Europe still can’t turn the page

By Peter Boockvar - December 21st, 2010, 9:25AM

As we are on the cusp of rapping (pun intended) up 2010, one of the main issues that impacted markets that of sovereign European debt problems, remains in full force. After seeing bailouts for Greece and Ireland and now the implementation of a permanent bailout facility we’ve learned that outside of temporarily saving senior bank bondholders, the actions have done nothing to calm investor concerns as funding costs are still very elevated. While markets are thin this week and let’s not read too much into this just yet, and I emphasize yet, French 5 yr CDS today is rising to a record high at 109 bps. They are now above Panama and are approaching Columbia. As Germany and France take on more financial responsibility for their friends, their own respective financials will be more heavily scrutinized. Greek CDS is back above 1000, Ireland’s 10 yr bond yield is back above 9% and nearing a 17 yr high and Moody’s put Portugal on review for a downgrade by 1-2 notches.

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Category: MacroNotes.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

2 Responses to “Europe still can’t turn the page”

Barry Ritholtz Says:
December 21st, 2010 at 10:07 am
Spain bad loan ratio rises to near 15-year high
* Bad loans ratio 5.66 pct vs 5.49 pct in September
* Ratio rises in both savings banks, listed banks
* Weak banks seen as liability for Spain
http://www.reuters.com/article/idUSLDE6BG0RU20101217
RodgerMitchell Says:
December 21st, 2010 at 7:52 pm
Lending to Monetarily Non-Sovereign governments makes no sense. It merely puts them deeper in debt, and as they do not have the power to create money, they cannot service their starting debt, much less the additional debt of the so-called “bailouts.” It is absolutely, positively, mathematically impossible for Monetarily Non-Sovereign nations to survive long term on tax receipts alone. They must have money coming in from outside their borders, because inflation makes their money supply worth less each year.
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Contrast this with Monetarily Sovereign nations, which can service any debt of any size, and do not need money coming in from outside.
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Without fundamental changes, the euro is a path toward depression.
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Rodger Malcolm Mitchell