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Spread Between US and European Investment Grade Spreads Hits All Time Record
All those who may have had the displeasure of trading CDS in late 2008, just after Lehman collapsed, will recall that the most perplexing phenomenon was the massive surge of US IG spreads, coupled with the very modest move out of Europe. How the market back then was so retarded not to realize that the US banking system is just a fraction of the European one, and thus the carnage that would follow in Europe should all hell break loose in the US would be orders of magnitude worse, is merely an indication of just how stupid most market participants are. Yet looking at the chart below shows that after years of denial, finally credit traders are realizing the sad truth: namely that the European financial system is far more risky than the American one. After having traded tighter pretty much since inception, the US IG index went tighter to iTRAXX Europe for the first time in May, when it became obvious that the best Europe can hope for is a delay of the inevitable. Yet even back then the widest the now positive spread differential hit was 14 bps. Enter November 26, and a new all time wide of about 16+ bps. In other words, the incipient risk of the "safest" of European names is now the widest it has been to comparable US risk. We expect iTRAXX to continue surging ever wider as the European implosion, after well over two years of denial, is finally accepted by all. Of course, just like in the inverse case, should Europe collapse, the US will follow shortly, as the great globalization experiment ends, and America's ability to fund an endless current account deficit, the Sino-US decoupling, and the myth that Keynesianism is in any way viable ends with a massive thud.
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How long before the "man on the street" sees this picture more clearly courtesy a USD/EUR blowout? A week?
Don't know if the man on the street is a currency trader in general. The FX pairs tend to be pushed around by a fairly savvy lot (I did not state benevolent or "fair" though). That's not to say they go the direction they should, when sovereign forces with infinitely deep pockets doing most of the pushing.
Remember the Keynes' Caveat: markets can remain irrational far longer than anyone's money can last.
Or words to that effect.
Pardon me but the discredit of all things Keynes is well underway and I'd advise you put down your cup of rootin tootin rasberry
Look, I am far from a fan of Keynes but that does not mean that he doesn't have any insightful commentary. That quote is a pretty good gem.
Meanwhile shoppers are oblivious, mobbing stores like Macy's....
LOL.....
That's not Macys, that's a soup kitchen.
Hungry asian dudes clad in leather and pea coat jackets?
A tution protest at Cal State San Luis Obispo
+ 1
Only one thing to do: call in the coordinates where that photo was taken.
"PBR streetgang, this is Almighty, over..."
Who cares about impending doom when there's SALES!!!
So many paralles to be drawn, one of which was during Noah's flood: "and they took no note..."
The other which I said a million and one times: Americans rather watch Dancing with the stars and Jersey Shore than to hear about "bad news" as long as they are comfortable and collecting unemployment checks or have a job... that's ending in a few days
Did you expect anything else...the only spread they understand is that which they put on their dinner roll...the uninformed are always the last to know and thus the most vulnerable.
It's Macy's Herald Square, according to MarketWatch
http://www.marketwatch.com/story/slide-show-black-friday-shoppers-hit-stores-2010-11-26?dist=bigcharts
Is Justin Beiber playing?
Is this an allusion that what "he" does is playing?
Oh, maybe that "he" is "playing" us?
That playing definition would make more sense.
Free bowl of greasy Noodles with purchase of any Oprah Winfrey endorsed product.
A most optimstic post. Nothing better for kicking off another holiday binge.
He said it! He said the magic word!
Is there any economic/welfare/health system/scheme that isn't a ponzi scheme?
The good old pyramid scheme, used century after century to transfer wealth/control from the masses to the few.
She
http://en.wikipedia.org/wiki/Iveta_Radi%C4%8Dov%C3%A1
How does he dare to call it a ponzi scheme?! It is the only right thing to do /sarcasm
When in Rome...err...Egypt? Wherever we are, I don't recognize this place anymore.
For now this will be a slow motion wreck. Denial and vested interests are strong. However there are black swans gathering just over the horizon.
The anti-globalization movement is gaining momentum. In the center of the crosshairs is the global banking cartel. And you can bet that a whole bunch of dirty little secrets are going to to be exposed shortly as the Eurozone goes through the process of wading in the muck.
Ultimately what will come to the forefront is the banker-politcian connection. The anti-globalization movement will grow because it will become clear that government 'austerity' is merely corporate welfare for bankers paid for by the citizens.
I think the American public has already figured that one out and, in fact, will be a major impediment to further bailout legislation. Furthermore, it will put the breaks on Bernanke. The public is wising up to financiers' shenanigans.
Yes, to a point. The knowledge is there but action is lacking. They believe GOP candidates who are claiming that 'austerity' is the way back to prosperity. They're going to be in for a rude awakening once they get their benefit cut and find out that QE to infinity will continue and Wall Street bonuses will keep spiraling. It's a vicious cycle because austerity and government job cuts are deflationary and the Fed programs are inflationary.
The trouble with the current Fed configuration is that the real economy will continue to deflate while the paper economy will inflate, taking prices up with it. CheckMate.
"Fed programs are inflationary."
There is a difference between regulatory enabled fraud and inflationary monetary policies. In a deflationary environment what looks like counter inflationary interest rate objectives is in reality disguised bail outs for politically connected corporations, or regulatory enabled fraud. They care not if the net effect is inflationary for GDP, they want their losses wiped out or at least mitigated.
In reality QE is deflationary as it takes an interest bearing instrument with an estimated future value (maturity) in current purchasing power and then brings that future value into the present by monetization, that current value must be discounted since it is money creation and thus devalues all other existing currency. The exact amount of discounting is a direct unknown, however it is deflationary.
If the public objects, the public will be ignored. It amazes me how many people still fail to grasp this.
Right. Only if the public acts up. Keep in mind that the public has been so indolent for so long that even a bit of fight will take them by surprise. Then it will be time for the countermeasures like in march 09, spreading stories that bankers are getting death threats.
If the public acts up, it will be localized, maginalized, and euthanized.
Perhaps the public is acting up by beating the financiers at their own game a la jingle mail. The fact that default is going mainstream and is becoming socially acceptable is surely a sign of the times? How about the movement to move deposits out of TBTF banks and organized bank runs via the internet? It may not be blood on the streets but it is organized resistance to the establishment.
I don't know, I think the natives are getting a bit restless. The resistance to the airport scanners seems to have come as a bit of an eye-opener for .gov. I don't have first hand knowledge, but I hear that the TSA used the old metal detectors at the airports on Wednesday and only used the scanner strip search device or the groping pat down if you set off alarms. After invoking the goblins who will get you if you don't watch out, appeals to our patriotism, appeals to sympathy and finally bluster and ugly threats to take names, the TSA conceded to the threat of an opt out. They're calling it a victory, but it looks like appeasement to me.
Retailers are "slugging it out" a little harder than usual with low prices. I am persuaded to do a little shopping myself and I am a hard sell.
US$ Index has next resistance at 83.5 from current 80.4. Breaking above 80 was huge.
Dollar testing resistence for sure. Resistence at 80.5. Euro/USD at inflection. Europe is more broke than US? Which ugly/stupid/complacent girl would you date?
the one that gives it up easy.
It's amazing, those that "hate our way of life" have not figured out how to stop the shop.
Lots of shoppers... few shopping bags.
http://www.youtube.com/watch?v=IvJEJEGzeU8&feature=channel
Shhhh, you'll wake the baby.
did anyone else see the lloyd blankstein doll on Bloomberg? dress down black friday, play doll. it wasn't a joke, i don't think, do you. i mean this bald headed beck has a barbie doll?
This is the end
beautifull friend
this is the end
my only friend, the end
of our elaborate plans, the end
of everything that stands, the end
no safety or surprise, the end
desperatelly in need of some strangers land
weird scenes inside the gold mine
In Europe they protest, shut down services and destroy property when the government cuts services and bails out banks.
In the US they rush to spend the money before it is worthless.
Shouldn’t it mean „ ITRAXX Europe LESS US IG CDX” on the chart?
.
There would be far more detailed information, serious and educated content, and much less cynicism ( more recent colloqial usage of the term, rather than the original ancient Greek) within this article if it were for anyone other than "the man on the street", albeit one the who is looking slightly bewildered in the opposite direction to the rest of the crowd.
delete repeated post