Thread: European Bond Market Meltdown; PIIGS

Friday, November 12, 2010

European Bond Market Meltdown; ECB is Buyer of Only Resort for Greece, Ireland and Portugal

Thing's don't matter until they do. Ireland finally matters. So does Portugal. The big event happens when Spain and/or Italy matters, and that is just a matter of time.

In the meantime, a huge feud is developing between European Central Bank President Jean-Claude Trichet, Bundesbank President Axel Weber (the likely successor to Trichet), and German Chancellor Angela Merkel.

Right now, ECB’s Trichet Is Buyer of Only Resort as Debt Crisis Worsens. http://noir.bloomberg.com/apps/news?pid ... x__IctFSIU

European Central Bank President Jean-Claude Trichet is the buyer of only resort as the euro area’s bond market melts down.

Just six months after he threw out his rule book to prevent Greece’s debt crisis from splintering the euro area, the 67-year old Frenchman may again be the only policy maker able to prevent the collapse in Irish and Portuguese bonds from spreading. That may require him to ignore opposition from Bundesbank President Axel Weber to the ECB’s bond-buying program and expand purchases of sovereign assets, according to Citigroup Inc. and Royal Bank of Scotland Group Plc.

“The ECB’s lack of action is puzzling to say the least and begs the question as to whether it’s fulfilling its financial- stability mandate,â€

Thursday, November 11, 2010

Irish, Portuguese, Spanish Bond Whacked; France Joins Germany in Proposals to Make Bondholders Share the Pain; Trichet Supports "Extend and Pretend"

A pair of articles on Bloomberg highlight the ongoing mess in Europe. Please consider Irish Debt Falls for 13th Day on Default Concern; Bunds Climb http://noir.bloomberg.com/apps/news?pid ... w4jXGisDk4

Irish government bonds tumbled for a 13th day on mounting concern that the nation will be forced to restructure its finances.

Spanish bonds also headed for a 13th day of declines as data showed the nation’s economic growth stalled. French Finance Minister Christine Lagarde said yesterday that investors must share in the cost of safeguarding sovereign debt. German bunds advanced on demand for the safest assets, while Portuguese debt recovered from earlier losses. Italian bonds fell.

“Lagarde’s comments mentioned restructuring, and that’s another nail in the coffinâ€