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Greece Sends Global Markets Into Tailspin Again: European CDS Spreads Demand Another Bailout

Tyler Durden's picture




 

The futures are tumbling with U.S. futures falling in sympathy with plunge in European stocks; Italy’s FTSEMIB index down 5.3%, DAX down 4.4%, CAC down 4.3%, Spain’s Ibex down 4.1%, FTSE down 2.9%. But here is the true reason why Europe already needs another bailout, or the promises thereof, courtesy of those so vile CDS which no matter how hard it tries, Europe just can't kill:

  • Italy CDS Rise 45.5 bps to 491; update +53 495/505
  • France CDSs rise 14 bps to 190; update + 17 191/196
  • Spain CDSs rise 33.5 bps to 374.5; update + 41 375/385
  • Portugal CDSs rise 57 bps to 1,028; update + 71 1015/1055

The reason? Why Greece of course: the same referendum decision that it took the market yesterday 45 minutes to process before the sell off began. From Bloomberg:

  • Greece’s decision to call a referendum on its 5-day-old bailout blindsided its European partners and placed another hurdle in the way of efforts to staunch the debt crisis, German coalition lawmakers said.
  • Referendum announcement came “out of the blue, it’s surprising, very risky,” said Norbert Barthle, the ranking member of Merkel’s CDU party on parliament’s budget committee
  • “There’s an enormous amount at stake,’’ Barthle says; "We have a new unknown,” he says
  • Sarkozy Is ‘Dismayed’ at Greek Referendum Plan, Le Monde Says

And the Greek reaction to the "stunning" announcement by G-Pap?

  • Ex-Greek Minister Manos Says Vote May Trigger Default, Euro Exit
  • Greek opposition leader might ask his entire Parliamentary group to resign, which would lead to elections
  • Greece’s Samaras Says in Critical Times, Meets President
  • Samaras Says Papandreou Has Placed Greek Place in Euro at Risk
  • Greek Opposition leader Antonis Samaras speaks in Athens.
  • Says elections are a national need, all must do their duty
  • Says Papandreou has trying to save himself
  • Greece’s Papandreou to Hold Meeting With His Ministers Today at 6 PM

And FTMFGlobalW, from Bloomberg:

  • The European Union wasn’t informed in advance of Greek Prime Minister George Papandreou’s plans to seek a referendum on Europe’s bailout, an EU official said today in response to a question.

So much for the year end rally.

 

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Tue, 11/01/2011 - 07:22 | 1831097 westboundnup
westboundnup's picture

Voluntary is the new bullish.

Tue, 11/01/2011 - 07:24 | 1831098 Conrad Murray
Conrad Murray's picture

Dia de los Muertos, putas!

Tue, 11/01/2011 - 07:25 | 1831099 GeneMarchbanks
GeneMarchbanks's picture

This was fixed already!

Contagion... Schtumptagion, pppffffffffftt Europe is fine...

Tue, 11/01/2011 - 07:45 | 1831140 Socrate
Socrate's picture

Let's not be scared. Another bailoud coming i a few days, bitchez!

Tue, 11/01/2011 - 07:27 | 1831103 Innocent Bystander
Innocent Bystander's picture

The cracks appear..

ROME A senior Italian politician lashed out at France Monday, saying President Nicolas Sarkozy was partly to blame for Italy's increasing sovereign debt problems.

Sarkozy helped trigger a "premeditated speculative attack" by saying that if last week's European Union summit hadn't saved Greece it would have pushed Italy over the brink, Italian foreign Minister Franco Frattini said in an interview published Tuesday by Rome daily Il Messaggero.

Frattini said Sarkozy's gaffe was at least as unfortunate as Italian Prime Minister Silvio Berlusconi's description last Friday of the euro as a "strange currency that nobody believed in."

Italian 10-year government bonds rose to an all-time high above equivalent German bunds Tuesday, while Italian bank shares also fell heavily. However, French bank shares fell even more after the Greek government announced late Monday that it may hold a referendum on the austerity reforms it has agreed to in exchange for bailout loans.

Frattini, who spoke with Il Messaggero shortly after speaking with Italian President Giorgio Napolitano, also appealed to world leaders attending G-20 meetings starting Thursday, to hold a summit "of courage, not of uncertainty and vileness."

 

Tue, 11/01/2011 - 07:28 | 1831104 jcaz
jcaz's picture

LOL-  Greece thinks they have them by the short hairs- gee, couldn't see this coming.....

Tue, 11/01/2011 - 07:28 | 1831106 EL INDIO
EL INDIO's picture

This is the new recovery plan:

Create tremendous volatility and chaos so that favoured banks can sell high and buy low.

Long live volatility.

Tue, 11/01/2011 - 07:32 | 1831110 daily bread
daily bread's picture

If the people of Greece actually get a chance to vote [I still think the IMF/EU/FED will try anything to keep a vote from happening], it will be wonderful to see a silver stake driven through the heart of the vampire.

Tue, 11/01/2011 - 07:43 | 1831134 Ghordius
Ghordius's picture

so for you the EU is "part of the vampire"?

I do hope the Greeks get a proper referendum, by the way

Tue, 11/01/2011 - 07:31 | 1831111 Peter K
Peter K's picture

The fall of western European socialism. Who would have thunk:)

Tue, 11/01/2011 - 07:32 | 1831112 wisefool
wisefool's picture

Timmy said everything is going to be fine. Timmy is Sec-Tres.

Tue, 11/01/2011 - 07:32 | 1831113 Cult_of_Reason
Cult_of_Reason's picture

After the referendum, Papandreou will announce his retirement, and Greece will default like Argentina's government defaulted on $95 billion of debt after a 2001 run on banks contributed to the nation’s financial collapse.

Tue, 11/01/2011 - 07:43 | 1831135 I am more equal...
I am more equal than others's picture

And even that event will not trigger CDS because it was a voluntary vote.

Tue, 11/01/2011 - 07:52 | 1831152 Cult_of_Reason
Cult_of_Reason's picture

Sure, they “invited” Greeks to vote, so it is a “voluntary” indeed.

ISDA (the least corrupt after FINRA) will determine “no credit event” for sure.

LOL

Tue, 11/01/2011 - 07:33 | 1831117 Schmuck Raker
Schmuck Raker's picture

Somebody get a stomach pump...

I think I took too many Reds!

Tue, 11/01/2011 - 07:34 | 1831119 SlipStitchPass
SlipStitchPass's picture

I'm growing a rally beard..or maybe a crash beard. Ay any rate "no shave November" right on into "Decembeard". 

Tue, 11/01/2011 - 07:38 | 1831124 Josephine29
Josephine29's picture

This referendum is affecting Greek bond prices and yields too.

This also adds yet more uncertainty to Greek government bond prices which were in the process of digesting the 50% haircut on private-sector holdings. Today all that has reversed with the yield on her one year bonds rising from a post summit 154% to 174%. The yield on her ten-year government bonds has risen back to 24%.

http://www.mindfulmoney.co.uk/wp/shaun-richards/the-greek-referendum-means-that-the-latest-euro-zone-summit-deal-has-unwound-already/

The description of how the rescue vehicle the EFSF is misfiring due to all of its flaws is worth a read on its own...

Tue, 11/01/2011 - 07:47 | 1831142 disabledvet
disabledvet's picture

just like i said they could..."by the end of the week" turned out to be optimistic. "Wednesday" would have been more accurate.

Tue, 11/01/2011 - 07:39 | 1831125 ArkansasAngie
ArkansasAngie's picture

WHo would have thought that a vote by the people for the people would throw such a monkey wrench into things.

The 1%'ers' game plan does not include letting the 99%'ers vote on things that might actually change the winners' list. 

 

Tue, 11/01/2011 - 07:43 | 1831136 march52011
march52011's picture

That is what I find humorous.

TPTB are afraid that the people will vote in their own best interest.

Tue, 11/01/2011 - 07:41 | 1831128 HITMAN56
HITMAN56's picture

And I heard as it were the noise of thunder....theres a man going round takin names...everybody won't be treated all the same...when the man comes around

Tue, 11/01/2011 - 07:45 | 1831131 Raskolnikoff
Raskolnikoff's picture

Man, is it so hard to admit that no one should have lent so much to such a country(s) and that was the first and biggest mistake?  

Like Santelli said, 'Failure is the biggest and best regulator' (paraphrased of course)

time to take your losses like the men you should be.

Tue, 11/01/2011 - 07:42 | 1831132 GerritB
GerritB's picture

Where are the bulls now?

Probably will see an uptick after G20 fake promises!

Tue, 11/01/2011 - 07:47 | 1831141 williambanzai7
williambanzai7's picture

Sarkozy is dismayed? Actually to their credit the Greeks got cold feet and decided maybe we should ask the voters what they think.

Sarkozy does not appreciate the true peril of his lunacy.

Tue, 11/01/2011 - 07:47 | 1831146 disabledvet
disabledvet's picture

He is "dismayed." But "that's about it."

Tue, 11/01/2011 - 07:47 | 1831143 ThisIsBob
ThisIsBob's picture

So in the Cradle of Democracy, the citizens are to vote if their future earnings are going to be taken to help out some bankers who made bad bets.

Why can't we do that?

 

Tue, 11/01/2011 - 07:48 | 1831148 disabledvet
disabledvet's picture

Greek Vortex, bitchez!

Tue, 11/01/2011 - 07:48 | 1831150 darkpool2
darkpool2's picture

What pain?.....only for the rest of Europe. This is just ( another ) huge fucking red banner telling every Greek citizen they have another two months to get their ( subsidized) euro denominated savings either out of the country or into gold. Once the " new Drachma" is issued, those with Euro offshore wealth can live comfortably in the new " low cost" Greece ( unless you were part of the population that didnt have wealth to convert!!! ) ..........and the cash economy will continue to flourish. ( which as an aside, is one of the better ways of constraining your over- reaching governments)

Tue, 11/01/2011 - 07:50 | 1831151 bnbdnb
bnbdnb's picture

Me thinks the technicals are irrelevant.

Tue, 11/01/2011 - 07:54 | 1831157 Mitch Comestein
Mitch Comestein's picture

Its the Halloween surprise, bitchez.

Tue, 11/01/2011 - 09:41 | 1831839 Grand Supercycle
Grand Supercycle's picture

As mentioned for some time, the bullish USD weekly chart continues to exert it’s influence and according to my analysis this will continue.

DOW chart showing bearish megaphone pattern warned of resumption of downtrend:

http://stockmarket618.files.wordpress.com/2011/10/2011-10-31_dow_dy_x.png

Tue, 11/01/2011 - 10:07 | 1832021 Dr. Nancy
Dr. Nancy's picture

 

All that's happening is predictable, as there are 7 stages that any major economy goes through. Those who know how it works profit & massive wealth is transferred to them. You can see what one millionaire has to say about the 7 stages countries go through & how you can profit like the ultra-rich during these tough times.

His free video

"How To Create Incredible Wealth in Today's Economic Crisis"

is at:

http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bi...

Hope this info helps everyone as much as it has me.

Dr. Nancy

 

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