Portuguese-Bund Spread At New Record Wide
The "on again, off again, but totally clueless" European bailout whose fate may be cemented with a negative vote of confidence tomorrow in Greece, in what may be the most important offshore government decision in European history, continues to slaughter PIGS as the 10 Year Portuguese-Bund spread just blew out by 35 bps to a new all time high of 914 bps. From Reuters: "The premium investors demand to hold Portuguese 10-year government bonds rather than benchmark German Bunds hit a fresh euro lifetime high on Monday, due to ongoing concerns about Greece's immediate financing situation. Yields on bonds issued by euro zone's lower rated states were broadly higher after ministers delayed granting emergency loans for Greece. "There's general contagion in the periphery ... There's not a huge amount of trading but because the market is so thin prices are being marked wide on the screen," a trader said. "People are putting very defensive prices out there with the bid/offer being a lot wider."" And while risk is broadly off on the screen, this is wonderful news to Ben Bernanke, who as we have been saying for months now, will need crude to drop to at least $85, and the S&P to triple digits, to have a solid case for pushing on with more suicidal Keynesian policies (the cure for record debt is more debtTM). Again from Reuters: "Crude oil prices fell by more than $1 on Monday, extending last week's losses, with risk aversion rising after euro zone finance ministers postponed a final decision on emergency loans to Greece. "The crisis in Greece has resulted in higher risk aversion, which is weighing on oil prices," Commerzbank analysts led by Eugen Weinberg said in a note.
Laslty, adding insult to surreality, AP reports that Greece is facing power outages on Monday as employees at the main power utility began 48-hour rolling strikes to protest the company's privatization, part of austerity plans needed to avoid a national debt default.
It said it was preparing hour-long power cuts in several areas if that became necessary.
"We are on strike because, believe it or not, I feel that they - the government and its measures - have taken my smile away, have robbed me of my life as well as my children's future," said electrician Giorgos Maleskos. "My only income comes from this job. After 33 years of work, we have got to the point of wondering if we will be able to survive."
It will be oddly poetic if tomorrow's vote to effectively end the European unity experiment is held over a candelit vigil...
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