Tag Archives: Spain

“We Are In A State Of Siege”: Spanish Police Arrest Top Catalan Officials In Referendum Raids, by Tyler Durden

Is another Spanish Civil War in the offing? From Tyler Durden at zerohedge.com:

Spanish police arrested top-ranking Catalan officials including the region’s junior economy minister Josep Maria Jove, as Madrid launched a crackdown on Catalonia over the upcoming Independence referendum Reuters reported. Jove, who is a senior member of the Republican Left of Catalonia political party, was detained following a Wednesday morning raid carried out by Spain’s Civil Guard, which has the authority of both the Interior and the Defence ministries.

At least a dozen high-ranking local officials were arrested, La Vanguardia newspaper said. Among those detained are Josue Sallent Rivas from the Centre of Telecommunications and Information Technology, Xavier Puig Farré from the Office of Social Affairs and Josep Maria Salvat Tenesa from the Ministry of Economics and Finance.

 Police, acting under court orders, have stepped up raids on printers, newspaper offices and private delivery companies in recent days in a search for campaign literature, instruction manuals for manning voting stations and ballot boxes.

On Tuesday, Spain’s Civil Guard, a national police force, seized more than 45,000 envelopes packed in cardboard boxes that the Catalan government was ready to send to notify people around the region about the referendum.

Catalonia is now in a state of siege ”, Catalonia’s Minister of Labor, Social Affairs and Family Dolors Bassa said on Twitter, confirming that the Civil Guard has also entered her department.

Meanwhile, the fiercely pro-independence leader of the regional government, Carles Puigdemont, has called an emergency meeting of his cabinet for 10:30 CET (8:30 GMT), the sources said.

To continue reading: “We Are In A State Of Siege”: Spanish Police Arrest Top Catalan Officials In Referendum Raids

In Catalonia: A Spanish Tiananmen Square? by Justin Raimondo

All those who want to start breaking the grip of evil, centralized governments should be rooting for Catalonia in its standoff with Spain. From Justin Raimondo at antiwar.com:

Spain and the Catalonians are headed for a violent confrontation

One of those crises that no one saw coming is about to rear its head in a very unlikely locale: Catalonia, Spain’s richest province, where the local government has scheduled an independence referendum on October 1.  Of course, some observers – e,g, Julian Assange – did see it coming, but the current trend to find “fascists” under every bed in America may have obscured our ability to detect them where they really live – in Madrid, where the federal authorities are threatening to arrest Catalonian politicians who advocate independence.

Madrid has mobilized 4,000 police to stop the referendum. They are seizingelection materials, shutting down web sites, and invading the offices of newspapers: they have threatened 700 pro-independence mayors with arrest and prosecution.

The Spanish position – upheld by the country’s Constitutional Court – is that only the federal authorities can call a referendum, and that in any case all Spanish voters, not just those resident in Catalonia, must be allowed to vote on the question of Catalonian independence. So much for the right of self-determination.

Catalonia has long been a cash cow for the Madrid regime: the province is by far the richest in the country, and contributes much more to the national budget than it receives. With 16 percent of Spain’s population, the region produces 25 percent of the nation’s exports, hosts 23 percent of industry – and receives 11 percent of government expenditures. This essentially parasitic relationship perhaps accounts for the fierce resistance to the secession movement by the rather shaky regime of conservative Prime Minister Mariano Rajoy.

Madrid’s hard-line stance is rather shortsighted when one looks at the matter in purely economic terms. Spain has been skirting insolvency for quite some time now, and the federal authorities have been counting on Catalonia’s contribution to the national GDP – which amounts to 19 percent — to pay the interest on the debt. With Spain having only partially recovered from the economic downturn of 2008, the loss of Catalonia would be a hard blow to Madrid – and yet the policy of confrontation pursued by the shortsighted central authorities promises to make the blow all the harder.

To continue reading: In Catalonia: A Spanish Tiananmen Square?

Catalonia’s Defiance of Spanish Authority Turns into Rebellion, by Don Quijones

Spain and would-be breakaway province Catalonia go to war. From Don Quijones at wolfstreet.com:

“Do not underestimate the power of Spanish democracy.”

With these words, eerily reminiscent of a line once spoken by Star Wars villain Darth Vader, Spain’s Prime Minister Mariano Rajoy brought to a close a week of frenzied drama. It began with a foiled attempt by the Spanish police to close down the official website for the Catalan independence referendum. As often happens with web-based raids, the official site was up and running again within minutes, albeit with a different domain name.

Next, the Public Prosecutor’s office ruled that the referendum is now illegal “beyond all doubt” and instructed the Civil Guard, National Police, Catalan Police (Mossos d’Esquadra) and local police forces to act to stop it. It also launched criminal investigations against the entire Catalan government, the Speaker of the Catalan Parliament, the leaders of two separatist municipal associations and more than 700 Catalan mayors(representing 75% of Catalonia’s municipalities) for agreeing to cooperate with the planned plebiscite.

On Friday, Spain’s Finance Ministry joined the fracas by introducing a motion that would hand Madrid much greater control over how Catalonia spends its money in an effort to block the regional government from using state cash to pay for an illegal independence referendum. It has also frozen Catalonia’s monthly advance of the national liquidity fund (FLA), worth some €1.4 billion a month, and demanded that banks report any transactions related to the referendum vote to the central government.

The ultimate goal is to turn the Catalan regional government into an empty shell of an institution — one that has no autonomy, or for that matter any practical function or purpose.

Starving Catalonia’s regional government of funds could well make the vote logistically impossible, but the policy is not without its risks. As we warned a few months ago, if the Catalan government feels that it’s backed into a corner financially, it could weaponize its tick-tocking debt bomb. If Barcelona refuses to honor its debt to Madrid, both Catalan and Spanish debt could be declared in default, with disastrous consequences for both.

To continue reading: Catalonia’s Defiance of Spanish Authority Turns into Rebellion

Catalan Independence Vote October 1: Why? What’s At Stake? What do the Polls Suggest? by Mike “Miss” Shedlock

The unstoppable forces—devolution and decentralization—continue on their merry way. From Mike “Mish” Shedlock at mishtalk.com:

Unless the central government in Madrid forcibly stops elections, the Catalan Independence Vote will take place on October 1.

Politico covers What Spain has to Lose from Catalan Independence.

Catalonia Percent of Spain

Voting Intentions

Poll Source in Spanish: Centre d’Estudis d’Opinió (CEO) June 2017

2015 Advisory Voting Map

Why?

Please consider Why some Catalans want to break away from Spain.

Research from CEO (above link), as translated by Politico

  • Increased autonomy (26 percent)
  • Belief that Catalonia would improve if it struck out on its own (23 percent)
  • Desire for a new model for running a country (19 percent)

“I want a fair country, a more social and leftist country, and I believe the best way to achieve that is leaving Spain,” said Marc Becat, a 22-year-old who works in sales.

“All the money and all the taxes that flow to the Spanish government will stay in [an independent] Catalonia,” said Ana Martí Benavente, a 78-year-old Barcelona pensioner.

“It’s the Popular Party above all things, I hate them, that’s it,” said Alex Fores, a 21-year-old engineering student. “They’re very right-wing and obviously if you look at what people vote here [in Catalonia] it’s a completely different ideology.”

“What we Catalans find surprising is how the international community doesn’t react to the fact that we’re being prevented from voting” — Marta Alsina, teacher.

March in Barcelona

Pro-Independence Flag Face

Spain Threatens to Arrest Mayors in Favour of Vote

The Express reports Spain Threatens to Arrest Mayors in Favour of Vote.

Aljazeera reports Spain Summons Catalan Mayors Over Independence Vote.

Spain’s state prosecutor has ordered a criminal probe of all 700-plus Catalan mayors who have backed an independence referendum, as Madrid seeks to block the separatist vote it deems illegal.

The country’s prosecutor office on Wednesday ordered the 712 mayors, who have agreed to help stage the October 1 vote, to be summoned to court as official suspects and called for their arrest in case of a refusal to appear for questioning.

Barcelona Mayor Ana Colau, who opposes secession but supports a vote, says she wants to help arrange the referendum but won’t do so without assurances that she and her staff would be acting legally.

To continue reading: Catalan Independence Vote October 1: Why? What’s At Stake? What do the Polls Suggest?

Catalonia’s Independence Showdown Nears, Investors Fret, by Don Quijones

Catalonia looks sets to hold a referendum that the Spanish government has declared illegal. Devolution and decentralized are the theme of our age. From Don Quijones at wolfstreet.com:

After years of simmering tensions, the biggest showdown yet between Barcelona and Madrid appears to be just weeks away. On Oct 1, the regional government of Catalonia plans to hold a referendum on national independence, in complete defiance of Spain’s central government in Madrid. As a last show of strength, an estimated one million separatists filled the streets of Barcelona, a city of just one and a half million people, for Catalonia’s national holiday, La Diada, on Monday.

Companies and investors are somewhat less enthused by the prospect of a head-on clash between Madrid and Catalonia, Spain’s richest and fastest-growing regional economy. An increasing number of financial firms, analysts and rating agencies are finally warning that what began as a largely political (and perfectly avoidable) crisis has the potential to spiral into a financial maelstrom that could spread far beyond the borders of both Catalonia and Spain.

Catalonia accounts for almost one-fifth of the nation’s economic output, but for years it’s been locked out from the capital markets and unable to issue its own debt, which is in deep junk territory. As such, it depends on the central government’s national liquidity fund (FLA) for about 60% of its funding, while the central government depends on Catalonia’s tax revenues to keep meeting its financial obligations.

This mutually dependent relationship has been under heavy strain ever since 2010, when Spain’s highly politicized Supreme Court, at the urging of the People’s Party, then in opposition but now in govermnent, decided to annul many of the articles of the new Statute of Autonomy signed in 2006 between Spain’s previous Zapatero government and Catalonia’s regional government, effectively stripping the agreement of any meaning.

The same court, once again at the urging of the PP, now at the head of a minority government in Madrid, just suspended Catalonia’s latest legislative move to allow a referendum on national independence. This time, however, Catalonia’s regional government is refusing to back down despite the ominous threats emanating from Madrid of criminal proceedings. Depending on which side of the fence you’re on, it is either a criminal act of treason or a heroic act of rebellion.

To continue reading: Catalonia’s Independence Showdown Nears, Investors Fret

Catalan Bid for Independence Seen in Broader Context of European Disintegration, by Alex Gorka

Yes, Europe is disintegrating, because it must. Massively centralized structures are dinosaurs awaiting an extinction event. From Alex Gorka at strategic-culture.org:

Catalonia’s secession movement has been growing in Spain for decades. The region has its own language and culture. On August 28, two pro-independence parties in Catalonia, the Junts Pel Sí («Together For Yes») coalition and the radical-left Popular Unity Candidacy (CUP), submitted a bill to the regional parliament, which outlines the legal framework for the transition to independence. The two parties currently hold the balance of power in the assembly and, therefore, control the regional government.

The bill is set to be passed before the next referendum on secession will take place on October 1, fulfilling a pledge made by a majority of Catalan MPs. According to opinion polls, a majority of Catalans favor holding a referendum on their status.

While Catalonia has been steadfast in its determination to hold a separation vote, the idea of referendum has been firmly opposed by the central government in Madrid. Prime Minister Mariano Rajoy’s conservative government is attempting to use the courts to prevent it from happening. Spain’s Constitutional Court has previously quashed Catalonia’s resolution to hold a referendum. 

The court and Spanish government have also warned Catalonian officials that they could face legal repercussions and sanctions if they help organize the vote. The war of words between Catalonia and the central government has escalated recently. The recent terrorist attack in Barcelona has failed to bring unity against a common foe. The Catalans are reluctant to comply with Spanish courts’ rulings and the use of force by the central government is hardly an option.

Catalonia, a prosperous region in northeast Spain, which generates a fifth of Spain’s GDP and already has wide sovereignty, managing its own education system and police forces. But it lacks the privilege the Basque Country enjoys, running its own taxes.

To continue reading: Catalan Bid for Independence Seen in Broader Context of European Disintegration

 

Autopsy of Banco Popular Shows How Fragile Europe’s Banking System Is, by Don Quijones

How much longer can Europe and its banks keep dodging bullets? From Don Quijones at wolfstreet.com:

What would a disorderly bank collapse in Spain and Italy have done?

New information has revealed just how serious a threat a disorderly collapse of Spain’s sixth largest bank, Banco Popular, might have posed to Spain’s banking system. In its final days, Popular was bleeding deposits at a rate of €2 billion a day on average.

Much of the money was being withdrawn by institutional clients, including global mega-fund BlackRock, Spain’s Social Security fund, Spanish government agencies, and city and regional councils, prompting accusations that Spain’s government was using insider knowledge to withdraw large amounts of public funds, which of course hastened Popular’s demise.

All the while, Spain’s Economy Minister was telling the bank’s less privileged investors, including retail shareholders and junior bondholders, that there was absolutely nothing to worry about. Those that believed him lost everything.

Between the end of March and its last day of trading, Popular shed €18 billion of deposits, roughly a quarter of the total. On the night of June 6, Europe’s Single Supervisory Mechanism decided that the bank could no longer cover its collateral. Popular, warts and all (take note, Italy), was sold for the meager sum of €1 to Banco Santander, though Santander will have to raise €7 billion of fresh capital to fully digest the bad stuff on Popular’s books.

According to the newly published report, the run on deposits did not end with Santander’s shotgun takeover of the bank. The day after the operation — a Wednesday — the money kept pouring out. The same happened on Thursday. On Friday, the deluge slowed a little. By Monday, the tide had finally turned, industry sources say. On that day, for the first time in a long time, Popular’s accounts witnessed more deposits than withdrawals.

To prevent a complete collapse of Popular, Santander had to inject €13 billion of its own funds into the bank’s accounts — one of the biggest one-off transfers of funds in recent Spanish history.

To continue reading:

 

Is Another Spanish Bank about to Bite the Dust? by Don Quijones

If too many banks fail in a country, the country can run out of semi-healthy balance to rescue the failures. The situation in Spain’s banking system bears watching. From Don Quijones at wolfstreet.com:

Stockholders and junior bondholders fear a “bail-in.”

After its most tumultuous week since the bailout days of 2012, Spain’s banking system is gripped by a climate of fear, uncertainty and distrust. Rather than allaying investor nerves, the shotgun bail-in and sale of Banco Popular to Santander on Tuesday has merely intensified them. For the first time since the Global Financial Crisis, shareholders and subordinate bondholders of a failing Spanish bank were not bailed out by taxpayers; they took risks in order to make a buck, and they bore the consequences. That’s how it should be. But bank investors don’t like not getting bailed out.

Now they’re worrying it could happen again. As Popular’s final days showed, once confidence and trust in a bank vanishes, it’s almost impossible to restore them. The fear has now spread to Spain’s eighth largest lender, Liberbank, a mini-Bankia that was spawned in 2011 from the forced marriage of three failed cajas (savings banks), Cajastur, Caja de Extremadura and Caja Cantabria.

This creature’s shares were sold to the public in May 2013 at an IPO price of €0.40. By April 2014, they were trading above €2, a massive 400% gain. But by April 2015, shares started sinking. By May 2017, they were trading at around €1.20.

But since the bail-in of Popular, Liberbank’s shares have seriously crashed as panicked investors fled. Scenting fresh blood, short sellers were piling in. On Friday alone, shares plunged another 17%. At one point, they were down 38% before bouncing at the close of trading, much of it driven by the bank’s own share buybacks:

To continue reading: Is Another Spanish Bank about to Bite the Dust?

“Bail-In” Era for Europe’s Banking Crisis Begins, by Don Quijones

It’s the foundation of bankruptcy for most companies, but the idea that shareholders and subordinated debt holders, creditors of a bank, should actually lose money when the bank is insolvent has been considered violation of a sacrosanct item of faith. Instead, taxpayers are supposed to bear the loss. It looks like that may be changing, at least in Europe. From Don Quijones at wolfstreet.com:

Many Banco Popular investors wiped out. Taxpayers off the hook. What it means for Italy.

Banco Popular, until today Spain’s sixth biggest bank, is no more. Its assets, including a massive portfolio of small-business clients, now belong to Banco Santander, Spain’s biggest bank. The global giant now has 17 million customers in Spain, a country of just 45 million people. The price was €1.

Spain’s Ministry of the Economy revealed that by 3 pm Tuesday, Popular was no longer able to contain the deposit outflow. “It had exhausted all its lines of liquidity, both ordinary and extraordinary.” It had run out of collateral to cover any further lines of emergency liquidity.

This apparently triggered the intervention by the ECB’s Single Resolution Board (SRB), which decided on Tuesday that the bank “was failing or likely to fail” and would have to be wound down, unless a buyer could be found.

Banco Popular’s shareholders, who’d been repeatedly suckered into handing Popular fresh funds in numerous capital expansions, will be wiped out.

Holders of Popular’s riskiest bonds, its AT1 bonds and AT2 bonds, or CoCo bonds, also got wiped out. These bonds had already plunged in recent weeks.

But the bank’s senior bondholders and depositors were spared.

To plug the remaining hole of Popular’s non-performing loans, Santander has said it will set aside €7.9 billion, most of which will be raised in a fresh €7 billion rights issue.

“The decision taken today safeguards the depositors and critical functions of Banco Popular. This shows that the tools given to resolution authorities after the crisis are effective to protect taxpayers’ money from bailing out banks,” said Elke König, chair of the SRB, in the statement.

This marks the first time under the EU’s Bank Recovery and Resolution Directive, passed in January 2016, that shareholders and subordinate bondholders of a European bank have not been bailed out by taxpayers, but where “bailed in.”

And it was the first time that a banking failure was allowed to occur in either Spain or Italy whose resolution didn’t involve taxpayer intervention. Perhaps the Eurozone’s banking authorities are finally growing some teeth. The fact that financial markets received the bail-in of Popluar’s investors calmly tells the ECB that investor bail-ins are the route to go. And so the rule takes hold.

To continue reading: “Bail-In” Era for Europe’s Banking Crisis Begins

This Is How A “Bail-Out” Becomes A “Bail-In” by Simon Black

Banco Santander just bought Banco Popular for one euro and probably overpaid. From Simon Black at sovereignman.com:

Here’s the perfect example of how insane our financial system has become.

It was announced yesterday that, after a 24-hour white-knuckled ride, Spanish banking giant Banco Popular had been sold to Banco Santander for the price of just 1 euro.

Note- that’s 1 euro in TOTAL. Not 1 euro per share.

Banco Popular had once been one of Spain’s largest banks.

But just as certain banks tend to do from time to time, Popular sacrificed responsibility and good conduct for quick profits.

They spent years gambling their depositors’ savings away on idiotic, dangerous, pitiful loans. And those bad loans eventually came back to bite them.

The modern business of banking is all about pooling customer deposits together and making various loans and investments with those funds.

Safe, responsible banks make sensible investments.

They maintain extremely high loan standards. And they keep a SUBSTANTIAL rainy day fund set aside in case those loans and investments go bad.

Banco Popular did none of those things.

Back in 2006 during the height of the real estate bubble, for example, Popular maintained a liquidity ratio of less than 2% according to its annual report that year.

This means that over 98% of its customers’ savings had been gambled away on bad loans and bad speculations.

Eventually those risky loans started failing, and the bank started losing money.

Last year alone Popular lost 3.5 billion euros, which is about as much as they earned in all of the bubble years combined.

Fearing for the banks ability to continue servicing its customers, European regulators stepped in on Tuesday and forced a fire sale.

Banco Santander “won” that auction, again, paying a symbolic price of just 1 euro.

This means that Banco Santander will now inherit all the toxic loans (and consequent losses) that Popular had on its books.

The insanity here is that Santander had almost no time to conduct its due diligence, i.e. research the business to understand what they were buying.

Banco Popular had a balance sheet worth over $150 billion with hundreds of thousands of different loans.

To continue reading: This Is How A “Bail-Out” Becomes A “Bail-In”