1000 words (part 5)

IT, POR / GER 10 year bond spread

Bloomberg chart -- It/Ger bond spread

pretty good measure of European stress

also, A E-P article on Portugal

Here's the bloomberg POR/GER 10 year spread

zerohedge on fire today

www.zerohedge.com

• Bank Downgrades Jump The Atlantic: S&P Cuts Italian Intesa Sanpaolo, Mediobanca From A+ To A
• Moody's Goes For Trifecta, Downgrades Citi Short-Term Rating Of Citi From Prime-1 To Prime-2
• Double Tap For Octogenarian Of Omaha: Wells Downgraded From A1 To A2
• Suck It Up Warren - Moody's Downgrades Bank Of America From A2 To Baa1
• 'Twist' Sends Ultra Investors Shouting With 30Y Treasury Yield Back To Jan 2009 Lows

China to 'liquidate' US Treasuries, not dollars

Ambrose in the FT

pullout:

The Chinese are clearly vexed with Washington, viewing the Fed's QE as a stealth default on US debt. Mr Li came close to calling America a basket case, saying the picture is far worse than when Ronald Reagan and Margaret Thatcher took over in the early 1980s.

Mr Li, one of three outside academics on China's MPC, described the debt deals on Capitol Hill as "just trying to by time", saying it will not be enough to stop America's "debt dynamic" turning dangerous.

Europe -- CDS and yields

PIIGS credit default swap info, from MarketTicker: "CDS spreads on the PIIGS (composite), ...is up an astounding 60% today"

And from Mish, bond yields:
"On a spread-basis, the only country whose yields have collapsed is Ireland.
Italy, Belgium, France and Spain are at or close to spread highs. Also note how France is creeping up.
On 1-year spreads, Italy, Spain, and Belgium are at new highs, suggesting the ECB is losing the containment war on Italian bond yields."

Yield Curves -- Germany going to recession (or just bailout business?)

From Wall Street Transcript, via yahoo (my bolding):


Edward M. Dempsey: The German yield curve is beginning to invert. Yield curves should be positively sloped if all is well since it reflects healthy demand for money. When you get an inverted yield curve, it is a very reliable harbinger of a coming recession. It reflects concerns of an economic slowdown and deflationary period. So now you can have a scenario where if Germany enters recession, and given that Germany is the strongest link in the euro chain, what happens to Greece, Italy, Spain and Portugal? In that kind of a scenario, German public support for the euro can very, very quickly evaporate. Everyone is worried about Greece being kicked out of the euro, but what if you wake up and Germany says, "We are out of the euro"? I don't believe that is outside the realm of possibility.


Image from mish:

Interactive Chart from financial times:

The $1 Billion Armageddon Trade Placed Against the United States

link to article