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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westboundnup's picture

Voluntary is the new bullish.

Conrad Murray's picture

Dia de los Muertos, putas!

GeneMarchbanks's picture

This was fixed already!

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

Socrate's picture

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

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."


jcaz's picture

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

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.

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.

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

Peter K's picture

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

wisefool's picture

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

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.

I am more equal than others's picture

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

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.


Schmuck Raker's picture

Somebody get a stomach pump...

I think I took too many Reds!

SlipStitchPass's picture

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

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%.

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

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.

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. 


march52011's picture

That is what I find humorous.

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

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

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.

GerritB's picture

Where are the bulls now?

Probably will see an uptick after G20 fake promises!

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.

disabledvet's picture

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

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?


disabledvet's picture

Greek Vortex, bitchez!

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)

bnbdnb's picture

Me thinks the technicals are irrelevant.

Mitch Comestein's picture

Its the Halloween surprise, bitchez.

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:

Dr. Nancy's picture


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