IS THE CDS MARKET SENDING A WARNING SHOT AGAIN?
As the problem of debt refuses to go away and in fact, quietly spreads, we’ve seen another slow development over the course of the last few weeks – problems in Greece appear to be worse than originally expected and credit default swaps are sending warning messages again. The term structure in Greek CDS recently inverted as investors are now increasingly concerned of a default in the next few months. This is something we saw in 2008 before the financial markets nearly collapsed. That time the inversion was in Lehman Brothers and Merrill Lynch CDS.
As the problems in the banking sector unfolded in late Summer 2008 the sovereign debt of the big three developed nations began to skyrocket before reaching a crescendo in early 2009. What’s alarming with the situation in Greece is the similarities in CDS price action. The recent uptick could be serving as a warning flag of things to come in 201o and 2011 when the problem of debt has potential to rear its ugly head again. Barclays might not have been too far off when they said the probability of a crisis would grow in 2010.
Greece,Iceland,Spain–
who you gonna call–Debt Busters !
It’s ok, Helicopter Ben will lend his magic alchemy device, the printing press, to the Europeans. All will be bailed out, all will be saved, and we will pretend like we really hit shore when in reality we just exited the eye of the storm.
I swear to you, had they lived 500 years ago, Bernanke & Co would have pursued alchemy and attempted to turn a piece of dog crap into a bar of gold. Isn’t that after all what’s happening with the great Citi experiment? I’m starting to think that Saluzzi was right, the market really appears to be a lagging indicator. $7B loss, no one understands their balance sheet (the company is insolvent after all, transparency is highly disruptive to business), and up we went yesterday.
But heck of a day today: we fail to penetrate 1150, the dollar breaks short-term resistance, and the s&p appears to break short term support at 1132, all in the first few hours! Isn’t a top most likely when no one is on the lookout for it?
Problems in the Euro zone seem to be building. At the same time the market’s voting machine gave the thumbs up to the $US in the aftermath of a Republican winning Ted Kennedy’s old seat. Many see this, or hope to see it as a defeat for big government programs in the US. And probably correspondingly lower expectations for a big dollar route. So the dollar rallied against most major currencies.
It likely also brings some degree of comfort to business owners in the US. Where the threat of Obamacare and other big spending programs has been a psychological impediment to moving forward. They didn’t know what to expect, except that it would be bad for them.
I am going to attempt to provide as educated and detailed response to all of this I can,
It is wonderful that Republican Brown beat cokely “yes I did use lower case.
BUT! we, “Republicans” even with the temporary majority we held several years ago are still in this because we were enjoying the ride of carefree money. Make no mistake, all in Washington are responsible, except for maybe Ron Paul! NO! Except for Ron Paul.
We are but a mere second away from the last turd down the toilet! Shortly folks we will all be looking like the poor people of Haiti. Looting, burning and killing our neighbor for a crumb of food, rather than come together and help each other. Begging those Nations and persons who tried to help us and warn us of our greed to come in and now save us!
Foooie! We deserve the punishment. Salute!
Predictions 2010:
The Collapse Of The Euro- With Germany having such a different economy than the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) the weaker economies of the Euro region had a choice- to leave the Euro or to suffer massive deflation (since prices where too high and devaluation impossible due to the fact that they didn’t have control on the currency). Massive deflation meant budget deficits north of 10% of GDP and with no monetization possible the sovereign debt market of the PIIGS started to collapse. Some countries tried to cut the budget, which brought severe civil unrest while the economy continued to detoriate. Others refused to physically reform which resulted in further revolts in their sovereign bond markets. The first domino to fall was Greece- when the yield on the 10 year government bond reached 8% percent it was clear that without a bailout from Germany they where bust, and bust they went. Like after the collapse of Lehman Brothers, the collapse of Greece caused a general panic in the markets, with government bonds of the rest of the PIIGS collapsing since it was clear that Germany will not bail them out. European banks refused to lend to each other and the havoc was over only when the rest of the PIIGS left the currency.
http://israelfinancialexpert.blogspot.com/search/label/predictions%202010
All of the hand-wringing, fingerpointing, doomsayers elaborations are meaningless!
The privately-owned CENTRAL BANKS ARE THE PROBLEM AND DISSOLUTION OF THEM THE SOLUTION!! We need to disclose who these proprietary owners are, confiscate
their fortunes and return the wealth to the general populations from which it was stolen! To create “money” out of ‘thin air’, put it into circulation where it
waters down the purchasing power of existing money (called ‘INFLATION’ to
obfuscate the scam!!)and then charge INTEREST TO TAXPAYERS RESPONSIBLE FOR
PAYING BACK THE ‘LOAN’ IS MORALLY UNCONSCIONABLE, CRIMINAL AND ILLEGAL!!!
We should start with the so-called “Federal Reserve System” in the U.S.A.
and bring out the GUILLOTINE for a quick “dispatch’ of the conspirators!!!
All we need is an “enlightened World Dictator” (Of course, the problem then would
be getting rid of him/her!!!)
Sawadee kab. I think you should all try to get to relax. Welcome to down the drain. If you call it ‘Down the toilet’ ,well it works. Do you know why, coz when something you splash down, it needs to be collected, cleaned and then back on track to do the same again. It is like riding a bicycle , you must move forward to keep a balance. So let the crab moving. Coz only these ‘Great fellows’ can show you how to recycle. Look , at the end, mind precides all phenomenon, so why not to keep it clean and relaxed. Leave it for them to create, take resposibilyties etc. You sit back easy and relax. That is their phenomenon what they create. We as nation and people cannot go against it , fixing it. But we can catch it, clean it and give it to them back for higher values that money are. they would wonder how it happend. And welcome to Thailand. It is a country that has the real phenomenon. Here the poor smiles. In there the poor cries. Try to default, it is nothing wrong and no need to be shy. Just smile, your mind you cannot buy.
Good investing
Dear Sirs,
I beg you the superior grace not to repeat the use of the acronym by which some people pretend to designate the (economics of) Mediterranean countries – “invented”, if I am not mistaken, by a schizophrenic creature that writes for the telegraph and passes to be a economist since the day he had the idea that Europe should have adopted the pound instead of the euro.
It is a rude, histrionic barbarity, adopted by barbarians. Please notice I’m not accusing this people of sleeping over their own vomit and/or urine. Just remembering that, at end of the day, I’ve seen a fair amount of compatriots of them that wouldn’t be proper to describe as unsoiled people.
I will not be ungraceful to the point of reminding the regrettable fact that those people exited the pig stalls were his ancestors used to live precisely because of the Mediterranean civilizations with whom they have learned almost everything that is worth to be known in this business of being alive.
I would suggest them to respect themselves in order to be worth of respect.