CDS spreads should widen now and extend to Spain and Greece from an Irish bank implosion coming soon. Another Eurozone/ECB bailout? With the trillion plus EU bailout that will disappear into banks extreme black holes; balance sheets are in a perpetual asset depreciation. Meaning? A major bank de- leverage of debt will take place 'i'e 'realized' and' unrealized' losses will surface right back to the European Central Bank/s.
Major EUR sell coming. European may have to settle for a debt de-leverage while the US prints, still looks like a downside FUBAR for equities.
From the Telegraph 12 Aug 2010:
"Spreads on Irish 10-year bonds reached 297 basis points over German Bunds on Wednesday amid reports the European Central Bank (ECB) is intervening to shore up Irish debt, a reversal of the bank’s plans to withdraw emergency support. The euro fell almost three cents against the dollar from $1.32 to $1.29.
Patrick Honohan, governor of Ireland’s central bank and a member of the ECB’s council, dismissed the bond jitters as yet another spasm by jumpy and emotional markets.
“The spreads are a setback for our hopes of a narrowing to reflect the fiscal credibility of the country. I don’t look at them every day but at this level they are ridiculous,” he told The Daily Telegraph, speaking at his office in the heart of Dublin."
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