It's all unraveling, and it's all quite fugly. That article I linked some time ago whereby Roubini spoke of the 'failure of a Sovereign?' He's not the only one, and the whisper rumors that are becoming louder and more frequent are that it could be either Spain of the U.K. Here's a tribute to the U.K. financial system and Bank of England (not the British people), which I believe is a festering, steaming pile of diptheria: <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/o4ddpFDC63Y&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/o4ddpFDC63Y&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>
all of your post are insightful and interesting, but this one is moreso you may be more right than you know a man had a dream, and in that dream 3 countries defaulted on their international loans during a two week period and the third country was mexico which owes the usa 80% of it's 100 billion loans i could tell you more of the dream, but it wasn't pretty and after all, it was just a dream Peace
A wave of mutilation??? WTF ??? I can see things getting pretty bad, but thats a total waste of explosives when he coulda just jumped off the cliff !!!
that music is the Pixies "Wave of Mutilation" except it's a slowed down wimpy acoustic version. Go to Youtube and listen to the original and avoid the covers like the Placebo cover. One of the best US bands of the early 90's. Play loud and turn up the bass. On the European country default dominos falling, look to the credit default swaps on sovereign debt pricing as (admittedly somewhat flawed) indicator. It places Ireland as the riskiest man standing in the eurozone. Generally think "PIIGS": Portugal, Ireland, Italy, Greece and Spain. The smart money apears to be betting against them. Then consider Austria which has 75% of its GDP extended as loans to ECC (eastern and Central Europe) as loans denominated in their various crappy currencies like the sinking Hungarian forint. Top that up with the fact that a lot of UK and Irish punters bought holiday homes in ECC countries and Spain too during the boom. The UK have decided upon quantitiative easing in a big way which will collapse their currency at say 18 months to 2 years from now (who knows when exactly). I think Bernanke's Oscar worthy performance on 60 minutes was to placate a very worried US public. I'm headed to the UK and Ireland next week (in NYC now where I live) and will be speaking to many business people in person, so I'm sure I'll pick up some tidbits.
oops, on the Hungarian loans I meant to say repayable out of crappy sinking forints. They are not "denominated in forints". Apologies.
Funnily enough, the mkt went completely the other way last week. Partly due to the equity/risk asset rally, EUR sov CDS tightened quite significantly. Spain 5y moved in almost 30bps, while Austria 5y tightened 84bps. The latter was probably, to a large extent, driven by the SNB decision to weaken CHF (and the relief for EM Europe that it provides), as well as the larger IMF mandate that can be used to resolve liquidity issues at the CEE banks.