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Thread: Spain requesting EU bailout.

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    Arrow Spain requesting EU bailout.

    (Reuters) - Spain is expected to ask the euro zone for help with recapitalizing its banks this weekend, sources in Brussels and Berlin said on Friday, becoming the fourth country to seek assistance since Europe's debt crisis began.
    Five senior EU and German officials said deputy finance ministers from the single currency area would hold a conference call on Saturday morning to discuss a Spanish request for aid, although no figure for the assistance has yet been fixed.
    Later the Eurogroup, which consists of the euro zone's 17 finance ministers, will hold a separate call to discuss approving the request, the sources said.
    "The announcement is expected for Saturday afternoon," one of the EU officials said.
    The dramatic development comes after Fitch Ratings cut Madrid's sovereign credit rating by three notches to BBB on Thursday, highlighting the Spanish banking sector's exposure to bad property loans and to contagion from Greece's debt crisis.
    "The government of Spain has realized the seriousness of their problem," a senior German official said.
    He added that an agreement needed to be reached before a Greek election on June 17 which could cause market panic and increase the threat of Athens leaving the euro zone if left-wing parties opposed to Greece's EU/IMF bailout win.
    The EU and German sources spoke to Reuters on condition of anonymity due to the sensitivity of the matter.
    Spain's deputy prime minister, Soraya Saenz de Santamaria, said the government needed to have at least a preliminary estimate of how much extra capital the banks needed before taking a decision.
    The International Monetary Fund is expected to announce imminently the results of its own audit.
    "It's important to respect the proceedings because it's important to know the ground," she told reporters, while not denying that the Eurogroup would hold a call on Spain's needs.
    "Before taking any kind of decision one should at least have a first estimate of the ground and the ground means figures."
    The European Commission's spokesman on economic affairs said Spain had made no request for aid but the euro zone stood ready to help if necessary.
    "If such a request were to be made, the instruments are there, ready to be used, in agreement with the guidelines agreed in the past," Amadeu Altafaj said. "We are not at that point."
    EFSF FUNDS
    If a request is made, Spain is expected to ask for help from the euro zone's 440 billion euro bailout mechanism, known as the European Financial Stability Facility. The amount will depend on the IMF audit and a separate report due by June 21 from two independent assessors, Oliver Wyman and Roland Berger.
    Financial industry sources told Reuters on Thursday that the IMF report, to be made public on Monday, had estimated Spanish banks' minimum capital needs at 40 billion euros ($50 billion), rising to 90 billion euros for a fuller recapitalization.
    Officials in Spain said the parameters for the IMF and the private-sector audits were effectively the same, meaning Spain could make the request for aid on the basis of the IMF figures rather than having to wait for the other assessment.
    The euro zone has been under strong pressure from the United States, China, Canada and other major partners to take swift, decisive action to prevent the debt crisis spreading and causing greater damage to the world economy.
    U.S. President Barack Obama said European leaders appeared to be moving in the right direction, but he also emphasized that he was being careful not to tell Europe what to do.
    "They understand the seriousness of the situation and the urgent need to act," Obama told a news conference.
    Speaking in Berlin, German Chancellor Angela Merkel said she was not pressing any country to take a bailout, saying it was up to Spain to decide what it wanted to do: "It's down to the individual countries to turn to us," she said.
    "That has not happened so far, and therefore (we) will not exert any pressure."
    Fitch said the cost to the Spanish state of recapitalizing banks stricken by the bursting of a real estate bubble, recession and mass unemployment could be between 60-100 billion euros ($75-$125 billion) - or 6 to 9 percent of Spain's gross domestic product. The higher figure would be in a stress scenario equivalent to Ireland's bank crash.
    BAILOUT LITE?
    European shares and the euro fell amid mounting concern over Spain following the Fitch downgrade although the Spanish stock market climbed nearly two percent on the prospect of help for the banks.
    While Spain would join Greece, Ireland and Portugal in receiving a European financial rescue, officials said the aid would be focused only on its banking sector, without taking the Spanish state out of credit markets.
    That would be crucial to avoid overstraining the euro zone's rescue funds, which would struggle to cover Spanish government borrowing needs for the next three years plus possible additional assistance for Portugal and Ireland.
    "I think they're trying to get a lighter support package, where the money is headed to the banks and not for financing the fiscal deficit," said Vincent Chaigneau, head of rates strategy at Societe Generale. "But you need to know the details, the size of the program and who participates."
    While funds would be paid to Spain from the EFSF, it remains unclear whether they will go directly to the Spanish state or to the government's bank assistance fund known as the FROB. Either way, analysts say the aid will accrue to Spain's budget deficit.
    The sudden escalation of the Spanish banking crisis, dramatized by last month's hasty nationalization of troubled lender Bankia, has contributed to raising Italy's borrowing costs towards danger levels as well as Spain's.
    The deputy governor of the Bank of Spain told parliamentarians on Thursday that 9 billion euros would also be needed to cover additional losses at nationalized banks CatalunyaCaixa and NovaGalicia, according to one source.
    SPANISH PRIDE
    The aim of a rescue package would be to relieve pressure on the state while enabling it to keep borrowing on markets.
    A "bailout lite" would also help salve Spanish pride. Spain is the world's 12th largest economy and No. 4 in the euro zone. EU and German officials have cited national pride as a barrier to requesting a full assistance program.
    Any political conditions would be light, related to the banks and would probably not add to the austerity measures and structural economic reforms which Prime Minister Mariano Rajoy's government has already put in place, EU and German sources said.
    The European Commission and Germany both agreed in principle last week that Spain should be given an extra year to bring its budget deficit down below the EU limit of 3 percent of gross domestic product because of a deep recession.
    (Additional reporting by Luke Baker and Jan Strupczewski in Brussels, Andreas Rinke in Berlin and Jesus Aguado in Madrid; Writing by Paul Taylor and Luke Baker; Editing by Mike Peacock and Alastair Macdonald)
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    http://www.reuters.com/article/2012/...8570DX20120608
    Last edited by PyratePrincess; 06-08-2012 at 11:34 AM. Reason: source addition
    ~Pyrate~


    "Those who make peaceful revolution impossible will make violent revolution inevitable.

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    JPM Tries To Explain Why The Bailout Train In Spain Will Lead To Much More Pain

    Submitted by Tyler Durden on 06/08/2012 - 12:46 Bond Eurozone Germany Gross Domestic Product International Monetary Fund Sovereign Debt Reports citing European sources state that Eurozone finance ministry officials, followed by finance ministers themselves, will hold conference calls on Saturday. A formal request for Spanish EFSF/ESM/IMF support, solely for the purposes of bank recapitalization, could be announced after these calls, and appears to be the motivation for them. As JPMorgan notes, while the timing of such a request would come as something of a surprise, the substance does not. A key question is whether this request for external support will serve to improve conditions in the Spanish bond market and raise Spain's chances of avoiding a broader support package. Our best guess is that it will not as JPMorgan believe that this is merely a stepping stone to a broader package of support for Spain and that the request for support has at least three negative consequences.
    ~Pyrate~


    "Those who make peaceful revolution impossible will make violent revolution inevitable.

    John F. Kennedy

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    won't/can't happen by the EU/ECB/IMF. you figure out what happens next...

    http://www.zerohedge.com/news/brussels-we-have-problem
    “Stand fast therefore in the liberty wherewith Christ has made us free, and be not entangled again in the yoke of bondage.” (Galatians 5:1 KJV)

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    The European governments and the IMF have made 386 billion euros ($480 billion) in loan pledges to Greece, Ireland and Portugal.

    Spain’s economy is more than twice the size of the three countries combined.

    http://washpost.bloomberg.com/Story?...EKJ533HIPGVR6F

    Interesting times indeed.

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    Burnthebanke has already committed Fed help for Spain. So all we mules better get back to work so our tax dollars can go help them (sarc off).
    ~Pyrate~


    "Those who make peaceful revolution impossible will make violent revolution inevitable.

    John F. Kennedy

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    They realize thier problem?
    Spain is run by Commies and they want Capitalist's taxes to bail them out?
    Recall that ALL our, and our children's tax dollars were spent years ago. Spain wants YOUR great grand children's TAX Dollars!!!!!
    They are soooo effen serious they'll have a conferance call on Saturday?
    When Beck says to Spit Yourself OUT Of The System he's talking about THIS!
    They swore, if we gave them our weapons, that the wars of the tribes would cease.
    “As a general rule, the earlier you recognize someone is trying to kill you, the better off you’ll be.”

    "You think a wall as solid as the earth separates civilisation from barbarism. I tell you the division is a sheet of glass."



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    Quote Originally Posted by PyratePrincess View Post
    Burnthebanke has already committed Fed help for Spain. So all we mules better get back to work so our tax dollars can go help them (sarc off).
    *Sadness*
    The truth may make us free but it also makes us sad...
    Their Government socialistic programs run out of their money so they turn to us and use our money to support their programs.
    Who will we turn to when our nations socialistic programs run out of money?
    • Philippians 4:6-7 “Be anxious for nothing, but in everything through prayer with thanksgiving, let your requests be made know to God”
    The Apostle Paul told us to not worry about anything.
    What should we do instead of worrying?
    1. Pray for what you need as well as for what you want.
    2. Tell God that you are thankful for what he has already given you.
    3. Request from God everything you need for the day, every day.
    Libertatem a Calumnia (Freedom from Oppression)

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    Quote Originally Posted by Chaplain Chuck View Post
    *Sadness*
    The truth may make us free but it also makes us sad...
    Their Government socialistic programs run out of their money so they turn to us and use our money to support their programs.
    Who will we turn to when our nations socialistic programs run out of money?
    I believe that's part of thier Plan, a global agenda to impoverish America.
    They swore, if we gave them our weapons, that the wars of the tribes would cease.
    “As a general rule, the earlier you recognize someone is trying to kill you, the better off you’ll be.”

    "You think a wall as solid as the earth separates civilisation from barbarism. I tell you the division is a sheet of glass."



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    Quote Originally Posted by Lraiser View Post
    The European governments and the IMF have made 386 billion euros ($480 billion) in loan pledges to Greece, Ireland and Portugal.

    Spain’s economy is more than twice the size of the three countries combined.

    http://washpost.bloomberg.com/Story?...EKJ533HIPGVR6F

    Interesting times indeed.
    ************************************************** *
    Given herebelow is a part of Post by Ezra Klien perinent to this issue.
    Chinese Marshall plan?
    _______________________________
    Posted by Ezra Klein at 07:42 AM ET, 06/08/2012 TheWashington Post






    "On Thursday, UBS titled their morning economic briefing "nothing, nothing, nothing." It was a succinct summary of the expectations for the world's central banks: The European Central Bank had announced they wouldn't cut rates. The Bank of England is expected to continue with its current policies. And the Federal Reserve, UBS said, wasn't likely to announce anything new.
    The banking and financial services conglomerate was right about all that. Bernanke expressed concern about the economy on Thursday. But he didn't express an immediate intention to do anything more about it. That said, the nothing strategy isn't absolutely universal: "In its first rate cut since the depths of the global financial crisis in December 2008, the People’s Bank of China lowered the interest rate on a one-year loan by a quarter percentage point to 6.31 percent, effective Friday"- (note by this poster, for domastic lending.
    ---------------------------
    P.S. What portion of $500 billion required is pending on what China can get out of it. What ever maybe 's a lot of money even for China.Thus, I am quite certain that China will want a for a retuen a lowest interest it can negotiate by surrendering complete excess to Spain in dealing with Eastern Europe and it market.

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    Home / China / Economy

    China's outbound investment may hit $2 trillion

    Updated: 2012-06-09 04:05 By Fu Jing in Brussels ( China Daily)
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    But report calls for caution against protectionism amid economic slowdown
    China's outbound foreign direct investment could hit the $2-trillion mark by 2020, with the private sector playing an important role, according to a report by US-based research firm Rhodium Group.
    The report said if Europe continues to attract the same share of global FDI as in the previous decade — around 25 percent — then Europe would see $250-500 billion in new Chinese M&As and green-field investment by 2020.
    In partnership with China International Capital Co Ltd, Rhodium Group released the report on China's investment in Europe on Thursday in Brussels.
    With the huge economic and employment impacts of China's upcoming surge in overseas investment, the authors urged European countries to keep their economies open in order to maximize the benefits of the Chinese inflows.
    The report was released amid speculation that the European Union is preparing to resort to protectionist measures against Chinese telecom investors.
    The report's author, Daniel Rosen, said that 63 percent of Chinese investment in Europe comes from private companies.
    So far, the top five Chinese private investors in Europe are Geely, Huawei, Lenovo, Sany and Wolong Group.
    China started to encourage its enterprises to invest overseas a decade ago, but the pace only started to pick up in the past couple of years.
    "Europe must not risk losing its hard-earned reputation for openness by imposing additional barriers to capital inflows based on economic security considerations," the report said. "Several cases have already raised that specter."
    Europeans will embrace foreign investment if a thorough, EU-wide process to address concerns is in place, guided by the principles of openness and non-discrimination, said the report.
    So far, Chinese investment has created 45,000 jobs in the EU.
    "Chinese investment in Europe is a very recent phenomenon, and Chinese investors still suffer from a lack of experience and managerial know-how," said Frank Xu, managing director of Investment Banking Department of CICC.
    Against this context, the expansion of Chinese investment in Europe is experiencing structural difficulties.
    "The predominating and the only advantage of Chinese investors is access to capital," said Xu.
    At the report's launch, EU Trade Commissioner Karel De Gucht said the EU is committed to openness in foreign investment.
    "At the same time we need to make sure that other countries — including China — increase their openness as well," said De Gucht.
    Tan Xuan contributed to this story.

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