, notice the lip service to Spain's "significant fiscal and labour market reforms and measures to strengthen the capital base of the Spanish banks".

It will be interesting to see the final terms but this bailout surely will not be the no-strings-attached request Spain had sought.

Once again, this is the wrong approach. Bondholders should have been wiped out. Instead, Spanish taxpayers will be put on the hook for another hundred billion euros.

If another hundred billion euros is all it takes, I will be amazed.

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

Bailout Lite? There's Really No Such Thing; €30 Billion Needed? It's Now €100 Billion; Contagion of Economic Idiocy

Posted: 09 Jun 2012 10:22 AM PDT

A few days ago Spain was purportedly going to need another €30 billion to €70 billion to recapitalize Spanish banks. I suggested the amount would be at least triple that and it did not take long to do so.

Yahoo! Finance reports Spanish bailout could reach 100 billion euros

A bailout for Spain's teetering banks, once requested by Madrid, could amount to as much as 100 billion euros, two senior EU sources told Reuters on Saturday.

Spain has not yet made a formal request for European aid but it could come during a conference call of euro zone finance ministers, the sources, who were both on an earlier call to discuss the technicalities of a rescue, said.

"A decision on Spain will only be taken ... by the ministers (in a second call). Madrid has not officially asked for help yet," one of the officials said. "The statement will mention 100 billion euros as an upper limit."

€100 Billion Upper Limit? Until When?

When I said triple the reported amount, I meant triple the upper end of the reported amount. Bear in mind I am just guessing. However, history shows that I am more likely to be on the low end than the high end.

As with Greece, every economic number from Spain is revised to the downside, month in and month out.

For now, the EU economic wizards will likely concoct a number just under that alleged "upper limit". My best guess is €90 billion. Then within six months, possibly as soon as the money is handed over, more problems will surface, more meetings will take place, and still more money will be stolen from Spanish taxpayers and handed over to the banks and bondholders.

Bailout Lite?

There is no such thing as a "bailout lite". Sure, they can ease conditions on Spain, but what kind of message does that send Greece with elections coming up on June 17.

Moreover, the odds the Spanish economy starts recovering later this year as forecast are virtually zero percent. Then what? Then Spain will need another "bailout lite" and still more extensions.

In the meantime, the odds France and Italy hit their budget deficit targets are also close to zero.

Contagion of Economic Idiocy

Combine the above ideas with the worst economic plan in history to combat high unemployment (please see Hollande About to Wreck France With Economically Insane Proposal: "Make Layoffs So Expensive For Companies That It's Not Worth It") and an economic disaster awaits the eurozone.

My conclusion is that Europe is about to suffer from contagion of the worst kind: contagion of economic idiocy on bailouts, on employment, and nannycrat nonsense.

The humorous quote of the day comes from "FamilyMan" who offers these thoughts on France's proposals to stem unemployment:

As a US citizen, I applaud the French strategy. Since we can't fix America, we need other countries to be even more insane than we are! Can we get France to implement a $500 euro an hour minimum wage to "wipe out poverty"?

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

Damn Cool Pics

Super Creepy Creepy Justin Bieber Fan Video

Posted: 08 Jun 2012 09:49 PM PDT

Justin Bieber has a new fragrance called Girlfriend and has launched a contest for his fans where you rewrite his song 'Boyfriend' and turn it into your own 'Girlfriend' version. One girl's fanvideo really stands out from the crowd. This entry definitely deserves to be the winner of the Justin Bieber 'Girlfriend' Sing-Off Contest.

Jobs That Could Kill You [Infographic]

Posted: 08 Jun 2012 09:39 PM PDT

Risky jobs are worth it for those paychecks, right? Actually, a lot of them pay less than you'd think. Check out some of the deadliest jobs with the least monetary reward for your risk, and get a glimpse of some of the best-paying ones, too!

There were 4,547 fatal workplace injuries in the United States in 2010. 9% were caused by exposure to harmful substances or environments. 16% were caused by contact with objects and equipment. 18% were caused by assaults and violent acts. 39% were caused by transportation incidents. 4% were caused by fires and explosions. 14% were caused by falls.

Click image to see a larger version.

Via Becomecareer

A "State Dinner" just for kids

Saturday, June 9, 2012

A "State Dinner" just for kids

Calling all kid chefs: Here's your chance to share your favorite delicious and nutritious lunch recipe with First Lady Michelle Obama.

Let's Move!, the First Lady's initiative to solve the problem of childhood obesity within a generation, is looking for parents or legal guardians of creative kid chefs from all over the country to submit their child’s recipe for a healthy and nutritious lunch.

So if your kids have some skills in the kitchen, we hope you'll take the time to share their recipes. We'll invite a winning child and their parent or legal guardian from each state and territory to join us for a Kid's "State Dinner."

The rules are simple: All entrants (parents or legal guardians of kids ages 8-12) are encouraged to reference the MyPlate nutritional guidelines to ensure recipes meet healthy standards. Recipes should include each of the food groups, either in one dish or as parts of a lunch meal, including fruit, veggies, whole grains, protein and low-fat dairy foods.

Then in August, Let's Move! will team up with the Department of Education, USDA, and Epicurious for a Kid's "State Dinner." Winning recipes will be published in an online book to help share these new, healthy lunch time ideas.

You have until June 17 to submit your recipe, so get cooking and share what you think we should serve for lunch at the White House:

http://www.letsmove.gov/kids-state-dinner

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Weekly Address: Congress Must Act to Keep Our Teachers on the Job

Your Daily Snapshot for
Saturday, June 9, 2012

Weekly Address: Congress Must Act to Keep Our Teachers on the Job

President Obama urges Congress to take action now to put our teachers back to work in classrooms, because the best predictor of individual and American success in this economy is a good education.

Watch the President's weekly address:

President Barack Obama tapes the Weekly Address in the Cross Hall of the White House, June 8, 2012. (Official White House Photo by Chuck Kennedy)

Weekly Wrap Up

Your quick look at this week on Whitehouse.gov:

Serving Those Who Served Us: Last Friday, President Obama made his way to Honeywell International in Minnesota. There he addressed the issue of veteran unemployment and how it doesn’t make any sense that the nation is leaving these brave volunteers behind. “Our government needs their patriotism and their sense of duty. That’s why I ordered the hiring of more veterans by the federal government; we’ve hired more than 200,000 so far.”

Equal Opportunities: This past week, the administration worked hard to try and raise awareness of the Paycheck Fairness Act, which would have worked to close the paygap between men and women in the workforce.

Don't Double My Rate: In less than a month, interest rates on Stafford loans are set to double. Congress needs to act fast or else students will be facing on average an extra $1000 in debt. That’s why President Obama visited UNLV to continue his “To-Do-List” for Congress campaign, specifically pushing the extension of the student loan interest rate cut.

The State of the Economy: Today the President held a press conference to address the state of the American economy. He began by addressing the ongoing crisis in Europe -- America's largest trading partner -- and why it's an area of focus for his administration. The President also said that the continued instability of the international economy is another reason why lawmakers need to do more to create jobs here at home: “We could be putting a lot of people back to work rebuilding our roads, our bridges, some of our schools. There's work to be done; there are workers to do it. Let’s put them back to work right now.”

West Wing Week: Your video guide to everything that's happened this week at 1600 Pennsylvania Avenue: Watch here.

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Seth's Blog : Silencing the bell doesn't put out the fire

Silencing the bell doesn't put out the fire

Many big organizations have full-time employees who scan the social media, looking for people with a complaint. They swoop in and grease the squeaky wheel, solving the problem of the person who spoke up.

The theory is that these loud complainers are a problem, and the easiest solution is to give them something to make them happy.

Of course, that doesn't do anything for the 95% of the population that has the very same problem but isn't speaking up, right?

When Jeff Jarvis blogged about Dell Hell, he hurt the company very badly. Mollifying Jeff (and those like him) did the company no good in the long run, though, because they didn't deal with the underlying cause, they merely gave the loud ones an excuse to be quiet.

The purpose of the bell is to point to a fire somewhere else. Worry about that instead.