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The fifth victim to fall in Europe’s arc of depression
November  21,  2011  
Let us all extend our sympathies to the Spanish people. They face the greatest national emergency since the Civil War
yet their vote for drastic change is palpably useless, even if democracy has in this case at least been respected.
As union leader Javier Dos put it, the EU-imposed austerity plans of the incoming Partido Popular are “nothing more than the continuation of policies leading Europe toward disaster”.

The immediate destiny of his country lies entirely in the hands of Germany, the AAA creditor core, the EU authorities, and the European Central Bank, the nexus of policy-making power that together dictates whether Spain will be thrown a lifeline or be pushed further into depression and social catastrophe.

What can the quiet Galician do to stop Spain’s 22.6pc unemployment rate – or 46pc for youth – from ratcheting higher this winter as the combined effects of fiscal austerity and a credit crunch together do their worst? How can he stop real M1 deposits contracting at a 5pc rate.

More than any other country, Spain exposes the lie behind this German narrative. It did not cheat, like Greece. It did not breach the Maastricht Treaty’s 60pc debt ceiling like Italy (or Germany itself). Its public debt was 36pc of GDP before the Great Recession. It ran a budget surplus of almost 2pc of GDP in 2007 and 2008.

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ZionsCRY  NEWS with Prophetic Commentary


Pressure builds on Spain and Italy over debts
27 July 2011
Just five days after European authorities unleashed a €159bn (£141bn) aid package designed to prop up the eurozone, Spanish and Italian bond yields yesterday soared on concerns over sovereign debt.
Spain's short-term cost of borrowing hit three-year highs. At an auction of Spanish government debt demand fell, while yields at a sale of six-month Italian paper hit their highest since late 2008.

By late afternoon, the yield on Italian 10-year bonds dropped back from 5.72pc to 5.63pc as Italy cancelled a debt auction scheduled for August.
Traders said the move "provided some relief" to volatile markets. Spanish bonds also dropped to 5.96pc having hit 6.07pc earlier.

The masses need to realize that BOTH the "left" and "right" are merely 2 sides of the SAME coin.
If Satan is divided against Satan, his kingdom is divided and falls.

11/21/11    Spanish right wins election by landslide: exit poll
Opposition leader Mariano Rajoy's Popular Party took an absolute majority of between 181 and 185 seats in the 350-member Congress of Deputies, said projections based on an exit poll by public broadcaster RTVE.
The ruling Socialist party PSOE won between 115 and 119 seats, the poll said.
Spain is the fifth and last of the so-called periphery eurozone nations to ditch its government this year after Ireland, Portugal, Greece and Italy.

Fitch lowers Asturias region in Spain
23 November 2011   MarketWatch
Fitch Ratings downgraded the rating of the Spanish region of Asturias one notch, citing deterioration in its budgetary performance in the past three years amid growing debt.

Spain in state of alert over air strike chaos
December  4,  2010

Spain's government will hold a crisis meeting today and may declare a state of alert, leading to possible criminal action against striking air traffic controllers.
The extraordinary cabinet meeting would declare a state of alert if the strikers had not returned to work, Interior Minister Alfredo Perez Rubalcaba said.
Spain's military has already taken control of the nation's airspace after air traffic controllers called in sick en masse.

"If a controller does not show up to his work place he will be placed immediately in custody accused of a crime which could mean serious prison sentences," Mr Rubalcaba said.
Workers are staging the unofficial strike over working hours, closing almost all airspace apart from the southern region of Andalucia.

The Spanish government has declared a state of alert after a strike by air traffic controllers grounded flights, stranding thousands of travellers.
The measures allow wildcat strikers to be charged with an offence of disobedience, and controllers began returning to work in the afternoon.
Works minister Jose Blanco warned that disruption could last up to 48 hours.
Officials said 250,000 people had been affected by the walkout, amid a long-running dispute about working hours.

Mr Blanco said all Spanish airspace had now reopened, but "normality will take some time, between 24 and 48 hours, if the controllers return to work as they must".
Almost all flights in and out of the country have been cancelled until Sunday morning.
Announcing the first state of alert since the end of military rule in 1975, Deputy Prime Minister Alfredo Perez Rubalcaba said the air traffic controllers were trying to protect "unacceptable privileges".
The immediate effect is that the controllers are are now under orders to go back to work and can be charged with a crime under the military penal code if they refuse. The state of alert will initially last for 15 days."

Spanish regions will miss 2011 targets: Moody's
5 December 2011
Moody's Investors Service said Monday that Spain's regional governments are likely to exceed 2011 deficit targets by nearly one percentage point, which is credit negative for those regions.
The ratings firm said that even though data for the first nine months of the year indicate regions are implementing austerity measures, those efforts won't be enough to keep them from exceeding the deficit target of 1.3% of gross domestic product.

The recently elected Spanish government will have to tackle the regions' fiscal problems, as these problems threaten to increase national deficit figures in 2012, the ratings firm said. Deficit targets for 2011 and 2012 are key to rebuilding market confidence, and difficult market conditions have meant stretched liquidity for regions has deteriorated further, leading to the "accumulation of significant commercial debt," said Moody's.

Spain's economy minister predicts downturn
26 December 2011
 Spain's newly appointed economics minister, Luis de Guindos, said Monday that the country will see negative economic growth in the final quarter of 2011 and the first quarter of the new year, technically putting it back into recession.
De Guindos made the comments at an inauguration ceremony of new officials at the ministry, according to media reports.
He said the next two quarters will be complicated for the country, in terms of growth and employment.
Spain has the highest unemployment rate in the euro region.

Spanish Mortgages Decline for the 18th Straight Month as Bad Loans Surged
28 December 2011  
Spanish residential mortgages decreased for an 18th month in October as banks reined in lending amid a surge in borrowing costs and bad loans.
The number of home loans fell 43.6% from a year earlier after a 42% drop in September, the Madrid-based National Statistics Institute said in an e-mailed statement today.
Total capital lent on all mortgages fell 40.6%, it said.

Spain is struggling to digest a glut of 700,000 unsold new homes since the collapse of the building boom[u] that has pushed the unemployment rate to 23%
Prime Minister Mariano Rajoy, who holds his second cabinet meeting on Dec. 30, has pledged to bring back tax rebates for mortgage holders and clean up an estimated 176 billion euros ($230 billion) of soured assets linked to real estate from the books of the country’s banks.

Bad loans as a proportion of total loans by Spanish lenders jumped to a 17-year high 7.42% in October, the Bank of Spain said on Dec. 19.
The average price of Spanish houses and apartments declined 7.4% in the third quarter from a year earlier, the National Statistics Institute said on Dec. 15.

Spain's economy worsening, says central bank
29 December 2011  The Telegraph
The Bank of Spain has warned that the economy has worsened, rattling investor confidence in Europe's fourth biggest economy just as recently installed prime minister Mariano Rajoy prepares to unveil his immediate budget plans.

The central bank said early indicators show that Spanish tourism, exports, spending and investment have been hit, which is likely to have led to a contraction in GDP in the fourth quarter.
In its December bulletin the bank said: "After the stagnation the Spanish economy showed in the third quarter, the available economic information, still incomplete, indicates activity contracted in the final months of the year."

Mr Rajoy, who was elected in a landslide election victory in November, has said he will today unveil economic measures that will last until a full budget can be presented to parliament in the first quarter of the year.
Spain, which has the eurozone's third-biggest budget deficit, is already struggling under tough austerity measures and the highest unemployment rate for 15 years.

Spain warns of higher budget deficit for 2011
30 December 2011  MarketWatch
More than a month after coming to power, the new center-right government in Spain has warned that the country's budget deficit will surpass prior expectations, hitting around 8% for 2011.
The prior government had predicted a budget deficit of 6%. Deputy Prime Minister Soraya Saenz de Santamaria made the announcements at a press conference, in which she said the government had approved an austerity package worth €8.9 billion euros ($11.5 billion) to combat the country's economic and budgetary difficulties.
Saenz also said the government would need to increase some taxes on a temporary basis.

Spain public deficit may top 8 percent
Jan. 2, 2012  - Spain's public deficit for 2011 may be higher than the 8 percent of GDP forecast by the new government, the economy minister said Monday, fuelling fears the country faces a prolonged period of tight budgets and economic contraction.

Spain had originally targeted a 2011 deficit of 6 percent of gross domestic product, but the newly elected conservatives said Friday the deficit would be 8 percent. It said it would now have to work hard to hit this year's tough deficit-reduction goals in an economy seen tipping back into recession this quarter and announced new tax rises and spending cuts.

"We'll need to see, but it's possible that we have gone over the 8 percent mark, though (we) expect that it hasn't done so by much," Economy Minister Luis de Guindos said during an interview with Cadena Ser radio, his first since taking the post after the conservatives won the November election.

Friday's announcement that the deficit would be as high as 8 percent of GDP has reignited market concerns about the financing needs of indebted euro zone countries and put downward pressure on the euro, which hit a decade low versus the yen Monday.

Spanish Unemployment Rises to 22.9%
27 January 2012
Spain’s unemployment rate rose to 22.9%, the highest in 15 years, increasing pressure on Prime Minister Mariano Rajoy to change labor rules and deliver on his election pledge to create jobs in a shrinking economy.
The unemployment rate rose in the fourth quarter from 21.5% in the previous three months, the National Statistics Institute in Madrid said today.

That’s more than twice the euro- region average and exceeds the median estimate of 22.2% in a Bloomberg survey of seven analysts.
Spain is home to a third of the euro region’s unemployed, according to the European Union’s statistics office, which estimates that half of young Spaniards are out of work.

Spain Sinks Deeper Into Periphery on Debt Rise
20 February 2012
Spain’s debt load is set to double from where it was when Europe’s sovereign debt crisis began, eroding the economic advantages that distinguished it from the region’s periphery and helped shield it from Greek contagion.
Finance chiefs meet in Brussels today in the latest effort to save Greece from default.

Spain went into the crisis with public debt of 40% of its GDP, compared with an average ratio of 70% in the euro region.
The European Union forecasts its debt will have almost doubled by next year, as Moody’s Investors Service says Spain is losing one of its “key relative credit strengths.”

Investors give Spain a discount of just 30 basis points on borrowing for a decade compared with what they charge Italy, down from 200 basis points at the end of last year.
Spain’s 10-year yield is 5.18%, up 33 basis points since Feb. 1.


Spain lifts 2012 deficit goal to 5.8% of GDP - Government predicts growth to fall 1.7%, jobless atop 24% this year
2 March 2012  MarketWatch
With the ink barely dry on a new European Union treaty enshrining tougher budget rules, Spanish Prime Minister Mariano Rajoy said Friday the country would be targeting a higher deficit to GDP target for this year of 5.8%.
That’s well above the 4.4% target the prior government agreed with the European Union.

Speaking in Brussels at the conclusion of an EU summit, Spanish Prime Minister Mariano Rajoy said he had not informed his European counterparts because it was a “sovereign decision,” according to media reports.
He also said the limit respected European Union rules and the stability pact, those reports said, with Spain adding that it remains committed to hitting its target of cutting the deficit to 3% of GDP by 2013.

The Spanish media had been speculating for days that Spain would ask Brussels for a break on its budget target.
Economists have been warning the country could not drop the deficit from 8.5% last year to just over 4% this year, without strangling an already deeply depressed economy.
Earlier in the day, the government announced that unemployment rose to 4.7 million persons in February, a rise of 112,269 from the prior month.

Data released from Eurostat earlier this week revealed that Spain continues to hold the unenviable position of the highest unemployment in the euro zone, at 23.3% for January.
The government forecast Friday that unemployment would reach 24.4% this year.

Spain toughens stance in EU deficit stand-off
March 1, 2012
- Spain has stepped up its battle to secure more lenient deficit targets from the European Commission this year as its economy slips into recession.
A government source told reporters that Spain would still be in compliance with European Union agreements on fiscal stability even if it did not hit a tough target of cutting the deficit to 4.4 percent of gross domestic product this year.

Spain would still be showing a commitment to fiscal stability and will be on track to hit the ultimate goal which is a deficit of 3 percent of GDP in 2013, the source said on condition he not be identified.
Madrid said this week that its 2011 budget deficit was 8.5 percent of GDP, 2-1/2 percentage points above a 6 percent target, putting the 2012 goal almost certainly out of reach.

Spain deficit slippage could trigger fine: EU
March 2012
Spain is hurtling towards an embarrassing test case of new EU budget rules and possibly a big fine for a "grave" breach of deficit limits, the European Commission said.
The overshoot amounts to scores of billions of euros, and led analysts to warn that leaders may have signed away more sovereignty to Brussels than intended during the debt crisis and that the onset of recession risks derailing the implementation of new EU rules.
"We need to shed full light on what went on Spain in 2011," EU Economy Commissioner Olli Rehn's spokesman Amadeu Altafaj said of what he called a "serious, grave" gap in the figures.

Altafaj said Madrid notified Brussels on December 30 that it had overshot its 2011 deficit target by two percentage points, then two days ago that it was another half a percentage point higher.
Spain's 2011 public deficit was supposed to come in at 6.0 percent of gross domestic product (GDP) but ended up at 8.5 percent, meaning the state spent 90 billion euros ($119 billion) more than it took in last year.

Yields on Italian, Spanish debt rise
6 March 2012, by Deborah Levine - New York (MarketWatch)
Spain and Italy's cost of borrowing rose on Tuesday after a report said a Greek default would likely force Italy and Spain to seek aid.
However, the move took yields back to levels about a week ago, at worst - just before the European Central Bank's latest mammoth lending operation.

Spain's 10-year yields rose as high as 5.05% from 4.95% on Monday.
They topped 5.60% at the beginning of the year.
Italy's 10-year yields increased 10 basis points, or 0.1%, to 4.97%, though still near their lowest levels since last fall.
Italy's 2-year yields increased 3 basis points to 1.80% and Spain's were up 5 basis points to 2.31% -- both still down significantly from a week ago.

Spanish house prices drop 11.2%, lowest since 2007
15 March 2012
Spanish house prices fell 11.2% in the fourth quarter of 2011 on an annual basis, a decrease of almost four percentage points from the previous quarter, with the index at the lowest since the first quarter of 2007, the national statistical office said.

In the third quarter, house prices fell 7.4% The prices of used homes fell 13.7% in the quarter on an annual basis.
House prices have been sharply declining since the fourth quarter of 2010, amid a collapse in the housing industry, which spurred a downturn in the Spanish economy.

Spain to lift power prices 5% to 7% in April: aide
27 March 2012, by Christopher Bjork - Madrid (MarketWatch)

Spain's government plans to increase power prices by between 5% and 7% at the beginning of April, Industry Minister Jose Manuel Soria said Tuesday in an interview with broadcaster Antena 3.

The rise of what is known as "last recourse" prices--a price ceiling for mostly domestic consumers of electricity--would affect about 20 million households and small companies and will be approved at the government's cabinet meeting Friday, Soria said.

The increase, Soria said, must be implemented to comply with a Supreme Court ruling forcing the government to raise prices when the annual tariff deficit surpasses €1.5 billion.

The country's power utilities and the government itself will also shoulder part of the cost of the deficit overrun, he said.

Spain edges toward economic abyss amid Europe woes


MADRID (AP) — Investors concerned that Spain is fast becoming Europe's riskiest economic link and could be the next bailout candidate have plenty to worry about this week.

On Thursday, much of the country will shut down in a general strike against labor market reforms that make it cheaper for companies to fire and offers incentives for them to hire.

The next day, new center-right Prime Minister Mariano Rajoy is expected to unveil about €30 billion ($40 billion) in spending cuts and tax hikes in a deficit-slashing budget. This comes fast on the heels of a similar €15 billion austerity package unveiled less than three months ago as part of Spain's push to avoid joining the ranks of bailed-out Greece, Portugal and Ireland.

So far, Rajoy has only given hints about what's in store in the next round of fiscal pain for Spain, which is already lurching toward recession and is battered with an unemployment rate of nearly 23 percent, the highest among the 17 countries that use the euro.


Debt worries put Spain under pressure again - Government details on 2012 budget trigger rise in bond yields
4 April 2012, by Barbara Kollmeyer - Madrid (MarketWatch)


- The government forecasts growth in Spain will drop 1.7% this year.

- Government debt rose to 68.5% of GDP in the fourth quarter of 2011 the highest number since Bank of Spain records stretching back to 1990.

- Borrowing needs will reach 79.8% of GDP for 2012 set to be the highest ever recorded.

- Unemployment rising again in March, a further 38,769 to 4.75 million.

- Jobless levels in Spain are the highest in the European Union at 23.6%, a number many see going higher.

- Budget unobtainable - 17% increase in corporate tax receipts and a 4.7% jump in income tax receipts.

- With unemployment high (and rising) and weak growth tax revenues fall.

- Gross debt issuance for Spain will climb to €186 billion.

The Budget seems both:

1: unrealistic in its revenue assumptions and

2: too focused on austerity which may weigh on growth going forward.

“From a budget perspective, the government is facing a lose-lose situation,” said de Guindos. “If you don’t make enough adjustments, markets will penalize you.

But if you go too far, markets could also penalize you.”

Spanish, Italian yields surge after auction
4 April 2012, by Sara Sjolin - London  (MarketWatch)

Yields on Italian and Spanish government bonds surged on Wednesday after Spain saw borrowing costs rise in its first auction demand since presenting its latest austerity budget last week.

In the secondary market, yields on 10-year Spanish government bonds jumped 11 basis points to 5.52%, after trading around 5.28% earlier in the week.

Yields on 10-year Italian government bonds gained 19 basis points to 5.26%.

Spanish yields jump above 5.7%; Italian yields up
5 April 2012, by Sara Sjolin - London (MarketWatch)

Spanish and Italian bond yields continued to rise on Thursday, as the broader European equity market declined.

Yields on 10-year Spanish government bonds added 5 basis to 5.71%, the highest level since December last year, when the European Central Bank conducted its first three-year long-term refinance operation, LTRO.

On Wednesday, Spanish yields surged as much as 24 basis points. The IBEX 35 index gave up 0.7% to 7,609.60 Thursday.

Yields on 10-year Italian government bonds jumped 11 basis points to 5.4%, while the FTSE MIB index lost 0.8% to 15,109.55.

Iran Escalates Again, Cuts Off Oil Shipments To Spain
10 April 2012, by Tyler Durden (Zero Hedge)

Those hoping for a quick and painless resolution to the Iranian question may have just seen their hopes dashed, following the breaking news from Iranian Press TV, according to which not only is Iran not seeking to appease its Western counterparts, but is, in fact escalating.

From Press TV: "Tehran has cut oil supply to Spain after stopping crude export to Greece as part of its countersanctions, unnamed sources confirmed on Tuesday.

Tehran also mulls cutting oil supply to Germany and Italy."

"Countersactions" - lovely: another Swiss watch plan by the insolvent developed world.

Said otherwise, one can hardly threaten to do something to a country, which is already doing so voluntarily, in the process hurting Europe's already crippled economies even more by removing the cheapest source of energy for both.

Which however begs the question: just how much more Iranian crude are China and India importing despite promises to the contrary, and open warnings from the US not to do so?

Bank of Spain: Country is back in recession
17 April 2012, by David Roman - Madrid (MarketWatch)

Spain's economy is back in recession after a mild recovery in early and mid-2011, and faces an "exceptional" situation that may led to further increases in unemployment, Bank of Spain Governor Miguel Angel Fernandez Ordonez said Tuesday.

The euro zone's fourth-largest economy is also conducting what Fernandez Ordonez called an "unprecedented" fiscal adjustment--seeking to lower its budget deficit from 8.5% of GDP last year to 5.3% of GDP this year--in an address to a parliamentary committee.

Fernandez Ordonez also defended the European Central Bank's move to provide ample bank liquidity via auctions conducted in December and February.

He added that, despite the misgivings of critics, the fresh liquidity inflow hasn't slowed down the progress of Spain's reform drive.

Spain borrowing costs jump in bill auction: report
17 April 2012, by William L. Watts - Frankfurt (MarketWatch)

Spain saw short-term borrowing costs rise as it sold €3.2 billion ($4.2 billion) of 12- and 18-month bills in a closely-watched auction Tuesday, news reports said.

Spain saw the average yield on its sale of 12-month bills rise to 2.62% from 1.42% in a March 20 auction.

Demand was stronger, however, with bids exceeding supply 2.9 times versus a "bid-to-cover" of 2.1 in March.

A sale of 18-month bills produced an average yield of 3.11% and a bid-to-cover of 3.8.

The March sale produced an average yield of 1.71% and a bid-to-cover of 2.9.

The rise in borrowing costs comes after Spanish yields were pushed higher in recent weeks amid mounting worries over the country's fiscal outlook.

The yield on 10-year Spanish government bonds fell 0.06 percentage point to 5.96% in the secondary market after pushing above the psychologically important 6% level on Monday.

A tougher test looms for Spain on Thursday, when it will attempt to sell long-dated bonds, economists said.

"Not if, but when" for Spanish bailout, experts believe
17 April 2012, by Luke Baker - Brussels (Reuters)

* Investor concerns target Spain as bond yields rise

* Analysts believe banks will need a euro zone bailout

* But Madrid could resist for months, even into 2013

* Critical factor is extent of Spanish mortgage debt

Spain’s Surging Bad Loans Cast New Doubts on Bank Cleanup
18 April 2012, by Charles Penty (Bloomberg)


Spain’s surging bad loans are spurring doubt on whether the government can persuade investors that it can clean up the country’s banks without further damaging public finances.

Non-performing loans as a proportion of total lending jumped to 8.16% in February, the highest level since 1994, from less than 1% in 2007, according to Bank of Spain data published today.

The ratio rose from 7.91% in January as €3.8 billion of loans soured in February, a 110% increase from the same month a year ago.

That takes the total credit in the economy that the regulator lists as “doubtful” to €143.8 billion.

Defaults are rising and credit is shrinking at a record pace as 24% unemployment corrodes the quality of loans built up in the country’s credit boom and saps the appetite of banks to make new ones.

Doubts about the extent of Spain’s non- performing loans problem is hurting bank stocks and driving up the government’s borrowing costs on investor concern that the expense of propping up ailing lenders may add to the debt burden.

“One of our concerns in Spain is to what extent contingent liabilities could pass to the central government,” said Andrew Bosomworth, Pacific Investment Management Co.’s Munich-based head of portfolio management.

Non-performing loans “will have to rise when you take into account the unemployment rate and what’s happening with the economy,” he said.

Spanish banks' bad-loan ratio hits 18-year high
18 April 2012, Madrid (MarketWatch)

Spanish bank's bad loans ratio hit a 17-year high in February, with the ratio topping 8%, the central bank said Wednesday.

The Bank of Spain data showed that 8.16% of the loans held by banks, or €143.82 billion, were more than three months overdue for repayment in February, up from 7.91% in January.

This is the highest percentage recorded since October 1994, and contrasts with bad debt levels below 1% of all loans in the years prior to the 2008 collapse of the country's property market.

Spanish Banks Gorging on Sovereign Bonds Shifts Risk
18 April 2012, by Yalman Onaran (Bloomberg)


Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors.

Holdings of Spanish government debt by lenders based in the country jumped 26% in two months, to €220 billion ($289 billion) at the end of January, data from Spain’s treasury show.

Italian banks increased ownership of their nation’s sovereign bonds by 31% to €267 billion in the three months ended in February, according to Bank of Italy data.

German and French banks, meanwhile, have cut holdings of those countries’ bonds, as well as Irish and Greek debt, by as much as 50% since 2010 in some cases.

That leaves domestic firms on the hook for a restructuring such as Greece’s last month and their main financier, the European Central Bank, facing losses.

Like Greece, governments would have to rescue their lenders with funds borrowed from the European Union.

“The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute.

“So the exposure of the core countries to the periphery is shifting from the private to the public sector.

Borrowing costs rise for Spain at key auctions
19 April 2012, by Barbara Kollmeyer - Madrid (MarketWatch)

The Spanish Treasury on Thursday sold €2.54 billion ($3.33 billion) in bonds dated 2014 and 2022, which was more than expected, but its borrowing costs rose.

The Treasury had been targeting a range of €1.5 billion to €2.5 billion for the auction.

The yield on the 10-year auction rose to 5.74% from 5.403% at a prior auction of similar paper in January.

For the auction of two-year paper, the yield rose to 3.46% from a prior 2.069% at an auction in March.

The 10-year auction was covered 2.42 times, versus a prior 2.16 times, while the 2-year auction was covered 3.28 times from a prior 2.81.

The yield on the 10-year Spanish government bond in second markets rose 2 basis point to 5.87%, according to Tradeweb, while the Spain IBEX 35 index fell 0.7% to 7,032.40.

Spain economy shrank 0.4 percent in Q1 - central bank
23 April 2012, Madrid (Reuters)

Spain's economy probably contracted 0.4% in the first quarter of 2012, its central bank said on Monday, the first clear official confirmation of the scale of recession in one of the two large economies at the centre of the euro zone's debt crisis.

Government and economists' forecasts have been pointing for some time to a contraction at the start of this year in quarter-on-quarter terms, but the figure in the central bank's monthly report has tended to give an accurate reflection of official data. The official numbers are due on April 30.

The Bank of Spain's report said weak domestic demand had dragged the economy into its second formal recession - two consecutive quarters of negative quarterly growth - since 2008 while the outlook for the rest of the year was uncertain.

"The Spanish economy began 2012 in relapse, in which very weak domestic demand side was only offset by relative strength in the external sector," the bank said.


[size=14pt]Rising Italy-to-Spain Yields Keep Banks on Life Support[/size]
25 April 2012, by Liam Vaughan and Gavin Finch (Bloomberg)


European lenders, more reliant than ever on emergency aid after borrowing $1.3 trillion from their central bank, may need additional cash infusions until policy makers stem the crisis engulfing Spain and Italy.

After more than 30 bond sales in the first quarter, no bank has sold unsecured debt this month, and the cost of insuring against default has soared to levels last seen in January.

Financial stocks, which rallied 20% following the European Central Bank’s December decision to provide unlimited three-year loans, are now 2% lower since then.

Investors are balking after some lenders used the ECB cash to boost holdings of sovereign debt and governments struggled to rein in deficits.

Because banks post collateral in exchange for the ECB loans, the amount unsecured bondholders would get back in a default has shrunk.

That has raised funding costs for what Morgan Stanley estimates is about €700 billion ($924 billion) of debt lenders must refinance by the end of 2013.

“There is a very compelling case for further intervention from the ECB,” said Barbara Ridpath, chief executive officer of the International Centre for Financial Regulation, a London- based research group funded by banks and the U.K. government.

“Many of these banks simply cannot refinance their maturing debt in the bond market.”

Spain’s Ratings Cut by S&P on Deficit, Bank Bailout Concern
26 April 2012, by Cordell Eddings (Bloomberg)

Spain’s sovereign credit rating was by Standard & Poor’s on concern the nation will have to provide further fiscal support to the banking sector as the economy contracts.

Spain’s short-term rating was lowered to A-2 from A-1, while the outlook on the long-term rating is negative, New York- based S&P said in a statement today.

The nation’s 10-year borrowing costs have climbed about 70 basis points this year as Prime Minister Mariano Rajoy struggles to convince investors he can control public finances amid soaring unemployment and a contracting economy.

Banks threaten to disrupt the premier’s efforts as bad loans reach the highest levels in almost two decades.


Spain Yields at 6% Show Bank, Economy Risk: Euro Credit
26 April 2012  Bloomberg
As Spain’s recession undermines efforts to cut the deficit, the risk of bank losses is keeping 10-year yields at almost 6% as investors speculate the government will be forced to bail out the financial system.

The nation’s 10-year borrowing costs have climbed about 70 basis points this year as Prime Minister Mariano Rajoy struggles to convince investors he can control public finances amid soaring unemployment and a contracting economy.
Banks threaten to disrupt the premier’s efforts as bad loans reach the highest levels in almost two decades.

“Spain is likely to need support in both the banking and government sectors,” said Jamie Stuttard, head of international bond portfolio management at Fidelity Investments, which has $1.2 trillion of assets.
“Government bond market developments hold the key.”

Yields on 10-year Spanish bonds surpassed 6% on seven trading days this month,
boosting concern that borrowing costs may reach levels that prompted bailouts for Greece, Ireland and Portugal.

The rate was 5.77% at 9:03 a.m. London time.

Investors lost 1.2%, including reinvested interest, on Spanish debt repayable in one year or more over the past three months, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies.
The bonds are the worst performers in Europe after Greece.

Spanish unemployment hits record 5.64 million
27 April 2012, BBC News
Spanish unemployment has hit a new record high, official figures have shown.
The number of unemployed people reached 5,639,500 at the end of March, with the unemployment rate hitting 24.4%, the national statistics agency said.

The figures came hours after rating agency Standard & Poor's downgraded Spanish sovereign debt.
Official figures due out on Monday are expected to confirm that Spain has fallen back into recession.
Earlier this week, the Bank of Spain said the economy contracted by 0.4% in first three months of this year, after shrinking by 0.3% in the final quarter of last year.
Other figures released on Friday showed that Spanish retail sales were down 3.7% in March from the same point a year ago, the 21st month in row sales have fallen.

Germany Rejects Spain Banks Tapping Bailout Fund, Meister Says
27 April 2012, by Rainer Buergin and Brian Parkin (Bloomberg)

Spain’s rating downgrade at Standard & Poor’s doesn’t alter Germany’s stance that banks can’t have direct access to Europe’s financial backstops, a senior lawmaker from Chancellor Angela Merkel’s party said.

“The German position is absolutely strict,” Michael Meister, the deputy caucus chairman of Merkel’s Christian Democrats, said in a phone interview in Berlin.

“And since such aid programs require unanimity, there’s not going to be any change. All sorts of people can try to set things in motion, but Germany won’t vote for it.”

It’s “obvious” that there can’t be unconditional help from the European Stability Mechanism to Spanish banks, Meister said today.

The responsibility and liability for the ESM lies with its members, which are nation states, not banks, he said.


Spain tumbles into recession
30 April 2012, by Katell Abiven - Madrid (AFP)

Spain has toppled back into recession, official data confirmed Monday, but the government warned there was no alternative to austerity to build future growth.

Spain's gross domestic product shrank by 0.3% in the first quarter of 2012, equalling the slump in the final quarter of 2011, according to preliminary data from the National Statistics Institute.

The recession returned barely two years after Spain emerged gingerly from the last downturn.

Despite growing opposition to cuts during a recession with 24.4% unemployment in the first quarter, Economy Minister Luis de Guindos said fiscal restraint was more essential than ever.

"The Spanish government does not see any incompatability between austerity and economic growth," he told a news conference in Santiago de Compostela after talks with his German counterpart Wolfgang Schaeuble.

"Budget discipline is unavoidable if we want to build solid foundations and sufficient financing for economic growth in our country -- it is a necessary condition," he said.

Tens of thousands of people took the streets on Sunday to protest against austerity measures by Prime Minister Mariano Rajoy's conservative government, especially those affecting health care and education.

"Looking ahead, we fear that things are likely to get worse before they get better," warned ING economist Martin van Vliet.

"Indeed, the ongoing drag from real estate and the sheer scale of Spain's planned fiscal adjustment -- more than four percent of GDP this year -- mean that the recession will almost certainly deepen in the coming quarters, pushing unemployment to even more dramatic highs."

Doubts about Spain's ability to meet its deficit goals have been amplified by the plight of the banks, many bogged down in bad loans extended during a property boom which collapsed in 2008.

Standard & Poor's on Monday downgraded the ratings of the top Spanish banks, including Santander and BBVA, after slashing the country's credit standing because of the deficit and recession.

The banks affected include Santander and its subsidiary Banesto, BBVA, Banco Sabadell, Ibercaja, Kutxabank, Banca Civica, Bankinter and the local unit of Barclays.

The government said it was studying a scheme to allow banks to split off their bad loans and place them into a separate agency but without financial help from the state.

An economy ministry official said banks that joined the scheme would have to set aside financial provisions that recognise the sharply reduced market value of the loans, extended during the housing bubble.

"If the valuation of the assets is correct, the possibility of separating property assets from bank balance sheets is something that I think makes sense and is positive for the entities," De Guindos said.

"It allows them to free up capital and fundamentally allows the banks to focus on their core business which is banking and not real estate," he said.

Bank of Spain figures on Friday showed commercial banks held problem real estate loans worth €184 billion ($243 billion), some 60% of their property portfolio at the end of 2011.

The ratio of bad loans -- those at least three months in arrears -- hit an 18-year high in February of 8.15% of total credit extended.

Spain aims to lower the public deficit -- the shortfall in revenues to spending -- to 5.3% of GDP this year and 3.0% of GDP next year, after allowing it to hit 8.5% of GDP in 2011.

The accumulated public debt is officially forecast to leap to 79.8% of GDP this year from 68.5% at the end of 2011.

Spain's Central Bank consults experts on toxic assets: sources
30 April 2012 , by Fiona Ortiz - Madrid (Reuters)

Spain's Central Bank is consulting with international bankers and property experts on setting up a holding company to value and sell off toxic real estate assets from the country's troubled financial sector, two sources said on Monday.

The consultation process will last a few weeks, one of the sources, from the central bank, said. "When we have those opinions we will use them for input on the formula for the entity," the source told Reuters.

Spain's banks were hit by billions of euros of losses after a decade-long property bubble burst in 2008 and concern about them, and the country's overspending regional governments, have fanned fears of a new euro zone debt crisis.

It has restructured the financial sector three times, injected some €18 billion into the system, taken over five banks and forced banks to recognize steep losses.

But investors are not convinced all the risks have been worked out of the system and Spain's borrowing costs are hovering around 6%, a point below levels deemed unsustainable.

The government is looking at what it calls a liquidation structure -- refusing to use the term bad bank -- to take toxic assets off the banks' books.

"Separating the real estate assets from the bank balances is something that makes sense and is positive for the banks from many points of view," Economy Minister Luis de Guindos said at a news conference on Monday.

"It allows you to free up capital and fundamentally it allows the banks to do their banking business and not the real estate business," he said.

Asked which banks were advising the government de Guindos declined to answer, saying talks were ongoing. The Bank of Spain source also declined to name the advisers.


Egan Jones Cuts Spain For Second Time In Two Weeks, From BBB- To BB+
30 April 2012, by Tyler Durden (Zero Hedge)

TEXT-S&P takes negative rating actions on 16 Spanish banks
30 April 2012, (Reuters)

Why We Should Worry about Spain’s Economic Pain


Two years ago this month I was in Madrid reporting a story on the troubles of the Spanish economy and what they meant for Europe and its debt crisis. And here I am today writing about the troubles of the Spanish economy and what they mean for Europe and its debt crisis. I usually don’t like to repeat myself, but the fact that I am anyway shows just how badly Europe’s strategy for resolving its debt crisis is failing.

In fact, Spain’s predicament has actually worsened in the past two years. The national statistics bureau revealed on Monday that GDP contracted by 0.3% in the first quarter from the previous one – placing Spain officially back in recession. Unemployment has continued to rise: Now, a staggering one in four people are out of work. Standard & Poor’s downgraded the government’s credit rating last week, and followed that up on Monday by doing the same to 11 Spanish banks. Meanwhile, Spain’s borrowing costs remain elevated. The yield on 10-year government bonds is back near 6%.

We should all be very worried about what’s going on in Spain. Because Spain isn’t Greece. The Greek crisis was most likely not a direct threat to the survival of the monetary union. Its economy was simply too small. The danger was in the possible contagion effect Greece might present if it outright defaulted or bolted from the union. Spain, the zone’s fourth-largest economy (after Germany, France and Italy) can do a lot of damage all by itself. If Spain ultimately requires a bailout, it would strain the resources available in the zone’s rescue fund (the European portion of which was recently boosted to a total of $925 billion) and put pressure on the zone to fatten up the fund even more, which Germany and others have been reluctant to do. Such an event would also be the biggest blow to the future of the euro yet, likely reigniting the crisis in Italy and making other bailouts more likely (especially for Portugal). With emerging markets slowing down, Europe in the toilet, the U.S. recovery uncertain, and energy prices high, a Spanish meltdown is exactly what the global economy doesn’t need right now.

Read more

Bankia shares drop as Spain readies bailout
8 May 2012, (AFP)


Shares in Spain's fourth-biggest listed bank, Bankia, fell sharply Tuesday after the government said it would inject public money in the lender this week to clean up huge bad loans.

On Monday shares in Bankia, which has the industry's largest exposure to the property market at €37.5 billion ($49 billion), had lost 3.26%.

An economy ministry official told AFP Monday that the government was "finalising a plan to clean up the bank", adding that the scheme would use public money and was likely to be announced by Friday.


The leading daily El Pais estimated Bankia would need €5-€10 billion ($6.5-$13 billion) to repair its balance sheet.

Business daily Expansion put the figure at €5-€7 billion.

Spain Underplaying Bank Losses Faces Ireland Fate
10 May 2012, by Yalman Onaran (Bloomberg)


Spain is underestimating potential losses by its banks, ignoring the cost of souring residential mortgages, as it seeks to avoid an international rescue like the one Ireland needed to shore up its financial system.

The government has asked lenders to increase provisions for bad debt by €54 billion ($70 billion) to €166 billion.

That’s enough to cover losses of about 50% on loans to property developers and construction firms, according to the Bank of Spain.

There wouldn’t be anything left for defaults on more than €1.4 trillion of home loans and corporate debt

Taking those into account, banks would need to increase provisions by as much as five times what the government says, or €270 billion, according to estimates by the Centre for European Policy Studies, a Brussels-based research group.

Plugging that hole would increase Spain’s public debt by almost 50% or force it to seek a bailout, following in the footsteps of Ireland, Greece and Portugal.

“How can you only talk about one type of real estate lending when more and more loans are going bad everywhere in the economy?” said Patrick Lee, a London-based analyst covering Spanish banks for Royal Bank of Canada.

“Ireland managed to turn its situation around after recognizing losses much more aggressively and thus needed a bailout.

I don’t see how Spain can do it without outside support.”

One year on, Spain's 'indignants' take to streets
Masses of chanting "indignant" activists poured into the streets across Spain on Saturday in a vast show of strength one year on from igniting a global protest against economic injustice.
Thousands packed Madrid's central Puerta del Sol square, the emblematic birthplace of their popular movement against inequality, sky-high unemployment and spending cuts that shook the political establishment.
Many had marched to the square for hours in separate columns of protesters from all directions.
Police gave no estimate for the turnout in Madrid but the authorities in Barcelona, Spain's second-largest city, said around 45,000 jammed the Plaza de Catalunya square.

Spain Potpourri: Official Denials From Finance Minister; More Nationalizations Coming Up; Banks Use ECB Money to Refinance Large Enterprises in Dire Shape, New Credit To Households Down 80%
15 May 2012, by Mike Shedlock (MISH'S Global Economic Trend Analysis)

Bankia hit by report of withdrawals
May 17, 2012  
Shares in Bankia, the Spanish bank that was part-nationalised last week, plunged by more than a quarter on Thursday morning, after a report that customers had withdrawn €1bn from the bank over the past week.
The shares fell 27 per cent in morning trade to €1.21 in an initial reaction to reports in El Mundo, a national Spanish newspaper, that customers had withdrawn the large amount, citing information from a recent board meeting.

Concerns about the sector’s exposure to about €180bn of bad loans have deepened, and Spanish banks have seen heavy selling over the past week.
On Thursday morning, shares in Banco Popular tumbled 7.1 per cent to €1.86, while Bankinter fell 5 per cent to €2.94. Caixabank, Spain’s biggest domestic retail lender by number of customers, fell 3.8 per cent to €2.19.
Bigger banks with less exposure to the domestic market were swept up in the selling. Santander, Europe’s biggest bank by assets, fell 2.8 per cent to €4.39, while BBVA slipped 2.8 per cent to €4.77.
Volatility among lending stocks helped to drive the broader IBEX 35 index down 1.6 per cent to 6,507.30.
Lenders across Europe fell, with the FTSE Eurofirst banking sub-index sliding 2.3 per cent to a new year-low of 342.09.

Damage Control? Perhaps   Question

No deposit flight at Bankia - Spain govt official
MADRID | Thu May 17, 2012
Spain's Economy Secretary said on Thursday there had not been an exit of deposit funds from troubled bank Bankia.

"It's not true that there is an exit of deposits at this moment from Bankia," said Economy Secretary Fernando Jimenez Latorre.
El Mundo newspaper earlier reported that Bankia had lost over 1 billion euros ($1.27 billion) in deposits, around 1 percent of retail and corporate accounts, over the past week.

Moody's cuts ratings of 16 Spanish banks
17 May 2012  MarketWatch
Moody's Investors Service on Thursday lowered ratings of 16 Spanish banks and Banco Santander's U.K.-based subsidiary by one to three notches.

Moody's cited unfavorable operating conditions on renewed recession, reduced creditworthiness of the Spanish sovereign, and rapid deterioration in asset quality for the downgrades.
The outlooks on ten of the banks are negative while ratings of seven other banks remain on review for further downgrade.
Some of the affected banks include Banco Santander SA, Banco Espanol de Credito, Banco Bilbao Vizcaya Argentaria SA, Caixabank, and Ceca.

Spain beset by bank crisis, downgrades, bond pressure
Spain's borrowing costs shot up at a bond auction on Thursday and its troubled banks suffered a double blow, with shares in part-nationalized Bankia diving and 16 lenders - including the euro zone's biggest - having their credit ratings cut.

Official data confirmed Spain was back in recession and a newspaper reported a big outflow of deposits from Bankia, but the government said it had taken a fundamental step to strengthen Spain's credibility by agreeing big budget cuts with the country's free-spending regions.
Moody's Investors Service cut the long-term debt and deposit ratings of the 16 Spanish banks, including Banco Santander, the euro zone's largest, saying the government's ability to support some banks had weakened.

Spain's banks, saddled with bad loans after a property boom collapsed, lie at the heart of the euro zone crisis as markets fear any major rescue would strain Madrid's already stretched finances and possibly require an international bailout.


Moody's downgrades four Spanish regions
17 May 2012, by Ben Fox (MarketWatch)

Moody's Investors Service lowered its rating on four Spanish regions, citing their poor fiscal performance and the low probability that the regional governments will be able to meet this year's deficit target set by central government.

The regions of Murcia and Andalucia were cut by two notches, while Extremadura and Catalunya were cut by one, while Moody's affirmed its ratings on the regions of Castilla-La Mancha and Valencia.

Catalunya and Murcia were dropped to junk level territory, as Moody's cited the regions' poor finances last year and its expectation that they are likely to miss the 2012 deficit target.

All six regions' outlooks are negative, in line with Spain's negative outlook, but the ratings action concludes a downgrade review that Moody's initiated in February.


Spain's GDP contracts as austerity hits spending
17 May 2012, by Christopher Bjork - Madrid (MarketWatch)

--Government, households buy less goods, services

--Business investment falls most in two years

--Exports are softening

Spain's government, households and companies reined in spending in the first three months of the year, leading the euro zone's fourth-biggest economy to contract 0.3% from the fourth quarter.

Exports softened after several quarters of strong growth, reflecting the wider slowdown in Europe. Exports had been a bright spot throughout the country's drawn-out economic crisis.


The pain in Spain seeks who to blame May 19,  2012  Saturday

UPDATE 2-Banks' rising bad loans add to Spanish troubles
18 May 2012, by Julien Toyer and Jesús Aguado - Madrid (Reuters)

* Spanish banks' bad loans rise to 8.37%, 18-year high

* Spain to name independent auditors for financial sector

* Goldman to carry out valuation of Bankia-sources

* Moody's downgrades 16 Spanish banks

* Shares rebound to trim losses in grim week

Spanish bank bad loans rose in March to their highest in 18 years, figures from the Bank of Spain showed on Friday, underscoring the problems facing the government as it attempts to clean up the sector and get its economy back on track.

The Bank of Spain said bad loans rose to 8.37% of the banks' outstanding loans, the highest since August 1994 and up from 8.3% in February, which was also revised higher.


Spain to inject 9 bln euros into Bankia: reports
23 May 2012, by Sara Sjolin - New York (MarketWatch)

The Spanish government will inject at least €9 billion ($11.3 billion) into Bankia SA to recapitalize the ailing bank, Spanish Finance Minister Luis de Guindos said Wednesday, according to media reports.

The government will provide funds to cover the bank's provisioning needs, as the bank otherwise is unable to comply with two banking reforms presented this year, the finance minister said.

The question was weather the capital would be injected into the public Bankia or unlisted parent company Banco Financiero y de Ahorros SA, which holds the company's most toxic real-estate assets.

The government funds will, according to a Wall Street Journal report, be provided to BFA, which means Bankia shareholders won't see their investments diluted.

Bankia is the third-largest bank in Spain by assets and controls about 10% of the country's loans and deposits.

Spain 'Discovers' €28 Billion In Debt
23 May 2012, by Tyler Durden (Zero Hedge)

Back in late March, we pointed out - much to the chagrin of the LTRO-funded Spanish-sovereign-debt-stuffing banks of the tapas-nation - that, in a similarly misleading manner to Greece's 'leverage' the debt-to-GDP data for Spain was significantly higher than official estimates.

Once sovereign guarantees, contingent liabilities and their responsibilities to the EU and the ECB were included things got a whole lot uglier.

Now, slowly but surely, as reported by Reuters this evening, some of these bilateral guarantees/loans are coming to light:

Instead of the expected €8 billion of 'regional refinancing' expected for 2012, it turns out there is €36 billion and as Reuters notes:

"the difference is due to bilateral loans from Spanish banks to the regions worth €28 billion that were not made public previously" adding that

"It could unnerve further investors concerned by the capacity of Spain to curb its public finances and reform its banking sector."

Critically this stunning 'discovery' should be worrisome since the plan, given the regions are virtually blocked from public market financing - due to the high cost of funds, was/is for the sovereign to guarantee (there's that word again) their issuance explicitly.

Ironically, as de Guindos and Hollande are chummy borrow-and-spendaholic growth-seekers versus Merkel's safe-and-austere determination, so now the Spanish authorities must lend exuberantly to their regions while at the same time demanding deficit targets are met (or else?) - or as one Reuters' source objects:

"You can't tell them on one side that they have to be austere and on the other side give them unlimited liquidity".

Irony indeed.

As Bankia Bailout Costs Grow Exponentially, Is A Stealth Bank Run Taking Place... And What Happens To Ronaldo?
24 May 2012, by Tyler Durden (Zero Hedge)

Bankia SA will have to ask the Spanish government for more than €15 billion as part of its effort to restore its financial health, state-owned news agency EFE reported Thursday, citing financial sources, Dow Jones, May 24


Morning business round-up: Spain's Bankia shares suspended

What made the business news in Asia and Europe this morning? Here's our daily business round-up:

The main event in Europe on Friday was the news that trading in shares in Spanish bank Bankia was suspended in Madrid.

It asked for them to be suspended ahead of a board meeting later on Friday to reformulate its accounts for 2011 and submit a plan to shore up its finances.

The bank is reported to be due to ask the government for a bailout of more than 15bn euros ($19bn; £12bn).

Bankia, which is Spain's fourth-largest bank, was part-nationalised two weeks ago because of its problems with bad property debt.


Spain to bail out Bankia with 19 billion euros
25 May 2012, by Sara Sjolin and Barbara Kollmeyer - New York (MarketWatch)

Spain’s government is ready to inject €19 billion ($24 billion) into ailing lender Bankia, the bank said Friday, in what would be the largest bank bailout in the nation’s history.

The board of the troubled Spanish bank said in a statement that it was seeking government help as part of a recapitalization plan.

The €19 billion figure already has been approved by the government, The Wall Street Journal reported, citing people familiar with the matter.

Bankia shares were suspended Friday ahead of the announcement. Shares have lost 11% this week and nearly 60% of their value for the year to date.


Spanish bond yields rise on Catalonia money woes
25 May 2012, by Barbara Kollmeyer - Madrid (MarketWatch)

The yield on Spain's 10-year government bonds shot higher on Friday after the president of one of the country's autonomous regions reportedly said it would need help from the government to refinance debt this year.

Catalan President Artur Mas told a group of foreign reporters that Catalonia is running out of options.

"We don't care how they do it, but we need to make payments at the end of the month.

Your economy can't recover if you can't pay your bills," Mas reportedly said.

The yield on Spain's 10-year government bond jumped to 6.32%, up 14 basis points from Thursday, according to Tradeweb.

The market is also waiting on news from ailing lender Bankia SA, which is expected to announce how much money it needs for a bailout from the government after a board meeting.

The news is expected to come well after the close of European markets.

S&P downgrades Bankia, Banco Popular to junk
25 May 2012, by Sara Sjolin - New York (MarketWatch)

Standard & Poor's Ratings Services on Friday cut several Spanish banks to junk status, citing concerns about the country's economy and current risks in the banking sector.

Bankia SA, and Banco Popular Espanol SA were downgraded to BB+ from BBB-.

"We believe that the Spanish government would likely provide short-term support to back any potential capital shortfall at these two institutions if necessary," the ratings agency said in a statement.

S&P also cut Bankinter SA to junk status and said the outlook for Banco Santander SA and BBVA SA are negative.

The ratings actions follow a "review of the wider implications for economic and industry risks in the Spanish banking sector after our two-notch downgrade of the Kingdom of Spain on April 26," the agency said.

Spain region, Greek exit warnings rattle euro zone


(Reuters) - Central banks and companies risk making a grave error if they do not brace for a possible Greek exit from the euro zone, Belgium's foreign minister said on Friday, rattling markets already alarmed by Spain's deteriorating finances.

Greek elections are scheduled for June 17 and could hasten the country's departure from the currency club should a government intent on ripping up the country's bailout program result.

Contrasting findings of opinion polls on Friday showed the outcome is too tight to call.

Greece accounts for little more than 2 percent of the euro zone economy but could pose a profound contagion threat if it quit the currency area, throwing the spotlight on Portugal, Spain and even Italy.



Spain Borrowing Costs Hit New High

MADRID—Concerns about Spain's ability to overhaul an ailing banking system while it tries to shore up its financially shaky regions and plug a gaping budget deficit sent Spanish borrowing costs to a record high Monday, prompting a new call from Prime Minister Mariano Rajoy for the European Union to take action to calm market turmoil.

"We need clear statements in defense of the euro and of the sustainability of euro-zone debt," Mr. Rajoy said in a news conference. Spain's 10-year government bond yield rose 0.18 percentage point to 6.47% Monday, a new 2012 high, after Spain announced a €19 billion ...

Spain Runs Out Of Money To Feed The Zombies

Bankia Parent Revises 2011 “Profit” Of €41 Million to €3.3 Billion Loss

Overnight Sentiment: Europe Is Open, Bankia Is Plunging And Spanish Bond Yields Are Soaring

Spain-AAA Spread Just Broke 450 bps: LCH Margin Hike Alert

EUR Shorts Hit New Record

ECB rejects Spain’s Bankia recap plan: FT
29 May 2012, by Wallace Witkowski - San Francisco (MarketWatch)

Spain will have to come up with another plan to recapitalize Bankia SA after the European Central Bank reportedly torpedoed a proposal to use government debt.

The ECB said Spain’s plan to use €19 billion ($24 billion) in sovereign bonds to recapitalize the bank was in danger of violating a ban forbidding the central bank to finance governments, the Financial Times reported in its online edition late Tuesday, citing European officials.

Spain nationalized Bankia, its third-largest bank, in early May.

Under a proposal, Spain planned sink billions of euros in its bonds into the ailing bank with an eye to swapping them out for cash at the ECB’s three-month refinancing window.

Such a plan would have allowed the country to sidestep having to raise the money in the bond markets.


Egan Jones Cuts Spain Again: From BB- To B, Outlook Negative
29 May 2012, by Tyler Durden (Zero Hedge)

The little rating agency (or is that former, now that it is public knowledge that Egan-Jones missed a comma in their NRSRO application?) that just refuses to go away, has done it again, and downgraded Spain from BB- to B (negative outlook of course), and on the edge of the dreaded triple hooks, mere days after it cut it from BB+ to BB-.


Spain contnues to be weakened by the government deficit of 9.6% (based on the first quarter results), an estimated decline in GDP of 1.7% (per the Economy Ministry), the 24.4% unemployment,

the IIF's recent estimate of additional bank loan losses up to €260 billion, and possible depositor withdrawals.

(Over the past three fiscal years, that is from 2008 to 2010, Spain's GDP declined from €1.09 trillion to €1.07 trillion.)

Meanwhile, its debt mushroomed from €381 billion to €563 billion.


Spain rattles markets, Greeks warned of catastrophe


MADRID/ATHENS (Reuters) - Spain's borrowing costs lurched higher and the Madrid stock market hit a nine-year low on Wednesday as investors rattled by deepening fears about its banking system fled to the relative haven of German bonds.

Spain's banking woes - the result of a burst property bubble aggravated by recession - have combined with growing uncertainty about Greece's survival in the euro zone to reignite Europe's sovereign debt crisis, driving the euro to a two-year low of $1.2454. European shares also extended their fall after Italy paid heavily to sell bonds.

Madrid said it will probably tap credit markets to inject funds into nationalized lender Bankia, but that looks expensive with 10-year borrowing costs at 6.67 percent near their euro era peak and close to levels at which Ireland and Greece sought international bail-outs.

The Economy Ministry played down a Financial Times report that the European Central Bank had rejected an initial plan to rescue Bankia, Spain's fourth biggest bank, by stuffing it with government bonds that could be used as collateral to borrow from the ECB. [ID:nL5E8GU39O]



Euro falls to 22-month low on Spain downgrade

NEW YORK (AP) — The euro plunged to a fresh 22-month low Tuesday after a ratings agency downgraded Spain's debt.

The euro fell to $1.2487 late Tuesday from $1.2539 late Monday. The euro fell as low as $1.246 earlier, its lowest point against the dollar since July 2010.

Egan-Jones Ratings Company downgraded Spain saying that it may have trouble paying its debt as growth slows and rising unemployment rate. Spain has a 24.4 percent jobless rate and is battling its second recession in three years.

The downgrade came after more bad news for the country. On Tuesday, Spain said that retail sales fell 9.8 percent in April from a year ago. That's more than double the 3.8 percent drop in March.


Spain faces 'total emergency' as fear grips markets

Spain is facing the gravest danger since the end of the Franco dictatorship as the country is frozen out of global capital markets and slides towards an epic showdown with Europe.


We’re in a situation of total emergency, the worst crisis we have ever lived through” said ex-premier Felipe Gonzalez, the country’s elder statesman.

The warning came as the yields on Spanish 10-year bonds spiked to 6.7pc, pushing the “risk premium” over German Bunds to a post-euro high of 540 basis points. The IBEX index of stocks in Madrid fell 2.6pc, the lowest since the dotcom bust in 2003.

Chaos over the €23.5bn rescue of crippled lender Bankia has led to the abrupt resignation of central bank governor Miguel Ángel Fernández Ordóñez, who testified to the senate that he had been muzzled to avoid enflaming events as confidence in the country drains away.

Markets are on tenterhooks as Spanish yields test levels that forced the European Central Bank to respond last November with its €1 trillion liquidity blitz. “Nobody is short Spanish debt right now because they are expecting ECB intervention,” said Andrew Roberts, credit chief at RBS. “If it doesn’t come -- if we take out 6.8pc -- we’re going to see a hyberbolic sell-off,” he said.



Money flies out of Spain, regions pressured

(Reuters) - Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday, and the credit ratings of eight regions were cut.

Spain is the next country in the firing line of the euro zone's debt crisis, with spendthrift regions and shaky banks threatening to blow a hole in state finances and pushing funding costs towards levels that signal the need for a bailout.

The European Commission gave new help on Wednesday, offering direct aid from a euro zone rescue fund to recapitalize Spanish banks and more time for Madrid to reduce its budget deficit.

That helped lower the risk premium investors demand to hold Spanish 10-year debt rather than the German benchmark on Thursday, but it remained close to the euro-era record, at 520 basis points.

Bank of Spain data showed a net 66.2 billion euros ($82.0 billion) was sent abroad last month, the most since records began in 1990. The figure compares to a 5.4 billion net entry of funds during the same month one year ago.


Italy, Spain default insurance costs hit record
1 June 2012. by William L. Watts - Frankfurt (MarketWatch)

The cost of insuring Spanish and Italian government debt against default via instruments known as credit default swaps, or CDS, hit new records on Friday, according to data provider Markit.

The spread on five-year Spanish CDS widened to 610 basis points from 596 basis points on Thursday.

That means it would now cost $610,000 annually to insure $10 million of Spanish debt against default for five years, up $14,000 from the previous day.

The spread on Italian CDS widened by 22 basis points to 579.

Core euro-zone countries also saw a rise, with the French CDS spread widening by 8 basis points to 225 and Germany widening by 4 basis points to 106, Markit said.

Euro Shorts Reach Record as Spain, Greece Concern Damp Demand
1 june 2012, by Catarina Saraiva (Bloomberg)


Futures traders boosted bets that the euro will depreciate against the dollar to a record high as concern increased that Spain’s banking crisis will worsen and Greece may exit the 17-nation currency union.

Hedge funds and other large speculators increased wagers on a euro drop for a fourth straight week in the five days ended May 29, Commodity Futures Trading Commission data showed today.

The surge came during a week in which Greece’s anti-bailout political party gained in the polls and as Spanish leaders debated how to recapitalize Bankia group.

“Positions are getting more extended,” said Brian Kim, a currency strategist in Stamford, Connecticut, at Royal Bank of Scotland Group Plc.

“It’s not just because of the crisis, but also data getting weak and expectations that the ECB could ease in the second half of the year.”

The [color]difference[/color] in the number of wagers on a decline in the shared currency compared with those on a gain, known as net shorts, was 203,415, the most since the euro’s inception in 1999.

It was the third consecutive weekly record.


G7 to hold emergency euro zone talks, Spain top concern


TORONTO/BERLIN (Reuters) - Finance chiefs of the Group of Seven leading industrialized powers will hold emergency talks on the euro zone debt crisis on Tuesday in a sign of heightened global alarm about strains in the 17-nation European currency area.

With Greece, Ireland and Portugal all under international bailout programs, financial markets are anxious about the risks from a seething Spanish banking crisis and a June 17 Greek election that may lead to Athens leaving the euro zone.

"Markets remain skeptical that the measures taken thus far are sufficient to secure the recovery in Europe and remove the risk that the crisis will deepen. So we obviously believe that more steps need to be taken," White House press secretary Jay Carney told reporters.

Canadian Finance Minister Jim Flaherty said ministers and central bankers of the United States, Canada, Japan, Britain, Germany, France and Italy would hold a special conference call, raising pressure on the Europeans to act.



Updated June 5, 2012, 10:49 a.m. ET.
Spain Warns Market Access Being Shut

MADRID—Spain's Budget Minister Cristobal Montoro on Tuesday urged euro-zone partners to act faster to help support its enfeebled banks, saying that the government has effectively lost access to capital markets because of steep risk premiums demanded by sovereign bond investors.

In making this dramatic admission, Mr. Montoro joined recent calls by the Spanish government for direct aid from European Union institutions for Spanish banks as the government hopes to avoid a full-blown bailout package.

The matter has gained urgency after Madrid was forced into a €19 billion ($23.75 billion) rescue of lender Bankia SA.

The government's borrowing costs have surged ...

Spanish industrial production sinks 8.2% in April
6 June 2012, by Barbara Kollmeyer - Madrid (MarketWatch)

Spanish industrial production dropped 8.2% in April on an annual basis, the national statistics office said Wednesday.

That comes after a fall of 7.5% in March.

Industrial production has been on the decline or flat for 14 months.

In May and August of 2011, production was unchanged.

The April fall was the biggest in more than a year.

Fitch cuts Spain credit rating to BBB
7 June 2012, by David B. Wilkerson - Chicago (MarketWatch)

Fitch Ratings on Thursday downgraded its long-term foreign and local currency issuer default ratings on Spain to BBB from A, with a negative outlook.

The BBB credit rating is just a notch higher than junk status.

The firm said Spain's "high level of foreign indebtedness has rendered it especially vulnerable to contagion from the ongoing crisis in Greece."

Fitch added that the nation's reduced financing flexibility hampers its ability to "intervene decisively in the restructuring of the banking sector and has increased the likelihood of external financial support."

Eurozone ministers discuss Spain bank bailout


Swedish PM: "Talk" Spain needs ?80B in rescue loan

STOCKHOLM (AP) — Sweden's prime minister says there is widespread European agreement that Spain needs to ask for outside help to try to prop up its ailing economy and that "there is talk" of a bailout package of up to €80 billion.

Fredrik Reinfeldt, whose country is not part of the eurozone, spoke with national broadcaster Swedish Radio ahead of an emergency conference call between European finance ministers on Saturday.

He said the situation in the southern European country "is serious" and "that in reality we're talking about one of the greatest financial rescue operations the world has seen."

A report from the International Monetary Fund on Saturday estimated Spanish banks need a recapitalization injection of at least €40 billion ($50 billion), but Reinfeldt says "there's talk about up to €80 billion."

Europe bailout of Spain could cost $125 billion
By DANIEL WOOLLS and SARAH DiLORENZO | Associated Press – 6/9/12

MADRID (AP) — Spain became the fourth and largest country Saturday to ask Europe to rescue its failing banks, a bailout of up to €100 billion ($125 billion) that leaders hoped would stabilize a financial crisis that threatens to break apart the 17-country eurozone.

The rescue offer follows growing pressure from international investors and the Obama administration and comes a week before elections in Greece, whose voters could decide whether the country leaves the euro.

Europe's widening recession and financial crisis has hurt companies and investors around the world. Providing a financial lifeline to Spanish banks is likely to relieve anxiety on the Spanish economy — which is five times larger than Greece's — and on markets concerned about the country's ability to pay its way.

"What the markets are looking for is essentially the Spanish government's acceptance that its banks are broke," said Jacob Kirkegaard, a research fellow at the Peterson Institute for International Economics in Washington.

Economy Minister Luis de Guindos announced the deal after an emergency conference call with eurozone financial leaders. He said the aid will go to the banking sector only and would not come with new austerity conditions attached for the economy in general — conditions that have been an integral part of previous bailouts to Portugal, Ireland and Greece.


Spanish bank bailout request welcomed
9 June 2012   Spain's decision to request a loan of up to 100bn euros ($125bn; £80bn) from eurozone funds to help shore up its struggling banks has won broad support.
The International Monetary Fund (IMF) said the bailout was big enough to restore credibility to Spain's banks.

Washington welcomed the measure as a vital step towards the "financial union" of the eurozone.
The move was agreed during emergency talks between eurozone finance ministers on Saturday.
IMF managing director Christine Lagarde said the plan for Spain should provide "assurance that the financing needs of Spain's banking system will be fully met".


Bailout for Spain's banks buys time[life support] for Europe
By PAUL WISEMAN and PETER SVENSSON | Associated Press – 6/10/12

[] = emphasis mine

WASHINGTON (AP) — The plan to bail out Spain's banks with up to $125 billion in aid buys European policymakers time to try to save the euro and eases deep fears in global financial markets.

The deterioration of Spain's banks and the pressing need for a rescue was threatening to bankrupt its government. That would likely cause far more pain for Europe than the financial messes in Greece, Portugal and Ireland, smaller economies that have received bailouts.

Investors need all the reassurance they can get. They're already worried about what will happen when Greek voters go to the polls June 17. The Greeks could elect a government that will refuse to live up the terms of a $170 billion bailout. That could force the country to exit the euro — an outcome that would raise fears that another, bigger European country might be next.

"A significant part of this (bailout for Spanish banks) has to do with ring-fencing Greece," says Jacob Kirkegaard, a research fellow at the Peterson Institute for International Economics in Washington. "This is enough to prevent added market contagion."


Spain relieved, angry over humiliating bank rescue
By ALAN CLENDENNING | Associated Press – 1 hr 5 mins ago.

MADRID (AP) — Spain's grinding economic misery will get worse this year despite the country's request for a European financial lifeline of up to €100 billion ($125 billion) to save its banks, Prime Minister Mariano Rajoy said Sunday.

A day after the country conceded it needed outside help following months of denying it would seek assistance, Rajoy said more Spaniards will lose their jobs in a country where one out of every four are already unemployed.

"This year is going to be a bad one," Rajoy said Sunday in his first comments about the rescue since it was announced the previous evening by his economy minister.

The conservative Prime Minister added that the economy, stuck in its second recession in three years, will still contract the previously predicted 1.7 percent even with the help. Small businesses and families starving for credit will eventually get relief as the funding props up banks and they increase lending, but Rajoy didn't offer guidance on when.

Spain on Saturday became the fourth — and largest — of the 17 countries that use Europe's common currency to request a bailout — a big blow to a nation that a few years ago took pride as the continent's economic superstar only to see it become the hot spot in the eurozone debt crisis. Its economy is the eurozone's fourth largest after Germany, France and Italy.


Fitch downgrades pair of Spanish banks
11 June 2012, by William Spain - Chicago (MarketWatch)

Fitch Ratings on Monday downgraded Banco Santander's and Banco Bilbao Vizcaya Argentaria's long-term issuer default ratings to BBB+ from A and viability ratings to bbb+ from a.

The outlooks on the long-term IDRs are negative.

The moves "are primarily based on the downgrade of the Spanish sovereign" and reflect concerns that "Spain is forecasted to remain in recession through the remainder of this year and 2013 compared to the previous expectation that the economy would benefit from a mild recovery in 2013," Fitch said

More Here: Fitch downgrades Spain's Santander, BBVA

Fitch lowers rating on 18 more Spanish banks
12 June 2012, by Kristin Jones (MarketWatch)

Fitch Ratings lowered its rating on 18 more Spanish banks, following the downgrade of Spain's sovereign debt last week, on the expectation that the country will remain in recession through 2013.

The downgrades also reflected the ratings firm's concerns that the portfolio of certain banks could deteriorate further.

Banks whose loan books are heavily exposed to the construction and real-estate sectors, or have low equity bases, are particularly vulnerable, it said.

Fitch has carried out new stress tests, both on the Spanish banking sector as a whole and on an individual basis, that factor in Spain's deteriorating macroeconomic conditions.



Market euphoria over Spanish bank bailout fizzles

Reuters) - Financial market euphoria over a European bailout for Spain's debt-stricken banks faded quickly on Monday as investors sounded the alarm over its impact on public debt and bondholders, and eyed the next risks in the euro zone's debt crisis.

EU and German officials said Spain faces supervision by international lenders after the deal to lend Madrid up to 100 billion euros ($125 billion), contradicting Prime Minister Mariano Rajoy who insisted the cash came without such strings.

European stocks leapt to a four-week high, with investors scooping up battered financial shares. But Spanish and Italian bond yields rose sharply as doubts set in about the impact and terms of the deal, designed to avert a run on Spanish banks.


Moody's cuts Spain rating to Baa3
13 June 2012, by Wallace Witkowski - San Francisco (MarketWatch)

Moody's Investors Service said late Wednesday it downgraded Spain's sovereign-debt rating to Baa3 from A3 and placed it on review for a possible further downgrade.

Moody's based the downgrade on Spain's plans to borrow up to 100 billion euros from the European Financial Stability Facility, its limited financial-market access and increasingly vulnerable economy.

Moody's said it will conclude its review to decide a further downgrade within three months.

The downgrade follows one earlier Wednesday from Egan-Jones, which lowered its rating on Spain to CCC+ from B.

On Wednesday, yields on Spain's 10-year note pushed past 6.75%.

Egan-Jones downgrades Spain to CCC+
13 June 2012, by Wallace Witkowski - San Francisco (MarketWatch)

Egan-Jones Ratings Co. downgraded its sovereign rating on Spain further into junk Wednesday as funding costs rise and the country's banking sector seeks financial aid.

Egan-Jones cut its rating on Spain to CCC+ from B, right on the heels of a downgrade from BB- in late May.

"As we expected, Spain requested support for its banking sector and will probably need cash for weaker provinces," the ratings agency said in a note.

"Assets of Spain's largest two banks exceed its GDP."

Yields on Spain's 10-year note hit 6.75% on Wednesday.

Yield on Spain bond yield hits highest-ever 7%
14 June 2012, by Barbara Kollmeyer - Madrid (MarketWatch)

The yield on Spain's 10-year government bond reached an all-time high of 7% on Thursday, with Tradeweb reflecting the yield at 7.01%, versus a close of 6.772% the prior day.

The move came in the wake of a three-notch Moody's Investors Service downgrade for Spain, which put its debt rating one notch above junk status.

Italy's yield was at 6.34% as the country prepared to auction medium- and long-term debt.

Spain's debt hits record as euro zone crisis worsens

LONDON (Reuters) - Spain's 10-year bond yield climbed to a euro-era record of 7 percent on Wednesday as the storm surrounding Europe's debt crisis worsened, with fears over its impact on global growth sending world shares lower.

U.S. stock index futures pointed to a more mixed start on Wall Street after weak retail sales data and the euro zone's problems had sent shares lower on Wednesday. <.N>

"The underlying problem of deteriorating confidence in sovereign debt in Europe is continuing to intensify," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi.

The rise in Spanish debt yields came as Germany, Europe's most powerful economy, rebuffed calls from other European leaders to help underwrite the region's debt or guarantee deposits in euro zone banks.



Global crisis deepens after Spanish bailout

Rising interest rates in bond markets demonstrate that the €100 billion Spanish bailout last weekend has done nothing to resolve the euro zone crisis and may well have made it even worse. The rate on Spanish 10-year bonds climbed to the danger level of 6.8 percent Wednesday, while interest rates on Italian one-year government debt reached their highest levels since last December.

The latest turmoil came as the World Bank issued a report warning that so-called “emerging markets” face heightened risks from the European crisis. The World Bank’s latest Global Economic Prospects report predicted that growth in developing countries would fall to 5.3 percent in 2012, down from 6.1 percent. The forecast for overall world growth was cut to 3 percent for 2013, down by 0.1 percent from the estimate in January.

The bank said that developing countries should prepare for a long period of volatility, warning that Eastern Europe and Central Asia were particularly vulnerable because of their trade and financial ties with the major European economies.

The director of economic prospects at the World Bank, Hans Timmer, said the volatility of financial markets made policy making difficult, adding that there was “no silver bullet” and that “you cannot solve problems over a weekend.”


Spanish Bank Borrowings From ECB Surpass Italian, As Italy Sovereign Debt Hits Record €1.95 Trillion
14 June 2012, by Tyler Durden (Zero Hedge)


First, we observe the just released data showing Spanish bank borrowings from the ECB:

at €287.8 billion, this was a €24 billion increase from April, €235 billion from a year earlier, and the highest ever.

For the first time since June of 2011, Spanish bank ECB borrowings increased to more than those of Italy, which at just €272.7 billion rose a mere €2 billion from April month (to a new record as well).

In other words, both Italy and Spanish banks are now spurned by counterparties everywhere, but Spain's a little bit more than Italy's.

Yet before Italy gloats, it bears reminding Italy that its own offsetting factor, and where it is weakest,

its insane public debt, just hit a new record high of €1.95 trillion, pushing the country's debt to GDP ratio well into the 120%+ range.

Moody's downgrades Telefonica over Spain crisis
20 June 2012, by Barbara Kollmeyer - Madrid (MarketWatch)

Shares of Telefonica SA fell 0.8% on Wednesday after Moody's Investors Service downgraded the telcommunications provider.

Moody's said the Spanish economic crisis will continue to weigh on consumer spending, and in turn, the telecommunications provider's domestic revenue.

The ratings firm cut Telefonica's long-term senior unsecured and issuer ratings to Baa2 from Baa1, and cut ratings of its guaranteed subsidiaries as well.

Those ratings all remain on review for further downgrades.

Telefonica "does not have the domestic or financial strength, or sufficiently robust access to liquidity, to distance itself from the current and future credit environment implied by the sovereign's Baa3 rating," said Carlos Winzer, a Moody's senior vice president.

The ratings firm said it believes that the required strengthening of the company's financial ratios and challenging domestic and international operations will increase its overall business and financial risk.

Spain to seek bank aid as borrowing costs soar


(Reuters) - Independent auditors said Spanish banks may need up to 62 billion euros in extra capital, to be filled mostly by a euro zone bailout, after Spain's medium-term borrowing costs spiraled to a euro-era record on Thursday.

Euro zone finance ministers met in Luxembourg to discuss how to channel up to 100 billion euros ($126 billion) in aid to Spanish lenders weighed down by bad debts from a burst property bubble. Madrid's economy minister said a formal request would be made in days for the bailout, which was agreed two weeks ago.

Many in the markets see the package as a mere prelude to a full program for the Spanish state, which Madrid vehemently denies it will need.

Spain's financial plight took centre stage a week before a European Union summit tackles long-term plans for closer fiscal and banking union in a bid to strengthen the euro's foundations, after bailouts for Greece, Ireland and Portugal failed to end a 2-1/2-year old debt crisis.

Spain formally asks for bank aid


NEW YORK (CNNMoney) -- The Spanish government made a formal request to the Eurogroup on Monday for loans to bailout its troubled banking sector.

"I have the honor to write to you, in the name of the Spanish government, to formally request financial assistance for the recapitalization of the Spanish banks that require it," wrote Economy Minister Luis de Guindos, in a letter to Eurogroup president Jean-Claude Juncker.

Guindos' letter also expressed appreciation to the Eurogroup -- the 17 nations that use the euro as their common currency -- for offering to support Spain on June 9 with up to €100 billion for its troubled banking sector.

Euro area finance ministers will now begin negotiating the "necessary policy conditionality" of the loans, Juncker said in a statement.


Moody's Downgrades 28 Spanish Banks


Spain formally requested a European bank rescue on Monday but lack of details kept investors fretting and Moody's cut the ratings of most Spanish lenders, citing the government's reduced ability to support them and the likelihood of higher property losses.

In a letter to Eurogroup Chairman Jean-Claude Juncker sent early on Monday, Spanish Economy Minister Luis de Guindos said he wanted to take up the EU offer of up to 100 billion euros ($125 billion) and hoped to finalise the package by July 9.

He did not specify how much money Spain will seek to recapitalise the indebted lenders and said the final amount and conditions of the assistance were still under discussion.

Spain borrowing rate hits bailout danger zone


MADRID (AP) — Spain's borrowing costs rose to dangerously high levels Monday as finance ministers of the 17 countries that use the euro began to gather in Brussels to discuss terms of a rescue package for the country's stricken banks.

The interest rate, or yield, on the country's 10-year bonds hit 7 percent Monday morning, a level that market-watchers consider is unaffordable for a country to raise money on the bond markets in the long term and the point at which Greece, Ireland and Portugal all sought an international bailout. Stocks on Madrid's benchmark index fell 1.7 percent. The yield later fell back down to 6.99 percent.

The yield indicates the interest rate a government would have to pay to raise money from financial markets when it holds bond auctions. While Spain can afford the high rates for a few weeks at least, it would find them too expensive in the longer term.


Spain borrowing rate hits bailout danger zone


MADRID (AP) — Spain's borrowing costs rose to dangerously high levels Monday as finance ministers of the 17 countries that use the euro began to gather in Brussels to discuss terms of a rescue package for the country's stricken banks.

The interest rate, or yield, on the country's 10-year bonds hit 7 percent Monday morning, a level that market-watchers consider is unaffordable for a country to raise money on the bond markets in the long term and the point at which Greece, Ireland and Portugal all sought an international bailout. Stocks on Madrid's benchmark index fell 1.7 percent. The yield later fell back down to 6.99 percent.

The yield indicates the interest rate a government would have to pay to raise money from financial markets when it holds bond auctions. While Spain can afford the high rates for a few weeks at least, it would find them too expensive in the longer term.


Eurozone ministers agree 30bn euros for Spanish banks
July 10, 2012   Eurozone finance ministers have agreed to lend Spain 30bn euros (£24bn; $37bn) this month to help its troubled banks.
It will be the first instalment of a bailout of up to 100bn euros, which was agreed in June.
The ministers will need to get approval from their own parliaments and hope to make the payment by the end of July.
The eurozone finance ministers also agreed to extend the 2013 deadline for Spain to cut its budget deficit to the EU limit of 3% by one year.
The yield on Spanish bonds rose sharply on Monday ahead of the meeting, with many fearing that little concrete action on Spanish banks would be reached.
There will be specific conditions for specific banks.

Spain Deepens Austerity Under European Pressure
July 11, 2012  Prime Minister Mariano Rajoy announced a swathe of new taxes and spending cuts on Wednesday designed to slash 65 billion euros from the budget deficit by 2014 as recession-plagued Spain struggles to meet tough targets agreed with Europe.
Rajoy, of the center-right People's Party, proposed a 3-point hike in the main rate of Value Added Tax on goods and services to 21 percent, and outlined cuts in unemployment  benefit and civil service pay and perks in a parliamentary speech interrupted by jeers and boos from the opposition.

Rom 13:13  Let us walk honestly, as in the day; not in rioting and drunkenness, not in chambering and wantonness, not in strife and envying.
Rom 13:14  But put ye on the Lord Jesus Christ, and make not provision for the flesh, to fulfil the lusts thereof

Dozens hurt as police, anti-austerity protesters clash in Spain
July 11, 2012  Madrid (CNN) - More than 70 people were injured in clashes in Madrid on Wednesday as Spanish police used rubber bullets and batons to disperse anti-austerity protesters, witnesses and emergency workers said.
Protesters, including a group of miners who have marched on the capital, are demonstrating against Spain's government and the cuts it is imposing as it seeks to curb the country's debt crisis.
Hundreds of people quickly moved out of the area as police moved in, with witnesses reporting the use of rubber bullets and batons by officers.
Madrid's ambulance service said 76 people were injured in clashes at or near the Industry Ministry.

July 12, 2012  Spain unemployment rate is over 24% and 50 percent for young people.
Sales tax hike to 21% on products and services like clothing, cars, cigarettes and telephone services

Spain and Italy ban short selling
July 23, 2012  Securities regulators in Spain and Italy both instituted short-selling bans Monday as financial markets tumbled.
The move is designed to limit the downward pressure on markets by preventing investors from betting against shares of certain companies.
The ban in Italy applies only to short positions in shares of banks and insurance companies, according to the Commissione Nazionale per le Società e le Borse, or CONSOB.
Spain's Comisión Nacional del Mercado de Valores (CNMV) banned short positions in shares of all companies under its purview.
Both bans are temporary.

In a statement, CNMV said European shares have been hit with "extreme volatility" that might cause the "disorderly functioning" of financial markets.
Regulators in Italy and Spain, as well as France and Belgium, imposed a temporary short-selling ban in August 2011, at the height of the last major flare-up in the eurozone debt crisis.
Back in 2008, the Securities and Exchange Commission banned short selling for 799 companies in the wake of Lehman Brothers' collapse. The move was aimed at restoring confidence and stemming a steep stock sell-off.

The bans could limit the selling in the short-term, but longer-term, investors want concrete evidence that the global economy is turning around.
Investors are currently concerned that Spain might be forced to seek a bailout similar to those taken by other troubled euro area economies, although Madrid reiterated Monday that it will not need additional aid.

12 Signs That Spain Is Shifting Gears From Recession To Depression
25 Jul 2012
#1 At one point on Monday, the IBEX stock market index fell to 5,905, which was the lowest level in nearly ten years.  When it hit 5,905 that represented a drop of about 12 percent over just two trading days.  If that happened in the United States, it would be the equivalent of the Dow falling by about 1500 points in 48 hours.

#2 So far this year, the Spanish stock market is down more than 25 percent.  Back in 2008, the IBEX 35 was well over 15,000.  Today it is sitting just above 6,000.

#3 Spain has banned many forms of short selling for 3 months.
#4 The yield on 10 year Spanish bonds is now well above the 7 percent "danger level".

#5 Thanks to the problems in Spain, the euro continues to fall like a rock.  On Monday it hit a new two year low against the U.S. dollar, and it is near a twelve year low against the Japanese yen.

#6 During the first quarter of 2012, the Spanish economy contracted by 0.3 percent.  During the second quarter of 2012, the Spanish economy contracted by 0.4 percent.

#7 Local governments all over Spain are flat broke and need to be bailed out by the broke national government.  The following is from a recent CNBC article....

Adding to Madrid's woes, media reports suggested another half a dozen of Spain's 17 regional authorities, facing an undeclared funding crisis, were ready to follow Valencia in seeking aid from the central government.
#8 The percentage of bad loans on the books of Spanish banks has reached an 18 year high.  European officials have already promised a 100 billion euro bailout for Spain's troubled banking system, but most analysts agree that 100 billion euros will not be nearly enough.

#9 Spanish industrial output declined for the ninth month in a row in May.

#10 The unemployment rate in Spain is up to an astounding 24.6 percent.
 The unemployment rate in Spain is already higher than it was in the United States at the peak of the Great Depression of the 1930s.

#11 The youth unemployment rate in Spain is now over 52 percent.

#12 The Spanish government has just announced a whole bunch of new tax increases and spending cuts which will cause the Spanish economy to slow down even more.  In response to these austerity measures, people are taking to the streets all over Spain.  Last week, 100,000 demonstrators poured into the streets to protest in Madrid alone.

8/2/12   ]Spain, Italy reject bailout; Draghi says euro irreversible
Spain and Italy rejected Thursday the need for a bailout after markets fell sharply on disappointment that the European Central Bank did not announce new immediate steps to tame the eurozone debt crisis.
ECB head Mario Draghi insisted earlier that the embattled single currency was "irreversible," damning speculative financial market bets against the euro for pushing up government borrowing costs to unsustainable levels.

But in the absence of concrete measures, the markets returned to the attack, with Spanish borrowing costs spiking back to danger levels above 7.0 percent and Madrid stocks slumping more than 5.0 percent as Italy was also hit badly.
United in adversity, Spanish Prime Minister Mariano Rajoy told a joint news conference in Madrid with his Italian counterpart Mario Monti that their "two countries want to work together" to get through the debilitating crisis.

It seems like this "social justice" nonsense has infiltrated almost every aspect of our society...and yes, that includes our "churches"...

Mayor in Spain leads food raids for the people
8/24/12  In the small Spanish town of Marinaleda, located in the southern region of Andalusía, Mayor Juan Manuel Sánchez Gordillo has an answer for the country’s economic crisis and the hunger that comes with it: He organized and led the town’s residents to raid supermarkets to get the food necessary to survive.

Seven people have been arrested in two raids in which trade unionists loaded shopping carts full of food and left without paying, with the support of the townspeople cheering them on and the mayor watching with approval. (, Aug. 15)

Gordillo, 60, is a leftist and a member of the Izquierda Unida political party. He sports a Palestinian kaffiyeh scarf around his neck and a Fidel Castro-like beard. Gordilla says he wants to draw attention to the plight of the common worker in Spain, a country in which the economic collapse has hit particularly hard and millions are suffering. (, Aug. 14)

Since 2007, poverty in Spain has risen 15 percent, while unemployment hovers around 25 percent and tens of thousands have lost their homes to bank foreclosures. The conservative national government has only made matters worse, by introducing austerity measures that have worsened the workers’ lives, while bailing out the bankers and capitalists who caused the crisis in the first place.

Gordillo plans to lead a march from Jódar, one of the cities most affected by the current economic meltdown, to other Spanish towns, to try to convince other officials to fight back against the ruling class’s demands of cutbacks and increased hardship for the workers. He is fighting dismantlement of state social services, bank payoffs, and the throwing of the common Spaniard under the bus to the benefit of those exploiting them. Gordillo hopes he can convince other mayors to stage a real resistance to the government’s demands.

Spaniards Pull Cash and Get Out of Spain
September 4, 2012  
After working six years as a senior executive for a multinational payroll-processing company in Barcelona, Spain, Mr. Vildosola is cutting his professional and financial ties with his troubled homeland. He has moved his family to a village near Cambridge, England, where he will take the reins at a small software company, and he has transferred his savings from Spanish banks to British banks.

“The macro situation in Spain is getting worse and worse,” Mr. Vildosola, 38, said last week just hours before boarding a plane to London with his wife and two small children. “There is just too much risk. Spain is going to be next after Greece, and I just don’t want to end up holding devalued pesetas.”

Mr. Vildosola is among many who worry that Spain’s economic tailspin could eventually force the country’s withdrawal from the euro and a return to its former currency, the peseta. That dire outcome is still considered a long shot, even if Spain might eventually require a Greek-style bailout. But there is no doubt that many of those in a position to do so are taking their money — and in some cases themselves — out of Spain.
In July, Spaniards withdrew a record 75 billion euros, or $94 billion, from their banks — an amount equal to 7 percent of the country’s overall economic output — as doubts grew about the durability of Spain’s financial system.

Euro Debt Crisis intensifies Depression, Suicides
September 4, 2012   Europe is approaching a crisis as debt crisis and austerity measures increase the rates of depression, suicide and psychological problems,
just as governments cut healthcare spending by up to 50%.
There appears to be a connection between unemployment rates and suicide.


Spain inches closer to asking for help as euro ministers hint at giving Greece more time

NICOSIA, Cyprus - Spain revealed Friday that it will present a new set of economic reforms by the end of the month, in a move that raises hopes that the struggling country will soon ask for financial help.

The economic reform plan, discussed at a meeting in Cyprus of finance ministers from the 17 countries that use the euro, will be unveiled by Sept. 27. It is expected to be the launch-pad to Spain's tapping of a new European Central Bank bond-buying plan.

Meanwhile, Greece's creditors indicated that it may get more time, but not money, to get public finances into shape.

The two countries topped the agenda of the first day of an informal meeting of European finance ministers in the Cypriot capital Nicosia, which is being held following a run of positive news in Europe's three-year debt crisis.

The ministers, as well as ECB president Mario Draghi and Christine Lagarde, the managing director of the International Monetary Fund, cautiously acknowledged that conditions have recently improved. The ECB bond-buying plan, the creation of a new government in Greece following two elections and a German court ruling in favour of Europe's new bailout fund have all calmed markets and politicians nervous at the eurozone's debt problems.

However they acknowledged that hurdles still need to be cleared if the euro currency is going to emerge intact from the crisis.



Spain's government debt hits 75.9 pct of its GDP

MADRID (AP) — Spanish government debt rose to 75.9 percent of its economy in the second quarter of the year according to figures published by the Bank of Spain.

The figure is up 9.2 percent year-on-year and is the highest ratio in at least 22 years. The total debt ascended to €804 billion ($1.0 trillion), up €99 billion year-on-year, Spain's central bank said in a statement Friday.

Central government spending increased by 4.4 percent to €617 billion, representing 58.3 percent of GDP.

Regional government spending grew by 2.8 percent to €151 billion, equivalent to 14.2 percent of GDP, also the highest level in at least 22 years.

The most indebted region in the second quarter was Catalonia with €44 billion followed by Valencia.

Spain King Juan Carlos meets with Bill Clinton, world leaders
September 23, 2012
Former U.S. President Bill Clinton told Spain King Juan Carlos that he was confident Spain will get through the economic crisis
during a 45 minute meeting in New York at which the pair discussed the latest outbreak of violence in Muslim countries and the upcoming U.S. election.
The Clinton Global Initiative kicks off in New York Sunday September 23rd.
Clinton said that Spain, just like Italy and Portugal, has enough strength to get through the crisis, adding that
he was confident that Germany will agree to act for the benefit of the EU.
King Carlos will also hold private meetings with other leaders in New York.
Monday he is scheduled to have lunch with Jordan King Abdullah.

Sounds like this Clinton Global Initiative dovetails with 'Certified B,' the UN Agenda 21 too.
You can always count on both Clintons to LIE and have an Evil hidden agenda behind their words.
Click 'Government the enemy! - to see how UN Agenda 21 severely hurts 2 Grandmothers - and ultimately - YOU!

Government the enemy!
I have been hearing a lot from those who sell healthy foods / products.
The govt wants the sheepl buying their toxic, harmful things, not natural items.
Govt WAR against pure beauty and health products.
Click here and scroll down to  Government the enemy!

UN War against the Natural Health Industry!
Just in case its not clear - Certified B is BAD!!  Evil or Very Mad
Evil or Very Mad  'Certified B is EVIL beyond your wildest imagination.  Dont say unbelievable - BELIEVE it, and ACT accordingly!
September 23, 2012  Celeste put together a complex detailed article on her link.  I pulled excerpts.

*  I have used blue for UN Agenda 21 as blue is the UN color.  WHY are so many American flags using the light blue of the UN instead of our own navy?


Panic Cash Withdrawals in Spain Drain Banks
September 24, 2012
 Greece-Style Economic Implosion Now Imminent.
Spain appears poised to become the next Greece in the ongoing European Union (EU) implosion, as Spaniards are withdrawing record amounts of funds from Spanish banks to avoid a potential insolvency situation.
Spain is undeniably on a downward economic spiral that is sending many of its people and their money to other countries like England, Germany, and Singapore, where economic conditions are much more favorable. Just like in Greece, there is a growing fear among Spaniards that their nation could revert from the euro to its former currency, pesetas, which would greatly devalue their personal wealth.

“The macro situation in Spain is getting worse and worse,” said Julio Vildosola to the NYT. Vildosola, a former senior executive at a large multinational company, recently moved all his money — and is now in the process of moving his entire family — to a small village near Cambridge, England. “There is just too much risk. Spain is going to be next after Greece, and I just don’t want to end up holding devalued pesetas.”

Spaniards pulling out their cash en masse
Vildosola’s opinion is shared by many others in Spain who are also moving their funds and families elsewhere in anticipation of an eventual collapse. Despite all the empty promises being made by EU officials, including a commitment to inject 100 billion euros into the Spanish banking system, the Spanish people, including many from the country’s upper echelons, have lost faith in their country’s ability to stay afloat in the long term.
The wealthy people have already taken their money out,” says Spanish economist Jose Garcia Montalvo about the ongoing capital flight. “Now it’s the professionals and mid-range people who are moving their money to Germany and London. The mood is very, very bad.”

During the recent festival of “Diada de Catalunya,” or Day of Catalonia, which celebrates the end of the siege on Barcelona during the War of the Spanish Succession, an estimated 1.5 million people took to the streets to demand that Catalonia, a wealthy region of Spain that includes the city of Barcelona, secede from the country and form its own independent state.



Markets Tumble on Unrest in Greece and Spain

LONDON — Clear signs of the political and social cost of the euro zone crisis sent stock markets tumbling Wednesday as debt-laden Greece faced a crippling 24-hour strike and Spain cleaned up after violent protests Tuesday near the country’s Parliament.

Spanish bond yields approached 6 percent for the first time in months, while European stocks and the euro fell sharply, as developments in Greece and Spain sent a new wave of anxiety through the ranks of international investors.

The Euro Stoxx 50, a measure of euro zone blue chips, closed 2.7 percent lower on Wednesday. National benchmarks were also down, led by the Ibex in Spain, which fell 3.9 percent, and the MIB in Milan, down 3.3 percent.

The euro was at $1.2863, down from $1.2950 late Tuesday in New York.

Spanish bond yields had fallen back from levels thought unsustainable after the European Central Bank announced a plan Sept. 6 to buy the sovereign bonds of debt-strapped euro countries, like Spain and Italy, in amounts sufficient to bring the cost of servicing their debt down to a manageable level.


Violent protests in Madrid
September 26, 2012
 (Reuters) - Violent protests in Madrid and growing talk of secession in Catalonia are piling pressure on Spanish Prime Minister Mariano Rajoy as he moves closer to asking Europe for rescue money.
In public, Rajoy has been resisting calls from bankers at home and the leaders of France and Italy to move quickly to request assistance, but behind the scenes he is putting together the pieces to meet the stringent conditions for aid.
With protesters stepping up anti-austerity demonstrations, Rajoy presents painful economic reforms and a tough 2013 budget on Thursday, aiming to persuade euro zone partners and investors that Spain is doing its deficit-cutting homework despite a recession and 25 percent unemployment.

Figures released on Tuesday suggested Spain will miss its public deficit target of 6.3 percent of gross domestic product this year, and on Wednesday the central bank said the economy continued to contract sharply in the third quarter.
By pre-empting reforms demanded by Brussels -- such as creating an independent fiscal auditor -- Rajoy hopes to sell them to voters as home-grown rather than imposed from outside.

Diplomats reported intense last-minute pressure on Madrid on Wednesday from key euro zone policymakers to take tougher measures, notably on freezing pensions.
On Friday, Moody's will publish its latest review of Spain's credit rating, possibly downgrading the country's debt to junk status.
On the same day, an independent audit of Spain's banks will reveal how much money Madrid will need from a 100 billion euro ($130 billion) aid package that Europe has already approved for the banks.

Spain bank audit paves way for state bailout
September 28, 2012
MADRID (Reuters) - Spanish banks will need a total of 59.3 billion euros ($76.3 billion) in extra capital to ride out a serious economic downturn, an independent report said on Friday, removing a major obstacle in the way of an international bailout for Madrid.
Spain said around 40 billion euros of the total will come as European aid while the rest could be raised by the banks themselves.
The audit, carried out by consultant Oliver Wyman, is a condition of getting European funds to patch up Spanish banks damaged by a prolonged real estate crash, and identifies which banks need more capital and precisely how much each requires.
Spain has agreed a credit line that could provide up to 100 billion euros in European Union rescue funds for its banks.

Spain, Portugal hit with anti-austerity protests
Tens of thousands of Spaniards and Portuguese rallied in the streets of their countries' capitals Saturday to protest enduring deep economic pain from austerity cuts.
In Madrid, demonstrators approached parliament for the third time this week to vent their anger against tax hikes, government spending cuts and the highest unemployment rate among the 17 nations that use the euro currency.
The boisterous crowds in the Spanish capital let off ear-splitting whistles near parliament and yelled "Fire them, fire them!" — referring to the conservative government of Prime Minister Mariano Rajoy.

On Friday, Rajoy's administration presented a 2013 draft budget that will cut overall spending by €40 billion ($51.7 billion), freezing the salaries of public workers, cutting spending for unemployment benefits and even reducing spending for Spain's royal family next year by 4 percent.
Pablo Rodriguez, a 24-year-old student doing a master's in agricultural development in Denmark, said the austerity measures and bad economy mean most of his friends in Spain are unemployed or doing work they didn't train for.
He doubts he will put his education to use in Spain until he is 35 or 40, if ever, will probably get job abroad and stay.

"I would love to work here, but there is nothing for me here," Rodriguez said. "By the time the economy improves it will be too late. I will be settled somewhere else with a family. One of the disasters in Spain is they spent so much to educate me and so many others and they will lose us."
In Lisbon, retired banker Antonio Trinidade said the budget cuts Portugal is locked into in return for the nation's €78 billion ($101 billion) bailout are making the country's economy the worst he has seen in his lifetime. His pension has been cut, and he said countless young Portuguese are increasingly heading abroad because they can't make a living at home.

Spain's King Juan Carlos meets with world leaders
Sep 2012
Former U.S. President Bill Clinton told Spain's King Juan Carlos Sunday that he was confident Spain will get through the economic crisis during a meeting in New York at which the pair discussed the latest outbreak of violence in Muslim countries and the upcoming U.S. election.

The meeting - which took place before the official inauguration of the Clinton Global Initiative, which kicks off Sunday in New York - lasted 45 minutes, according to sources within the Royal Palace, who added that the two men also spent 10 minutes talking in private.

The conversation revolved around three subjects, with special attention to the situation of Spain and the European Union, and the former president said that Spain, just like Italy and Portugal, has enough strength to get through the crisis, adding that he was confident that Germany will agree to act for the benefit of the EU.

The second area of discussion at the meeting was the Nov. 6 U.S. presidential election and although Clinton said he was confident that President Barack Obama would win reelection, he acknowledged that there is still a long way to go before the election, the palace sources said.

The Spanish monarch and Clinton also discussed the recent outbreak of violence in the Muslim world after the release of a video made in the United States in which Mohammed is depicted in a unfavorable and humiliating light, something that denigrates Islam's founding prophet and which Muslims consider blasphemy, and the ex-president acknowledged that he was "very concerned" over the situation.

Throughout the remainder of Sunday, the Spanish king will hold informal and private meetings with other leaders in New York, while on Monday he is scheduled to have lunch with Jordan's King Abdullah, a spokesman for the Royal Palace confirmed.

During his stay in New York, the king will also participate in the reception offered by Clinton, who governed from 1993-2001, for the heads of state and government who are attending the Clinton Global Initiative before departing for Spain on Monday evening. EFE

Spain Popular approves capital hike of up to 2.5 billion euros
Sep 30, 2012
- The board of Spain's Banco Popular has approved a capital increase of up to 2.5 billion euros ($3.2 billion), a source close to the process said on Sunday.
The bank's directors also agreed that Popular would remain independent rather than searching for a partner, the source said.
Popular declined to comment. ($1 = 0.7773 euros) (Reporting and editing By Jesus Aguado, Writing by Paul Day)

Spain's debt to rise to 90.5% of GDP in 2013
Spain's public debt will reach 90.5 percent of its gross domestic product in 2013 with its new austerity budget, according to government documents.
Spain also revised its debt ratio forecast for this year to 85.5 percent of GDP, up from 79.8 percent.

Finance Minister Cristobal Montoro said Saturday that Spain's increased interest costs on its public financing are the main cause of the rise: "it is important to reduce this increase and its speed."

Montoro spoke after presenting the 2013 draft budget the government says will cut overall spending by euro40 billion ($51 billion). The budget reduces funds available for unemployment payments by 6.3 percent, and support for Spain's royal house by 4 percent.
Spain is mired in its second recession in recent years with one-in-four workers without a job.

Spain Police Beating Everyone
October 9, 2012  

Spain police state has spiraled out of control as riot police are now running throughout the streets beating everyone in sight, men and woman, young and old.
When the people demand democracy from an oligarchy that rules their subjects trough the strong-arm of a totalitarian police state the streets fill with the madness and mayhem seen in this video.
Since September 25th the masses of Spain, no longer being able to feed themselves or their families, are protesting further massive tax increases, a situation so dire it threatens their very survival.

Soon America will face the same fate as its own financial house is much worse than that of Spain.
The American middle class are suffering through one of the worst economic crisises in the history of this nation.
Politicians are so incompetent they can accomplish nothing besides lining their own pockets.
Come January 2013 Americas will have new and unheard of U.N. taxes levied on us and the world - just for existing.

WARNINGS! DHS, FEMA Preparing for Civil War, Camps


S&P cuts Spain credit rating to BBB-minus, near junk


NEW YORK (Reuters) - Standard & Poor's on Wednesday cut Spain's sovereign credit rating to BBB-minus, just above junk territory, citing a deepening economic recession that is limiting the government's policy options to arrest the slide.

The S&P downgrade comes with a negative outlook reflecting the credit ratings agency's view that there are significant risks to economic growth and budgetary performance, plus a lack of clear direction in euro zone policies.

"In our view, the capacity of Spain's political institutions (both domestic and multilateral) to deal with the severe challenges posed by the current economic and financial crisis is declining," S&P said in a statement.

S&P's two-notch downgrade from BBB-plus brings it in line with Moody's Investors Service's Baa3 rating. Moody's has Spain on review for a possible downgrade.

Both firms have Spain just on the cusp of junk status. Fitch Ratings has a BBB rating on Spain, one notch higher, but also with a negative outlook.


Spain’s Regional Bailout Fund: A Drop In A Bucket Of Insolvency
19 October 2012
, by Tyler Durden (Zero Hedge)

It will come as no surprise to many that the initial size estimates of Spain's regional bailout fund are now being questioned.

The government is now 'analyzing' whether the EUR18bn 'temporary' bailout fund needs to be increased. In a word - Yes!

As this chart from Bloomberg Briefs shows, the size of the 'help' is pittance compared to the debt-loads of Catalonia alone (which recently sought secession).

As Bloomberg's Niraj Shah notes, Spanish regional elections in the Basque country and Galicia take place on Sunday, followed by a ballot in Catalonia on Nov. 25.

Prime Minister Mariano Rajoy may prefer to seek a bailout after the elections as a series of defeats for his People’s Party could exacerbate investor concerns about the government’s ability to control spending and revenue and bring down the deficit.

Perhaps our 'context' update on Spain's situation last night was rather prescient after all?

In what seems like a remarkable coincidence:

Spanish region of Asturias will seek EU261.7m from central govt’s rescue fund for regions

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