I’m travelin’ down the road,
I’m flirtin’ with disaster.
I’ve got the pedal to the floor,
My life is running faster.
I’m out of money, I’m out of hope,
It looks like self destruction.
Well how much more can we take,
With all of this corruption. – Molly Hatchet
Did you think just because Greece voted to accept more money from the EU that everything was “fixed” again? Not by a long-shot. That’s like your cousin getting out of jail and hitting you up for a loan that you know you’ll never see again “fixing” the family’s finances.
While little Greece may be able to slide by for a few more months now, this does nothing for Spain and Italy and we’ve already had a rally that anticipates some massive G20 action and today the clown college meets in Mexico and it’s put up or shut up time for our Global leaders.
SocGen analysts predict the Fed will unveil a $600Bn QE3 program at its meeting on Wednesday AND extend the existing Operation Twist but it’s not enough without firm commitments from the EU and $600Bn from those guys is NOT going to cut it. We had a nice pop in the Futures last night but now the clock is ticking and every hour that goes by without a firm announcement of more stimulus will take more wind out of the markets’ sails – you can’t just jawbone the Global Economy anymore – hopefully our “leaders” finally realize that.
Spain’s 10-year bond yield went UP this morning, to 7.08% – a completely unsustainable amount and Italy hit 6.12% – a very unsustainable amount. On the bright side, Greece’s 10-year bond yields pulled back 62 basis points – all the way down to 26.51% on the “good news” following the election. So if Spain and Italy are fixed the way they “fixed” Greece – we’re all DOOMED!
Bad loans held by Spanish banks hit an 18-year high in April, data from the Bank of Spain shows, with 8.72% of loans over three months in arrears. The total number of nonperforming loans is 10 times the level of 2007, the peak of the property boom. The data explains why 10-year yields are surging. “Yields are at levels at which Spain…