Sovereign debt bubble thread

[Admiral Yi]

the crash from this sudden insane optimism today will be quick and spectacular.

Looks to me like a safe haven, not insane optimism.

Wonder what's happing to Swiss securities.

[Iormlund]

Yep. Money is in full flight mode from any potentially affected country now. I know I would do the same if I had any significant savings.

[Admiral Yi]

A problem that could have been resolved months ago with some common sense and willingness to bend a few principles

Please elaborate.

[Zanza]

Looks to me like a safe haven, not insane optimism.

Wonder what's happing to Swiss securities.

Switzerland hasn't paid interest for several months now on its government debt. They also had to set an upper limit on the CHF - EUR exchange rate, which means their Central Bank is willing to print unlimited amounts of CHF to buy Euro if necessary. Ironically, they would only buy safe Euro assets, meaning German and possibly French or so securities. Which will widen the spread to Italian and Spanish bonds. And the CHF goes up to a good degree because people from the Euro periphery look for a safer asset and buy CHF...

[MadImmortalMan]

This action makes me wonder if a big eurobank came close to failing last night.

Jim Cramer just tweeted:

jimcramer Jim Cramer
I believe a major European Bank would have gone under this weekend....That's why they did this....

Maybe I should be worried. If I start thinking Cramer-style I'll have to quit investing.

[Zanza]

I expect that the ECB will start monetizing government debt within days.

France will need 37 billion Euro in December, Italy needs more than 50 billion Euro in February.

[The Brain]

If the Greeks were sent to Madagascar the better areas of Greece could be sold off to pay the debt. As they are now, with Greeks in them, they are worthless.

Or maybe they'll use their freedom of movement and move to the EU country with the best economy: Sweden. 

Unlikely. Here you pay taxes.

[The Brain]

Dumping on Greece, howevery psychically satsifying, is just gross hypocrisy - it is like the corner liquor store owner casting moral opprobrium on the town drunk while counting up his Night Train receipts.

Which is it? Make up your mind.

[The Minsky Moment]

A problem that could have been resolved months ago with some common sense and willingness to bend a few principles

Please elaborate.

Firing a Paulson-Bernanke sized bazooka and committing $1 trillion in real money to the stability fund.  Biting the bullet on the eurobond concept.  Earlier and more aggressive provision of liquidity from ECB to the banking sector.  Shock and awe the market and convince them that Eurozone institutions and member states put the integrity of the single currency as the top priority - even over inflation risks or other particular national concerns.

Instead the member states have convinced the markets that they will rather see the euro fall apart over compromising other principles.  The market reacts accordingly and the prophecy becomes self-fulfilling.

[The Minsky Moment]

I expect that the ECB will start monetizing government debt within days.

France will need 37 billion Euro in December, Italy needs more than 50 billion Euro in February.

It has already happened in fact if not as a matter of policy; the ECB's latest sterilization auction came up short.

[PJL]

There's an interesting article suggesting that the Fed could buy Eurozone bonds in order to prevent a collapse and a subsequent deflationary effect it would have on the US.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8918784/Should-the-Fed-save-Europe-from-disaster.html

[alfred russel]

JR, so how bad do you think things will be? I'm trying to decide between 3 options: not so bad, bad, and very bad.

Not so bad: Plan is to reallocate into canned goods and basic medical supplies.

Bad: society violently collapses. Stores of value will be of little use and will only leave you a target. Plan is to reallocate in guns and ammunition.

Very bad: Rambo might no last a day where we are headed. Immediately reallocate all savings into taco bell and die in an epic binge of gluttony.

[Zanza]

The Taco Bell plan sounds best.

[alfred russel]

There's an interesting article suggesting that the Fed could buy Eurozone bonds in order to prevent a collapse and a subsequent deflationary effect it would have on the US.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8918784/Should-the-Fed-save-Europe-from-disaster.html

I don't know why that would be deflationary; I would think it would be inflationary.

[alfred russel]

The Taco Bell plan sounds best.

It is the only way for a 21st century american to go.