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With Contagion Risk Back On The Table, Will PIIGS (Spreads) Fly?
The chart below, courtesy of CreditTrader, demonstrates that the sovereign credit spread between BRICs and PIIGS (Portugal, Italy, Ireland, Greece and Spain: the Eurozone's weakest legacy links) continues converging. The market is now fully expecting the next risk flaring event to occur deep within the bowels of Europe. And with the ECB's head stuck firmly up its rear end, and in fact threatening it is preparing to raise rates, the Stardust has started a line on the number of months before the break up of the European Union experiment becomes a fact.
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Break-up of the European Union? Unlikely.
Leaving the Eurozone? Much more likely (though very difficult).
P*ss*ng on that stupid, worthless piece of sh*t that is the Lisbon Treaty? Absolutely.
Adopting extreme protectionism and telling he rest of the world to take a hike? NOW, you are talking!
Taking a cr*p on Trichet, and wiping your *ss with Barroso's neck tie? Baby, save me seat on the front row!
Just another day in European Union history...
A bankrupt state in the Middle East CHECK
A bankrupt state in Europe PENDING
A bankrupt state in USA PENDING
Are these all certainties, will we be adding plural to each?
Go Bull, Go
Think you need to check off that "Bankrupt state in the USA". California sure won that one!
Though it may be a forgone conclusion, I go by the "if the ref doesn't call it," it's not a bankruptcy.
Believe it or not the Irish are a extremely conservative nation (Ireland has never defaulted on its debt) - We would be willing to sacrifice our first born on the alter of the bond markets , indeed we have numerous budding King Herod types willing to do their masters bidding.
The fact Europe might be raising interest rates at least ostensibly goes to show that unlike the our corrupt govt., the FOMC and "Turbo-Tax" Timmy, they care about the valuation of their currency.......
Perhaps, but they whine a lot about it's strength.
Because the Germans (and many others) have an export-oriented economy.
Spain, for instance, used to make tons of cheap stuff. Strong € = a lot less exports and a lot more economic pain.
Rising rates will make it even stronger (dollar carry trade).
Italy is so desperate for tax revenues that it is offering a tax amnesty for tax evaders, money launderers and other scoundrels. If one repatriates, there will be no questions asked, no fines and immunity from prosecution for tax evasion, all while maintaining anonymity. Yours, for the low low price of 5% tax on the repatriated sums.
Non male!
All wandering maverick cattle are requested to return to their pens and will only be subject to a stick with the prod.
Nevermind the upcoming trip to the abattoir...
Driving through Virginia I heard the state hawking tax amnesty. Doesn't that leave you wide open for the IRS to get a bite?
Virginia may not prosecute, but can't they just forward your info on to the IRS and let them send you to jail?
Wonder about all the loans that German banks have outstanding in those eastern block country's,that are bankrupt?
The CDS risk spread is extreme,compared to the US-
True... but you should compare those German banks to the poor Austrian banks. Ouch...
romania, hungary, turkey, ukraine, austria, italy....not necessarily in that order...just thinkin'
Please do not forget Greece.
I note that the conditions reflected here are attenuated and enhanced by the massive ongoing efforts at reflation. The sovereign CDS markets at key points continue to reflect a growing expectation within the markets that regional choke points will once again assert themselves. The trend appears to be focused upon the European non primary financial hubs and intermediate finished goods producers. I suspect that this trend will continue to emerge in Asia as well over the next weeks and months although the Asian dynamics are different due to its proximity to the Sino-American love fest.
Interesting chart.
Turkey? Turkey is actually doing okay coming out the hole.
Greece on the other hand, is fooked.