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Spanish, Belgian CDS Hit Record Wides, Even As China Announces Plans To Buy €18 Billion In Spanish, Greek And Portuguese Bonds
Today, despite the announcement by Chinese Vice Premier Li Keqiangin in Madrid that China is willing to buy as much Spanish debt as that of Greece and Portugal (but not Ireland), or roughly €6 billion each, CDS in both the core and the semi-periphery, are back to record levels (El Pais and Reuters sources). Spain was last seen trying to catch up with Illinois, somewhere in the mid 300s, while Belgium also took out record wides at 225 bps. On one hand this is beneficial news for Spain, now that China is seemingly instituting its latest sphere of influence, but in reality is just doing all it can to precent the euro from collapsing (and thus killing Chinese exports to its second largest trading partner, the EU) and with net issuance in the country expected at just €47.2 billion, Spain may have well gone the distance to plugging as much as 13% of its net funding needs for the year. However, and what is spooking markets more, is that, as we reported yesterday, today European Commissioner Michael Bernier will publish a “consultation
paper” outlining ways to shield taxpayers from banking crises, chief among which is the renewed floating of the debt haircut idea.
As the Telegraph reports, the paper "is the
first stage of what will almost certainly become a binding law. We are pursuing the idea of a debt write-down or conversion to help stabilise
a failing bank and reduce the need for public funds,” said an EU source." While in practice this is great, consultation papers come and go, and as Ireland demonstrated so vividly less than a month ago, German banks will fight tooth and nail to prevent this from happening.
And lastly, following in the aftermath of the weak German and Portuguese bond auctions, and confirming that not even the very heart of the core of the Eurozone is clear, today's French auction of roughly €9 billion in medium and long term OATs due 2020, 2026 and 2029, as the yields continued pushing ever higher compared to previous auctions. To wit:
- French OAT auction for EUR 4.48bln, 2.5% 12-Oct-20, bid/cover 1.996 vs. Prev. 1.87 (yield 3.36% vs. Prev. 2.87%)
- French OAT auction for EUR 3.42bln, 3.5% 25-Apr-26, bid/cover 1.763 vs. Prev. 1.76 (yield 3.76% vs. Prev. 3.07%)
- French OAT auction for EUR 1.075bln, 5.5% 25-Apr-29, bid/cover 2.395 vs. Prev. 2.80 (yield 3.84% vs. Prev. 3.15%)
Obviously, it is the bolded sections that are most relevant
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Just what are the Chinese gonna do with all these vassal-states, once they've bought'em? Turn the Mediterranean into a Chinese swimming pool?
lol!
manipulate them..........
You mean in the same way that they are already manipulating the US?
That's China saying, "How else can we get rid of these Dollars?"
Military bases, like us?
Greece is definitely fucked. Their 10YR are trading higher than the May 2010 top. Their bank stocks display the typical chart of worthless penny stocks: no sign of life. Ireland property prices have dropped 15% on the last year, AIB is now fully nationalized, and Bank of Ireland will need 3 billion before the end of February to just continue running.
I'm curious about what were the Greek debt deadlines. It is obvious by now that this country will not even be able to pay back what the EU lent them.
Talking about Portugal and Spain is one thing, but we should not forget the previous fallen States, which are still supposed to somehow pay back the emergency lending, and then the bondholders.
They wont pay it back.the debt will be rolled over.
Austerity doesn't spur economy growth.
What is the worth of Keynesianism, when all it does is grow debt faster than growth?
Austerity actually has a track record of relative success. Of course, in most cases, the debt loads weren't as astronomical as those of today.
Greek 10-year yields are at 12.62 at present time.
http://www.bloomberg.com/apps/quote?ticker=GGGB10YR:IND
Meanwhile, the equity markets go whistling, as Europe have another green day.
Insane.
why arent we are seeing some short of correction in european equities....as the dollar has rallied a bit in the last 3 days......we are seeing that in the indian markets......
Just turn the lights out.
Printed money and fed manipulation rules. Just resolve yourself to being a peon and deep in debt. We have no voice. We have no future. It's just the rich take all. Democracy dead and big corporations run the world.
Personally, I'm converting every cent of the salary I get every month to precious metals, as holding Federal Reserve notes is supporting the Ponzi and getting screwed by real rates.
I also plan to withdraw myself from the State, buy a farm and grow my own food. When inflation will hit, I highly doubt producers of food around the world will still accept worthless dollars. Food shelves will be empty, like in Weimar Germany.
Some would Say its crazy butni think you're right.
But do you really think people will be allowed to live free off the grid? Were moving towered a police state every day.
It will depend. It is obvious that in the USSR, independent producers of food - the 'kulaks' - were not left alone. They were assassinated and tortured just because they refused to hand over their harvesting to the State.
Maybe one day the government will come after me. In that case, I will fight up to my death. Better to die a free man than live like a slave for eternity.
+1
Being a slave is not a choice.
Tyler is all over this like white on rice
Full court press on Spain to keep a lid on.
Hold breath. Other EU children are watching.
a debt write-down or conversion to help stabilise a failing bank and reduce the need for public funds
Not sure I understand this. A debt write down will send the bank down the gurgler, peoples deposits with it, thus requiring a guarantee of public funds but a conversion, presumably to Eurobonds, will require a guarantee of public funds.
Happy New Year, gentlemen. Now that Wall Street has found its idiots to unload their massive, margined long positions and even the last rookie on this earth is jumping for risk free money that is called US Dollor "toilet paper", we can happily await the "value disinflation" to move on. How, that even mainstream "braniacs" media has become aware of the fact that the jump in oil prices, copper and other FED induced idiocy policy commodities is moving up, we can pray that "nobody" intelligent like Jan Hatzius will finally uderstand where the journey goes...
Just to recall: which investment bank was first to cry for several trillion in FED QE "stimuli"? So, you believe the bulsh1t of Christmas related hiring? Wait for the January figures. That´s going to be fun!
UK PMI Services coming in below 50 - think twice!
Last year we saw countries like Greece, Ireland facing bankruptcies due to increasing deteriorating financial position and increased borrowing costs. They had to be bailed out by the ECB and IMF. These problems are likely to spread to bigger countries and the tipping point, which is likely to happen this year, would be when one too big to bail out country defaults on its debts. This would start a chain of defaults which all the governments and central bankers in the world put together cannot reverse pushing the world economy on an extended path of slow or negative growth for years.
http://www.marketoracle.co.uk/Article24581.html
In Belgium, our government went into gridlock last night and today/tomorrow it is expected they turn in their resignation.
So = new elections
New elections = breakup of the country comes closer.
Our country is in a real crisis now a breakup of the country that houses the center of Europe isn't really good advertising for the rest of Europe.
Also, now leaks are comming out about the state of our finances and it's a mess. Between 2013 and 2015 we will run out of money for the pensions and this will need to be compensated by the state.
The situation is so bad, I don't even feel like typing it all down anymore.
We're just fucked in our little rainy country and no chocolat or beer can save us anymore.
I'm French, and I know quite well your situation, bande de petits saligauds.
Il faudrait peut-être que vous vous décidiez un jour. Ca doit faire plus de deux ans que vous êtes dans l'impasse. Leterme, De Wever, ça se succède sans aucun résultat... vous avez l'air de vous haïr, et pourtant vous n'avez pas les couilles de déclarer la sécession.
Disons que la faillite de l'Etat à venir hâtera probablement les "négociations".
La capitale de l'UE dans un pays explosé, avec Bruxelles qui ressemble de plus en plus à une ville du tiers-monde... ça va être drôle à voir.
Attention, je ne dis pas que la France est dans un meilleur état sur le long terme.
"Il faudrait peut-être que vous vous décidiez un jour. Ca doit faire plus de deux ans que vous êtes dans l'impasse. Leterme, De Wever, ça se succède sans aucun résultat... vous avez l'air de vous haïr, et pourtant vous n'avez pas les couilles de déclarer la sécession."
Ah vous les Français toujours à vouloir expliquer aux autres ce qu'ils doivent faire dans leur pays, comment, et plus c'est sanglant mieux c'est. Je comprends que ça vous ait excité de courir dans la rue, de décapiter les gens et que c'est un de vos mythes fondateurs mais en Belgique on a tranquillement fait notre révolution à l'opéra.
"Attention, je ne dis pas que la France est dans un meilleur état sur le long terme."
Sauf erreur de ma part, les émeutes de 2005 n'ont pas eu lieu en Belgique et chez nous la population ne se soulève pas parce qu'un policier fait son travail et arrête un braqueur de banque =)
Sad to hear this, on the bright side 2 liters of Duvel will do wonders for your mood!
I'm no economics genius (or any other kind for that matter) but this sure doesn't look good.
If you where a economic genius mister Racoon, you wouldn't need to search in other peoples garbage looking for food now would you?
Freecycling is very economical; money not spent on food goes for silver.
Good point.