The European Crisis Is Back: Italian, Spanish Bonds Crash Amid Political Chaos

Just when you thought it was all over... the PIIGS chaos rears its ugly head as political crises start to spread across the periphery.

European stock markets are extremely mixed with the core relatively stable as the periphery plunges...

Italian banks stocks - so bloated with Italian sovereign debt - are accelerating lower...

Italian 2Y Yields are now at their highest since 2014...

As the entire BTP curve flattens dramatically...

And Italian sovereign risk is exploding...

Which leaves us wondering...

As if Italy was not enough, Spain is now under pressure as PM Rajoy is under pressure from a potential 'no confidence' vote and Spanish bond yields (and sovereign risk) is blowing out...

The widest spread to Germany in almost 6 months...

Which means only one thing... the PIIGS are coming back to life and there is little that Draghi can do this time...

And all of this is weighing on the euro...

And finally - the scariest chart of all - reflecting the reality of Italy's 'Mini-BoT' parallel currency concerns...


"Get back to work Mr. Draghi..."



A Sentinel MoreFreedom Fri, 05/25/2018 - 09:44 Permalink

Seems likely that yields are going to rise (just intuition, I don’t follow fixed income at all.) To me that suggests that short-term holding (at best) makes sense. 

Good old Georgie Soros used to talk about wanting to take down a bigger country. Maybe he’ll do some massive short or whatever Europe allows.

And just maybe, he’ll take a huge bath!

In reply to by MoreFreedom

hooligan2009 Fri, 05/25/2018 - 09:38 Permalink

wait for macron/merkel/may - three women - to highlight a bunch of streets to set on fire so that draghi can print paper to throw on the blaze, until it is well and truly a threat to the whole of europe.

Quantify Fri, 05/25/2018 - 09:41 Permalink

The unemployment rate in Spain increased to 16.74 percent in the first three months of 2018 from a 16.55 percent in the previous period and above market expectations of 16.20 percent. ... In Catalonia, the unemployment rate was 12.19 percent and in Madrid 13.40 percent....I don't think they want to work.

Make_Mine_A_Double Quantify Fri, 05/25/2018 - 12:27 Permalink

Why isn't there an EU program to send these young people to work within EU countries such as Ireland that apparently have a need for young workers?


Plan Ireland 2040 calls for importing over a million sub IQ retarded rock worshiping mud savages most of whom are illiterate in their own language, utterly useless welfare sponges and whom will only rape the local drunken paddies until their defective gene pool is bleached. 


It's almost like the EU has an ulterior motive or something......

In reply to by Quantify

buzzsaw99 brian91145 Fri, 05/25/2018 - 09:52 Permalink

Kilgore: Smell that? You smell that?

Lance: What?

Kilgore: Napalm, son. Nothing else in the world smells like that.


Kilgore: I love the smell of napalm in the morning. You know, one time we had a hill bombed, for 12 hours. When it was all over, I walked up. We didn't find one of 'em, not one stinkin' dink body. The smell, you know that gasoline smell, the whole hill. Smelled like

[sniffing, pondering]

Kilgore: victory. Someday this war's gonna end...

In reply to by brian91145

Ghost who Walks Fri, 05/25/2018 - 10:31 Permalink

It doesn't seem that long ago that the banks in Cyprus were loaded up with Greek Government debt (because Govt. debt is low risk!).

Then a lot of huffing and puffing occurred and the Wolf blew over the banks made of sticks and straw. Luckily all the solidly built brick banks survived and those little piigs made out like bandits.

So it looks like the wolf is going to pay the Piigs a visit again?

Luckily we know from all of the wonderful bank stress tests that none of the depositors have anything to worry about, because there is the wonderful new Bank Resolution Crisis laws that uses Depositor funds to recapitalise the banks, and make the banks stronger.

I wonder which bank collapse will cause the dominoes to cascade.

MaxDemon Fri, 05/25/2018 - 10:32 Permalink

The Euro (not European) crisis never left, and will never leave, unless either the Euro is abandoned or the Euro zone moves to be a single financial group. The cause of the problem is that there is a single currency (the Euro) but multiple sets of laws and governments all using it officially.

In years past when (say) Italy did something the markets thought irresponsible, the Lira would lose value, and things would balance out smoothly.  That happened a lot (like all the time, for those who don't remember).  But it can't happen anymore because Italy issues debt in Euros not Lira, and so long as Germans behave like Germans, the value of the Euro will stay much higher than the value of the Lira would be.

This is not to say the Germans are right and the Italians are wrong, just that they are different.  But the Euro won't let them be different, because it can't adjust differently for different countries, so pressure builds until something breaks.  They can paper over the differences as much as they want; this will continue until either the Euro itself breaks, or the rights of governments to control their own finances and financial laws breaks.

Bring the Gold MaxDemon Fri, 05/25/2018 - 14:02 Permalink

Well since the entire point of the Euro was to force Europe into a singular all powerful un-elected technocratic POLITICAL union (en route to the bigger global version), I'd say it's working out just grand.

EU will become unified politically with a military as the US pulls out of NATO forcing their hand. At the same time or thereabouts, all sovereign currencies will crash and burn as planned and be replaced by the Phoenix/Bancor/SDR blockchain digital currency. Said currency, will be to the planet was the Euro was to Europe in 1998, which is to say a stealth move towards a political union...just this time on a planetary scale.

The writing has been on the wall for a long time for those with eyes to see, courage to not look away and a brain that processes information even if scary to the weak kneed.

Ya know though, elites never work together. That's why they don't have things called the Tri-Lateral commission, CFR, Five Eyes, Bilderberg and Davos. Nope, only poor people and the mafia conspire. The rich elites just have an unending series of lucky coinky dinks.

In reply to by MaxDemon

Dragon HAwk Fri, 05/25/2018 - 10:32 Permalink

Pigs  Pigs, where have i heard that term before, Didn't we kick This Can Already.

Bunch of broke banks lending a bunch of broke Countries Money, was supposed to blow up long ago.

Ghost who Walks Fri, 05/25/2018 - 10:42 Permalink

It can't be far off the time when Banks really are turned into Financial intermediaries as per economic theory rather than credit creators which is what happens profitably for them now?

The system reset must be close, and I think that the Financial sector must be thinking deeply about how they come out the other side of the collapse with some real wealth.