• 14 Jul 2014 at 3:25 PM
  • Banks

Lies, Damn Lies And Nonperforming Loan Levels

Things are getting better in Spain. Just perhaps not as fast as certain numbers might have you thinking. Read more »

When last we checked in with Javier Martin-Artajo, his attorney was telling the press that he was on vacation and had no plans or reason to believe it was necessary to cut said vacation short. Now this is happening: Read more »

  • 23 Sep 2013 at 2:37 PM
  • Banks

For Sale: The ‘Bad’ In Spain’s ‘Bad Bank’

The bank loans that made Spain what it is today can now be yours. Read more »

  • 19 Aug 2013 at 3:37 PM

Another Number Goes Up In Spain

It seems that the unemployed and the failing companies have difficulty paying their bills. But austerity is totally working. Read more »

  • 04 Jan 2013 at 2:35 PM

Twinkie Economics In Spain

The good people who used to run Hostess Brands aren’t the only people who came up with the idea of raiding pensions to pay bills: Read more »

Every time I talk about Europe I begin by saying “Europe is all better,” because Europe these days operates on big-bang fixes followed by long slow decays, repeated indefinitely, so I guess you should sell the news and buy the quiet. Anyway, Europe is all better, since Mario Draghi announced today that the ECB will be buying unlimited quantities of European government debt, subject to a series of footnotes to which I tip my hat as a fellow connoisseur. Like me, the ECB likes its footnotes suggestive rather than exhaustive,* so the details are a little vague but will include “conditionality” in which the subject governments need to sign up for EFSF bailouts and adhere to their conditions. Without many details you can pick lots of nits; a good one is the ECB’s attitude to the seniority of its purchases, which is ably picked here.

The analyst reaction is mostly of the too-cool-for-this, everyone-expected-it variety but then there’s this:

So either “the market has gotten ahead of itself,” or “expected” comes with some variance, or I guess both why not.

Anyway, this is the internet, you can’t just be like “the ECB is buying lots of bonds,” you need a theory; two worthwhile ones are: Read more »

  • 20 Jun 2012 at 12:49 PM

A Euroblather Arbitrage

No human can realistically be expected to understand or focus on the constant stream of Eurozone gyrations and in fact humans increasingly don’t, with the half-life of blather-driven euphoria declining rapidly. The latest gyration seems to be that Germany is contemplating letting the Eurozone collective rescue funds think about maybe one day putting up for discussion the possibility of considering buying bonds of distressed countries directly to try to drive down funding costs for those countries.

This seems to have helped Spanish yields more than did the announcement earlier this month that those funds might consider giving Spain €100bn in special senior debt to get its banks sorted, for sort of obvious reasons. If the EFSFSMCBFFFFF is buying hundreds of billions worth of Spanish bonds right alongside whatever brave dopes are buying them already, that buying pressure should push up prices and push down Spanish borrowing costs and improve Spanish sustainability in a virtuous circle etc. etc. If the EFSFSMCBFFFFF is instead putting in its money at a more senior level than those bondholders, then those bondholders are subordinated and, empirically, sad about it.

One weird thing though is that there is little assurance that “EFSFSMCBFFFFF buying the same bonds that everyone else is buying” is actually the same thing as “EFSFSMCBFFFFF ending up with the same bonds that everyone else is buying.” The (not yet ratified!) ESM treaty maybe requires the ESM to be senior to market creditors (maybe!), but also maybe allows it to buy market bonds, which generally are not senior to themselves. Seniority is ordinarily a matter of contract: if you buy one of a series of totally fungible publicly traded bonds, you generally expect to be treated pari passu with the rest of those publicly traded bonds.

Ordinarily! Read more »

Spain, as you may have heard, does not have a lot going for it at the moment. Its bond yields have crossed 7 percent, unemployment is at something like 70 percent, and on Monday, it announced a rather poorly received bailout of the country’s banks. Investors don’t want to touch their financial institutions with a 100 foot pole. One bank that knows the rejection all too well? Banco Santander, probably on account of the open sores and the fact that it’s a regular down at the free clinic. Today, though, that’s about to change. Everyone’s gonna want a piece of this. Read more »