Europe Just Had Its Bear Stearns Moment – Don’t Be Fooled Again!

Mel-Gibson-Plays-The-Ghost-In-The-Patriot
They fooled us once in 2008 before the collapse saying all was well with the Bear Stearns collapse. It just happened again and this time the crash will be much worse.

In a repeat of the 2008 Financial Crisis, Europe just had it Bear Stearns moment as the third largest bank in Too Big To Bail Spain failed and was forced to be nationalized.

Recall, in the run up to the 2008 financial crash the failure of Bear Stearns was the beginning of the end.

The collapse was the prelude of the financial meltdown that would steal trillions of dollars of wealth from people and government’s all over the world and lead into the greatest financial crisis and recession since the Great Depression.

At the time I was not a political activist nor did I go around ranting about government lies , corporate media propaganda, or the crooks on Wall Street the way I do today but soon that would all change.

Between my wife, her siblings and their extended family they had millions invested in Wall Street banks and most of it in Wachovia.

Growing up I aspired to be a Wall Street stock broker and followed the markets since 7th when I joined my middle schools stock market club.

As the media repeatedly downplayed the failure of Bear Stearns saying no cause for concern I knew better having a sense of familiarity with the Savings and Loans crisis and remembering the run on the banks during the great depression.

I warned my wife to get her money out of the market in spring and she did. Most of her family however didn’t instead choosing to listen to the TV.

Come September they had all lost millions in the markets joining the millions around the world who lost trillions as the banks were forcefully seized by the government and given to other Wall Street firms who started the crisis.

As the crisis unfolded, I became ever more apparent of the lies being told by the media and their complicity in pushing government fear-mongering as they told the public unbelievable things.

The sickening debacle was the spark that ignited the fire that has since turned into my enraging inferno of activism.
Now here we are 4 years later and history is repeating itself.

This time, Europe is center stage and the dominoes that are falling are so large that no amount of propaganda or government intervention can prop up the simply to big to bail EU nations that stand in the path of falling dominoes.

Europe just had its Bear Stearns moment yesterday as Spain’s largest bank failed and was nationalized.

Again, we are told no cause for concern and again the media is complicit in leading the sheep failing to warn they are about to be slaughtered.

The choice is yours. You can follow the advice I gave my wife before the crash or you can choose to ignore the warnings and trust the media.

Of course, I have been warning about this for some time.

 

Financial Armageddon Approaches: Spain is About to Enter a Full-Scale Collapse

Greece Default Will Now Lead To Euro Collapse
Economic data and technical data coming out of Spain is telling us point blank that disaster is looming and will trigger the dominos to fall across Europe.

The perfect storm of an economic collapse fueled by an all out housing and mortgage crash, a sovereign debt crisis, and a run on the over-leveraged unregulated Spanish banks is hammering Spain right now.

The IMF and the ECB knows that Spain is too big to bail which is really bad news considering the economic data and technical indicators show irrefutable evidence that Spain is about to enter a full-scale collapse which will in turn send the dominoes falling across Europe.

Last year we were repeatedly warned that if Greece defaulted the result would be Financial Armageddon and even warned America could lose its financial sovereignty.

The when Greece finally defaulted, the media downplayed the ramifications and claimed the debt contagion wouldn’t spread.

They lied and there is a reason that Spain has banned all cash transactions over 2,500 Euros and the IMF is raising the alarm that the debt crisis will persist throughout all of 2012.

There is a reason that the IMF is warning of a collapse of the Euro and full-blown financial panic.

Plain and simple, whether the media will admit it or not, Spain is next.

Brace yourself because doomsday is rapidly approaching for the entire global economic system.

Via Zero Hedge, Graham Summers reports:

Spain is About to Enter a Full-Scale Collapse.

A few facts about Spain:

• Total Spanish banking loans are equal to 170% of Spanish GDP.

• Troubled loans at Spanish Banks just hit an 18-year high.

• Spanish Banks are drawing a record €316.3 billion from the ECB

(up from €169.2 billion in February).

Things have gotten so bad that Spanish citizens are pulling their money out of Spain en masse: €65 billion left the Spanish banking system in March 2012 alone.

As bad as they are, even these data points don’t do justice to the toxic sewer that is the Spanish banking system.

Case in point, over HALF of all Spanish mortgages are owned by Spanish cajas.

If you’re unfamiliar with the caja banking system, let me give you a little background…

Until recently, the caja banking system was virtually unregulated. Yes, you read that correctly, until about 2010-2011 there were next no regulations for these banks (which account for 50% of all Spanish deposits). They didn’t have to reveal their loan to value ratios, the quality of collateral they took for making loans… or anything for that matter.

So, with Spain today, we have a totally unregulated banking system sitting atop HALF of ALL Spanish mortgages after a housing bubble that makes the one that happened in the US look like a small bump.

[…]

Read The Rest

And See This: Spain Bans Cash Transactions Over 2,500 Euros

From Zero Hedge yesterday:

Bank Of Spain Formally Nationalizes Bankia, Says Insolvent Bank Is “Solvent”, Adds There Is No Cause For Concern

The only thing funnier than a nationalization statement spun as positive, or favorable for taxpayers, is one that has been Google translated, in this case from Spanish, courtesy of Bank of Spain, which has just formally bailed out Bankia, leaving the best for last: “In any case, BFA-Bankia is a solvent entity that continues to function quite normally and customers and depositors should have no concern.” Move along. Nothing to see here. Nobody should be concerned.
From de Bank of Spain:

Statement on BFA-Bankia

The Board of Finance and Savings Bank (BFA) announced today the Bank of Spain its decision not to buy in the terms and conditions agreed to the securities issued in the amount of € 4.465m who signed the FROB (Bank Restructuring Fund). BFA has concluded that the most desirable to strengthen the soundness of the business project that began with the appointment of Jose Ignacio Goirigolzarri as president is to request the conversion of these titles in stock ordinary. This conversion must be authorized by the Bank of Spain and the other authorities Spanish authorities and community and will be conducted in accordance with the valuation process established in the indenture securities.

The Bank of Spain has worked hard in recent months with the group address BFA-Bankia to specify the measures to ensure compliance with the provisions of the RD-l 2/2012 for the sanitation Spanish financial system. BFA-Bankia late March presented a restructuring plan and restructuring that included measures that would comply with the RD-l, and standardize its financial position.

After analyzing this reorganization plan, the Bank of Spain also ordered the entity measures complementary to streamline and strengthen management structures and management, increasing professionalization and a divestment program. These additional actions should serve to enhance the soundness of the institution and restore market confidence. The events of the past weeks and the growing uncertainty about the future of the company has made it advisable to go further and raise the providing resources to accelerate and increase public sanitation.

The changes in the presidency of BFA-Bankia is precisely oriented in the direction shown in professional management and allow the group to boost its restructuring program. The new address of the entity must submit in the shortest possible plan of reorganization strengthened that places BFA-Bankia able to cope with a full guarantee its future.

In any case, BFA-Bankia is a solvent entity that continues to function quite normally and customers and depositors should have no concern.

As a follow up:

Bankia: The Failed Bank In The Coalmine

From Mark Grant, author of Out of the Box

To Providence I Commend You

“’Tis now the very witching time of night, when churchyards yawn and Hell itself breathes out Contagion to this world.”

-William Shakespeare

The Immortal Bard must have been referencing Madrid when penning these lines or, if not, would likely approve of their application this morning. The nationalization of Bankia, the third largest bank in Spain, is not some isolated event that is singular and alone in nature regardless of the expected dampening and muted words and phrases issued by the Spanish government. The cancer has been identified but not isolated and you may be assured that it remains in the lymph nodes of the two major banks in Spain. Fortunately, during America’s financial crisis, many of the sub-prime mortgages were securitized and no longer resided on the balance sheets of the American banks. In the case of Spain we find not only the majority of the mortgages resident at the Spanish banks but we find an added dimension which is a huge amount of money lent to Real Estate developers which is impaired and still on the books of the Spanish banks. Further, in my opinion, none of these loans have been accurately accounted for and they are being carried at whimsical valuations by the banks or pledged as collateral at the ECB where the Spanish bank funding jumped 50% in one month and now stands at $294 billion. Following the bouncing ball; there is now so much encumbrance of assets between pledged collateral and covered bond sales that the actual worth of the two major Spanish banks is now someplace between “not much” and “De minimis” should the situation deteriorate to the point of impairment.

The Bankia nationalization also required a further injection of capital from Spain which obviously impacts the balance sheet of the sovereign as the government issues press releases trying to obscure the obvious. In Spain for the banks and for the country the math just does not work as unemployment and austerity measures are a toxic cocktail that will soon causes the drinkers to cry out for medical assistance. The jump in ECB loans is the first stage cancer but you may expect a major worsening and a higher level soon where both the country and the banks will require life support from some European institution and in a size that cannot be afforded without toxic shock in other nations. Consequently I again issue a warning on Spain and their banks and advise a great distance between you and them!

Greece-The Situation Grows Perilous

The argument for months was that Greece was such a small country that it hardly mattered and why was everyone focusing on Greece. I pointed out that the total debts of this country stood at $1.1 trillion and, since then, have gotten bigger even after the PSI took place. In fact, Greece borrowed $130 billion to pay off $105 billion and the ECB/EIB and the IMF refused to take the hits. Now just the country, the sovereign, owes $517 billion to various parties both public and private which is not only an astronomical number for a country of this size, about the same as the total GDP of Switzerland, but one that cannot be paid back by any stretch of anyone’s imagination. The 120% debt to GDP ratio flaunted about by the EU and the IMF some months ago is the stuff of nonsense, fairy tales and stories that would please the Brothers Grimm. Greece has been a continuing saga of make believe, hopes and prayers answered by no one as the nation is far past the gates that guard the entrance to Hades. Now it appears as if there will have to be another election in June as no one can form a government and the second most populous party wants to either renegotiate the terms of the IMF/EU agreement or leave the Euro and devalue to save the country’s finances and the Greek pride. If this should happen the consequences for the rest of Europe will be severe. You could start with the fact that it would wipe out, by approximately three times the total equity capital of the European Central Bank. If Greece defaults it would not only wipe out the new bondholders but impair the EIB and have a telling effect on the IMF. It was never the size of the country but the size of their debts and in an effort to protect the German and French banks at the time a monster was created by abysmal thinking and the fanciful notion that austerity would solve the problem which it plainly has not.

Then besides all of this there is the $104 billion owed to the other Euro nations through the Stabilization funds, the $65 billion of Greek bonds bought by the ECB to try and hold down Greek yields and the $135 billion in Target2 funds that the Greek Central Bank owes to the other central banks in Europe. Then it is just the sovereign debt, not the bank debt and not the derivatives and not the private debt and not the municipal debt but just the country that owes $874 billion which is just shy of 300% of their total Gross Domestic Product. $874 billion is also 27% of the total GDP of Germany and the numbers are not just frightening but very scary.

Greece is now long past the point where growth or Inflation can bail it out. The Europeans have played this game very badly in the attempt to hold the coalition together. The can kicking, heralded by so many as an achievement, has actually exacerbated the situation from a travesty to somewhere out past a calamity and there is no longer any way out without fiscal pain of the most serious kind whether Germany refuses additional funding or whether Greece opts out for their own reasons. We sail at the center of the maelstrom and the markets, quite soon in my view, will one day waken to the “Oh My God” moment which everyone has tried so hard to avoid. There is no longer any way out!

“To that Providence, my sons, I hereby commend you, and I counsel you by way of caution to forbear from crossing the moor in those dark hours when the powers of evil are exalted.”

-The Hound of the Baskervilles

Categories: ECONOMY

Write a Comment

Your e-mail address will not be published.
Required fields are marked*