• Sprott Money
    05/06/2016 - 06:03
    The US, in its own decline, is showing this same self-destructive tendency. The worse things get, the greater the inclination of the citizenry to say, “Carry on, everything’s fine.”

Spain May Not Be Uganda, But Germany Is Chile

Tyler Durden's picture


While we discussed the definitive new world geography last week, it appears the CDS market has decided to add a new parallel for us, Germany is now Chile (in terms of 10Y restructuring and devaluation risk). As a reminder, Germany's credit risk has risen by almost 50% in the last 3 months to record highs, and has converged higher towards Europe's GDP-weighted average sovereign risk in the last 2-3 weeks.



and as a reminder - here is Germany's 10Y CDS (interestingly we rallied modestly today - perhaps on the back of Merkel's restatement that there will be no new aid package - or more risk transfer)...

The point being that Germany's credit risk has converged over 20bps (quite notably) higher towards the GDP-weighted sovereign risk of Europe in the last 2-3 weeks as belief in the risk-transfer union grows and today, that has reverted by around 10bps (as hope fades we suspect).

Charts: Bloomberg

h/t Alex Gloy

Your rating: None

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Mon, 06/18/2012 - 13:00 | 2536630 adyaner
adyaner's picture


Mon, 06/18/2012 - 13:13 | 2536678 flacon
flacon's picture

Inigo Montoya: I hate waiting. I could give you my word as a Spaniard. 

Man in Black: No good. I've known too many Spaniards. 

Mon, 06/18/2012 - 14:53 | 2537000 Silver Bug
Silver Bug's picture

Germany needs to get out while the getting out is good. The poor euro countries are destroying them.



Mon, 06/18/2012 - 15:18 | 2537085 ATM
ATM's picture

the poor Euro countries made them by borrowing and buyng all those well engineered german manufactured goods. Now the Germans want to call in the loans but the poor Euro countries still don't have any money. The never did but the Germans lent to them anyways. 

The did the Euro so they could try to guarantee they got paid back, not like the many tomes before thatthe poor Euro countries inflated their way out of paying the Germans back. 

Mon, 06/18/2012 - 15:29 | 2537116 OttoMBMP
OttoMBMP's picture

So much for the people (also on ZH) who tell us, Germany is rich and could bail out the failed states of the south or relaunch the world economy.

Germany has been in the terminal phase of the welfare-state desease already before 2008. Without Maastricht and EUR Germany could have lived maybe one or two decades longer than, say France. That was inacceptable to TPTB. They needed a crisis to drive their EUSSR project.

Mon, 06/18/2012 - 20:23 | 2537907 WhiteNight123129
WhiteNight123129's picture

Otto, as long as you stay on your side of the Rhine and do not come on my side for good everything is fine. You can for holidays and have some fun from time to time you are welcome in France.  Aside from that, I could not care less what happens to Germany, the Euro. For my part we will have to kick Hollande, Sarkozy, Melechon, and Le Pen all of them pretty much. Hire one auditor four accountants to run France with a deminis electoral college with a de minimis parliamentary system, cut down taxes to the level they were back in say 1860, re-introduce bi-mettalism, privatize the Elysee and make a museum out of it. Then I will have some nice St Joseph wine with a St Félicien cheese and I will watch the sea at Deauville or St Malo, civilization will come back, we are just stuck in the last days of the ugly XXth century which does not want to end. You and I can agree on that, the XXth century was truely ugly for everybody with rise of mass movements and violence, let´s come back to mettalic standard, no welfare, no police state, no paper money, low taxes, freedom.


Mon, 06/18/2012 - 16:00 | 2537219 Zaydac
Zaydac's picture

Absolute bollocks. Germany agreed to the Euro so that France would agree to reunification. Now that this historic change is irreversible they can and will leave the Euro.

Mon, 06/18/2012 - 13:02 | 2536641 Diogenes
Diogenes's picture

If Germany is Chile they should put on a sweater.

Mon, 06/18/2012 - 13:39 | 2536750 American34
American34's picture

Bullish on sweaters!

Mon, 06/18/2012 - 14:01 | 2536842 walküre
walküre's picture

Germany is Argentina - OOPS.

Wo ist das Gold, Herr Kommandante?

Mon, 06/18/2012 - 14:04 | 2536850 Roger Knights
Roger Knights's picture

And PIIGS in a blanket?

Mon, 06/18/2012 - 15:45 | 2537153 The Big Ching-aso
The Big Ching-aso's picture



Germany's ass is gonna feel like they passed habanero chile.

Mon, 06/18/2012 - 13:04 | 2536650 Raymond_K_Hessel
Raymond_K_Hessel's picture

Soy un buñuelo de jalea.

Mon, 06/18/2012 - 13:05 | 2536654 MoreNails
MoreNails's picture

Given the mild exposure of the Buba to all the rest of Europe, I'd guess a CDS at ~100 implies eurobonds, a debt redemption fund, and a central bank willing to print without ever looking back ?

Mon, 06/18/2012 - 16:02 | 2537227 Zaydac
Zaydac's picture

Mild exposure? You are forgetting Target 2. Come on MoreNails, pay attention.

Mon, 06/18/2012 - 13:07 | 2536660 slaughterer
slaughterer's picture

Germany is in far more trouble than they let on.  

Mon, 06/18/2012 - 13:11 | 2536671 falak pema
falak pema's picture

chili con carne or chili non carne?

Mon, 06/18/2012 - 13:11 | 2536672 MoreNails
MoreNails's picture

Commerzbank, WestLB (and the other ***LBs), HRE, Depfa, IKB, DB, Target2... What trouble ?

Mon, 06/18/2012 - 13:28 | 2536719 Cognitive Dissonance
Cognitive Dissonance's picture

"Germany is in far more trouble than they let on."

That's because if you owe Germany $100,000 then you have a problem. But if you owe Germany $1 Trillion then Germany has a problem.

I suspect Germany has a BIG problem.

Mon, 06/18/2012 - 14:12 | 2536879 azzhatter
azzhatter's picture

Yep, you can see the Egan Jones memo on Germany- You lent money to people who can't pay you back

Mon, 06/18/2012 - 15:01 | 2537024 Cognitive Dissonance
Cognitive Dissonance's picture

Ha Ha

How quaint. "Pay back." Too freaking funny.

What century are you from? :>)

Mon, 06/18/2012 - 14:13 | 2536882 Poetic injustice
Poetic injustice's picture

No, Germany has PIIG problem.

But every month abbreviation list grows longer and funds shorter.

Mon, 06/18/2012 - 13:09 | 2536662 falak pema
falak pema's picture



Huge scandal of sale of tickets by Olympic committe members in several countries; out of which Greece. That shill proposed Greek quota to ME millionaires for millions of Euros. Greece is top dog in this game, but the Chinese and Serbs are not far behind. Olympics now a groovy money out thin air ponzi scheme organised by those who sit on its top committees. 

Greece olympic committee bosses are worse than Ugandans until proven the contrary. 

Mon, 06/18/2012 - 14:03 | 2536847 walküre
walküre's picture

Blame Souvlaki. Greeks invented the Olympics and the Olympic Ponzi.

Now here's an event I would pay to see. Competing Ponzi Masters.

Mon, 06/18/2012 - 13:08 | 2536664 azzhatter
azzhatter's picture

Ve dont vant the risk of those piigs

Mon, 06/18/2012 - 13:11 | 2536675 midgetrannyporn
midgetrannyporn's picture

The rest of Europe should boycott German products until they squeal uncle.

Mon, 06/18/2012 - 13:18 | 2536692 Dr. Engali
Dr. Engali's picture

Doesn't Europe have to make something of their own in the first place in order to boycott Germany? Or should they just buy more cheap Chinese crap?

Mon, 06/18/2012 - 13:32 | 2536733 Ropingdown
Ropingdown's picture

If "the rest of Europe" had the inclination to sacrifice their individual preferences in favor of national economic well-being it would have happened some years ago.  I had the pleasure of some Spanish politician company in spain last year.  They both insisted Germany wanted to be the New Rome or the Fourth Reich.  I told them "no, you don't understand, Germany is terrified of having to rule the Med countries.  That is their fear, not their desire." The same pols showed up in German cars, one of which was brand new.  Talk is cheap, but given the choice between good German cars and Spanish or French cars or Fiats...well, "screw Spain!"  Get it?  Only when street thugs start targetting German cars for immolation will that change.  Remember, the politicians are now "Europeans," not Irish, Spanish, or Italian.

Mon, 06/18/2012 - 13:45 | 2536774 buzzsaw99
buzzsaw99's picture

Mercedes sux. What you wrote just proves that most eurotrash has no taste.

Mon, 06/18/2012 - 13:40 | 2536753 mark7
mark7's picture

I will not use my BMW M5 today and maybe not even tomorrow. Boycott is ON!

Mon, 06/18/2012 - 14:39 | 2536963 Bam_Man
Bam_Man's picture

I have been "boycotting" BMW for 17 years and counting by continuing to drive my 1995 M3 all these years. Doesn't even have electric seats or tilt steering wheel, but is still the best car EVER. You could not pay me to buy one of the newer insanely over-engineered versions.

Mon, 06/18/2012 - 14:05 | 2536854 Satan
Satan's picture

Not possible. We source 90% of the parts we use from Siemens and Bosch as they offer products that are so far superior to anything else on the market. The day we choose inferior materials is the day our company dies.

Mon, 06/18/2012 - 16:18 | 2537281 vh070
vh070's picture

Ya, the Germans make good stuff.  Other Europeans just stuff things up good.

Mon, 06/18/2012 - 14:34 | 2536939 walküre
walküre's picture

FAIL. Back to the drawing board.

Mon, 06/18/2012 - 13:13 | 2536677 ghostfaceinvestah
ghostfaceinvestah's picture

Germany will be the first country to leave the Euro.

Mon, 06/18/2012 - 15:34 | 2537126 OttoMBMP
OttoMBMP's picture

You all assume German politicians act in favour of the German people.

This assumption is WRONG.

Mon, 06/18/2012 - 20:32 | 2537929 WhiteNight123129
WhiteNight123129's picture

Otto, the plague is democracy. I am not advocating totalitarian state. Just a parliamentary state like XIX UK, with limited involvement of hte masses. All the Western world "democrac" politicians are filthy rats who are in teh case of France ready to debase to infinity to stay in power for a littel longer. At least you have someone resisting printing so do not complain too much about your politicians. I guess François Hollande was taught at school that the French revolution happened because the masse of Paris had read "l´esprit de lois" from Montesquieu! The truth is that massive budget deficit and overspending brought down teh kingdom. It looks like we are reviving a taste for printing in France, we will revive a taste for Guillotine too as a result.


Mon, 06/18/2012 - 13:14 | 2536680 kralizec
kralizec's picture

Nein! Nein! Nein!

Mon, 06/18/2012 - 13:14 | 2536682 fonzannoon
fonzannoon's picture

I love sittinng in the US on my glass lawn chair in front of my big glass house and reading all this stuff about who is who.

Mon, 06/18/2012 - 13:25 | 2536713 Dr. Engali
Dr. Engali's picture

Drinking a nice cool beer out of my glass bottle ,eating chips out of our glass bowl, and watching events unfold on the glass tube. When all this breaks We will be picking glass from our asses for decades.

Mon, 06/18/2012 - 13:57 | 2536821 Satan
Satan's picture

I like getting stoned in my glass house...with my glass bong.

Let he who is without debt cast the first stone.

Mon, 06/18/2012 - 14:00 | 2536833 LULZBank
LULZBank's picture

If only you guys had Glass Steagall.

Mon, 06/18/2012 - 13:20 | 2536694 yogibear
yogibear's picture

For Germany go down trying to save the deadbeats or save yourself and let the deadbeats go down.

Mon, 06/18/2012 - 13:20 | 2536696 Jack Sheet
Jack Sheet's picture

All they need now is "Operation Drehung" - the only thing that could fuck up a bet on higher Bund yields

Mon, 06/18/2012 - 13:21 | 2536700 SDRII
SDRII's picture

All clear..apparently a $2 Trillion shortfall of dollars worldwide...on the demand side...


Central banks rebuilding foreign- exchange reserves at the fastest pace since 2004 are crowding out private investors seeking U.S. dollars, boosting demand even as the Federal Reserve considers printing more currency. After falling to an all-time low of 60.5 percent in the second quarter of last year, the dollar’s share of global reserves rose 1.6 percentage points to 62.1 percent in December, the latest International Monetary Fund figures show. The buying has left the private sector with $2 trillion less than it needs, according to investment-flow data by Morgan Stanley, which sees the dollar gaining 8.2 percent in 2012, the most in seven years.

Mon, 06/18/2012 - 13:27 | 2536718 SDRII
SDRII's picture

Forget GS, Blackrock seems to be dressing itself as the deathstar.


Blackrock's Rick Rieder - of former Lehman and R3 fame - on TV says sees value in credit risk


"BlackRock, the big money manager, has acquired R3 Capital Management, the firm announced in an internal memorandum obtained by DealBook. (Read it after the jump.) R3, founded and run by the former Lehman Brothers executive Rick Rieder, has about $1.5 billion in assets under management. Mr. Rieder, who was formerly Lehman’s head of global principal strategies and credit businesses, will become a BlackRock managing director and will lead its fixed income alternatives portfolio.



Lehman Brothers Should Come Clean on R3 Capital: Jonathan Weil

The more you learn about Lehman Brothers Holdings Inc.'s relationship with R3 Capital Partners, the more it looks as if Lehman may not be telling investors all they need to know.



BlackRock Picked by Irish Central Bank to Evaluate Six Banks' Debt Assets




Bank Of Spain Hires Experts To Isolate Banks' Toxic Assets - Report



Mon, 06/18/2012 - 13:34 | 2536732 skepticCarl
skepticCarl's picture

This low volatility, low volume rally is more than a dead cat bounce in the U.S. equity market.  Investor bearishness is still pretty high, a contrary indicator.  Retail and transports indicate more rally to come. Stay long in June, until those two market segments break down.

Mon, 06/18/2012 - 13:37 | 2536746 mark7
mark7's picture

When we get to the part some pissed off terrorist nukes New York. And not some puny 20K nuke crap, we want at least 150K former missile head.

Mon, 06/18/2012 - 13:45 | 2536772 mark7
mark7's picture

In case you have not noticed, Europeans are busy watching football. There are some unlucky janitors taking care of DAX, Footsie and Stockholm Cheerleader Auction Market. Selling and buying at random. It has worked surprisingly well.

Mon, 06/18/2012 - 14:07 | 2536864 LULZBank
LULZBank's picture
Spain May Not Be Uganda, But Germany Is Chile

In the end ... It would'nt matter ...

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