By: Nadeem Walayat / Market Oracle
The global banking system that publicly went bankrupt during September 2008 prompting government interventions in the form of capital injections, buying of toxic assets, insurance of bad debts and even outright nationalisation’s has started to bankrupt the states that bailed them out, starting with the smaller states with Iceland setting the ball rolling, and this year the bailiffs came knocking on the doors of the Eurozone club members, with first Greece, and now Ireland requiring a Euro-zone bailout (German) to prevent debt default bankruptcy, where if one falls then soon would all of the dominos tumble.
The Euro 200 billion bailout out of Greece and Ireland is in the form of a series of loans set at a 5% interest rate, against which one can measure the relative credit risks in the market as theoretically 5% should be seen as a cap with the view that market rates should be below the 5% bailout rate. However the bond markets are NOT responding positively to Ireland’s bailout as they had done during May’s Greece bailout, which is evidenced by the yields on 10 year euro-zone sovereign bonds rising across the board:
Greece’s 10 year yield continues to trade at a high 12% despite the Euro 110 billion bailout at 5%, because Greek bond holders continue to discount a highly probable eventual debt default / restructuring as a deflating economy has sent public debt to GDP soaring to 135%.
Ireland’s yield has surged higher to stand at 9.2%, following Monday’s bailout low of 8%, again suggesting debt restructuring given depression inducing public debt at 95% of GDP.
Portugal’s yield has crept higher to a new credit crisis high of 7.1% from Mondays low of 6.7%, confirming that a bailout of Portugal at an estimated Euro 40-80 billion is imminent for an uncompetitive economy carrying a rising debt to GDP ratio at 83%.
Spain’s yield has now crossed above the 5% bailout rate to 5.2%, which suggests that the market is pricing in a bailout for Spain, which is not surprising given the exposure of Spanish banks to Portuguese debts, official debt is put at 64% of GDP but this does not fully take into accounts Spanish banks bad debts that as with Ireland could easily send Spain’s debt to GDP to well over 100%.
Italy’s yield has trended higher to 4.42% putting Italy firmly in the queue for a debt crisis blowout given that public debt is already at 120% of GDP.
Belgium’s yield rose to 3.7%, which illustrates an elevated risk as a consequence of the failure of the political parties to form a new government and public debt is already at 100% of GDP.
UK – Whilst not part of the eurozone has seen its 10 year yields continue to trend higher to 3.3%, marginally below the recent high of 3.4%. The lower UK yield despite Britains huge debt mountain illustrates the flexibility afforded by being OUTSIDE the euro-zone as it allows Britain to continue to stealth default on its debts by means of printing money induced high inflation that the Eurozone countries cannot do individually I.e. the UK government prints money that it loans to the bankrupt banks at 0.5% to buy UK government bonds at 3.3%, hence why the yields are lower than the likes of Spain and Italy, which acts as a safety valve preventing outright bankruptcy but the price paid is in high inflation, with the doctored official inflation measure of CPI is at 3.2%, the more recognised RPI at 4.5% and real inflation at 6% as the following graph illustrates.
Submitted by cpowell on 05:44AM ET Thursday, September 9, 2010. Section: Daily Dispatches
8:40a ET Thursday, September 9, 2010
Ben Davies, CEO of Hinde Capital put together this piece exclusively for the King World News blog which gives an outstanding synopsis of both the 41 page slideshow presentation and 23 page speech from the rising star out of London. It discusses US government suppression of the gold price and the unsustainable debt of the US & UK. It gives some staggering potential price figures for gold and it is a must read:
Gold Wars – A Golden Renaissance
By Ben Davies, CEO of Hinde Capital
September 9 (King World News) - We are at War. It may not feel like it, but we are. This is no ordinary war. It is not a military war but it is just as damaging because it has brought about a loss of freedom, poverty and an imbalance in wealth. The War I refer to is a Gold War.
I’ld laugh… but it’s…oh heck I’ll just laugh…
~jude
The high-profile financial pundit Max Keiser doesn’t shy away from crystal-clear, unmistakable statements. The following exclusive interview is no exception. Mr. Keiser sees an attack exercised against the majority of people in the U.S., sets out why gold is in no bubble at all, points at a remarkable move by the Harvard University, and has an advice to some US-American billionaires disguised as noble philanthropists: “Just pay your taxes and shut up!”
Max Keiser, born January 23, 1960 in New Rochelle, N.Y., USA, has been involved with markets and finance for 25 years. He started his career as a stock broker on Wall Street after graduating 1983 from New York University.
He is the inventor of the “Virtual Specialist Technology” (US patent number 5950176) – a software system used by the Hollywood Stock Exchange, and is the creator, co-founder and former CEO of HSX Holdings/Hollywood Stock Exchange, which allows traders to exchange virtual securities such as “MovieStocks” and “StarBonds,” and a convertible virtual currency, the Hollywood Dollar. The Hollywood Stock Exchange remains until today the highest volume stock exchange in the world. He currently has a patent pending for “crowd funding media properties” used in his latest creation, “piratefilm.com”.
Mr. Keiser presented / produced TV and Radio formats at NBC, CBS, BBC, BBC World News, and the English programme of Al-Jazeera. For Iran’s Press TV he’s the host of “On the Edge,” and with his co-host, Stacy Herbert, he presents for the Russian broadcaster RT TV the “Keiser Report” (see for more at: http://maxkeiser.com/). In addition, he has appeared as a financial pundit on a number of news-networks.
To his success as a financial analyst belong the following predictions:
- In the September 2004 issue of The Ecologist magazine, Keiser correctly predicted the 2008 collapse of Fannie Mae and Freddie Mac when he wrote, “My guess is that the two stocks that look the likeliest to implode at the hands of derivative-wielding Wall Street financial types (and other fundamentalists) preying on a US economy made weak by cheap money are Fannie Mae and Freddie Mac.”
- In 2006 he correctly predicted that sub-prime mortgage-backed securities would be the cause of recession by 2008.
- In 2007 he correctly predicted the break-down of Iceland’s economy in 2008.
- In 2009 he correctly predicted that Cantor Fitzgerald would fail in their attempt to launch box office futures contracts (based on his intellectual property).
Max Keiser, who’s also a frequent contributor to “The Huffington Post” (http://www.huffingtonpost.com/max-keiser), lives in Paris, France.
Mr. Keiser, in your initial email you wrote to me:
“The key to understanding the current situation is to understand that house prices, jobs, wages, and pensions in the US are all being attacked with original-issue debt dollar junk.
This will continue until the middle class has been completely wiped out.”
Can you elaborate on this, please?
by Jim Willie, CB. Editor, Hat Trick Letter
Neither the US financial press nor the US bank leaders take the sovereign debt crisis seriously. Even the USCongress seems totally unaware of the growing global intolerance for government debt out of control. The issue is rollover of short-term debt, size of the overall debt burden, borrowing costs to sustain the debt, annual deficits that accumulate further debt, and size of debt versus economic size. The United States projects a certain degree of arrogance that foreigner must continue to finance the USGovt debt at a time when the evidence gathers on loud suspicious activity in the USTreasury auctions. The US travels down a road to debt default also, as the mask of corrupt USTBond management is removed. The plight of Europe will strike the United States and United Kingdom, as contagion is ripe. The claim of containment incites laughter. The Euro currency has finally begun to stabilize, which will make all the more apparent a global bull market in the Gold price. The Gold price in almost every major currency is rising. In the US$ it will be last.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_a.png?x-id=2cecf419-66ec-4f4a-9da2-17468b7af815)