# Has a run on European debt started?



## BillS (May 30, 2011)

Gonzalo Lira: We're In The Middle Of A Run On Europe-And It's Gonna Get Worse

We're In The Middle Of A Run On Europe-And It's Gonna Get Worse
Specifically, a run on European debt.

So this morning, I woke up-and was confronted with some bond market action that was . . . absurd.

Yeah, I know: A spread like that
doesn't seem humanly possible.

Actually, kind of scary.

Yeah, Italian bonds are back to yielding over 7%, Greek debt is ludicrous (28.85%? Really?) as it has been for the last year, Portuguese 10-years are at 11.29%, the Irish at 8.20%, Spain at 6.33%-numbers that more or less fit where we are supposed to be insofar as the PIIGS are concerned, following the whole Greek Drama and Italian Farce, right?

So what's up with Austria's debt? Nevermind France's debt, which is of course higher because of the whole Italy thing-what about Holland's debt? Finland's debt? In short, what's going with the debt of the non-PIIGS who are not Germany?

Take Austria: Their 10-year is yielding 3.63%-which is 186 basis points over Germany's 10-year, which is at 1.77% as I write: In other words, Austria's debt is yielding over twice Germany's.

What was the German/Austrian spread on, say, September 1? A mere 67 basis points, on a German yield of 2.15%.

WTF?

France is seeing historic spreads this morning with the 10-year yield at 3.67%, and Holland-Holland!-seeing wicked spreads as well. Christ, Holland is essentially Germany's Germany insofar as fiscal prudence is concerned-and the Dutch yield is surprisingly wide.

Check out this quick-and-dirty chart, comparing spreads today to spreads back on Sept. 1:

All of these spreads are at or scraping all-time highs. CDS's are also up across the board-even though the two new governments in Greece and Italy are making all the right noises about Austerity and Fiscal Discipline and such.

Again, WTF?

All of these facts and figures and information floated in my head, until all of a sudden, it snapped into place:

*We're about to have a run on the eurozone bonds*.

Like, now-unless somebody does something about it.

The "somebody" of course is the ECB: The European Central Bank has to go out there and put a stop to this incipient run-today.

*Why today? Because tomorrow the French are gonna go out and hawk something like €25 billion in two-to-five year debt; the Spanish are also putting out something like €4 billion. *Here's a link to a handy chart, courtesy of Zero Hedge.

*What will happen if this incipient run isn't nipped in the bud? The French are going to be up shit's creek tomorrow, November 17-and from there, it's only a matter of time before the eurozone disintegrates. *

At my Strategic Planning Group, we've been putting together contingency plans for the break-up of the eurozone. All the analysis is in the "When The Euro Breaks" scenario at SPG-from the best case, to the worst case, to the really worst case.

But up to now, those contingency plans for the break-up of the eurozone were something that I honestly thought wouldn't need to be applied any time soon. Eventually, yes, of course-but not so soon. Like planning for the end of the world, or for your own death: You know it's gonna happen eventually, just not as soon as it actually does.

But now? Sheesh: If the European Central Bank acquiesces to Germany by not going out there and stabilizing the bond markets with some fairly massive purchases, then we are going to see a run on the eurozone bond market. And it'll be just like the 2008 Global Financial Crisis-only instead of conventional weapons (plain old mortgage bonds), this crisis will be with nukes (European sovereign debt).

In a previous post, I'd been thinking that-since the European leadership is so keen to avoid any type of Lehman-like event, and will do literally anything to prevent such a triggering crisis-the likely absence of a trigger might actually prevent a collapse. But now, that might be wishful thinking: An avalanche happens not because a gunshot sets it off-it happens because all of a sudden, there's simply too much pressure.

Like what's happening this morning in the bond markets: No gunshot-just an avalanche.


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## SageAdvicefarmgirl (Jun 23, 2011)

Your analysis looks quite interesting, and if you are right, American banks collapse follows? I am the dunce in the corner on these matters...


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## BillS (May 30, 2011)

I posted the article after I posted the link. I didn't post any analysis. Your question is the million dollar question: When European countries default will that take down American banks? I think it will.


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## UncleJoe (Jan 11, 2009)

BillS said:


> When European countries default will that take down American banks? I think it will.


I don't see how it could be otherwise. The financial communities of the entire world are so intertwined, when the dominoes in Europe start falling there just isn't any way for those of us on the west side of "The Pond" to not be affected.


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## Immolatus (Feb 20, 2011)

Of course it will, as Joe said, how could it be otherwise? The plan is for the ECB and that rescue fund to buy up all these bonds, which is what happenening already anyway. Where are they getting the money for that? Where could they be getting the money? Firing up the printing presses? This must have been the plan all along, right? Were Greece and Germany (seen from the opposite sides of the coin) really so short sighted to not see this coming? That doesnt seem possible, which means that this whole thing was planned all along, just like our own debt situation.
So... by whom, and to what end? I hate to get into the whole NWO and associated conspiracies (my Halloween costume [I went to Nawlins!] was a Guy Fawkes mask with a tin foil hat) but isnt that where it leads? Its the only conclusion that I can see. Am I nuts? Could it be something as inocuous (Hah!) as politicians/banksters getting into the game for the short term, not caring about what happens in the future?
:gaah:


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## UncleJoe (Jan 11, 2009)

Here's a view from an Irish economist. He's not very positive about the outcome of the European financial situation.


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## The_Blob (Dec 24, 2008)

isn't Ireland the second Domino in the 'P.I.G.' collapse?


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## BillS (May 30, 2011)

Immolatus said:


> Of course it will, as Joe said, how could it be otherwise? The plan is for the ECB and that rescue fund to buy up all these bonds, which is what happenening already anyway. Where are they getting the money for that? Where could they be getting the money? Firing up the printing presses? This must have been the plan all along, right? Were Greece and Germany (seen from the opposite sides of the coin) really so short sighted to not see this coming? That doesnt seem possible, which means that this whole thing was planned all along, just like our own debt situation.
> So... by whom, and to what end? I hate to get into the whole NWO and associated conspiracies (my Halloween costume [I went to Nawlins!] was a Guy Fawkes mask with a tin foil hat) but isnt that where it leads? Its the only conclusion that I can see. Am I nuts? Could it be something as inocuous (Hah!) as politicians/banksters getting into the game for the short term, not caring about what happens in the future?
> :gaah:


I think the end game has to be the formation of a one-world government. Societal collapse would create enough turmoil to achieve that. Hyperinflation and the Great Depression created the opportunity for Hitler to come to power in Germany. You can only imagine what kind of world government we'd get if we had mass starvation in the most technologically advanced countries in the world. Whether it's deliberate or not I'm sure there are a lot of people who won't waste a good crisis.


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## partdeux (Aug 3, 2011)

The_Blob said:


> isn't Ireland the second Domino in the 'P.I.G.' collapse?


It's actually PIIGS
Ireland/Italy


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## UncleJoe (Jan 11, 2009)

The_Blob said:


> isn't Ireland the second Domino in the 'P.I.G.' collapse?


 Yes, but it appears that it's not being called "PIGS" anymore. It's now "GIIPS". 
Must be the new politically correct term. 

*The "exposures" of U.S. lenders to major European banks and the stressed nations of Greece, Ireland, Italy, Portugal and Spain, known as the GIIPS, are smaller than those to some of the continent's larger countries, Fitch said. *

U.S. Banks Face Contagion Risk From Europe Debt - Bloomberg


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