Spain to Inject Billions Into Ailing Savings Banks

[S2007S]

Every week or two there is another country or 5 pumping billions into their banks. How long can this go on for, how long can our country and the rest of the countries continue to bail out the system, is that the answer to this credit crisis, to just keep pouring billions and trillions of dollars into a broken economic system to keep it propped up. I don't think this the answer, they didn't teach you these kind of tricks in economics 101. Where is the lesson being learned, the reason why were in this credit crisis is because of the easy money policies and lack of regulation, seems once again what created the credit crisis is still with us today. Just keep pouring the trillions into the system....only way to fight this credit crisis is with more trillions!!!


Spain to Inject Billions Into Ailing Savings Banks: Report
Published: Wednesday, 19 Jan 2011 | 5:52 PM ET
By: CNBC.com




CNBC.com
Spain is planning to inject billions of euros into the nation's struggling savings banks, known as cajas, according to a report from the Wall Street Journal.

The move appears to be an attempt to calm investor fears that the banks are unable to raise their own funds.

In addition, sources told the Journal, Spain will likely move to simplify the structures of the banks, many of which feature complex ownership structures and disclose little financial information.

Blowback from the move, however, could be severe as Spain has in recent months frequently disputed allegations it is nearing financial collapse. Last month, credit rating agency Moody's put the nation's debt on review for a downgrade.

 

[Martinghoul]

Quote from S2007S:
Every week or two there is another country or 5 pumping billions into their banks. How long can this go on for, how long can our country and the rest of the countries continue to bail out the system, is that the answer to this credit crisis, to just keep pouring billions and trillions of dollars into a broken economic system to keep it propped up. I don't think this the answer, they didn't teach you these kind of tricks in economics 101. Where is the lesson being learned, the reason why were in this credit crisis is because of the easy money policies and lack of regulation, seems once again what created the credit crisis is still with us today. Just keep pouring the trillions into the system....only way to fight this credit crisis is with more trillions!!!

The situation in Spain and the origins of its crisis are different, in a variety of significant ways, to the issues in other parts of the world, such as the US. You really shouldn't simplistically conflate all these things.

 

[Arthur Deco]

Could you take a moment, please, to briefly explain that? I thought Spain's problem was a collapsed housing bubble.

 

[[Proximo]]

Martin - how come the bund keeps kicking ass. Thanks.

 

[Martinghoul]

Quote from Arthur Deco:
Could you take a moment, please, to briefly explain that? I thought Spain's problem was a collapsed housing bubble.

Well, yes, but the big difference (and a very significant contributor to the creation of the bubble) is the fact that Spain is part of the EMU. Being part of the currency union also constrains the choice of available solutions that the Spaniards can implement ('cause, God forbid, you piss off their new German overlords). There's all sorts of other, more technical differences, but the Euro is the big one.

Quote from [Proximo]:
Martin - how come the bund keeps kicking ass. Thanks.

Not sure what you mean, sire? Bund is sucking ass today, but maybe you're talking about it generally. Bund is kickin' ass, 'cause the ECB is being mostly hawkish, which removes the inflation risk premium from Bund yields.

 

[Arthur Deco]

Quote from Martinghoul:

Well, yes, but the big difference (and a very significant contributor to the creation of the bubble) is the fact that Spain is part of the EMU. Being part of the currency union also constrains the choice of available solutions that the Spaniards can implement ('cause, God forbid, you piss off their new German overlords). There's all sorts of other, more technical differences, but the Euro is the big one.

Not sure what you mean, sire? Bund is sucking ass today, but maybe you're talking about it generally. Bund is kickin' ass, 'cause the ECB is being mostly hawkish, which removes the inflation risk premium from Bund yields.

Thanks for explaining. Trade well.

 

[[Proximo]]

My wording was not so clear - I guess I should have said how come yields keep going up with all the bad news.

Mainly looking for your fundamental perspective on Europe.

Thanks.

Quote from Martinghoul:

Well, yes, but the big difference (and a very significant contributor to the creation of the bubble) is the fact that Spain is part of the EMU. Being part of the currency union also constrains the choice of available solutions that the Spaniards can implement ('cause, God forbid, you piss off their new German overlords). There's all sorts of other, more technical differences, but the Euro is the big one.

Not sure what you mean, sire? Bund is sucking ass today, but maybe you're talking about it generally. Bund is kickin' ass, 'cause the ECB is being mostly hawkish, which removes the inflation risk premium from Bund yields.

 

[Donski]

Quote from S2007S:

[B I don't think this the answer, they didn't teach you these kind of tricks in economics 101. [/B]

Yes they did, it's called monetary policy.

 

[Martinghoul]

Quote from Arthur Deco:
Thanks for explaining. Trade well.

Thank you and it was a very skimpy explanation, if you could call it that.

Quote from [Proximo]:
My wording was not so clear - I guess I should have said how come yields keep going up with all the bad news.

Mainly looking for your fundamental perspective on Europe.

Thanks.

Well, my friend, it's a bit of a mystery to me, tbh. I am personally a bit long and wrong at the moment. I guess it's either the strength of the global recovery/inflation, some good news in Europe that I am not aware of (i.e. some sort of a resolution's been quietly reached) or simply a function of positioning, where too many people got long bunds/short periphery towards the end of last year and are being washed out as we speak. It could be all of the above, for all I know. I certaintly don't think the European woes are over. Even if the whole enlarged EFSF mechanism is agreed and works, it just buys them time, no more.

 

[[Proximo]]

Thanks for the comments. I also don't think the problems are over.

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