Europe Is *NOT* “Safe”


For anyone who is interested in what happens when you refuse to deal with reality and instead lie over and over when it comes to debt levels, you need to look at what the morning looks like for European debt this morning

Greece 2 year 34.5% $66
Portugal 2 year 21.2% $78.50
Ireland 2 year 23.3% $77.80
Italy 2 year 4.65% $95.66 *
Spain 2 year 4.55% $96.5 *

Italy and Spain are now moving, and the others are basically a lost cause.  20+% 2 year rates are not interest rates, they’re implied recovery rates.

The problem with what we have going on right now in the United States is that this is not just about raising the debt ceiling.  S&P has made clear that if they do not see $4 trillion in credible 10 year debt reduction (not the “back-loaded” garbage that has been put forward time and time again, including by the CBO, but has proved time and time again to be lies) they will downgrade the United States.

Egan-Jones did downgrade the United States this morning (will be Tickered separately when the video shows up on CNBC’s web site) – and in my opinion, correctly.

The reason is simple: There is no credibility within Congress on these issues at the present time, nor any reason to believe that problem will be addressed.  Instead, Congress and The Administration – both sides of the aisle – will play politics and lie.

The problem is that while you can lie to people, you can’t lie to mathematics, and the inevitable and factually-known consequences from a standpoint of mathematical relationships will assert themselves unless your behavior changes.

Either Congress changes their behavior – now – or we’re next.

The Market-Ticker
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