Mish's Global Economic Trend Analysis |
- Men in Black Seek Answers; Troika to Return to Spain in May Asking "What Happened to €42 Billion in ESM Bank Recapitalization Tranches?"
- Federal Spending Per Non-Government Worker
- Slovenia Under Pressure; Risk of Next Cyprus Already at Hand
- Regulators Prepare for Run on Cypriot Banks; Two Largest Banks Remain Shut, Others Open Tomorrow
- Another "Euro Is Saved" Moment in Pictures
- Merkel's Vision: "United States of Germany"
| Posted: 25 Mar 2013 11:08 PM PDT SAREB, Spain's bad bank, has received assets (primarily bad loans) from Bankia, NCG Banco, Catalunya, Caixam, Banco de Valencia and others. Bankia, a component of Spain's nationalized bank system has been one disaster after another. Guru's Blog reports that has you invested €37,500 in the IPO of Bankia at €3.75 per share, it would be worth 70€ today, a loss of 99.81%. Had you waited to buy at the bargain basement price of €0.26, your investment would be worth €1,009, a loss of 97.3%. That's quite the loss. Bankia shareholders have been wiped out. Recovery is impossible. Men in Black Seek Answers The question at hand now is "What Happened to the €41 billion Spain received in two tranches of ESM money for bank recapitalization?" That's a good question and one the "men in black" want to know as well. El Confidencial reports Troika Will Return to Spain in May to Investigate Bankia The troika, made up of the European Commission, the ECB and the IMF threaten an upcoming visit to Spain, during the last week of the month of May. The 'men in black' come this time seeking to clear up some of the derivatives in the famous bank bailout.This was an exceptionally difficult piece to translate. I believe I have the gist correct but if you read Spanish you may wish to refer to the original El Economista Article. The key point is the "men in black" will be in Spain trying to figure out what happened to €41 billion in ESM tranches that Spain received to recapitalize its banks. They also want to understand why SAREB cannot sell its properties. The answer to the latter question is easy enough to figure out. Banks valued the assets too high, there is no market for them, and writeoffs will be even bigger than previously estimated. In short, SAREB will need still more money. The "men in black" will not be pleased. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Wine Country Conference I am hosting an economic conference on April 5 in Sonoma, California. Proceeds go to the Les Turner ALS Foundation (Lou Gehrig's Disease). Please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs for my association with the disease. To learn about the economic conference with world-class speakers including John Hussman, Michael Pettis, Jim Chanos, John Mauldin, Mike "Mish" Shedlock, Chris Martenson with guest moderator Lauren Lyster and other Special Guests, please visit Wine Country Conference April 5, 2013 |
| Federal Spending Per Non-Government Worker Posted: 25 Mar 2013 06:16 PM PDT Here is a pair of interesting charts from reader Tim Wallace. Ratio of Workers  click on chart for sharper image Tim used non-seasonally adjusted numbers from the BLS, subtracting the number of government employees from total employed to produce the above chart. Spending Per Non-Government Worker  click on chart for sharper image Tim used government spending records as posted on the White House website and data from the first chart to compute the amount of spending per non-government worker. Obama claims the cutbacks will hurt the economy. Federal government spending now amounts to $31,679 per non-government employee, annually. This is a spending problem, not a revenue problem. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Slovenia Under Pressure; Risk of Next Cyprus Already at Hand Posted: 25 Mar 2013 04:39 PM PDT If you thought you could take a breather following the crash of Cyprus, you were wrong. Bloomberg reports Slovenia's Nascent Cabinet Under Pressure to Avoid Cyprus Fate. Slovenia's six-day-old government is being urged to prevent the nation becoming the euro region's next bailout battleground.Story Ends in Disastrous Bailout Anyone who has followed Ireland, Greece, Cyprus, or Portugal knows how this story will end: In yet another disastrous bailout followed by the destruction of the Slovenia economy. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Regulators Prepare for Run on Cypriot Banks; Two Largest Banks Remain Shut, Others Open Tomorrow Posted: 25 Mar 2013 01:17 PM PDT Most Cypriot banks will open tomorrow but capital controls remain and the two largest banks will remain shut while the ECB "monitors the situation" and regulators determine precise haircuts. CNN Money reports Big Cyprus banks to stay shut after bailout Most banks in Cyprus will open again Tuesday for the first time over a week. But the two biggest lenders at the heart of a €10 billion European Union rescue will stay shut for two more days to give regulators time to prepare for a run on deposits.Cyprus will be ruined for a decade. Expect GDP to plunge by as much as 30%. Since Big depositors at Popular Bank face complete wipe out, Cyprus may as well have done this on its own and left the Euro. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Another "Euro Is Saved" Moment in Pictures Posted: 25 Mar 2013 09:25 AM PDT Euro 20 Minute Chart  click on any chart for sharper image US Dollar 20 Minute Chart  Gold 20 Minute Chart  Rescue Me I was looking for a video by Aretha Franklin but the above by Fontilla Bass will have to suffice. The idea that Cyprus was in any way shape or form "rescued" by the Troika is preposterous. The good news appears to have worn off already. Next up Spain. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Note: Some ATT users (not a fault of ATT) received timeouts on my "Wine Country Conference" link (see below). If you were one of them, please try again. The problem has been fixed. Wine Country Conference I am hosting an economic conference on April 5 in Sonoma, California. Proceeds go to the Les Turner ALS Foundation (Lou Gehrig's Disease). Please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs for my association with the disease. To learn about the economic conference with world-class speakers including John Hussman, Michael Pettis, Jim Chanos, John Mauldin, Mike "Mish" Shedlock, Chris Martenson with guest moderator Lauren Lyster and other Special Guests, please visit Wine Country Conference April 5, 2013 |
| Merkel's Vision: "United States of Germany" Posted: 25 Mar 2013 12:13 AM PDT Following brutal negotiations with EU finance ministers, the IMF and various European government officials, Cyprus finally agreed to measures that her highness, Angela Merkel would accept. This time she held her ground. Previously, Merkel compromised every key position she has ever held in the sake of political expediency. For example, Merkel went to the well twice on Greece to appease her opponents. She repeatedly caved in to demands from French president Nicolas Sarkozy. She reversed her stand on nuclear energy following German polls. So why did Merkel draw the line at Cyprus? To Merkel everything is a play to win the next election and ultimately to preserve her legacy. She is willing to play hardball now for one reason only. Public opinion is decisively against further bailouts, and anything but exceptionally harsh terms on Cyprus would hurt her election chances in September. She fears the rise of the eurosceptic Alternative for Germany (AfD) Party and the best way to take some wind out of the AfD sails is to show she cares about austerity. Merkel's Vision Merkel's vision is not a United States of Europe. Rather, Merkel's vision is for a "United States of Germany". In this light, every move she has made makes perfect "political" sense, solidarity be damned. That Cyprus and Greece were ruined in the process is acceptable "collateral damage". If Spain is not careful, it will become the next "collateral damage". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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