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Portuguese CDS Surge, Hit 235 bps, Just 7 Away From Record
PIIGS investors are following closely the rapidly deteriorating developments in Greece: the latest indication that the EU's botched bluff attempt with Greece is likely to have adverse implications on not just the Mediterranean country but on all other highly leveraged countries are the CDS spreads of Portugal. After blowing out to all time wides in early February, about the same time we first heard that Greece was in essence insolvent, the country's credit risk has been once again slowly creeping higher and today hit a level of 235bps: for all intents and purposes a record. As the risk posture reasserts itself in Europe, America has not looked back even once since the market lows of 2010, which were caused by just these European fallout considerations. Is Europe slowly coming to the same conclusion that Dylan Grice did today? What will take for the US to emerge from its bubble trance of a utopia in which any and every problem can be solved with just more money printing, and a steeper yield curve. For now, the answer is nothing, as consumers get their second wind on mortgage payment and credit card bill defections.
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France lends to Greece, Greece lends to Portugual, Purtugual lends to Spain, Spain lends to Italy, Italy does the final reach around money shot and lends all back to France. Problem solved. :)
I don't know why you guys get so mad, you can't pay enough for this high quality entertainment.
Your post reminds me of a joke I heard awhile back:
This is the real story, unfortunately. When we allow the financial and media elites to control things the way they have, I now understand why Americans are so clueless to hwo things work. We have a massive stock market rally, green shoots and a "nascent recovery" for sometime now. You wouldn't know it in real life, so we eventually lose our collective ability to understand that bad policy has bad consequences.
Unless, as the theory goes, the stimulus actually does create true growth in the economy. That was/is the whole point of throwing so much money at the problem. Right now it appears to be working to an extent as we're seeing the economy gain some traction.
Consumption leads to demand which leads to production of goods. It's undeniable that manufacturing has been picking up steadily the past few months. If that leads to job creation, the cycle completes and becomes self sustaining. In essence a "nascent recovery" that continues for quite some time (barring a major war or equivalent event.
All that is happened is a decline of the rate of decline, waves within waves.
Credit formation does not support your theory. See Fed's Z1 report. Matter of fact, every day that goes by the more power is needed to sustain the system... welcome to the equation of exponential growth... there is no out, there is only in. Man has been trying to defeat Math for many centuries, Math loses plenty of battles but always wins the war.
Your whole theory rest on "IF", well "IF" Man had unlimited power then you would be correct they could win the war, absent unlimited power, Man will fail and Math will win the war just like it always does.
Man got swamped in late 2007 thru 2009, Man retreated and fell back and formed a rallying point further back. The good news, the enemy is advancing at a slower rate, now the bad news.... the enemy is growing exponentially.
Now the plan is to have Benny and the Jets organize a counterstrike against the enemy and lead all you morons back up the hill you just lost, heck if you keep believing him you might actually be able to take part of that hill back. You are still faced with the same problem, the enemy is growing exponentially and you are having a hard enough time as it is... the enemy will not stop growing.
The equation has been losing battles for decades, since 1944 it has been basically losing every battle, well until the one that showed up in 2007. The equation will always kick your ass in the end, it is always the winner of the war. This war was decided before you're grandfather's grandfather was even a thought.
True growth? You do not know of the FRB ponzi? We have reached debt saturation. You are an unbelievable troll. You are Jacob the Liar. You are the sort that says, "Hey, this works! It's not right, but it works! Let's have more of it!" Acquiesce to TPTB all you want, troll, but reality always wins. And when it does, it's going to be a bitch of a ride.
I hope you are talking to Harry, the equation always wins.
Note indents.
Well, Harry is right though, he is actually a platoon leader in the war against the equation. Benny has been trying to rally the troops for the last year. Benny's job nor the platoon leader's just to sit around and accept defeat. Their job is to continue to fight that which can't be defeated.
Harry's job is to gather as many lemmings as possible and lead them up the hill.
" sound of inevitability Mr. Anderson"
As Bob Paulson so kindly noted, yes, I was talking to Wanger the Troll.
Sure dude, it's all good til it's not.
These jobs?
http://www.minyanville.com/businessmarkets/articles/washington-mcdonalds...
Thanks for that link. It's an interesting article.
I have never seen so many PIIGS flying in the sky.
And each and every one crapping on the rest of us.
I guess they should all just form a cue while the IMF is in town. Next! Lets do this in aphabetical order.
They have ignored cause the media has focused them on EPS and greece has left the center stage. As economic data supports a sequential decline in growth in 2Q and definitely in 3Q which I suspect it will then they will start the worrying process again.
The only thing CNBS cares about is I-Pad sales. Nothing to see here!!! Just BUY, BUY, BUY!!!
"The only thing CNBS cares about is I-Pad sales."
Does that still come in second behind defending GS?
It's the debt stupid, right?
We keep hearing from economists that debt is nothing to worry about until you have to worry about it. A child can kick a can down the road, an adult can kick a medicine ball down the road, and a giant can kick a keg of beer down the road with the same effort. Make no mistake about it, the entire developed world is playing extend and pretend with cheap credit. God help us if the giant gets diagnosed with Lou Gehrig's Disease.
One of the most powerful assumptions that served as the foundation of finance was that as the risk of default increases then the interest rate on borrowing should also be expected to increase. I say 'was' because it is clear that this can no longer be assumed to be the case when it comes to sovereign debt because the greater fool (IMF/US Taxpayer) seems willing to lend at below-market rates.
When considering all of the intentionally floated rumors (market reaction fishing) about the Greek crisis it doesn't take much of a leap to consider what rumors will be flying around when the attention focuses on the USofA.
Can we expect to see PIIGS soverign rates continue to explode higher? Probably. Will we continue to be bombarded with news about potential below-market financing deals and government cost-cutting? Yep. Will this all end well when the CITIZENS of those countries are getting charged 20% interest on a 30-year mortgage? Nope....
That's the interesting part of this: it does not stop at Greece. It will spread like Ebola, and Germany cannot backstop the whole of the EEU. And the contagion creates its own slippery pathway, as supporters move out of the way, collect their marbles as best as they can (bank run) and move on. THis is why the IMF took that $500 billion action recently: it's not a contingency plan, it is a battle necessity. And $500 billion is just the downpayment.
Reap what you sow.