Half of Spanish debt is held at home

Nov. 26 (Bloomberg) -- Spain is counting on budget cuts and domestic appetite for its bonds to build a firewall against contagion as Prime Minister Jose Luis Rodriguez Zapatero warned investors would lose money betting against the nation’s debt.

Spain, which has the euro region’s third-highest budget deficit, says it won’t adopt new measures to protect itself from Europe’s worsening debt crisis after cutting the central government’s budget gap by almost 50 percent and taming regional spending. Providing support is about half of Spanish debt is held at home, more than in Ireland or Portugal, offering a line of defense against changes in foreign investors’ moods.

“I should warn those investors who are short-selling Spain that they are going to be wrong and will go against their own interests,” Zapatero said in an interview with Barcelona-based broadcaster RAC1 today. He “absolutely” ruled out Spain would need a rescue.

Spain is trying to distance itself from other so-called peripheral nations after Ireland’s request for a European bailout sparked a bond markets sell-off that pushed Spanish yields to the highest in eight years. The risk for Europe is that Spain’s economy is twice as big as that of Greece, Ireland and Portugal combined, meaning the euro region’s 750 billion- euro ($994 billion) bailout fund may not be big enough.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=ags_5NYoq.vE&pos=3

It´s too funny how Anglo Saxon media outlets are perversely attacking Spain and other peripheral countries, but it sells good to their Anglo Saxon "ANALyst" readership who are providing these outlets with their latest "European sovereign debt" fairytales. Two predictions : Greece and Ireland will survive the crisis and be in better shape than the UK or the US of A ! Because they did the right thing !

 

This paranoia has to stop... Nobody is attacking Spain. I f*cking hope it (and Ireland) survives, but the politicians have to stop this bullsh1t.

 

The only two countries that were intelligent during the fiat currency set up were the UK and Switzerland. The non adopters. Poland would be wise not to allow the Euro as the bench mark denomination because there would be greater flexilbilty in finnancial policy for the country. Concering the PIGS and other outlying soverign nations standing pat would be best. BTW did anyone checkout the Bloomberg Currency Converter?

Akuma

 

Take a look at Japan. Hedgies and affiliated US and UK "investment banks" are not attacking Japan. Why ? We had this discussion several times ! As of December, about 93 percent of Japanese government bonds were held by domestic investors, including banks and life insurance firms, according to the Finance Ministry. Households have financial assets totaling 1,400 trillion yen.

Now, Ireland and Greece are easy targets. Widen the CDS spreads a bit - which are anyway controlled by a handful of so called "market makers" - add the so called ANALyst work of RBS, Evolution Securities, Barings Asset Management and other copycat babblers - and voila !

If the people of Greece and Ireland would be smart enough, they would buy NOW every single government bond that is out there !

This way you would wreak havoc amongst global macro funds and other scare mongers...

 

With all due respect, that's utterly wrong, ASus... There were huge amounts of Greek sov paper that were held by domestic banks/investors. This didn't help matters, because domestic investors lost confidence in their own financial system and there was a massive outflow of deposits. Same with Ireland... Japan is different, because the Japanese are perfectly happy with the status quo.

This has nothing to do with "evil speculators" attacking the innocent European sovereigns. Don't listen to the politicians. It certainly has nothing to do with sov CDS, given that sov CDS is an absolutely negligible size mkt, compared to the cash bond mkt.

 

I believe that Roubini said France is owed all that paper of Greece and Ireland to the tune of $650 billion.... they are the 1000 lb Gorilla in the room.

Then again, France also said Jerome Kerviel owes them $5 billion Euros.

 

What are we, traders or socialists? Panic driven contagions are what we WANT, right? That's how we, er, make money, right?

 

Well, some of the biggest holders of Irish bank paper (the stuff that's been guaranteed by the govt now) are the German Landesbanken, rather than the French. So France isn't actually the usual suspect in this particular case.

 

ASusilovic and Zapatero: