Spain Begins Bailing Out Banks

Spanish Prime Minister Mariano Rajoy said Monday that he will reverse policy, and pump public funds into the Spanish banking system to prop up the ailing institutions. 
Won’t be long before Italy joins suit in a TARP style bank bailout.  That would be LONA en espanol.

– Spain may inject public funds into banking sector

– Move signals change of policy

– Spain preparing a clean-up of retail banks

MADRID (Dow Jones)–Spain may pump public funds into its banking system to revive lending and its recessionary economy, Prime Minister Mariano Rajoy said Monday, signalling a policy U-turn.

The government had pledged to not give money to the banking industry that is struggling in the wake of a collapsed, decade-long, housing boom.

“If it was necessary to reactivate credit, to save the Spanish financial system, ..
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  1. Doing the same thing over and over, and expecting different results…. le sigh.

  2. what does moving public funds into the Spanish banking system mean?
    where do they get these public funds?
    Im guessing it doesn’t mean banks that already hold public money as deposits can rehypothecate it ?!
    otherwise they wouldn’t have to pre announce it.
    they go door to door and ask people to put money in the sinking ship banks?

    Interesting though.
    “The Policy we had put in place that you all had to follow and plan around?, we are reversing it, sure hope people planed one way for a moment and a complete reverse on policy the next.

    Feels like when i was a kid playing Monopoly with my older brother, he would change policy every other roll, to keep anyone but him winning.

    I never dreamt i was learning a useful lesson on how bullying cheaters in this real corrupt world work, because of my older brother, i see the strings more clearly.


  3. When the ECB rolled out the $1.3 trillion LTRO these completely DA Spanish bankers went and took their $300 billion of this 1% rate funds and bought Spanish bonds.  Because the Sp.  bonds were paying about 4.5 to 5% this seemed like a good spread. I always think its a great idea to buy bonds of a bankrupt country.    But no one in their right mind was buying Spanish bonds so the banks were bailing themselves out   Now that rates are 6% and climbing, those bonds are underwater;  their collateral value  dropping like a stone.  These banks will get margin calls and all kinds of other nasty things so the Spanish gummint has to come to the rescue.  With what?  More debt, of course.  

     The Spanish are totally screwed and,  unlike the Greeks, who’s debt  default/haircut nearly unhinged Europe and set in motion the first leg of the Euro recession, causing  the first $1 trillion bailout, the Spanish economy is $1 trillion (5 X Greece) and their debt is 226% of GDP.  The two large banks, Santander and BBVA, have negative capital base, 8% delinquencies, a collapsing housing market and the other usual problems of a diseased Lehman-like fiscal FUBAR.  Sinclair said this bailout will cost $16 trillion and I don’t doubt his estimate.  Fire up the presses, the time is nigh.  Get out of paper while you can.  This will spread like wild fire. There is not enough money to spread around to fix this  IMO

  4. Kill face   one more thought. Last year the Portugese goverment took $6.8 billion in public and private pension funds to bail out the government when it ran a multi billion dollar deficit.  I would guess that  Rajoy will be looking to  the Sp. honeypot of loot to pillage.  It will probably look like the Conquistadors when they met the Meso American’s gold  and silver stacks   Adios Dinero. 

  5. Monopoly seems to have been a good thing KS. They’re going to change at every turn now. Per AGX and Sinclair “$16 trillion”. Look out below for the PM’s to fall as the Euro does (but not for long). What with France’s new boss wanting to add debt while trying to cut it, Greece all but done, Spain about to trip over their own shoelaces and Portugal (well…Portugal LOL) the next few months is likely to cause a number of hear attacks as well as make a lot of people happy. Spanish public funds (retirements, investments, social benefits, etc??????????).

  6. More millions, billions, trillions.
    Our world is just crazy!

    People work and save for their kids future ….. and now?!

  7. 2 OZ  I’ve been thinking about the chances of PM prices falling like they did with the Lehman crash.  There is something really different about this crisis and silver’s present price.   If you take the $48 oz price 1 year ago, we may be experiencing the price crunch of silver right now.  That Fibonnaci * retracement  of 38% is pretty much the right percent drop in the last year.  If silver holds this $30 price we may not see more price drops, no matter how bad the Euro/US crisis becomes.   If it does not hold, we could see $20 but that would be a very short lived event.  IMO 

    The Euro crisis is upon us and has been for months.  the Dow continues its  liquidity fueled climb and silver just sits there like a sick dog, doing nearly nothing for 8 months.  I think that the silver price will be a ressurection based on that proverbial wall of worry that drives so many commodity prices.

  8. I kind of wonder the same thing AGX. Talk about consolidation. It’s been a while (a long while) and like the rounds of QE, the smack downs are having less and less effect. I think we’ll know for sure within the next two to three weeks as the Euro tries to find direction. I still expect some drop with the fallout of the Euro, but it won’t be long lived. In the past year (with the PM’s being kept down) as people have continuously bought US treasuries, that trend seems to be ending. A lot of countries as well as individuals are seriously dumping treasuries. A turn to PM’s my be a very short time away. Glad I’ve stuck with it. 38% is right in line with that type of correction and I think the juice is spilling from the cup and handle formation so something has to give. Eyes wide open now.

  9. … and Greece is the same!

  10. I don’t understand why they just don’t give the money to the people, at least they will spend it on the economy whereas the bankers will put it in their pockets. Bail Out, Bail Out, Who runs the world The Banks? Oop’s yes I Think So.

  11. Marchas45: I’m sure you have tongue in cheek when you say this. Giving money to the people is TAKING money FROM the people. Of course Giving money to banks is the same thing.

    The fact is, and I’m sure you know this, but I’ll say it anyway–Issuance of paper money generates debt period. I’ve never seen a Silver Stimulus Plan proposed by a politician-LOL!

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