Catolonia asking urgent bail-out to Madrid

News from Spain are becoming every day more surreal and worrying, if Bankia bailout was not enough cause for concern, now Catolonia the most prosperous region of Spain is asking for help to the central Spanish government. For those not accostumed with Spanish politics this is a major event. Catolonia has always been together with the Basque country at the forefront of a nasty fight to get independent from Spain or at minimum to gain exceptional autonomy in handling their affairs, to go back to Spanish central government begging for help can only be justified by a serious deterioration of the country finances, certainly the situation must be dire enough for Catalans to put aside their pride and ask help to the odious Madrid central government. Keep checking the Basque country if they will do the same than Spain is in real danger.


From Reuters:

Spain's wealthiest autonomous region, Catalonia, needs financing help from the central government because it is running out of options for refinancing debt this year, Catalan President Artur Mas said on Friday.

"We don't care how they do it, but we need to make payments at the end of the month. Your economy can't recover if you can't pay your bills," Mas told a group of reporters from foreign media.

The debt burden of Spain's 17 highly devolved regions, and rising bad loans at the country's banks, are both at the heart of the euro zone debt crisis because investors are concerned they could strain finances so much that Spain, the currency bloc's fourth biggest economy, will need an international bailout.

Catalonia, which represents one fifth of the Spanish economy, has more than 13 billion euros in debt to refinance this year, as well as its deficit.

All of the regions together have 36 billion euros ($45 billion) to refinance this year, as well as an authorised deficit of 15 billion euros.

Last year many of the regions financed debt by falling months or even years behind in payments to providers such as street cleaners and hospital equipment suppliers.

This year the central government provided them with a special credit facility from the Official Credit Institute, or ICO, to pay providers, of which Catalonia has taken 2 billion euros.

The provider credit lines from the ICO run out in June and the central government has pledged to come up with a new mechanism for backing debt from the regions, which have been mostly priced out of international debt markets since the Greek rescue in 2010.

Catalonia's Mas, from the centre-right Convergence and Union Party, said he is running out of options. In the past two years Catalonia has placed patriot bonds, at 4.5 percent to 5.0 percent, but he says the capacity for the people of the region to buy such bonds is at its limit.

A quarter of all Catalan savings are already in patriot bonds, he said.

The other option would be short-term financing from banks, but Catalonia's neighbour, the region of Valencia, recently paid 7 percent for a six-month loan, a level seen as unsustainable.

Catalonia's annual interest payments have already doubled in the last two years, to 2 billion euros this year.

Eurozone Debt Infograph

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Volcanoes eruptions that could change the world

Recent new of an increased activity of the Santorini Caldera is certainly bad news for crisis-stricken Greece although an eruption of Santorini as tragic as it would be for Greece and the Mediterranean is not the worst event to worry insurance companies and governments.

Below a list of the 6 nightmare volcanoes that could literally trigger catastrophe on a global scale in a relatively short timeframe.




1. KATLA (Iceland)
Last erupted: 1918
Effects of a major eruption: If Katla goes off, its eruption will be 10 times stronger than Eyjafjallajokull's. Katla's larger ash plume would shoot higher in the air and spread over larger areas of Europe for a longer period, with much more devastating effects on air travel and economic trade. An eruption could tip Europe's economy — perhaps even the world's — back into severe recession or a depression.
Likelihood: Fairly high. The two volcanoes, only 12 miles apart, tend to erupt in tandem, and Katla is slightly overdue in its 80-year cycle.
2. CUMBRE VIEJA (La Palma, Canary Islands)
Last erupted: 1971
Effects of a major eruption: In 2001, U.S. and British scientists warned that a major eruption of Cumbre Vieja could cause the enire western flank of the volcano to fall into the sea, creating a "mega-tsunami" in the Atlantic. Traveling at 500 miles per hour, it would wipe out Florida, coastal Brazil, and parts of Europe with waves up to 160-feet high. 
Likelihood: The scientists say the "year to year probability" of a major eruption is low, but preparations should be taken anyway given the potentially cataclysmic damages.
3. MT. VESUVIUS (Italy)
Last erupted: 1944
Effects of major eruption: Famous for wiping out Pompeii and Herculaneum in 79 A.D., Vesuvius would do much greater damage today. About 3 million people live near the volcano, 600,000 of them in the "red zone." An eruption would kill at least 8,000 people and cause more than $24 billion worth of damage, according to Willis Research Network, which just named Vesuvius the most dangerous volcano in Europe. The ash would change weather patterns in Europe and leave the Naples area a "lifeless desert."
Likelihood: Scientists say Vesuvius is overdue for an explosion.
4. POPOCATÉPETL (Mexico)
Last erupted: 2000
Effects of a major eruption: The third-tallest active volcano in the Northern Hemisphere, Popocatépetl is only 40 miles west of Mexico City and its 18 million inhabitants, and 30 miles east of Puebla, a city of two million. A large eruption could send deadly mudslides into the populous valleys below, creating "catastrophic" loss of life.
Likelihood: After an 80-year dormant period, Popocatépetl is showing signs of activity.
5. MT. TAMBORA (Sumbawa, Indonesia)
Last erupted: 1967
Effects of a major eruption: Tambora erupted in spectacular fashion in 1815 and changed weather patterns around the globe, causing "frosts in Italy in June and snows in Virginia in July, and the failure of crops in immense swaths across Europe and the America." The blow-up killed more than 71,000 people directly, and many more through famine and sickness.
Likelihood: Tambora is still active and, given its history and Indonesia's 222 million inhabitants, closely monitored.
6. YELLOWSTONE "SUPERVOLCANO" (U.S.)
Last erupted: 640,000 years ago
Effects of a major eruption: When the Yellowstone Caldera, or "supervolcano," in Yellowstone National erupts again, it will render a huge swath of North America, from Vancouver to Oklahoma City, uninhabitable. It would have incalculable human and economic consequences. The last eruption of similar magnitude — 73,000 years ago in Sumatra — plunged the entire planet into a decade-long volcanic winter and nearly wiped out the human race.
Likelihood: Geologists see signs that it could be preparing for another major blowout soon, although "soon" could mean thousands of years.

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Housing Crisis Visualized

Greece banking system is officially bankrupt

The latest opinion polls, as per Credit Suisse, show Syriza soar from 52 seats to a hugely dominant 128 seats.









Greece After Elections - current opinion polls...







Just few hours ago this was the biggest danger to the Eurozone a left party willing to reject the current status quo and repudiate previous contracts.
But things have been moving fast and ECB President Draghi just admitted that while the ECB Governing Council would like Greece to stay, they will not take any further extraordinary measures to save it.

Bloomberg: Draghi Signals ECB Won’t Keep Greece in Euro Area at Any Cost

European Central Bank President Mario Draghi indicated that while his “strong preference” is that Greece stays in the euro area, the bank won’t compromise on its principles to prevent an exit.

“The ECB will continue to comply with the mandate of keeping price stability over the medium term in line with treaty provisions and preserving the integrity of our balance sheet,” Draghi said in a speech in Frankfurt today. Since the euro’s founding treaty does not envisage a member state leaving the monetary union, “this is not a matter for the Governing Council to decide,” Draghi said.

The comments are the closest Draghi has come to conceding Greece could leave the euro region. Greece faces a fresh election on June 17 that may boost parties opposed to the conditions of its international bailouts, raising the specter of its exit.

“The Governing Council’s strong preference is that Greece will continue to stay in the euro area,” Draghi said.

What does it mean it became just to clear when Reuters came out with the following piece of news:

From Reuters:

The European Central Bank has stopped monetary policy operations with some Greek banks as they have not been successfully recapitalized, euro zone central bank sources said on Wednesday.

The ECB declined to comment.

The ECB only conducts its refinancing operations with solvent banks. With no access to ECB funds, the banks concerned must go to the Bank of Greece for emergency liquidity assistance (ELA).

It was unclear exactly how many banks were affected.

One person familiar with the matter said four Greek banks' capital was so depleted they were operating with negative equity capital. According to its own rules, the ECB cannot provide liquidity to banks in such a situation.

What it means is that we are practically witnessing an attempt to control the default of Greece and the bankruptcy of its banking system which in a matter of hours or days unless by hook or crook something is implemented will happen.

Greece cannot bailout its banks, we are facing a total collapse of a banking system unless a sudden injection of money will materialize from somewhere.

Eventful days worth being monitored closely not only for Greece but for the entire world economy.

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