As the mainstream media tries to convince the masses that all is well, the truth telling blogger world is still hard at work. Mike Shedlock http://globaleconomicanalysis.blogspot.com/ reports that Europe’s fake solution to the Greek fiasco is already collapsing two weeks after being announced. Interest rates are soaring all over Europe. Guess what is fatal to countries with massive levels of debt? That’s right – RISING INTEREST RATES. The worldwide system is stuffed with bad debt – un-payable debt. When this European house of cards collapses, it will destroy European banks and US banks who have guaranteed much of this bad debt with their creative derivatives.
Americans have a way of focusing on themselves, thinking the rest of the world doesn’t matter. How myopic and egotistical of us. I suggest you skip the MSM and stick to the sites that deal with facts and realism. By the way, China’s real estate bubble is popping and the Middle East turmoil is getting worse.
Fourth Turnings do not get less intense as they progress. They get more intense until the final crescendo. We are, at most 5 or 6 years into this Fourth Turning. Only 15 years to go. Hang on tight. It’s gonna be bumpy.
Spain, Italy, Belgium Bond Spreads Hit Euro Record; Italy 10-Year Bond Yield Highest Since 1997; Self-Fulfilling Crisis
The idea that the latest Greek bailout plan would solve anything is officially dead. Government bond spreads of Spain, Italy, and Belgium are at all-time highs. The yield on 10-year bonds of Spain and Italy are now both well North of 6%. Here are a few charts to consider.
Belgium 10-Year Government Bonds
Spain 10-Year Government Bonds
Italy 10-Year Government Bonds
Germany 10-Year Government Bonds
Portugal, Greece, and Ireland are now a sideshow. However, as a point of interest, 2-Year Greek bonds are 32.35% down from a record high of over 40% but well above the lows in the high 20’s following the Greek bailout agreement.
Self-Fulfilling Crisis
Bloomberg reports Italy, Spain 10-Year Bond Spreads Are at Euro-Era Record on Growth Concern
Italian and Spanish 10-year bonds dropped, pushing yields up to euro-era records versus benchmark German bunds, on concern that slowing growth will hamper efforts to tame the nations’ debt loads.
“This has all the features of a self-fulfilling crisis,” said Harvinder Sian, a senior bond strategist at Royal Bank of Scotland Plc in London. “The rise in yields looks pretty relentless, and it doesn’t look as if the politicians are anywhere near to getting ahead of the curve.”
The yield on 10-year Italian bonds jumped 18 basis points to 6.18 percent as of 8:48 a.m. in London, the most since November 1997.
Spanish 10-year yields surged 16 basis points to 6.36 percent, pushing the spread over similar-maturity German debt up 19 basis points to 393 basis points. A 6.5 percent yield will be a key level for Spain, RBS’s Sian said.
The yield premium investors demand to hold Belgian 10-year bonds instead of benchmark bunds widened to a euro-era record of 202 basis points before an auction of as much as 2.8 billion euros of 105-and 168 day bills.
Expect a “stern warning” from ECB president Jean-Claude Trichet soon. Also expect the market to laugh in his face.
Any bets on when the EU has another emergency meeting? I suspect two more days of this action might do it. Now answer this: what can they do that makes any sense?
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Sentiment Crumbles On Relentless Euro Crisis, French, Italian And Spanish CDS Hit Records
Submitted by Tyler Durden on 08/02/2011 07:10 -0400
Despite Congress passing the debt ceiling hike, the market’s reaction has been swift, brutal and vicious as ever more attention is being paid to Italy and the unforgiving European crisis. As both Spanish and Italian spreads hit new all time records, while CDS are at all time wides for the two countries plus France, the vigilantes are once again preparing to attack and test the ECB’s resolve to keep the Euro alive: at this point it is obviously a losing game although expanding the EFSFS to $2 trillion is inevitable (at which point the reaction to German spreads will be swift). In the meantime the scramble for safety is at 2011 highs, with gold on the verge of another record, while the 10 Year US Treasury touching a low of 2.685%, and UK Gilts touching record lows: remember – this is all to make QE3 more palatable when it does begin. Lastly, Bloomberg’s TJ Marta summarizes all the market indicators of a day in which sentiment has truly crumbled and in which we expect Italian bank stocks to be halted at least 3 times before market close.
From Bloomberg All News:
Italian and Spanish spreads widened to euro-era record levels and 10-yr gilt yields slumped to record low after recent PMIs added to concern the global recovery is faltering.
10-yr gilt yield -3bps to 2.78%; hit 2.77%, lowest since at least 1989 when Bloomberg began collecting the data, on speculation of fresh QE or tax cuts to boost growth
European stocks fall to 10-month low, Swiss Franc rose to a record against the dollar; 5-yr CDS for France, Italy and Spain rise to records
Although no significant negative headlines overnight, price activity suggests that EU crisis is at imminent risk of worsening
Euribor/OIS spread +4.75bps, 2.7 std devs, to 38.6bps, high since Jan.; 1yr euro basis swap -5.6bps, -2.3 std devs, to -39.0bps, 3rd-lowest since Jan.; all other general risk indicators flashing red
Eurodollar interest rate future yields higher, sign of US$ funding stress
EU peripherals almost all wider, with significant moves for Belgium 2, 10yr, Italy 2yr; record wides for Belgium, Italy, Spain
Swiss franc outperforming all major currencies on risk aversion, new record low vs. euro; A$ underperforming after RBA held rates steady with dovish rhetoric
Barclays Cuts 3,000 Jobs as Investment Bank Profit Declines
All in all, expect continued selling until 11:30 when Europe closes, and the low volume US-based levitation machine takes over.
Is it merely coincidence or God’s work that the pronunciation of “Euro” and the Greek sandwich “giro” are almost identical? Neither at the moment are being digested well, too.
Well, at least we have Europe insulating us to some extent at the present time. As the propagandists say, “US Treasuries are safest place to put your money, you know”. Those Italian and Spanish bonds don’t seem too whoopy right now, do they? This should buy us a brief reprieve to further get our personal fiscal houses in order before Bennie fires up the printing press again. Hmmm. I think I hear them warming up now….
Bomber Ben is flossing the inkjets
and fondling the paper tray
Just askin’, for the sake o’ the ting:
If the PIIGS bonds are crappo despite rising yiels (you will never get your $$$ back), and the Germans are po’d at backstopping the Euro, and the Chinese/Russians don’t issue any bonds,
well,
where ELSE is the world going to park it’s capital besides US Treasuries?
I mean, really, gold? Silver? A whopping mattress? (My personal favs.)
I predict that the world’s capital will flock to US Treasuries, despite what the bozos do in DC about the debt.
After all, in a world of eunuch’s, the man with the vasectomy is still King…..
This isn’t “another crises”. It’s just the same old crises that continues along until it stops.
As I write, the senate just approved the “debt ceiling extension” and gold is up $23.20 and going up like a rocket. Silver even took a jump today. And the DOW is croaking, the S&P blew through its’ 200 day MA going down and the Transport average has lost 161 points – which is an absolutely horrible loss in one day! CNBS is parading “experts” to say now is the time to buy, buy, buy and a market bottom is in!!! If it wasn’t so asinine and such a joke it would be sad.
Move along folks, no news here. It’s just the markets passing judgement on the serial and continuous stupidity, lies and bull shit of those dingle berries that purport to run the place.
This “debt extension” does just that. More debt, no spending reductions, just the same horse pucky going higher and deeper. This will just grease the skids to a faster decent into whatever HELL we are destined to visit.
Doesn’t it just make you feel so good!
MA
Muck, you beat me to it… gold up $23 and rising, Dow just broke through its 12,000 level.
How much longer now?
@HopeZK: How true. The 30 year yield just dropped through 4%, I sold TBF/TBX after loosing about 3% on the trade (more than I usually accept – I was stunned into inaction by what was happening!) as money fleas (sic) into Treasury’s where they are guaranteed (right now) a minimum loss of 6% in purchasing power a year! Insanity but you called it.
I had a vasectomy at 21 and have enjoyed the rights and privileges of that action all my (long, fun) life! I just never saw it put that way before! Love it!
MA
@Thinker: How much longer until what?
MA
I still say we’re more fucked than Europe:
…”We will note, however, that by some measures, the United States is even more deeply in hock than Greece.
Greece’s debt-to-GDP ratio is 143%. America’s is officially 97%. But the $14.3 trillion national debt, stacked up against a $14.7 trillion economy, doesn’t tell the whole story.
• $14.3 trillion: “Official” national debt
• $5 trillion: Amount Uncle Sam is on the hook for Fannie Mae and Freddie Mac
• $62 trillion: Total liabilities and unfunded obligations for Social Security and Medicare
And that doesn’t count the black box of bailouts.
We know how much the Federal Reserve doled out in emergency loans: $16.1 trillion between Dec. 1, 2007, and July 21, 2010. We know that because yesterday the Government Accountability Office completed its first-ever audit of the Fed, made possible largely through the persistence of Rep. Ron Paul making that audit, however incomplete, the law.
What we don’t know is how much of that has been paid back. “We have literally injected about $5.3 trillion,” said Dr. Paul last week during his questioning of Fed chief Ben Bernanke, “and I don’t think we got very much for it. The national debt went up $5.1 trillion.”
Bernanke did not challenge those figures.”
Gold up $40. Can’t wait to see what happens on all the world’s markets…
They are piling into EDV Vanguard Long Treasuries for safety and will ride that until it stops at around125., now at 92. Then I bet they will really pile into AU. There will be nothing left that is worth a shit.
Gold up 39. today, cannot believe it. Shows how much the gold bugs think of the new debt ceiling agreement. This debt time bomb is gaining momentum, we are truely fucked. Unemployment is gaining, industrials tanked today, so lookout below.
The new dynasty, government employees, are about to get thrown under the bus.