Fears of 'Lehman-style' tsunami as crisis hits Spain and Portugal

The Greek debt crisis has spread to Spain and Portugal in a dangerous escalation as global markets test whether Europe is willing to shore up monetary union with muscle rather than mere words.

Julian Callow from Barclays Capital said the EU may to need to invoke emergency treaty powers under Article 122 to halt the contagion, issuing an EU guarantee for Greek debt. “If not contained, this could result in a `Lehman-style’ tsunami spreading across much of the EU.”

Credit default swaps (CDS) measuring bankruptcy risk on Portuguese debt surged 28 basis points on Thursday to a record 222 on reports that Jose Socrates was about to resign as prime minister after failing to secure enough votes in parliament to carry out austerity measures.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7159456/Fears-of-Lehman-style-tsunami-as-crisis-hits-Spain-and-Portugal.html


Since nobody was brave enough to regulate the CDS monsters, now they're going to run whole countries into default just to get paid off. Moody's is helping them too. If the PIGS fall it will be another round of global outrage towards the banksters.

Portugal, Italy, Greece, and Spain are all set to fail. Yes, there will be another tsunami.

The crisis is worldwide and it's nowhere near being over. Maybe another crash will bring the regulation we need to get the financial house in order again by curtailing the activities of the thieves at the top.

Future generations will wonder why we were so slow to react. This has been going on since the summer of 2007 and nothing has been done.

This will likely impact our economy.

nt

a shit tsunami offshore

Over the past 24 hours, the European Commission added more pressure on Greece to rein in their deficit. Portugal reported weak demand for their bonds at a recent auction while Spain raised its budget deficit forecasts.

Concern about PIIGS default is becoming a self-fulfilling prophecy by driving up credit default swap (CDS) rate spreads on PIIGS bonds.

A Strengthening Downward Spiral Into Default

Credit default swaps, which measure the cost of insuring against a default of debt, continued to rise with Portuguese CDS spreads hitting an all time high. The reason why the market obsesses over CDS spreads is because the higher the spreads rise, the lower bond prices go as investors demand higher yields to compensate for higher perceived risk. This of course in turn makes financing for the PIIGS more expensive, raises their deficit interest payments as a percentage of GDP, and makes them even less creditworthy and less able to borrow funds needed to fund ongoing operation.

That makes default more likely by further feeding the uptrend in CDS spreads and borrowing costs, until these countries are effectively shut out of credit markets as their bonds sink to junk bond levels and yields. They cannot avoid default on obligations coming due without their assumed ongoing access to credit.

EU “Just Talk” Attempts At Mere Spin Control Isn’t Helping

http://seekingalpha.com/article/186890-piigs-default-fears-becoming-self-fulfilling-prophecy?source=hp_wc

And Italy saz "What are you talking about. That pig only has one eye" lol

2/5/10 From John Xenakis blog...
I've mentioned these five countries before -- the Europeans call them the "P.I.I.G.S." All of these countries appear in the same kind of debt spiral as Greece.

If you listen to the pundits, then you frequently hear something like, "Greece cannot solve its fiscal problems by itself. The European Union HAS TO to bail out Greece, because if Greece defaults, then the other four countries will also default."

But then you hear the other set of pundits. They say, "Greece has to solve its fiscal problems by itself. The European Union CAN'T bail out Greece, because if it does, then it will have to bail out the other four countries as well."

Either prospect is very daunting. Greece and Portugal have small enough economies, but Spain has a very large economy, and either a bailout or default would bring down the euro currency.

more...
http://www.generationaldynamics.com/cgi-bin/D.PL?xct=gd.e100205#e100205

I can do about this. Therefore, 'fiddle,dee,dee' :)
Really, all we'll do is work ourselves into a frenzy. The top 1% doesn't care, why should I?

is a whole lot like getting pissed on.

I am working on cashing it all in here and traversing the hill that shit is about to roll down.

and I'm not trying to start a flame war or anything like that, but what can people like us do? My job is a part time one, I'm almost 60 years old and don't really have any long term resources to draw upon.
This isn't a boo-hoo response, because I know I'm not alone in these conditions, my question is, what can I/we do to change any of this?
I'm drawing a blank. I mean there are things like trying to stay out of debt,which I have done pretty much, but as far as having any effect whatsoever on the outcome of this situation, again I say, 'fiddle dee dee, tomorrow's another day' :)

escaping to a country that affords us a life of less struggle. If someone has social security or early retirement it can let you live without the struggle that will come to the former USA. Those that can't retire early at a lower level income are stuck unless a country is found that lets you take jobs from their citizens. But the USA is nearly alone in that insanity, so that's a tough one.

I fought this decline and rape of America for decades in every way short of taking up arms, which I wont do. I'm tired. I'll donate to a few and vote but that's it anymore.

...if that dries up? That could be very bad.

We are literally sucking the credit markets dry and thus transferring the credit crisis to lesser nations.

When there are so many US Tresuries available, why buy the bonds of Greece, Spain or Portugal?

We are forcing these countries into austerity measures because we simply don't want to go there ourselves.

The "power" of having a reserve currency.
:sarcasm: