Nico Omer

“The simple reality is this: The Euro zone is absolutely unworkable in its present form and, if those in charge of it don’t decide on their own that it needs to be reworked, then markets will make that decision for them.  If and when they do, it will be anything but ‘manageable’.  Spain will need a bailout that will dwarf those given to Ireland and Greece, the Greeks will have to cut loose and forced to return to the Drachma and governments will fall right across the continent before this is settled, bringing the kind of political instability and strength amongst extreme parties that hasn’t been seen since the dark days of the 1930s – a return to which the Euro zone was ironically designed to specifically prevent.”

-Grant Williams, Portfolio and Strategy Advisor for Vulpes Investment Management

Jika Anda masih mengira situasi di Spanyol dapat diatasi dan negara tersebut tidak memerlukan bailout penuh, maka artikel dari Mark J. Grant, penulis Out of the Box, berikut tentunya masuk dalam kategori HARUS DIBACA:

Spain: Shall Bitterly Begin His Fearful Date

The data out from Spain this morning should be one serious wake-up call for anyone exposed to Europe. The fourth largest economy in the Euro zone is getting hammered and for anyone that has doubted that they will need a full scale bailout; think again. The numbers are a disaster. Deposits at the Spanish banks dropped by a record amount in July, -$93 billion which is a decline of -4.7% in just one month. On a year-over-year basis the decline in deposits is 12.0% but the trend in loss of deposits is escalating rapidly. The total banking deposits in Spain are $1.51 trillion we are told and the loss in deposits is 56.4% on an annualized basis which, if this trend continues, would effectively wipe out the capital of each and every bank in Spain. With an economy that has shrunk to $1.3 trillion the drop in bank deposits represents a 6.6% loss of capital to support the economy. This is not a leak, as reported by some in the Press, but a bank run. Spain also reported out for June bad loans at 9.4% ($205.45 billion) which is the highest on record as reported but it is also a number which may not be believed!

Beginning in 2000 the Spanish banks, with full support from the government of Spain, began what is called “dynamic provisioning.” Please allow me to explain this arcane phrase to you in simple English; it means the official allowance of “cooking the books;” it does not mean anything else regardless of what you may see bandied about in the Press. It means that losses and reserves can be shifted and modified from one quarter to the next and it also means that categories, such a Real Estate losses or provisions, may be falsified by some bank or by the government of Spain to show what they wish to show or hide what they wish to hide. This is why I have stated and re-stated so many times that the financials of the Spanish banks are garbage or worse and cannot be trusted.

In 2009 the Bank of Spain’s Director of Financial Stability wrote the following in a paper published by the World Bank.

“Dynamic loan loss provisions can help deal with the procyclicality in banking. Their anticyclical nature enhances the resilience of both individual banks and the banking system as a whole. While there is no guarantee that they will be enough to cope with all of the credit losses of a downturn, dynamic provisions have proved useful in Spain during the current financial crisis.”

Several years ago Spain, along with the rest of the European Union, adopted the International Financial Reporting Standards but the adoption did not mean implementation. The EU from 2000 to today has allowed Spain to utilize their own accounting rules, this “dynamic provision” financial scam and so the books for all of the Spanish banks have been inaccurate, have been a lie, have been a fraud for the last twelve years. This is strong language and I am quite aware of it but it is accurate language and categorizes what Spain and its banks have done.

Consequently even when you read today’s numbers and when you try to put them in perspective one can only guess because it is obvious that the data is purposefully minimized in favor of the government and of the banks so that investors can be fooled by the make believe figures.

Real Numbers

First let me state that it is quite impossible to get any kind of accurate figures for any and all of the Spanish banks. You can look at the actual Real Estate prices in the Spanish market and realize that the Spanish banks are overvaluing their holdings by about 40% and there is a starting point for defining the seriousness of the problem. One can then guess, and it is a guess but a rational one, that not only are the Real Estate provisions wrong and inadequate but that the reserves are inadequate, that the losses are far greater than reported and that the scam of utilizing “dynamic provisioning” is applicable to all of the Spanish bank loans which, if close to reality, would mean that all of the banks in Spain are insolvent. This would mean bankrupt and only being kept alive by falsified numbers. This is not the end of the problem however and it is only a small leap to a far worse situation.

If the government of Spain is allowing this “dynamic provisioning” for their banks; what makes you think that they are not using the exact same scheme for their national data? If Spain is allowing the numbers for their banks to be cooked then I would assert that they are following the same plan with the country’s numbers so that nothing about the Spanish banks or the Spanish GDP, debt to GDP and the size of their economy is even remotely believable. I would state that we know almost nothing that is real about Spain or her banks and that Spain is a fairy tale wrapped in deceit and bound in giant lies to preserve the country in her state of disgrace.

A Vastly Increased Risk

One year ago the Central Bank of Spain was borrowing $71.53 billion from the European Central Bank. In the last figures available, July, the Central Bank of Spain was borrowing $530.8 billion (an increase of 86.5%) from the ECB either directly or through the Target2 funding which impacts the Bundesbank and Germany quite directly. In other words Germany is now at a huge risk which is not just their 22% ownership of the ECB but a direct and full risk of impairment or default by Spain in the Target2 funding provided by the Bundesbank.

SPAIN’S SOVEREIGN OBLIGATIONS

Sovereign Debt                                   $763 Billion

ECB/Target2 Debt                              $530.8 Billion

Regional Debt                                     $175.7 Billion

Spain’s Bank Gtd. Debt                      $153 Billion

Total Direct Debt of Spain               $1,622.50 Billion

Spanish GDP (If Believed)               $1,331.00 Billion

Spanish Direct Debt to GDP Ratio        121.90%**

**This does not include Spain’s obligations to the EU or the ECB nor does it include corporate debt that has been guaranteed by Spain which would raise the debt to GDP ratio considerably.

Some consequence, yet hanging in the stars, Shall bitterly begin his fearful date, With this night’s revels, and expire the term

-William Shakespeare, Romeo and Juliet

Selain itu penggalan informasi Tyler Durden di www.zerohedge.com pada 18 Juni lalu mengenai krisis yang sedang berlangsung di Eropa, dari laporannya yang berjudul “Biderman on Europe: Germany Must Say No To Greece, Spain, & Italy”, benar-benar lurus.

Dijelaskan secara singkat apa yang salah dengan negara-negara pinggiran Eropa, dan bagaimana hal itu dapat diatasi dengan sangat mudah (jika ada kemauan politik yang setidaknya dapat mengubah tindakan mereka saat ini):

“After offering his condolences for the loss today of Dan Dorfman, Charles Biderman, of TrimTabs, takes the Greeks (and Germans) to task. Charles remains long-term bearish on European stocks (and the big US banks). Greeks, it appears from Charles perspective, want to stay in the Euro but on easier terms. This, at first glance, perplexes the less-than-sanguine Sausalitan, given the disastrous economic situation they remain in. However, on reflection, Biderman realizes that the simple fact is that the Greeks like the ability to borrow money to pay their bills and even better, never having to repay the loan – which makes perfect sense.

If the Germans are willing to keep lending to Greece, even if most goes to repay old loans, then Greeks keep getting some new cash – which would disappear if the Greeks left the Euro. This situation, he opines, would seem ‘horrible’ as “Greeks might have to go and do something for a living and even pay some taxes”. Concluding on the three types of creditors that exist, it is little wonder that the Greeks, in their ponzi state, would want to keep the dream alive and hold the M.A.D. grenade over Germany’s head just a little longer.

The brutal truth is that Greece (and Spain and Italy) will take as much cash as they can until there is no more given and then-and-only-then will they act for change. The disastrous end-result will be the same as if Germany left the Euro and first mover advantage in this case may well prove exceptionally valuable.”

What Do the Charts Say?

Pada awal September lalu, Tyler Durden di www.zerohedge.com telah mengingatkan dalam laporannya yang berjudul “Spain’s Debt Buyer of Last Resort Becomes Seller in Scramble to Fund Deposit Outflows”, mengenai kebutuhan dana Spanyol yang akan berlanjut menekan pasar.

Berikut adalah sejumlah paragraf yang paling penting dalam laporan tersebut, disertai sejumlah grafik yang menunjukkan tingkat keparahan krisis hutang yang sedang berlangsung:

“Several days ago we reported that Spanish financial institutions suffered the largest deposit outflow on record in the month of July when a whopping EUR74 billion, or 5% of the country’s entire asset base, picked up and left, the bulk of it most likely taking the well-known path of least resistance to the safety of Swiss and German bank vaults. We showed how this looks visually, and as the chart below confirms it can be summarized in one word only: waterfall.

… add to this the surge in Spanish bad debt, which as we reported recently soared to an all time high: NPLs which will have to be provisioned for with cash-hungry charge offs, and one can see why suddenly from a perfect summer, Spain may head straight into the perfect storm.

Spanish loan delinquencies bad and getting worse in a hurry…

And with the August vacation now in the rearview mirror, here is why should the deposit outflows persist, Spain may have a problem or two funding itself now that the peak of its gross issuance is upon us:

• 6 September: Spain auction. Bonds
• 18 September: Spain auction. Bills
• 20 September: Spain auction. Bonds
• 25 September: Spain auction. Bills
• 4 October: Spain auction. Bonds
• 16 October: Spain auction. Bills
• 18 October: Spain auction. Bonds
• 23 October: Spain auction. Bills

Graphically, supply is set to rise significantly in September and October for Spain:

Dan meski kesemuanya teratasi di tahun 2012, sejak 1 Januari 2013 akan menghadapi penurunan. Seperti yang dijelaskan oleh UBS:

Spain’s situation is even more worrisome when looking at next year’s funding requirements.

In 2013, Spain will need to refinance around EUR 60bn of maturing Bonos and Obligaciones while issuing an additional EUR 45bn to cover its public deficit. In this analysis, we assume that the government’s targets for next year are reached. This amount needs to include the funding for the deficit of local administration since regional issuance is unlikely to resume next year. Similarly, the central government very likely will need to cover the EUR 15 billion of Spanish regional debt maturing in 2013, which as it stands now cannot be otherwise refinanced. Additional central government funding may also need to be provided for maturing Spanish international and agency debt such as FADE bonds for a further EUR 3-4bn.

All in all, the total amount of gross bond issuance from Spain in 2013 could be in excess of EUR 120bn. That is around 40% higher than this year, 10-20% higher than in 2009 and almost four times larger than the average amount of Spanish bond issuance recorded in the previous four years.

Oops.

Perhaps at this point the only thing that can save Spain now that the 1 month respite from reality is over, is fast forwarding straight to the Christmas break, and the inevitable LTRO X, which the ECB will have to do in order to provide additional funding to Spain, which unlike before, however, will no longer work as Spain and the rest of Europe, are out of eligible collateral, meaning the ECB will have to get the Buba to agree to even more last minute rule changes to keep Spain “solvent.”

Agar tetap ceria menjelang akhir pekan, berikut adalah sebuah gambar lucu terkait dengan pemilu presiden AS yang akan datang:

Di pekan mendatang, saya akan membahas 2 hal yang merupakan favorit saya, yaitu bursa saham dan pasar komoditas emas. Selama berakhir pekan dan jaga diri Anda …

Dibuat Tangga; 21 September 2012