European CDS Bloodbath Increasingly Threatens Core

Tyler Durden's picture

Perhaps if CNBC could pretend for a second that there was more to the economy than (disappointing) Black Friday channel checks it would realize that there is a complete massacre in European CDS spreads. At last check the Iberian Peninsula was the target of a tactical CDS nuke, with Spanish and Portuguese CDS widening by 23 and 36 bps respecitvely, to 354 and 538 bps. The second tier of bailoutees is also expected: Belgium and Italy, both of which are wider by just over 16 bps, hitting 178 and 232 bps. And lastly, even the core is no longer safe, as Austria and Germany were both about 5% wider to 87 and 50 bps each. Bases are widening as cash bonds are lagging today. The reason for the move, which should be completely expected to all Zero Hedge readers, is as Market News reports, that "a growing school of thought believes that - without
major debt restructuring for Ireland - the current solution is just
buying time. Many traders also fear that the interest rate applied
to the new cash of 5.83% is unmanageable for the Irish economy." In other words start your Portugal, Spain, Belgium, Austria bailout countdown timer.

Some CDS charts:

G8 countries ex Canada and Russia:

Liquid G8 and Western Europe

source: citi

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Oh regional Indian's picture

Strange how Greece does not even find a mention anymore. 

These are such times. 

More dollar pump-up, against all logic. The safe haven is damaging the PM complex, creating buying opportunities for the astute.


Oh regional Indian's picture

Funny Id. Strange times indeed. Except that they are (I know you are being sarcastic) till they aren't and then vapour.

Much harder to vaporize Au or Ag.


Fish Gone Bad's picture

Is CNBC even a REAL channel any more?

Arius's picture


Greece has played its role - it's history.

Now, we are moving to bigger and more profitable things...

johngaltfla's picture

Funny how Dubai doesn't either. And they have a real estate crisis which makes Miami look viable.....

Oh regional Indian's picture

True John, I'd forgotten all about them too.

Short short span of attention!


LeBalance's picture

I'll be shorting your short attention span!

Oh regional Indian's picture


On the other hand, I might pick up Children of Dune again, which might be bad for your investment!



firstdivision's picture

I see France is finally starting to widen quickly as well.  Things will get interesting as the core group will be going down.  I am a bit amazed that there was no mention of Netherlands nor Poland.

What is with the 30 year since 7 am, front running POMO?

jbc77's picture

I love the smell of CDS blowouts in the morning. Goes well with the aroma of my fresh coffee. Maybe they can all just rob their national pension funds to kick the can three feet down the road. 

Xibalba's picture

Maybe Russia and China will split the scraps?

the not so mighty maximiza's picture

exponentially exciting

Dismal Scientist's picture

A short burst of risk off, before the end of year rally. Markets are not usually known for collapsing in December, its bad for consumer sentiment. Remember 2007, when the wheels had already come off the trolly some months before but we powered on to close at lifetime highs in Europe ? Or 2008, when we'd all had enough of the world coming to an end and the dead cat bounce started in late November ? Or 2009, where we closed at year highs ? I'm not saying its right, just that its more likely than a big puke.

Sofa King's picture

Greece was actually mentioned on Bloomberg, this morning.  Unless I heard incorrectly, part of the Irish package includes an extension of the Greek payback period from 5 years to 7.5 years.  Somebody make me a liar.

Oh regional Indian's picture

Heh, did not expect to hear that in the context mentioned. Not that anythign surprises anymore.


sushi's picture

I thought it was the Greeks bailing out the Irish and the Poles? Am I watching the wrong channel?

chinaguy's picture

CORRECT - Greek re-payment schedule was lengthened.....and thousands of Germans started their day with a stiff drink.

Mercury's picture

"bailoutee" simply a great word.

Part of the new Esperanto no doubt.

Dr. Hannibal Lecter's picture

My Dear Friends,

We're broke bitchez.

Warmest regards,



eigenvalue's picture

Where is Sudden_Debt? Your homeland is in trouble. Pls do something.

ZippyBananaPants's picture

And don't call me Shirley!

bonddude's picture

I just want you to know...we're all counting on you.

By the way did you have the fish?

Moonrajah's picture

I guess the market is getting it's Irish on.

knukles's picture

The Euro Song

Whistle while you wank,
   Tra la la la la la lah
The Euro is a skank,
   Tra la la la la la lah
It ain't so funny,
U no getch yer money,
No matter how yer finger stank

CABO's picture

AUSTRIA is the real deal. It was rumored in Austria that the SPO [Social Democratic Party of Austria] politician Hannes Swoboda said If the 150 billion Euro used for guarantees granted by the State were called, the Austrian State would be bankrupt.

So the Austrian State is  drawn into the crisis  to save the big  banks, the state will collapse. That can be seen in Iceland, Ireland . There will be a  sell-off the government bonds .

 Why should we care? Because of Austria´s big brother Germany, any crisis in Austria will spread to Germany, E.U cannot survive whithout Germany

MachoMan's picture

If there really was a bastion of safety out there, it would defect before it allowed itself to be brought down by the others.

whopper's picture

Don't forget the CMG, Burritos are the new keystone for economic growth in the new normal. 

SheepDog-One's picture

What? CNBC pay attention to something real instead of the usual daily fluff and hype theyve been directed to hard-sell? Unthinkable.

Miles Kendig's picture

See what happens when evil speculators are allowed unfettered access to markets?!  ROFLMAO

MrTrader's picture


ella's picture

On the topic of CDS', if they are so important to the bond market and serve as insurance in the event of default then it is time for default.  Instead of the people paying for the folly of the bonus stuffed bankers who made foolish loans and levered up to 30 to 1, let the securities holders collect on the CDS'.   

What you say???  CDS' do not have enough money set aside to cover and they are just another layer of a fraudulent contract because the sellers of CDS' cannot complete their contract obligations to the buyers?  WOW and you are worried about the spreads.  I am far more worried about the ability of the sellers to pay.  Are we looking at AIG 100 fold?   

It is time to take a good look at the CDS market.  Does it have any real value or is it just another sham transaction to fleece a few more dollars.   It is time for the sellers of the CDS' to pay up instead of the people.   The solvency problems are not going away no matter how much extend and pretend is shoveled our way.  

The natives are restless and soon will be onto these scams.  The only questions is will the natives have to pay?  Sick of it.

jmc8888's picture

Type-O said it best

Loving you - loving you - love love loving you was like loving
the dead - was like fucking the dead

ZeroPower's picture

I am far more worried about the ability of the sellers to pay.  Are we looking at AIG 100 fold?   

Most contracts among big desks trading CDSs would cancel out, especially moreso when you say 'let them all fail'.

So yes, you might have this number in your head of gross notional in the trillions of $, but net-net, i wouldn't call it a bigger issue than the ~$110Bn set aside for Ireland...

gkm's picture

It's amazing that analysts concluded that people trampling on each other to save a few bucks is bullish.  It's desperation to save a few bucks.  What would be bullish is if you could spread the buying out and maintain margins.  

This is just another indicator of the divergence between the "have's" who can have whenever they want, and the foodstampers.  Unforunately, there always ends up being more foodstampians over time than have's

Buck Johnson's picture

CNBC is an eye candy station, nothing more.  They where trying to push the positive today and ignore the bad news.