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

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.