With Valencia bust, Spanish bonds at all-time record spreads to bunds, and yields at euro-era record highs, Spain's access to public markets for more debt is as good as closed. What is most concerning however, as FAZ reports, is that "the money will last [only] until September", and "Spain has no 'Plan B". Yesterday's market meltdown - especially at the front-end of the Spanish curve - is now being dubbed 'Black Friday' and the desperation is clear among the Spanish elite. Jose Manuel Garcia-Margallo (JMGM) attacked the ECB for their inaction in the SMP (bond-buying program) as they do "nothing to stop the fire of the [Spanish] government debt" and when asked how he saw the future of the European Union, he replied that it could "not go on much longer." The riots protest rallies continue to gather pace as Black Friday saw the gravely concerned union-leaders (facing worrying austerity) calling for a second general strike (yeah - that will help) as they warn of a 'hot autumn'. It appears Spain has skipped 'worse' and gone from bad to worst as they work "to ensure that financial liabilities do not poison the national debt" - a little late we hesitate to point out.
Franfurter Allgemeine: Now Burns Spain
(Via Google Translate)
Spain has no "Plan B" more. The money will last until September. Then you have to spend the Treasury after a break in August and again fresh government bonds. However, if the interest and the risk premium on the record highs of the past "Black Friday" hold, is the fourth largest economy in the Euro zone - to Greece, Ireland and Portugal - the fourth rescue candidate.
How much has shaken the unrelenting storm in financial markets and alarmed the country's government can be seen in an almost desperate sounding aggressive opinion of the Spanish foreign minister. At a conference with other European leaders in Palma de Mallorca attacked José Manuel García-Margallo, the European Central Bank (ECB) with unprecedented severity as Tunix bank.
García-Margallo accused the ECB, which has reportedly bought for five months, no more Spanish government bonds and thus the pressure on Spain not reduced before, to keep "hidden". Literally, he added. "It does nothing to stop the fire of the (Spanish) Government debt," his claim on the ECB in the sign of European solidarity now to intervene in favor of his country, was not all. When asked how he saw the future of the European Union and its common currency, he replied that it could "not much longer go on," that countries such as Germany, debt free could, while others such as Spain standing water up to his neck.
What had happened 20 at that July 2012, the Black Friday signaled as early as the Thursday night by the images of nationwide protest rallies "Greek standards." Here, the organized power of protests by the unions were run primarily employed by the public service with the exception of a few final acts of violence in the capital peacefully everywhere. But the union leaders called the warnings of a "hot autumn", wants a second general strike this year wore on waking certainly not to reassure international investors in regard to the soundness and solvency in Spain.
Then came the early afternoon of the next big bang: Valencia asked the first of the seventeen regions of Spain for help from the newly created National Salvation Fund (FLA), because it has serious liquidity problems. Since it did not help that a quarter of an hour later from Brussels came the news that the Euro Group have released the more than 100 billion euros to recapitalize ailing Spanish banks and the first installment of disposable 30 billion for the already partly nationalized banks until the end of July were.
The faces of government officials fossilized
Of this and of the parliament on Wednesday adopted drastic austerity program of 65 billion unfazed, overthrew the Spanish stock market fell by almost six percent. At the same time increased the risk premium on Spanish government bonds already well above the Greek-Irish-Portuguese rescue addition to a record level of 610 basis points above German reference value. The interest rates for ten-and thirty-year bonds ended the trading day at around 7.3 percent is also acute in the danger zone.
The faces of government officials who had to announce on Friday itself even more bad news fossilized rapidly. Even the hard from her left Façon to be brought Deputy Prime Minister Soraya Sáenz de Santamaría called it "incomprehensible" that the markets in Spain punished in such a way where his government produce it for six months in the timing of the reform and austerity at a time.
In desperation sought the Deputy Prime Minister verbal refuge with federal Finance Minister Wolfgang Schaeuble said, "I fully agree with him. The situation we are experiencing is so because of the large uncertainty that exists in the euro zone. "Then dodged all questions, whether on the bank bailout now inevitably will come to the whole country, but closed already no longer sufficient. At the two major ghosts in the background, namely the possible insolvency of Spain or a breakup of the euro, was at that time then stir no more.
Six other regions are in need of help
The bad news flipped finally on his own Finance Minister Cristobal Montoro. He admitted that the recession will extend to a negative growth of an estimated 0.5 percent of gross domestic product (GDP) in 2013 for one year. Given falling tax revenues and rising social expenditure - unemployment is expected later this year rising to over 25 percent - is no longer with the previously approved mini growth of 0.2 percent expected. This year it will just as it has several foreign analysts, including the International Monetary Fund (IMF), have predicted to go down significantly: minus 1.5 percent.
Then had Montoro, the best pen-pushers in the cabinet of Prime Minister Mariano Rajoy, another piece of bad news: Because of rising interest rates and unemployment benefits would have to increase government spending in the coming year and by 9.2 percent. As an upper limit for the next budget, he called 126 billion euros (116 this year) and estimated the proportion of debt service on up to 39 billion. So this would be the largest budget item in general.
As the Minister of Foreign Affairs in Palma went out of his skin diplomats and deposed the emergency call to the ECB, the swirling dust of Valencia had not only not set, but spread to other regions. The six other candidates are called rescue Catalonia - the former "engine" of the Spanish economy alone corresponds approximately to the volume of Portugal - Balearic Islands, Canary Islands, Castile-La Mancha, Murcia and Andalusia may have. It is the largest and most populous region. You scrape all of the insolvent and can along without help from the central Wages Liquidez Autonómico (FLA), neither their use nor pay for the bonds maturing their suppliers.
Monti comes to Madrid
18 billion euros to put the government in the FLA pot. Of which 6 billion a called dormant "advance" the government agency with the best credit rating: the National Lottery. Valencia, a stronghold of the conservative People's Party, whose representatives are there over the years contributed megalomaniac buildings and even a new airport, which is never a plane has landed, is expected to require first aid as two billion. In Catalonia, there should be a bit more expensive. Perhaps the most obvious may be the last three decades Socialist-ruled Andalusian black hole, no one even dares to predict.
Prime Minister Rajoy also remained true to its strategy over the weekend not to step into self-publication. But it became known that he for the second Mario Monti, has been invited to Madrid - august his Italian neighbors - and co-conspirators against Chancellor Angela Merkel at the last European summit in Brussels. This will enable the two friends in Berlin alone at the thought of causing goose bumps "Euro Bonds" on a common approach and probably speak a new attempt to lure the ECB from its "hiding place". Some doubt now, though, that Monti wanted to identify themselves too closely with the Bredouillenspaniern, yet there is Italy, the 'risk premium' now suspended well.
Vice Premier Sáenz de Santa María was meanwhile from the exchange. "Now we need to work to ensure that the financial liabilities (the banks) do not poison the national debt" That's easier said than done if the EU and the ECB is not Spain under the arms . access Brussels to act from the perspective of Madrid always a snail's pace, where the Spanish crisis but is now viewed primarily as a "euro crisis" for which one - need new, credible supporting stability mechanisms - with central bank help. Be if Spain, which this year will have around 60 billion euros to repay loans due rescued, would have, there are two variants: the already "traditional" with loans to macroeconomic conditions and visits to the "Men in Black" or the use of Other funds from the bank bailout fund.
In almost all European capitals, including Madrid, has been in the past week vehemently denied that the 100 billion euros would be used not only to clean up the banks. But somewhere in the agreements is a smooth passage in which this kind - would allow - after approval of the euro group, and probably also of the German Bundestag. Perhaps as soon as a Foreign Minister García-Margallo hard to knock.