Merkel Hides Behind The Troika Report, The Greeks Seethe, And The Drachma Advances

Frau Merkel takes a mini-vacation.  How could she not?  The Greeks love her?  The testosteronepit, via Zero Hedge:

..Athens was prepared for her. Both sides. Police had designated a “red zone” where demonstrating and loitering were prohibited. The Parliament, the prime minister’s mansion, and the presidential mansion were sealed off. Some metro stations were closed, some buses and trolleys were pulled out of service. Water cannons, 7,000 police in riot gear, crowd-control fences... it was all there.


As were 80,000 protesters—or 60,000—who’d been seething for days. It wasn’t just Merkel’s presence on their soil, but also the restrictions on their constitutional right of assembly. “FRAU MERKEL GET OUT,” a poster read. A group of school kids were taken into custody. Tear gas was used. Protestors were trying to tear down crowd-control fences. A melee broke out. Rocks flew. A Nazi flag was burned. But... “Strange thing about Greek demos is that they are part political protest, part village fete, small of meat on the BBQ everywhere,” ‏@teacherdude reported (screenshot).

So why the heck did Merkel dive into this? To express “her support for the difficult reforms,” government spokesman Steffen Seibert explained on Monday, and to “emphatically” point out “everything” that still needed to be done. It was the outline of her strategy. Accomplished politician, she’d try to satisfy both sides, those who want Germany to open the wallet even more, and those who don’t want to see their money disappear into a bottomless pit.
..
Merkel was the epitome of understanding. Greece is in a “very difficult period,” she said, but should “finish what it has started,” otherwise “things will be even harder.” It’s about “our children and grandchildren.” Then, brutally, she pointed at the sword of Damocles hanging over Greece: “Of course, we are not the representatives from the Troika.”
The mighty Troika. It will come out with a report that had been delayed, rescheduled, and re-rescheduled. It will spell out whether or not Greece complied with the agreed-upon 89 “structural reforms.” It’s a huge report, worked on for months, a shield for politicians to hide behind, even for Merkel [Greece Prints Euros To Stay Afloat, The ECB Approves, The Bundesbank Nods, No One Wants To Get Blamed For Kicking Greece Out].

And what was the purpose of her visit, a reporter asked. “I came here to understand the situation on the ground,” she said. “Close contact leads to greater understanding. What the visit means to Greeks, I don’t know.”

So it went. No answers of any kind. They strolled to the Presidential Mansion and said hi to President Karolos Papoulias before heading to the Hilton for a meeting with business leaders from both countries. Chancellors have to bring home the bacon. They travel with a delegation of executives and meet local tycoons to do business. With privatizations on the docket in Greece, surely there’d be some sweetheart deals to be made. And by 7:18 p.m., she was waving goodbye from the door of the plane.

She’d given nothing away. Other than platitudes. No assurances that Greece would remain in the Eurozone, though it was her “hope and wish” that Greece should try. A broken record. There was no promise that the next bailout tranche of €31.5 billion would be disbursed, ever. Greece, which has been paying its bills only selectively, will run out of money entirely by the end of November, and barring a miracle, would have to revert to the drachma.

The Landlord came by to check upon her "investment."  The disdain for her new tenants was palpable.  Towards her, her new tenants felt the same.  Their new "arrangement" will not be comfortable.

The crescendo to all this ugliness will be bloody, both literally and figuratively.  All action going forward will illicit equally strong reactions.

Presenting Spain's Economic Collapse In Context

Short, but not sweet from ZeroHedge.  Bonus bad graph included..

We have presented many charts over the last few weeks showing the collapse in retail sales in Spain, along with surging unemployment, bankruptcies and non-performing bank loans. But to do justice to the situation, you’ve got to put it in context of the last 150 years, and JPMorgan's Michael Cembalest provides just such context. Spain’s adventure in the Eurozone(Starting in 1986) has sent it into an economic tailspin the likes of which have not been seen, with the exception of the Spanish Civil War, since the 19th century. At that time, the Spanish empire was at the tail end of its colonial decline, and was an under-regulated, agrarian, closed economy subject to frequent crises. The chart shows the details, highlighting the economic declines during revolutions, depressions and agricultural epidemics. Spain’s recent decline has now matched them.

 

Greek Deposit Plunge Continues As Tax Inspection Finds Every Business On Zakynthos Broke The Law

Greece is boned, but Mario Draghi says "Everything's gonna be allllll right.."  Zero Hedge.  Excerpts:

On one hand we have Mario Draghi promising he has a magic wand (not a printer - remember the keys to that are now held by Angela Merkel who is on vacation) and to "believe him" that the EUR will survive. On the other we have Greece which is a poster child of everything that is wrong in Europe. And that we summarize as follows: i) an epic and now relentless deposit outflow from Greek banks which continues as all trust in the local banking system is now gone, as €7 billion in deposits or the second biggest amount ever, is pulled and 20% of the entire corporate and household deposit base has vaporized in the past year, and ii) an economy in which it is every man for himself and where nobody pays any taxes any more, period. Best of luck in preserving that EUR Super Mario.


And a quick story on which Greece will never be fixed no matter what magic Draghi and Potter concoct between them:

The Financial Crimes Squad (SDOE) on Thursday reported that six in 10 businesses inspected at popular tourist resorts were not issuing sales receipts, and that of the 1,410 checks conducted in July, 57.1 percent found business owners to be in breach of the law.

..
In Zakynthos in the Ionian and Rethymno on Crete, every business inspected was breaking the law, while on the islands of Paros and Myconos, 70 percent were avoiding taxes.

No deposits, and no tax revenues: thank you Germany for continuing to fund this slow motion trainwreck thus providing everyone with hours of taxpayer-subsidized entertainment.



I think he's being sarcastic.  I don't think he thinks it's really entertainment.

Spain and Italy ban short-selling to calm volatile markets as debt crisis spawns global sell-off

Too little, too late, but God love 'em for tryin', right?  CNN, via The Extinction Protocol:

July 23, 2012 – ROME – 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.(Artfully worded, no?) 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.

At this stage of the endgame, today's actions are pointless.  Pointless.

Trickles Down? No, Streams Offshore!

Found this on Xymphora.  He's right:  This is an important article.  Short, but sweet, from Bad Attitudes:

Trickles Down? No, Streams Offshore!



The Guardian has a series of articles on the flight of wealth from countries that are producing it to a tiny number of bank accounts in countries that are tax havens. It’s not news that a small number of people are extraordinarily rich. But it might be news that 0.001% of the world’s population — that’s right, one one-thousandth of one percent — or about 92,000 people have $10 trillion in assets stashed in these tax havens. In total, 10 million people worldwide hold offshore assests; considering them all, claims a study commissioned by the group Tax Justice Network, you find upwards of $21 trillion, possibly $32 trillion. For comparison, estimated US GDP in 2011 was a bit over $15 trillion, while Japan’s was slightly below $6 trillion.


Where did this money come from? Well, that depends on what you think about capital. Does profit come work or financial manipulation? Americans used to favor the former answer, but that got your hands dirty rather than getting you rich quick. So, like empires before us, we farmed out the actual work to our colonies and kept the hugely enriching stuff at home, namely finance and the military might needed to enforce its extraction. Concentration of wealth is the goal of empire once it becomes established, and ours is no different. We concentrate wealth gathered, from the locals’ viewpoint often stolen, from around the world into our hands. And we concentrate wealth from all Americans into the hands of a tiny proportion of the population.
The study was performed by James Henry, formerly chief economist at McKinsey and an expert on tax havens.

The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.

This is particularly true of states with oil riches. A person with a sense of history might be tempted to bring up how the people who control those vast sums of money in the oil-rich states came to be in charge and to be capable of defending their wealth and privilege. Certainly one must look beyond those states, and toward North America and Europe, for some of the most powerful sources of influence.


Tax Justice Network calculates that if the $21 trillion in tax havens earned 3% interest per year and governments could tax that income at 30% it would generate $189 billion each year, which is more than the rich countries spend on aid to the developing world annually.


Billions of people around the world are suffering from malnutrition, disease, endemic warfare, and environmental degradation. These problems cannot be separated from the concentration of enormous amounts of wealth in small numbers of hands. Indeed these two issues are two sides of the same coin: with one comes the other. There is nothing positive for society or the individual in the accumulation of such private fortunes, and we are all paying a price for letting it happen.

Yes.  This.

Why Won't Mitt Won't Release His Taxes?

A lot is being made right now regarding Mitt's taxes, and his astonishingly stubborn response to releasing more than just the 2010 returns(And we're still missing a page, there, too..), the theory being Romney paid no taxes in 2009.  This is probably true, but maybe there's more:  What if he made a bunch of money in the quickly blooming LIBOR scandal between 2005 and 2009?  Like, a fuckin' killing?  Huge, HUGE MONEY! 

Maybe Bain ain't the only thing Mitt's got goin' on..  23 years of taxes to John McCain and only most of one year is part of the equation:  Maybe 2008 as opposed to 2012 is the other.  Four years ago during the economic meltdown,  nobody could prove nuthin'.  Maybe now they can.

So what if that's the case?  Nobody knows just how much this guy's really worth, or what financial vehicles he rode to his current success.  So much institutionalized financial shenanigans in the 2000's, and Mitt's a rich rich man in the wealth accumulation department.  Maybe transactions..  Overlapped.  Formerly sterling associations are now more..  Negative and/or Criminal than they were in 2008. It might all still be "legal," but it is also impossibly complicated and convoluted, and might not "feel" legal to unwashed, uneducated eyes.. 

You do realize some things are next to impossible to explain to you people, don't you?

"Now, if you'll excuse me, I just bought my horse an island, and I'd like to celebrate by buying another island."

This Week In Financial Shenanigans..

Peregrine chief arrested for lying to regulators.  Raw Story.  Excerpts:

The head of collapsed US futures broker Peregrine Financial Group was arrested Friday on criminal charges, days after he apparently attempted suicide and confessed to fraud in a signed statement.



Russell Wasendorf, the sole owner and chief executive of Iowa-based PFG, admitted in the suicide note that he had embezzled millions of dollars from clients over 20 years.


The company’s accounts have a shortfall of about $200 million, according to a US regulator who sued the company Tuesday.

A US federal court in Cedar Rapids, Iowa said Friday that Wasendorf, 64, was charged with making false statements about customer funds.



He was due to appear in court later Friday.


“The complaint alleges that, from 2010 through July of 2012, Wasendorf made false statements to the United States Commodity Futures Trading Commission (CFTC) regarding the value of customer segregated funds held by Wasendorf’s company, Peregrine Financial Group, Inc.,” the court said in a statement.


According to the complaint, filed by the FBI, emergency personnel responding Monday to a 911 emergency call found Wasendorf “unresponsive” in his automobile, along with an apparent suicide note to his wife.

In addition, a signed statement was found inside the vehicle detailing fraud committed by Wasendorf through PFG over the past 20 years.

“I have committed fraud. For this I feel constant and intense guilt,” Wasendorf wrote.

“Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts.”



The forgeries went undetected for nearly 20 years, he said, because he had sole access to the company’s accounts at US Bank.


Wasendorf said he used a combination of Photo Shop, Excel, scanners and printers to make “very convincing forgeries.”


“With careful concealment and blunt authority I was able to hide my fraud from others at PFG.”


When online banking became prevalent, he said he learned how to falsify online bank statements.


“The regulators accepted them without question.”


The Iowa court said that Wasendorf was interviewed by law enforcement personnel at the University of Iowa Hospital on Monday, and Wasendorf acknowledged he had written the statement and that the information it contained was true.


PFG, also known as PFG Best, filed Tuesday for Chapter 7 bankruptcy, which involves the sale of assets to pay off creditors.


The action came hours after the CFTC sued PFG and Wasendorf, alleging they had falsified information in filings and overstated the company’s bank deposits.


The CFTC said the firm had a shortfall that currently exceeds $200 million.


“The whereabouts of the funds is currently unknown,” the CFTC said.


On Monday the National Futures Association, responsible for monitoring PFG for compliance with reporting requirements, took an emergency enforcement action against PFG and Peregrine Asset Management.


The NFA blocked new or additional customer accounts or funds, alleging PFG had failed to prove it had met capital and segregated funds requirements.


On Friday, other regulators indicated they were looking into the situation.


The US Securities and Exchange Commission is reviewing records to determine where there are securities customer funds missing, SEC spokesman John Nester said.

A spokeswoman for the Financial Industry Regulatory Authority, told AFP that “FINRA reps have been on-site at Peregrine’s Cedar Falls offices to look into the firm.”

Suicide note and FBI affidavit here:

The Real Libor Scandal   Paul Craig Roberts. From Activist Post.  Excerpts:


The question is, why do investors purchase long term bonds, which pay less than the rate of inflation, from governments whose debt is rising as a share of GDP? One might think that investors would understand that they are losing money and sell the bonds, thus lowering their price and raising the interest rate.



Why isn’t this happening?


PCR’s June 5 column, “Collapse at Hand,” explained that despite the negative interest rate, investors were making capital gains from their Treasury bond holdings, because the prices were rising as interest rates were pushed lower.


What was pushing the interest rates lower?


The answer is even clearer now. First, as PCR noted, Wall Street has been selling huge amounts of interest rate swaps, essentially a way of shorting interest rates and driving them down. Thus, causing bond prices to rise.


Secondly, fixing Libor at lower rates has the same effect. Lower UK interest rates on government bonds drive up their prices.


In other words, we would argue that the bailed-out banks in the US and UK are returning the favor that they received from the bailouts and from the Fed and Bank of England’s low rate policy by rigging government bond prices, thus propping up a government bond market that would otherwise, one would think, be driven down by the abundance of new debt and monetization of this debt, or some part of it.

Libor: They all knew – and no one acted

"Trade-Off": A Study In Global Systemic Collapse  Zero Hedge.  Excerpts:




The argument that a large-scale and globalised financial-banking-monetary crisis is likely arises from two sources. Firstly, from the outcome and management of credit over-expansion and global imbalances and the growing stresses in the Eurozone and global banking system. Secondly, from the manifest risk that we are at a peak in global oil production, and that affordable, real-time production will begin to decline in the next few years. In the latter case, the credit backing of fractional reserve banks, monetary systems and financial assets are fundamentally incompatible with energy constraints. It is argued that in the coming years there are multiple routes to a largescale breakdown in the global financial system, comprising systemic banking collapses, monetary system failure, credit and financial asset vaporization. This breakdown, however and whenever it comes, is likely to be fast and disorderly and could overwhelm society’s ability to respond.


Why Don’t the Corrupt Players On Wall Street and In D.C. Show Remorse for Their Destructive Actions…And Why Don’t We Stop Them?  Washington's Blog, via Zero Hedge.  Excerpts:

(From Bloomberg)

The “corporate psychopaths” at the helm of our financial institutions are to blame [for the financial crisis].


Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”


As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”


How do people with such obvious personality flaws make it to the top of seemingly successful corporations? Boddy says psychopaths take advantage of the “relative chaotic nature of the modern corporation,” including “rapid change, constant renewal” and high turnover of “key personnel.” Such circumstances allow them to ascend through a combination of “charm” and “charisma,” which makes “their behaviour invisible” and “makes them appear normal and even to be ideal leaders.”
***
They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”
***
He says the unnamed “they” seem “to be unaffected” by the corporate collapses they cause. These psychopaths “present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings and investments, and as lacking any regrets about what they have done. They cheerfully lie about their involvement in events, are very convincing in blaming others for what has happened and have no doubts about their own worth and value. They are happy to walk awayeconomic disaster that they have managed to bring about, with huge payoffs and with new roles advising governments how to prevent such economic disasters.”

They continue to lie.  We continue to let them.

Things That Make You Go Hmmm - Such As The Transition From Conspiracy Theory To Conspiracy Fact

Here comes the LIBOR scandal!  And it's BIG.  And probably The Tipping Point for all Financials.  BIG.  From Grant Williams, author of Things That Make You Go Hmmm, via Zero Hedge:



Attempts to manipulate free markets invariably end badly - after all, they are, supposedly, by their very nature, free.


Over the past few weeks, the exposure of the Libor-rigging scandal has monopolized the headlines of the financial press and inveigled its way onto the front pages of every major news publication in the world through the sheer size and scale of the story.


Something as big as this just CAN’T be hidden from the public.


Only... it can.


It has been. It no doubt still is to a certain extent. I’m not going to go through all of the events of the past few weeks as you are no doubt familiar with them, but [simply understanding how LIBOR works makes for a simple conclusion].


I’m afraid it’s rather obvious. Given that almost half the reported inputs that help establish the Libor rate are discarded immediately, Barclays simply CANNOT have manipulated the Libor rate alone. Period.

What’s more, to effectively ensure the rate is set at the price required, you’d need to not only establish the highest and lowest 25% of prices, but then ensure the remaining 50% average out to the required rate and, based on the fact that there are 16 banks that submit rates, that would mean about 13 of the 16 involved would need to be complicit.



As a very good friend of mine put it earlier this week; at best this is a cartel, at worst it’s outright fraud on a scale that is completely unprecedented.


So for five years there have been attempts to fix the Libor rate and, take it from me, during that time, many inside the financial industry were familiar with the rumors of such manipulation but it was another huge scandal with such high powered connected interests that it would no doubt be brushed squarely under the carpet. Forget ‘too big to fail’. This was ‘too deep to prove’.


Libor is so important to so many people in the financial industry that the question of why it was manipulated really ought to be framed differently:

Assuming you COULD manipulate something as important and potentially beneficial as the Libor rate with such ease for years, why wouldn’t you?

The answer to this question would ordinarily be:

"Because it’s illegal and government regulators would throw the book at us"

So, working from the ground up; we have a set of traders looking to produce the best profits they can for personal gain, the major bank they work for and who should be supervising them with a need to disguise the level of its own funding costs and above them all, a government seeking to keep borrowing costs down in the middle of a gigantic financial storm. From such alignments of interest are the greatest of conspiracies born.



In my humble opinion, the Libor scandal (which has a LONG way to go before it has played out and which will claim a LOT more scalps) will mark a fundamental change in the treatment of financial conspiracy theories in the media. The sheer amount of coverage it will undoubtedly receive will signal a shift in attitude towards the exposing of such scandals rather than the blind-eyes that have been regularly turned in recent years.
But perhaps, most-of-all, watching how quickly those in high places begin to throw each other under the bus, it will hasten the end of many other possible government conspiracies as exposing such events becomes an exercise in self-preservation. Prime amongst conspiracy theories that may soon be finally proven to be either valid or the figments of overactive imaginations, are those alleged in the gold and silver markets.


The allegations concerning precious metal price manipulation predate those surrounding Libor by decades but until now day they have remained similarly acknowledged within financial circles and ignored without. That may well be about to change.

Unencumbered by liability, the rising price of gold has always been a barometer of governmental failure to protect the purchasing power of fiat currency and the best indication of the damage that inflation does.Forget inexorably rising gold prices. Forget the corrections that shake loose hands from the wheel at every turn. In the broader context they carry far less relevance than the intrinsic values that gold provides a consistent yardstick to.
A look at the value of assets measured in ounces of gold remains the most consistent way to get a sense of their real value and the charts below demonstrate all too clearly the true performance of the Dow Jones Industrial Average and average US house prices over the long term when measured in gold ounces.
 

If the long-stated claims about government-sanctioned, bank-led manipulation of precious metals markets put forward so eloquently by the likes of Ted Butler, Bill Murphy & Chris Powell at GATA as well as Messrs. Sprott, Sinclair, Davies et al are eventually proven to have any validity whatsoever, the fallout from the Libor scandal will prove to be (to use the words of Jamie Dimon) just another “tempest in a tea pot” as the precious metals are the very underpinnings of the entire global financial system. Conspiracy or no, it would be a blessed relief to get closure no matter what the truth turns out to be.




Oh Snap. Are we really here? If 13 of 16 banks are complicit, how much further statistically is 16 of 16? The answer?  Not far at all.  How crazy will the public response be when this finally goes mainstream? Financial Pandora's Box blowing open in 3.. 2..

Lastly;  Lest anyone forget, people have been talking about the derivatives collapse for quite some time now.  Also:  While this might not be the first time Barclays got caught shit handed, it might be the last.. 

Barclays boss under pressure as bank inquiry launched

The first derivatives domino is rocking back and forth.  Can Barclay's "stabilize"(sweep under the rug/publicly ignore) the situation before events get out of hand?  Reuters.  Excerpts:

Pressure grew on Barclays Plc Chief Executive Bob Diamond to quit as Britain launched an inquiry on Monday into a market-rigging scandal, saying a "culture that flourished in the age of irresponsibility" among bankers had to end.
Barclays Chairman Marcus Agius resigned on Monday, saying "the buck stops with me" as the scandal over manipulating Libor interest rates claimed its first major scalp.
But his departure did not take the heat off Diamond, who ran Barclays' investment banking arm when the rate rigging took place, drawing a record fine for the lender last week in a scandal likely to involve many more banks.
"The buck in Barclays stops with Bob Diamond, and it is Bob Diamond who must accept responsibility," said John Mann, an opposition Labor member of a parliamentary committee that later this week will question Agius and Diamond.

"He must resign. He's got to go," Mann told Sky News.



Anger with the culture of bankers in London, a world financial capital and major part of the British economy, crossed the political divide with Conservative finance minister George Osborne outlining the parliamentary inquiry.


"The behavior of some in the financial services has damaged the reputation of an industry that employs hundreds of thousands of people and is vital to the economic prosperity of the country," Osborne told parliament. "It's time to deal with the culture that flourished in the age of irresponsibility and hold those who allowed it to do so to account."


Barclays has admitted that some of its traders tried to manipulate the London Interbank Offered Rate (Libor), which is used worldwide as a benchmark for prices on about $350 trillion of derivatives and other financial products across a range of currencies and loan durations.

Well, gosh!  I ain't never heard of no derivatives!  They really couldn't kill the global economy, could they?  Yes.  Yes they could..

Spain formally asks Eurogroup for bank aid

Because of the huge news day we had yesterday, Spain asking for bailout got lost amongst the chaos.  Make no mistake:  This is a big story.  CNN Money via The Extinction Protocol.  Post:

June 25, 2012 – SPAIN - The Spanish government made a formal request to the Eurogroup on Monday for up to €62 billion ($77 billion) in financial aid for 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. In a worst case scenario, Wyman found that Spanish banks would need between €51 billion and €62 billion in additional capital. Berger estimated the banks would need €51.8 billion. The auditors used stress tests similar to those conducted by the International Monetary Fund, which said last month that banks need to raise €40 billion. The Spanish government did not specify the exact amount it would need. The uncertainty around Spanish banks has raised speculation that Spain will need a bailout similar to those given to Greece, Ireland and Portugal. Investors are also worried about how Spain’s problems will impact Italy. The fear is that bailing out Spain would drain the euro area’s crisis resources and leave Italy without a safety net. The leaders of the four biggest eurozone economies agreed Friday on a plan to boost economic growth in the troubled currency union. Without going into detail, the leaders said they agreed on a set of growth-enhancing policies equal to about €125 billion, or 1% of eurozone gross domestic product.

Spain's GDP is bigger than Greece, Ireland, and Portugal together.  Spain very well could be the Eurozone's Tipping Point into collapse. 

Greek Finance Minister Resigns Just Days After Appointment; Cyprus Officially Requests Bailout

Bad Omen Monday..  Like, two-headed crow flying backwards, ten feet above your head shrieking "NOOOO!," bad..  Zero Hedge.  Whole Post:

This has to be a record:

•GREEK FINANCE MINISTER RAPANOS RESIGNS; PRIME MINISTER ACCEPTS


This is the same guy who was appointed last week, and who fainted after seeking the official Greek numbers. In fact we are not sure he ever got an official appointment. And elsewhere:


•CYPRUS REQUESTS EU AID


•CYPRUS SEEKS EXTERNAL FINANCIAL ASSISTANCE FROM EURO AREA: China just said NEIN


Prepare the bath salt firehose.


Repanos: we hardly knew thee. Courtesy of William Banzai:

Welcome, Cyprus!  If you haven't been paying attention, you're in for some "excitement!"

Forget the PIIGS, the EU as a Whole is Insolvent

Impending Systemic Collapse has an ominous ring to it.  Zero Hedge has the bad news..  Excerpts:

Europe is heading into a full-scale disaster.
You see, the debt problems in Europe are not simply related to Greece. They are SYSTEMIC. The below chart shows the official Debt to GDP ratios for the major players in Europe.


As you can see, even the more “solvent” countries like Germany and France are sporting Debt to GDP ratios of 75% and 84% respectively.



These numbers, while bad, don’t account for unfunded liabilities. And Europe is nothing if not steeped in unfunded liabilities.


Let’s consider Germany. According to Axel Weber, the head of Germany’s Central Bank, Germany is in fact sitting on a REAL Debt to GDP ratio of over 200%. This is Germany… with unfunded liabilities equal to over TWO times its current GDP.
To put the insanity of this into perspective, Weber’s claim is akin to Ben Bernanke going on national TV and saying that the US actually owes more than $30 trillion and that the debt ceiling is in fact a joke.
What’s truly frightening about this is that Weber is most likely being conservative here. Jagadeesh Gokhale of the Cato Institute published a paper for EuroStat in 2009 claiming Germany’s unfunded liabilities are in fact closer to 418%.

And of course, Germany has yet to recapitalize its banks.


Indeed, by the German Institute for Economic Research’s OWN admission, German banks need 147 billion Euros’ worth of new capital.

To put this number into perspective TOTAL EQUITY at the top three banks in Germany is less than 100 billion Euros.

And this is GERMANY we’re talking about: the supposed rock-solid balance sheet of Europe. How bad do you think the other, less fiscally conservative EU members are?
Think BAD. As in systemic collapse bad.

Tickticktick..

Dr. Michael "The Big Short" Burry's "Brutal Hangover Is Inevitable" State-Of-The-World UCLA Commencement Speech

The prediction has been made.  Will Dr. Burry continue his roll?  Zero Hedge(Video at the link) Whole post:

Infamous for his prediction of the great recession, Europe's demise, and the collapse of the US financial system (as well as profiting extremely handsomely from said predictions), so well captured in Michael Lewis' book "The Big Short", UCLA's Dr. Michael Burry undertakes UCLA's Economics Department's commencement speech with much aplomb. In this "age of infinite distraction", the astounding truthiness of this 15 minute speech is stunning from single-sentence summation of Europe's convulsions that "when the entitled elect themselves, the party accelerates, and the brutal hangover is inevitable" he reminds us that Californians, and indeed all Americans, should take note. A quarter-of-an-hour well spent from a self-described 'chicken-little' who was "just trying to figure it all out".


Another clear-eyed warning to be ignored, yeah?  It's not like this collapse is already in motion or anything..

Global Financial House Of Cards In Peril By New Round Of Moody's Downgrades

Britain gets sucked into the mix..  British banks to be downgraded by credit ratings agency Moody’s as euro-crisis spreads  The Extinction Protocol.  Excerpts:

Royal Bank of Scotland, Lloyds Banking Group and Barclays are all in line for a downgrade by ratings agency Moody’s over fears the eurozone crisis threatens their stability. In a move that would cost financial institutions billions of pounds and could have a knock-on effect on the cost of credit to business and consumers, Moody’s is set to push some banks down two notches, sources said. Moody’s will also downgrade a number of the biggest banks around the world, it was claimed, a decision that would show how the eurozone sovereign debt crisis is hitting all areas of global finance. The cuts are part of a wider review by Moody’s of the global banking sector that Sky News said is likely to be unveiled tonight after the US market closes. The downgrades, which are expected to range in scope from one notch to three notches, will follow joint efforts by the Bank of England and Treasury to boost cash flows in Britain’s banks through a multi billion pound cheap loan scheme. The banking industry has been hit by higher funding costs as the eurozone troubles escalated and has been hoarding money for fear of another worrying phase in the crisis.

And U.S. banks aren't immune,either..  This from the L.A. Times.  Excerpts:

U.S. banks hammered with downgrades: Moody’s Investors Service lowered the credit ratings of 15 the world’s largest banks late Thursday, including Bank of America, JPMorgan Chase and Goldman Sachs, saying their long-term prospects for profitability and growth are shrinking. The ratings agency said it was especially concerned about banks with significant financial markets businesses because those markets have become so volatile.



The global effects of this round of downgrades should be a large portion CNBC's jabber-talky today, but probably not scary enough for Rick Santelli to shit his pants on-air.  Although that day is coming, it probably won't be Friday..  When that day comes, don't worry, though:  I will be posting video!

Deja Vu: Pasok Is Warming Up To Coalition With Only New Democracy

Ahh, the great PASOK flip-flop.  Nice..  Sensible Greeks, you have every reason to believe the two parties that brought you to the brink of financial DOOM will find the way back to prosperity!  Good for you;  Here's a participation ribbon!  Rest up, Riot Dog; You'll be busy soon enough!  Zero Hedge.  Excerpts:

One of the biggest caveats from yesterday's Greek election result was that Pasok announced it would only participate in a broad coalition government that includes Syriza. Obviously Syriza promptly turned down the offer, which has now put the ball back in the court of the Pasok leader - Venizeloz. Being a career politicians, and knowing quite well what the final outcome of the Greek fiasco would be, it was only a matter of time before the former minister of defense, finance, and yes, sport, would flip flop, and hint that a government of just ND and Pasok would also work, as the alternative is just too harsh to even consider. In other words, we may shortly get a repeat of the precisely same leadership that brought Greece to 23% unemployment and a completely destroyed financial and economic system, with Veni back in the role of finance minister once again.

And:
Does this mean a Greek government just may happen, evading a 3rd Greek election in as many months? We will know for sure by tomorrow night, when Pasok said is the deadline by which a new government has to be formed. As for bets on the longevity of the new cabinet, we have no idea what the spread is, but we take the under.


What's the definition of insanity?  Happy fun times are just ahead with your "new" old leaders, Greece!  Opa!  When you take back to the streets, remember to hydrate?  It's gonna be a long, hot summer!

Eurozone critical mass: How it could all go down this summer with Italy and Finland exiting and banks in flames

Interesting theory as to how the Eurozone may spin down/spin out of control and implode/explode..  The Extinction Protocol.  Excerpts:

 Here’s how the Eurozone crisis might come to a head over the summer: a “Spanic,” followed by a “Quitaly,” followed by a “Fixit.” A fresh panic in Spain might be followed by rising demands for Italy to quit if it doesn’t get the same terms its fellow Mediterranean country has been offered, followed by a Finnish departure from the euro that might finally bring the whole saga to a climax. It would be a rough ride — and you wouldn’t want to be holding many assets other than dollars or gold or possibly Swiss francs while it was playing itself out. But at least it might bring a resolution to the crisis. Almost a quarter of the euro’s 17 members have now needed outside help, and Cyprus will probably join the list soon. It is hardly a great record for a monetary experiment, which, let us remember, was meant to bring greater stability — not less. So how could this play out over the summer. Here’s how the sequence might work: First, the Spanic (for a panic in Spain). We’ve just seen one rescue package for the troubled Spanish banks. But who says 100 billion euros is enough? This is a country that is sliding into deep recession, and where the government is cutting spending fast — which is only going to deepen the recession.
..
 Imagine how that is going to feel to the Italians. The Spanish get borrow money at half what it costs them — and this at a time when very high borrowing cost are pushing your country into the fifth recession since the nation joined the single currency. Worse, Italy has to stump up around 22% of the Spanish rescue — borrowing money at 6% to give to its neighbors at 3%. That isn’t going to go down well.  Finally a Fixit (for a Finnish exit). The crisis will finally come to a head when one country decides to get out. Finland is the most likely. Why? Because it is a small nation with a strong economy. It is easy to head for the door. Finland would be better off on the first day, just as Estonia was when it decided to leave the ill-fated ruble zone created after the collapse of the old Soviet Union. It doesn’t particularly have to worry about the impact on the European Union, in the way that Germany would if it opted out. If a country such as that leaves, it is effectively game over, but no one can really say that of a tiny place such as Finland. And it has a strong anti-euro political grouping; the True Finns scored well in the last election and may well improve their position in the polls. Finland is already demanding collateral for its portion of the Spanish loan. That could well turn into a deal-breaker — no collateral, so we’re out of here. Once one country leaves, it is much easier for the next to leave, in much the same way as it is easier to be the second person to leave a really bad party than the first.

(Emphasis from the article)European Banks will be wiped out: Few large eurozone banks would be left standing and the banking sector could face a €370bn (£298bn) loss if the euro crisis results in the single currency bloc breaking apart, according to one of the first in depth analyses of what might happen if the eurozone disintegrates. The analysis by Credit Suisse estimates that up to 58% of the value of Europe’s banks could be wiped out by the departure of the “peripheral” countries – Greece, Ireland, Italy, Portugal and Spain – from the eurozone. Even if the single currency remains intact some €1.3tn of credit could be sucked out of the system as banks retrench to their home markets, unwinding years of financial integration, the Credit Suisse analysis warns his represents as much as 10% of the credit in the financial system. “We find that a Greek exit could be manageable … but in a peripheral exit, few of the large listed eurozone banks would be left standing,” the Credit Suisse report said. The banking sector could need capital injections of as much as €470bn if the three scenarios considered by the Credit Suisse analysts – a Greek exit, an exit of the periphery countries and a situation where banks retrench domestically – happen at once.
And:(My emphasis)
The Credit Suisse analysts insist they are not expecting the euro area to break up – or for Greece to leave – but they believe it is likely there will be a dramatic reduction in cross-border business – leading to less loans for businesses and individuals. The International Monetary Fund has estimated that some €2tn of credit could be lost through a euro zone break up and the Credit Suisse analysts point out they have only analysed the impact on banks they research.

Remember the good old days of say, January, when any mention of Greek, Spanish, or Italian bailouts, defaults, or anyone at all leaving the European Union was so far fetched it wasn't even discussed?  Wow, six months later, and here we are..  So what does that say about the real magnitude and urgency of Credit Suisse's analysis?  Is this close to an accurate assessment, or a vastly under-estimated threat?

Eurozone epidemic meltdown: Spain in emergency crisis, Danish banks downgraded

From The Extinction Protocol.  Excerpts:


Spain in emergency crisis: “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.
And:
Mr Roberts said the collapse in Spanish tax revenues is replicating the pattern in Greece. Fiscal revenues have fallen 4.8pc over the last year, and VAT returns have slumped 14.6pc. Debt service costs have risen by 18pc. The country is caught in a classic deflationary vice: a rising debt burden on a shrinking economic base. “Once you get into such a negative feedback loop, you can move beyond the point of no return quickly,” he said.

It's not like one country's financial implosion stops or gets better--Greece, Italy, Portugal, and Ireland are still in bad shape--The focus just switches whenever new, horrible economic data is reported.  In hindsight, the multiple paths to economic Armageddon will become clear when they all become critical simultaneously.  Buckle up:  Here we go!