EU Bonds

One solution that seemed to make sense a couple of months ago was the EU, as a union, issuing bonds, so that those with high rates - like Italy, Greece, Spain and the like - can finance with better rates by financing with those with low rates, like Germany. Well, it seems Germany is starting to run into a smidge of a ripple in rates. Nothing too serious just yet, but bond rates is a confidence business and the minute those buying the bonds get a bit spooked, the rates go up. All this means that the prospect of a EU unified bond sale is becoming more problematic. Obviously, there is still a quantum leap between German rates and say Italian rates, but is seems to me a common EU bond will price toward the negative, like Greece, Italy and Spain, and not toward the positive. The buyers are already getting a bit edgy about Germany and the fact that its banks are heavily exposed to EU sovereign debt.

China seems to be slowing too, which is no big surprise. With its biggest export markets sucking wind and a domestic real estate bubble, hard to believe anything else will happen.

Disclosures: None.

Take Your Medicine

Good things come to those who take their medicince up front and put the problem behind them as quickly as possible. Admittedly, Iceland's problems were so severe it had no other choice, but the fact it is already on the rebound is telling.

http://www.bloomberg.com/news/2011-11-23/iceland-s-outlook-revised-to-stable-by-s-p.html

Mama Needs a New Pair of Shoes!!

We have been waiting, and waiting, and waiting, and waiting for that other EU shoe to drop. Perhaps it is a stylish Italian leather shoe or a spicy Spanish one with big flaps and straps sticking out. Is a French stiletto soon to be in the mix? Ireland isn't known for its shoes and I am pretty sure the same can be said for Greece and Portugal. But somewhere out there is a major shoe about to drop and - pleeeeaaassseee - let go of that sucker already, cause Mama needs a new pair of shoes.

http://www.reuters.com/article/2011/11/21/eurozone-idUSL5E7ML3UK20111121

Pressure is mounting and the chess pieces keep moving but I have yet to hear anyone (who has no direct stake in the game) say that the EU can work this out without some major defaults. It is going to happen . . . I almost hear the wind around a falling shoe shaped object. Yes Spain and Italy - as in the too big to save category - are both seeing unsupportable financing rates on their bond sales. France is facing a possible credit downgrade. New leaders in Greece are not ready to announce good plans yet (like they have one) . . . and on and on.

This side of the pond, the "not so" supercommittee failed to make their recommended cuts - surprise, surprise, surprise!! Seriously, did anyone think that a committee split between Dems and the Dem nots would agree to over a trillion in cuts. Heck, they probably cannot agree on where to order lunch.

http://nbcpolitics.msnbc.msn.com/_news/2011/11/21/8934763-panel-fails-to-cut-deficit-12-trillion

Add in Hank Greenberg (die already) suing the U.S. government for $25 billion over a loser company the U.S. spent way, way too much saving and it really is a nice mess.

http://www.businessweek.com/news/2011-11-21/greenberg-s-starr-sues-u-s-for-25-billion-on-aig-bailout.html

Perhaps China is ready to swoop in and save the day - NOT. Japan is sucking wind and where do you think emerging economies will be when the EU and US are screwed. Yep, I am seeing roses coming up everywhere - especially in New Hampshire in late November.

Disclosures: None.