Saturday, March 17, 2012

The Hiding of European debt/Hungary will probably do "an Iceland"/

Good morning Ladies and Gentlemen:

Yesterday we had no bank failures but did have this story where the FDIC are suing insiders of the failed OMNI National bank of Georgia:

FDIC sues insiders of failed Omni National Bank

The Atlanta Journal-Constitution
Federal regulators filed a civil lawsuit against 10 former insiders of a failed Atlanta bank on Friday that has been at the center of several criminal cases for borrower and banker misconduct.

Downtrodden neighborhoods near downtown were a gold mine for Omni National Bank, a former high-flying Georgia bank with its own corporate jet. Omni failed in March 2009.
It is the seventh Federal Deposit Insurance Corp. civil suit against failed bank insiders in Georgia, which leads the nation with 77 bank failures since mid-2008.
The suit said Omni’s collapse resulted in more than $300 million in losses to the Federal Deposit Insurance Corp.’s fund, which protects depositors.
The FDIC is suing over faulty handling of more than 200 loans and foreclosed property, resulting in $37.1 million in damages to the bank.
Among the names listed in the suit are: Stephen Klein, the bank’s former CEO; Irwin Berman, Omni’s president; and Jeffrey Levine, a former executive vice president.
Omni’s Community Development Lending Division, at the center of the suit, made short-term, high-interest loans to builders and speculators in lower income neighborhoods. These clients would fix up and often flip or rent the properties.
Six former officials in that division, including Levine, allegedly made scores of loans that later soured “despite numerous, repeated and obvious violations” of bank policy, bank regulations and safe and sound banking practices, the suit said.
Multiple Omni officials and borrowers have faced charges in the wake of the bank’s failure, including Levine.
The Atlanta Journal-Constitution reported in January 2010 that Omni’s collapse left hundreds of vacant homes in its wake, and the bank was a magnet for flippers and, sometimes, straw buyers who bought homes with fraudulent loans.
Levine pleaded guilty in 2010 to federal charges he doctored the bank’s books to obscure losses on bad loans. Prosecutors credited him for assisting authorities in multiple criminal cases. He was sentenced last year to 5 years in federal prison and ordered to pay $6.8 million in restitution.
Klein and Berman failed to properly supervise Levine and the CDL division and disregarded many “red flags” in the unit, the suit said. The CDL group ultimately became the second-largest producer of loans in the company.
The suit also accuses Klein and Berman of following an aggressive lending strategy that put profit ahead of bank policy and regulations.
The CDL division made more than 200 loans that violated bank policy, regulations or prudent and sound lending practices from 2005 to 2007, according to the suit. The loans resulted in $24.5 million in losses, the suit said.
The suit also faulted certain top officers for wasteful spending on foreclosed properties held on the bank’s books.
A spokesman for the FDIC declined to comment, citing agency policy about open litigation.
Alston & Bird attorney Theodore Sawicki, who represents Klein and former bank chief credit officer Eugene “Terry” Lawson, said he had not seen the suit and couldn’t comment on the allegations.
“We will demonstrate that each of them fulfilled their responsibility to the bank and they are not liable for any losses arising from the bank’s failure,” Sawicki said.
Jeff Horst, attorney for defendant Jules Greenblatt, a former officer in the CDL divison, also had not seen the case, but said he and his client would defend the case vigorously.
The claims against Berman are “completely unfounded,” said Berman’s attorney, David Balser with King & Spalding. Balser said his client has an “impeccable reputation as a banker” and vowed to vigorously defend the case.
Attorneys for the other defendants could not be found.


Gold closed down $3.60 to $1655.50 whereas silver fell by 12 cents to $32.57.
The final prices for gold and silver in the access market were as follows:

Gold;  $1660.10
silver:  $32.56

All eyes will be focused on Monday as we will hear the damage on what must be paid out on all of those Greek credit default swaps. On Friday, Mark Grant published an important paper on the hidden amount of European debt and I have provided this for you. The Israeli cabinet has voted 8:6 in favour of an attack on Iran. There are reports that Israeli war ships have passed through the Suez Canal and onto Iran.  Hungary has decided not to play ball with its creditors, which will surely bring havoc to Austria and its banks, who provided the lion share of money to this debt strapped nation.

Let us head over to the comex and asses trading on Friday.

The total gold comex open interest rose yesterday to 441,650 from 437,593 with the rise in gold. The gain in contracts is thus 4057.  The front non delivery month of March saw its OI rise to 213 contracts from 70 for a gain of 143.  Obviously some banker or some entity badly needed gold metal in a hurry.  On Thursday, we had 32 delivery notices so in essence we gained  175 contracts of additional gold standing or 17,500 oz.
The next front month is exactly two weeks away and here the OI fell by 7201 contracts as some have already rolled into June.  The Oi for the front month of April rests this weekend at 170,082 contracts.  The estimated volume at the gold comex today was mediocre considering the rollovers at 178,169.  The confirmed volume on Thursday was much better at 220,914.

The total silver comex OI  rests this weekend at 106,723 a fall of 2873 contracts from Thursday.  With the rise in price in silver on Thursday, I guess we lost a few shorts to decided it necessary to cover.  The front delivery month of March saw its OI fall by only 3 contracts and yet we had 0 deliveries on Thursday.
So we lost 3 contracts, probably due to cash settlements.  The next front month is May and here the OI fell by 783 contracts from 56,658 to 55,875.  The estimated volume at the silver comex Friday was 38,780.  The confirmed volume Thursday was quite high at 62,202.

Let us begin with March inventory movements  in Gold

 gold ounces standing in March 17:

St Patrick's Day

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
Deposits to the Dealer Inventory in oz

Deposits to the Customer Inventory, in oz
9705 (Brinks)
No of oz served (contracts) today
(178) 17,800
No of oz to be served (notices)
(35) 3500
Total monthly oz gold served (contracts) so far this month
(988) 98,800
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month


We had very minor activity in the gold vaults today.

The only transaction was a deposit of  9704 oz into a customer at Brinks.

Thus the total registered gold inventory remains the same at 2.461 million oz or 76.55 tonnes of gold.

The CME notified us that we had a rather large 178 notices filed for a total of 17,800 ounces of gold.
The total number of notices filed so far this month is represented by a total of 988 notices or 98,800 oz.
To obtain what is left to be served, I take the OI standing for March  (213) and subtract out Friday's delivery notices (178) which leaves us with 35 notices or 3500 oz left to be served upon.

Thus the total number of gold ounces standing in this non delivery month is as follows:

98800 oz (served)  +  3500 oz (to be served)  =  102,300 oz or 3.18 tonnes of gold.


the silver chart for March:    March 17/2012:

Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory45,554,(Scotia,)
Deposits to the Dealer Inventorynil
Deposits to the Customer Inventory 62,765 (Delaware, Scotia)
No of oz served (contracts)2 (10,000)
No of oz to be served (notices) 319 (1,595,000)
Total monthly oz silver served (contracts)1277 (6,385,000 )
Total accumulative withdrawal of silver from the Dealers inventory this month3,231,423
Total accumulative withdrawal of silver from the Customer inventory this month 1,918,618

We had minor activity inside the silver vaults today.

We had no dealer activity whatsoever.

We had the following customer deposit:

1.  14,324 oz into Delaware
2.  48,441 oz into Scotia

total deposit;  62,765 oz

we had the following withdrawal:
 45,554 out of Scotia.
we had an adjustment of one ounce of silver out of Delaware .

The registered or dealer inventory rests this weekend at 34.539 million oz
The total of all silver rests at 132.23 million oz.

The CME notified us that we had only 2 notices filed today for a total of 10,000 oz.  The total number of notices filed so far this month equates to 1277 notices or 6,385,000 oz.  To obtain what is left to be served upon, I take the OI standing for March (321) and subtract out today's notices (2) which leaves us with 319 or 1,595,000 oz.

Thus the total number of silver oz standing in this delivery month is as follows:

6,385,000 oz (served)  +  1,595,000 (oz to be served upon) =  7,980,000 oz
we lost 15,000 oz to probable cash settlements yesterday.


Let us now proceed to our ETF's SLV and GLD and then our physical gold and silver funds:

Sprott and Central Fund of Canada.

The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.

Thus a default at either of the LBMA, or Comex will trigger a catastrophic event.

March 17.2012

Total Gold in Trust



Value US$:68,921,973,519.0

March 15.2012




Value US$:68,506,928,146.97

March 14.2012:




Value US$:68,351,752,380.04

For the month we also witnessed very little activity into the gld vaults.



And now for silver March 17 2012:

Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67

March 15.2012:

Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67

March 14.2012

Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67

March 13.2012
Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67

strange:  we have neither gained nor lost any silver into the SLV vaults.



And now for our premiums to NAV for the funds I follow:

1. Central Fund of Canada: traded to a positive 4.1percent to NAV in usa funds and a positive 4.1% to NAV for Cdn funds. ( March 17 2012)

2. Sprott silver fund (PSLV): Premium to NAV  fell slightly today  to  7.99% to NAV  March 17.2012 :
3. Sprott gold fund (PHYS): premium to NAV rose slightly to   3.45% positive to NAV March 17. 2012). 


Late on Friday night we got the positions of our major players with respect to the COT report.

First the gold COT:

Gold COT Report - Futures
Large Speculators
Change from Prior Reporting Period

Small Speculators

Open Interest



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, March 13, 2012

here our large speculators that have been long in gold, were massacred again by the bankers to the tune of 7,665 contracts as the raid had its toll on their long positions.

those large speculators that have been short in gold decided to add more shorts to their positions
which probably hastened the fall in gold.

Our commercials;

those commercials that have been long in gold lightened up a bit and pitched 1,534 contracts of their long side.

those commercials that have been short in gold from the beginning of time, continued to cover their short positions to the tune of a big 10,054 contracts.

Our small specs:

those specs that have been long in gold were not frightened by the raid and they added a big 3,541 contracts to their long side.

those specs that have been short in gold covered a tiny 298 contracts.

Conclusion:  Massively bullish as the commercials are covering their shortfall.

For the past 12 years or so everytime we see a massive raid, inevitably we see the commercials covering their massive shortfall.  They do this collusively with other bankers.  Our regulators seem to ignore this very important footprint of the bankers crime.  The bankers should not be called commercials at all as they do not produce any gold (or silver) and they are net short of this commodity from the beginning of time.

Silver COT Report - Futures
Large Speculators

Small Speculators

Open Interest



non reportable positions
Change from the previous reporting period

COT Silver Report - Positions as of
Tuesday, March 13, 2012

In silver:

those large speculators that have been long in silver pitched a small 2,176 contracts from their long side.
those large speculators that have been short in silver covered a tiny 800 contracts from their short side.

Our commercials;

Those commercials that have been long in silver pitched a very tiny 988 contracts from their long side.
Those commercials that have been short from the beginning of time only covered a tiny 1,153 contracts from their short side.

Our small specs:

those small specs that have been long in silver added a smallish 586 contracts to their long side.
those small specs that have been short in silver  covered a small 625 contracts from their short side.

Conclusion:  slightly more bullish than last week.  However notice the difference between gold and silver.
Many more gold leaves fell than in silver.  Our silver holders are strong resolute and willing to take on the bankers.  No wonder the raids were fierce these past 10 days.


Before leaving the physical scene, we have the following story which will put a tiny damper on the gold and silver price:
Yesterday we had this important announcement from India where the Finance minister is proposing to double the customs duty on gold and silver.  This precipitated a huge panic buying for these precious metals.
The government is struggling with a huge fiscal deficits and thus the need for increased revenues from this importance stream:

(courtesy Goldcore)

On news that Finance Minister Pranab Mukherjee proposed to double the 4% customs duty on gold from April 2012, physical dealers saw some panic buying from India, the world’s largest gold consumer.
In January, India raised the gold import duty 90% and doubled the tax on silver as the government is struggling with a growing fiscal deficit and looked to increase revenues. Growing subsidies for fuel and food have left the government struggling to meet its budget target.
Indian investors, who are the largest consumer group of gold in the world, rushed to buy gold in advance of the government’s plan to increase the 4% customs tax in April 2012. The resulting gains where then eroded by stronger then expected US economic growth numbers. 


I brought this Jim Sinclair interview with KingWorld News to you on Thursday.  It is very important.
Sinclair believes that the reason for the Germans and the Swiss asking "where is their gold?" is that they suspect that the USA is selling it without their permission. There are two major foreign depositories in the world, the Federal Reserve Bank of NY, and the Bank of England.  The gold at the FRBNY is earmarked gold and cannot be used, sold, leased etc. Storage fees and insurance costs are borne by the owner-country.
It is one thing if the USA sold USA gold (at Fort Knox) without congressional approval.  It is another to steal other nations gold without their permission.  Wars are generally fought on this one!!
I urge you to listen to the tape!!

(courtesy KingWorld News/GATA/Jim Sinclair):

Sinclair - Is the Fed Selling Europe’s Gold During Interventions
Today legendary trader and investor Jim Sinclair told King World News that a number of European countries are beginning to ask themselves where the gold is coming from which is being used for interventions in the gold market. Sinclair also said some European countries are beginning to think it’s their gold, stored by the US Fed, which is being used for these interventions. But first, here is what Sinclair had to say about the recent plunge in gold: "Eric, this has been going on since $248 in gold. Any idea or concern that this kind of intervention is going to cause the gold bull market to cease or shorten or even contain where it will potentially go is simply wrong."
Jim Sinclair continues:
"Every time you intervene in any market or any time you intervene economically, it’s the same as using a controlled drug. The first application gives you the best high you’ll ever have. After that you have to do more and more just to near duplicate what you expected.
The selling down of the gold, what this means now is time....
Continue reading the Jim Sinclair interview below...
"If in fact they can’t bring the market under the $1,600 level, then the demand here is beyond the willingness for intervention. That means that if the demand is greater than the supply, the price is going to rise.
If gold does go through $1,764 and stabilizes there, you are beginning an unwind in terms of gold cooperating with the management of perspective economics (MOPE). (Central planners) would want gold to be very soft at a time when a credit event takes place in Greece, that very few of the participants and even bondholders knows yet exactly what happened."…


And finally this physical commentary from Jack Farchy of the London's Financial times
who comments that the BIS acting on behalf of central banks are buying gold as they know that gold has no liabilities and they are ditching their fiat for this important financial reserve:

March 16, 2012 6:51 pm
Central banks pounce on falling gold
By Jack Farchy
Financial Times
A sharp fall in gold prices has triggered large purchases of bullion by central banks in recent weeks, according to several traders with knowledge of the transactions.
The buying activity highlights the trend among central banks in emerging economies to buy gold, even as some western investors are losing patience with the metal. Gold prices have dropped 13.8 per cent from a nominal record high of $1,920 a troy ounce reached in September, and on Friday were trading at $1,655.60.
The Bank for International Settlements, which acts on behalf of central banks, has been buying significant quantities of gold on the international market amid falling prices, traders said.
According to several estimates, the BIS bought 4-6 tonnes of gold, worth roughly $250m-$300m at current prices, in the over-the-counter physical market last week, with purchases particularly strong at the end of the week. The total purchases over the past three or four weeks were likely to be as much as double that, the traders added.
In a note to clients this week, Credit Suisse referred to “aggressive central bank buying seen last Friday”.
The BIS declined to comment.
Central banks are one of the most important drivers of the gold market, holding one-sixth of all the gold ever mined in their reserves, but they disclose few details about their activities.
As a group, they made their largest purchases of gold in more than four decades last year, led by emerging economies such as Mexico, Russia and South Korea intent on diversifying their dollar-heavy foreign exchange reserves. The World Gold Council has also pointed to the possibility of significant unreported purchases by China at the end of last year.
At the same time, European central banks have all but halted a run of large sales.
“Central banks have definitely been looking at gold as an asset class much more closely ever since European central banks stopped selling,” a senior gold banker said. “There has been a huge interest.”
While some countries, such as Russia, China or the Philippines, have traditionally accumulated gold produced by their domestic mining industry, others use the BIS as an agent to carry out purchases and sales on their behalf, preserving anonymity.
The central bank buying comes as gold prices have slid in the past three weeks as strong economic data from the US has lowered investors’ expectations of quantitative easing by the Federal Reserve and made other investments, such as equities, appear more attractive.
Gold prices this week fell to their lowest since mid-January after the Fed struck an optimistic tone on the US economic recovery. “It’s clear that the market trend right now is an unwinding of safe-haven exposures, like gold, and a preference for growth assets,” said Edel Tully, precious metals strategist at UBS.
Buying from large physical consumers of gold such as China and India remains sparse, despite the fall in prices. India on Friday announced it would double import tariffs for gold, a move analysts said could damp demand.
“Asian physical demand remains lacklustre,” Credit Suisse said, arguing that gold prices could fall below $1,600. “Gold has now slipped back towards the middle of its long-term trend and has room to drop further.”
Copyright The Financial Times Limited 2012.  


Now for the big "paper"  or "debt" stories which will shape the physical price of gold and silver.
This first story is an extremely important paper presented by Mark Grant. Here he talks about bank debts which are not included in official European government debt figures as the authorities considers these contingent liabilities.  They must be added to get a real picture of what is going on in that nation.  He then delves into Spain as he shows that just the bank debts guaranteed by sovereign Spain amounts of 79 billion euros. The individual states of Spain have guaranteed 140 billion euros of debt plus additional municipal debt  plus other state run entities adds a further  55 billion euros of debt.  Total debt of Spain is thus almost 101 billion euros with a GDP of 107.3 trillion of GDP far greater than the 64% of GDP that they have been showing.

All governments are hiding the bank debts including Greece, Italy Belgium etc.

I have presented Mark Grant's paper with the official releases of Bloomberg and AFP on Spain's results.

I have changed some of Mark's numbers as he erred on the total admitted Spanish sovereign debt at 732 billion usa DOLLARS instead of the correct 735 billion EUROS (see AFP).  I adjusted all the numbers to conform properly with the data;

(courtesy Mark Grant/Bloomberg/AFP)

The Fool's Game: Unravelling Europe's Epic Ponzi Pyramid Of Lies

Tyler Durden's picture

From Mark Grant, author of "Out of The Box and onto Wall Street"
The Fool's Game
Bank Bonds Guaranteed by their Sovereign Nations
Spain:        79.039 billion euros        ($103 billion)
Italy:          78.032 billion euros        ($102 billion)
Portugal:    18.225 billion euros        ($ 24 billion)
Ireland:      27.707 billion euros        ($ 36 billion)
Greece:      67.244 billion euros        ($ 88 billion)
TOTAL      270.247 billion euros   ($353 billion) 
“Black markets will always be with us. But they will recede in importance when our public morality is consistent with our private one. The underground is a good measure of the progress and the health of nations. When much is wrong, much needs to be hidden.”
                                                                             -Eric Schlosser
Now in the curious world we live in today; this only came out in public as the answer to a question raised in the German Parliament. Some reflection on the nature of these guarantees, that the European Union had decided not to tell us about, causes me to think of them as “Ponzi Bonds.” These are the seeds of a great scheme that has been foisted upon us. Bonds of a feather that have flocked together and arrived with the black swans one quiet Wednesday afternoon. The quoted and much ballyhooed sovereign debt numbers are now known to be no longer accurate and hence the lack of credibility of the debt to GDP data for the European nations. Stated more simply; none of the data that we are given about sovereign debt in the European Union is the truth, none of it. According to Eurostat, as an example, the consolidated Spanish debt raises their debt to GDP by 12.3% as Eurostat also states, and I quote, that guaranteed debt in Europe “DO NOT FORM PART OF GOVERNMENT DEBT, BUT ARE A CONTINGENT LIABILITY.” In other words; not counted and so, my friends, none of the data pushed out by Europe about their sovereign debt or their GDP ratios has one whit of truth resident in the data.


If we just take the newest figures for Spain, which were released this morning, we find an admitted sovereign debt of 735Bn Euros  and a touted debt to GDP ratio of 68.5% which is up 10.7% from last year. Then, according to Phoenix Capital Research, the private sector debt is 227% of GDP while the Spanish banking system is levered 19 to 1. Danske bank points out this morning that the drop in home prices for Spain was -4.2% last quarter which marks the biggest drop ever  and they note a record high vacancy rate of 24.3% while further stating that the fall in Real Estate prices is so steep that it is equivalent to a 10% loss in GDP. In a report issued on 2/29/12 and apparently ignored by everyone including the ratings agencies, Eurostat reports that Spain has total sovereign guarantees of “other debt” which is 7.5% of their total GDP which would total around another $72.2 billion in uncounted debt. Then if we consider the “known” debt for Spain, only someone in La Mancha may know the “real” answers, we find:

Admitted Sovereign Debt                                  *  $960 Billion  (735 billion euros)
Admitted Regional Debt                                      $183 Billion  (140 billion euros)
Admitted Bank Guaranteed Debt                        $103 Billion (79 billion euros)
Admitted Other Sovereign Guaranteed Debt       $ 72 Billion  (55 billion euros)
Total Admitted Debt                                         $1.32 Trillion*  or 100.9 billion euros
A More Accurate Debt to GDP Ratio               94.0%

GDP of Spain:  1.073 trillion euros.
* (I changed the data to reflect correct data in euros and dollars..Harvey)

What Difference Does It Make
Now the world is a funny place these days. We have somehow come to the conclusion that since Europe can print all of the money they want, as in the LTRO scheme, that whether the combined ECB/EU loans are $3 trillion or $10 Trillion that it will make no difference as they can print all of the money they will ever need. They can print money, they can buoy their currency through central bank purchases, they can accept collateral that has the value of a nugget of fool’s gold so that they can rig the game to their heart’s delight and everything will be just fine. Now let me assure you, after almost thirty-nine years of engaging in the Great Game let me assure you, that this type of momentary nonsense will not prevail past the briefest of times and that the truth always emerges in due course. In the same Eurostat report, by the way, of 2/29/12 we also find that Belgium’s sovereign guarantee of “other debt” is 21.3% of their GDP, for Italy it is 3.6% of their GDP and for Portugal the number is 7.7% of their GDP. This does not include any guarantees of bank debt which would also have to be added in to the totals to reflect some sort of accurate fiscal picture. Consequently, as investors, we are not in some murky place but smack dab in a carefully engineered plan of outright Fraud where we are given manipulated and inaccurate numbers in the hopes that we will fund based upon them. We are being played as suckers as I state once again that I would not put one red cent in any of the European sovereigns or their banks as none of their data is real; only a consistent illusion created for fools.
“A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. With consistency a great soul has simply nothing to do.”
                       -Ralph Waldo Emerson


(the Bloomberg story on Spain)

Spain Debt Reaches Record as Rajoy Becomes Crisis Focus: Economy

March 16 (Bloomberg) -- Spain's public-debt burden surged to the most in at least two decades, underlining concerns about its ability to reorder state finances as contagion from the debt crisis focuses on the euro area's fourth-biggest economy.
The nation's overall debt last year amounted to 68.5 percent of gross domestic product, exceeding the government's forecast of 67.3 percent, data on the Bank of Spain's website showed today. That compares with 66 percent in the third quarter and 61.2 percent at the end of 2010.
"Spain seems to be the main risk in the near future for Europe," Stephane Deo, chief European economist at UBS AG, wrote in a note today. "There are enormous challenges ahead, including the debt-recession spiral in Portugal and Spain."
Prime Minister Mariano Rajoy spooked investors on March 2 when he defied European colleagues by loosening his deficit target for 2012 amid the second recession in as many years. Even as the European Central Bank's loans to banks prop up demand for Spanish bonds, the nation's borrowing costs have risen 30 basis points since Rajoy's comments.
The increase in Spanish debt was driven by the nation's 17 semi-autonomous regional governments, whose borrowings swelled 17 percent from a year earlier as they overshot their budget- deficit goals.

Debt Forecast

The European Commission forecasts that Spain's debt will have almost doubled to 78 percent of GDP by next year from where it was when Europe's sovereign debt crisis began, as the country's deficit-reduction efforts are hobbled by a relapse into recession. The International Monetary Fund expects the economy to contract 1.7 percent this year.
Euro-area finance chiefs agreed this week that Spain's deficit goal for 2012 was unachievable after the shortfall came in at 8.5 percent of GDP last year, compared with a 6 percent target. For 2012, European finance ministers agreed to ease the goal to 5.3 percent from an initial 4.4 percent.
"So far the government has disappointed," UBS's Deo said. "An ambitious reduction of the deficit is needed."
Elsewhere today, minutes of last month's Bank of Japan meeting showed that board members are concerned that increased bond purchases by the central bank may be viewed as financing government deficit spending. They said it was important "to clearly recognize and explain to the public" that the purchases are not "for the purpose of monetization," according to the document released on the BOJ website.

Read more:


And this from AFP on Spain.

Spain's public debt soars to record high
MADRID — Spain's public debt soared to a record high at the end of 2011, Bank of Spain figures showed Friday, as Madrid struggled to slash costs and escape the eurozone debt crisis.
Public debt amounted to 734.96 billion euros ($960 billion), equal to 68.5 percent of annual economic output at the end of 2011 -- up from 66 percent three months earlier and 61.2 percent at the end of 2010. (GDP= 1.073 trillion euros)
The accumulated debts breached the European-Union agreed limit of 60 percent of gross domestic product (GDP) but was still below the eurozone average, which approached 90 percent in the third quarter last year.
It was the highest public debt ratio recorded in Spain since statistics in the current format were first published in 1995.
Spain's public debt is rising fast because of runaway annual public deficits that have shot past EU-agreed targets, in part owing to high spending by regional governments.
The previous Socialist government, ousted by the conservative Popular Party in November elections, had forecast a debt of 67.2 of GDP for the end of 2011, aiming to curb it to less than 70 percent in 2014.
But the European statistics unit Eurostat was not so optimistic. It forecast a public debt of 69.6 percent in 2011, 73.8 percent in 2012 and 78 percent in 2013.
Spain's conservative government, which took power in December, has yet to announce a new public debt target.
The public debt ratio has grown without interruption since the first quarter of 2008 when, after nearly a decade of fast growth and budget surpluses, which trimmed the debt, it amounted to 35.8 percent of GDP.
The situation in the 17 regions is particularly worrying: at the end of 2011 their accumulated debt rose to 140.1 billion euros, or a record 13.1 percent of national GDP, from 11.4 percent a year earlier.
Municipal debts, however, eased over the year to 35.4 billion euros or 3.3 percent of GDP.
Regional governments enjoy a high level of autonomy, prompting concerns in financial markets that their spending could compromise the central government's deficit-cutting goals.
Spain had agreed to cut its annual public deficit to 6.0 percent of GDP in 2011 but it overran that target by a wide margin and ended up reporting a deficit of 8.51 percent of GDP.
After winning a slight relaxation from Brussels in its goals for this year, Spain is now aiming for an annual deficit of 5.3 percent in 2012 and 3.0 percent in 2013.
But the regions are not entirely to blame. The central government's finances also deteriorated in 2011, as its public debt rose to 52.1 percent of GDP at the end of the year from 46.4 percent a year earlier.


In the following summary we now are finally understanding that the Greek second bailout will cost the Europeans far greater than 130 billion euros.  Officially now it has risen to 173 billion euros soon to rise to what we believe will be in excess of 230 billion euros as everything needs to be funded e.g. the banks need to be recapitalized, the EFSF needs to be funded plus many more funding operations. We also see the huge rise in the Spanish sovereign debt as well as the state debt described in detail by Mark Grant above:

(courtesy Zerohedge)

Overnight Bizarro Futures Levitation Driven By Spanish Balance Sheet Deterioration

Tyler Durden's picture

A snoozer of an overnight trading session for now, with Asia rising modestly, Europe green and the now priced in futures levitation as US traders walk in. Nothing material to report, except the usual - the European leverage reality continues to deteriorate: as has been long discussed the taxpayer cost to rescue Greece keeps rising, and the latest and revised figure of the bailout is €172.6 billion, €43 billion than previously thought by some (as we have pointed out from the beginning the true cost of the bailout will hit €210 billion). We will shortly point out the total disaster that the Greek balance sheet is with 7 classes of debt outstanding post the OSI. More disturbing is the "austerity" report out of Spain, where we just learned that total public debt has hit €735 billion at the end of 2011, with regions debt at €140.1 billion, which means that public debt rose to 68.5% of GDP, from 61.2% a year prior.  As Peter Tchir says: "We are still in no one cares mode, but the exposure the core has to the periphery is growing by the day.  Germany's exposure is growing because of Target 2, and Spain and Italy are busy guaranteeing the debt of their banks. On the surface, all is calm. Below the surface it is messier than ever.  They are doing everything possible to keep that mess covered because if it rises to the surface, it will be harder to control than ever before." As a reminder, this is precisely what happened in early 2011... and early 2010. You can only keep trillions of underwater debt under the rug for so long.


It now seems that Hungary will do an Iceland and thumb their noses at the banks.
This will be an interesting side show:

(courtesy zero hedge)

Will Hungary Be The Next Iceland? PM Orban: "Hungarians Will Not Live As Foreigners Dictate"

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When it comes to being a NWO debt slave, one can accept their fate demurely and bent over, like a conditionally habituated dog electroshocked into perpetual submission just as the banker elites like it, with threats that the world would end the second one dared to change the status quo (see Greece), or one can do something about being a debt slave. Like Iceland. And then rapidly proceed to be the best performing economy in Europe. And reading some of the latest news out of Hungary, which has to count its lucky stars is not stuck in the inflexible nightmare that is the mercantilist Eurocurrency union, gives us hope that we may soon witness the next sovereign rebellion against the banker yoke. The WSJ reports: "Hungary's premier fired a new broadside in the country's running battle of wills with the European Union, saying that Hungarians should be free to make their own laws without interference from Brussels.  Speaking to a large crowd of supporters celebrating the anniversary of a 19th-century Hungarian revolt against Austrian rule, Prime Minister Viktor Orban said: "Hungarians will not live as foreigners dictate." This has promptly generated the anticipated response from European unelected dictator Barroso, who minutes ago said that Hungary's Orban doesn't get democracy. Oh, we think we does. What he doesn't seem to get, or like, is existence in a banker-governed technocratic, klepto-fascist state, in which the peasantry is merely an intermediary vessel for asset confiscation by insolvent banks. Like Greece... which however already is the butt of all jokes of personal submission to a foreign oppressor, so there is no dignity in kicking a dog that is down.
Why is Orban angry with the EU?
Mr. Orban's sharp words came amid tensions between Budapest and the EU, which is pressuring Hungary to change laws on its central bank, judiciary and data privacy that the group says violate its rules.

EU ministers also voted this week to suspend development funds for Hungary next year unless the country adopts new measures to trim its budget deficit. Hungary insists the country is on track to meet its EU-mandated targets.

The European Commission for Democracy through Law, a legal advisory panel better known as the Venice Commission is expected to issue Friday an opinion on the independence of the judiciary under Hungary's new constitution.
What is ironic, is that even this potentially faux statement of defiance, is peanuts compared to how the people really think. Does anyone wonder why the death of "democratic" Europe would be a referendum? Simple - the people are sick of living in the feudal middle ages, only this time instead of a lord, the person in charge is a CEO of a local insolvent bank..d
About a mile from Mr. Orban's rally in front of the country's neo-Gothic parliament building, an opposition protest drew tens of thousands of Hungarians angry with Mr. Orban and his Fidesz party's legislative agenda.

The demonstration was organized by the group One Million for the Hungarian Freedom of the Press, commonly known as Milla. Speakers called on the government to guarantee media freedom and observe EU norms.

Mr. Orban's government wants "complete political and economic control," said Andras Magyar, a 61-year-old pensioner who joined the protest. "I'm very unhappy about the injustice now, the development of a dictatorial system."

Mr. Orban and his supporters dismiss criticism of the new constitution, which they say protects Hungarian values while complying with EU standards.

"We are going to protect the constitution, which is our security for the future," Mr. Orban said Thursday, to applause. He said Hungary doesn't need the "unsolicited assistance of foreigners wanting to guide our hands."

Mr. Orban's speech offered no detailed, direct comments on the points of contention between Budapest and Brussels. But he did allude to central bank independence, which the EU and IMF have said must be insured before they will start talks on a precautionary loan Hungary wants.
Naturally, Europe merely wants every impression of defiance squashed: after all Germany hasn't funded all those current account deficits with €550+ billion in money it was never again see via the Buba just so these slaves can go ahead and revolt.
The EU is insisting, among other things, that Hungary change the oath of office for central bankers to reflect their role as part of an EU-wide central-bank system.

Mr. Orban's speech captured a sense of national grievance shared by many Hungarians unhappy that the prosperity they aspired to when they joined the EU has been smothered by a mountain of household and public debt.
As for the best summary of how Hungary feels right now?
One person in the crowd held a sign reading: "Colonization: 1956 Soviet Tanks, 2012 Western Banks."
The only question remaining: how much longer will the status quo dangle the carrot of a "solvent" welfare socialist state when at this point everyone knows Europe, and the entire developed world is broke. Curious how pensions will fare when reality comes crashing down? Why take a look at the 80% haircut in the Greek pension system. And then consider that Greece has a first mover advantage. The sad truth is that very soon several hundred million European, and Americans, will realize that the social safety net everyone had taken for granted, and thanks to which nobody dared to revolt, has been long-plundered.
What then?


Brent oil rises to 126 USA dollars per barrel as the Israeli cabinet votes for an attack on Iran:

(courtesy zero hedge)

Brent At $126 As Israel Security Cabinet Votes 8 To 6 To Attack Iran

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Looking at the tranquil sea that is the S&P one may be forgiven to ignore the rapid intraday surge in Brent which was up over $3 in a few hours, approaching $126 once again. But why? After all the FOMC minutes were oh so very slightly hawkish, and not to mention that the Fed's scribe Hilsenrath told everyone at best the Fed would proceed with sterilized QE which would leave risk prices untouched. Maybe it has something to do with this. According to Israel's NRG, in a just completed cabinet vote, for the first time Netanyahu has gotten a majority (8 over 6) supporting an Iran attack. NRG also notes that at this point Israel has decided to not wait until the US elections in November before proceeding with sending crude to the stratosphere. From NRG (google translated): "Israeli political sources believe that Prime Minister Benjamin Netanyahu a majority Cabinet support Israeli military action against Iran without American approval....He announced that he would not hesitate to perform the operation without the approval of President Obama mentioned the precedent of the decision to attack the Iraqi reactor, Prime Minister Menachem Begin, and with the comments heard yesterday some cabinet ministers say privately that "It sounds like a speech preparation for attack." Political - Security Cabinet 14 ministers.According to estimates, at this stage tend to support Netanyahu and
Barak's approach eight ministers, and six against it
(including the traditional opponents octet: Moshe Ya'alon, Dan Meridor, Benny Begin and Eli Yishai)." So... $4.00 gas is just around the corner. As is, probably, $5.00 gas. And $6.00 gas.
Just when you thought it was safe to come out from your air raid shelter after Bibi returned from his U.S. foray to stoke up war fever, Maariv raises the temperature to a boiling point.  Ben Caspit reports (Hebrew) that the cabinet now has, for the first time, a majority (eight votes for, six votes against) favoring the measure.  This means that theoretically Bibi can begin an attack at any time.  Of course, it could mean something different: it could mean the cabinet has approved a strike at any point in future with Bibi determining the timing.  So it doesn’t necessarily mean the F-16s will fly tonight or tomorrow.  But it could:

Cabinet Majority Supports Iran Attack

The prime minister yesterday delivered one of the most combative and explicit speeches in the history of the Iran affair.  Several cabinet ministers said in private conversations that it sounded like a “speech preparing for war.”

Political sources judge that the prime minister has a majority in the cabinet which favors a military strike against Iran, even without American approval.  Yesterday, Netanyahu said he wouldn’t hesitate to attack Iran even without the approval of Pres. Obama…A senior official said Bibi believed it would be best not to wait for the November presidential elections because he didn’t trust the president to deal with the problem after the election.
So it appears that the dies is cast. Our ETA for the earliest possible offensive? Not before CVN-65 Enterprise reaches CVN 70 and CVN 74, sometime over the next 3-5 days. Of course, this is not a prediction of war. Just a logistical notice.
h/t Gregor Peter

Published on 15 Mar 2012
This article is also available in 
Brussels, 15 March 2012 – Following an EU Council decision, SWIFT is today announcing it has been instructed to discontinue its communications services to Iranian financial institutions that are subject to European sanctions.
The new European Council decision, as confirmed by the Belgian Treasury, prohibits companies such as SWIFT to continue to provide specialized financial messaging services to EU-sanctioned Iranian banks. SWIFT is incorporated under Belgian law and has to comply with this decision as confirmed by its home country government.
"This EU decision forces SWIFT to take action" said Lázaro Campos, CEO of SWIFT. "Disconnecting banks is an extraordinary and unprecedented step for SWIFT. It is a direct result of international and multilateral action to intensify financial sanctions against Iran."
The EU-sanctioned Iranian financial institutions and the SWIFT customer community have been notified of the disconnection, which will become effective on Saturday 17 March at 16.00 GMT.
SWIFT has been and remains in full compliance with all applicable sanctions regulations of the multiple jurisdictions in which it operates, and has received confirmation of this from the competent regulatory authorities. As a global provider of secure messaging services, SWIFT has no involvement in or control over the underlying financial transactions that are contained in the messages of its member banks.
Related links
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 10,000 financial institutions and corporations in 210 countries. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.
For more information, please refer to

(courtesy Bloomberg and special thanks to Jessie from Jessie's American cafe:)

One Half of Italy's New Sales Tax Receipts Go Directly to Morgan Stanley in New York

Italy Said to Pay Morgan Stanley $3.4 Billion
By Nicholas Dunbar and Elisa Martinuzzi
Mar 16, 2012 10:10 AM ET

When Morgan Stanley (MS) said in January it had cut its “net exposure” to Italy by $3.4 billion, it didn’t tell investors that the nation paid that entire amount to the bank to exit a bet on interest rates.

Italy, the second-most indebted nation in the European Union, paid the money to unwind derivative contracts from the 1990s that had backfired, said a person with direct knowledge of the Treasury’s payment. It was cheaper for Italy to cancel the transactions rather than to renew, said the person, who declined to be identified because the terms were private.

The cost, equal to half the amount to be raised by Italy’s sales tax increase this year, underscores the risk derivatives countries use to reduce borrowing costs and guard against swings in interest rates and currencies can sour and generate losses for taxpayers. Italy, with record debt of $2.5 trillion, has lost more than $31 billion on its derivatives at current market values, according to data compiled by the Bloomberg Brief Risk newsletter from regulatory filings.

These losses demonstrate the speculative nature of these deals and the supremacy of finance over government,” said Italian senator Elio Lannutti, chairman of the consumer group Adusbef.

The transaction may prompt regulators to push for greater transparency and regulation of how governments use derivatives, said the head of the European Parliament panel that deals with market rules.

“This latest revelation shows that we need to know a lot more,” Sharon Bowles, chairwoman of the economic and monetary affairs committee, said in an interview today. “I’m reluctant to have quite as many exemptions for central banks and countries” from transaction-reporting rules, she said.

Morgan Stanley said in a Jan. 19 filing with the U.S. Securities and Exchange Commission that it “executed certain derivatives restructuring amendments which settled on January 3, 2012” and reduced its Italian exposure by $3.4 billion.

Mary Claire Delaney, a spokeswoman for the New York-based firm, declined to comment further. Officials at the Italian treasury in Rome declined to comment on the contracts...

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