Uncontained, Again.

It may have originated in the eurozone, but the current crisis looks to be following along the lines of the one that began in the U.S. subprime mortgage market four years ago. That is, a problem that authorities assured us was "contained" (the Bernank's famous last word) and resolvable has morphed into one that is uncontained and more dangerous by the day.

As the chart shows, an average of credit default swap (CDS) spreads for 71 countries around the world has now surpassed the peak seen in September and is hitting its highest level since April 2009. (Simply put, CDS are bets on the creditworthiness, or lack thereof, of a particular borrower.).

While skewed higher by fiscal basket cases such as Greece, in particular, Portugal, Venezuela, and Pakistan, the overall trend is clearly to the upside -- which is not, despite repeated assurances from those "in charge," a good thing (unless, of course, you're a clueless equity trader who still doesn't quite understand why credit markets matter).

Time to get those helmets on?

Comments

[John G.]

Nice chart, Michael.

I think the more important date is that spreads are now where they were back in September 2008.

I forget; did anything happen shortly thereafter?

[Rich B.]

Michael,

Great chart.

Any thoughts on CDS rates after the ISDA effectively invalidated the Greek swaps?

Thanks

[Collateral Dysfunctional Syndrome]

As the World Crumbles: the ECB spins, FED smirks, and US Banks Pillage

Today, the stock prices of the largest US banks are about as low as they were in the early part of 2009, not because of euro-contagion or Super-committee super-incompetence (a useless distraction anyway) but because of the ongoing transparency void surrouding the biggest banks amidst their central-bank-covered risks, and the political hot potato of how many emergency loans are required to keep them afloat at any given moment. Because investors don’t know their true exposures, any more than in early 2009. Because US banks catalyzed the global crisis that is currently manifesting itself in Europe. Because there never was a separate US housing crisis and European debt crisis. Instead, there is a worldwide, systemic, unregulated, uncontained, rapacious need for the most powerful banks and financial institutions to leverage whatever could be leveraged in whatever forms it could be leveraged in. So, now we’re just barely in the second quarter of the game of thrones, where the big banks are the kings, the ECB, IMF and the Fed are the money supply, and the populations are the powerless serfs. Yeah, let’s play the ECB inflation game, while the world crumbles.

http://www.nomiprins.com/thoughts/2011/11/21/as-the-world-crumbles-the-ecb-spins-fed-smirks-and-us-banks.html

[NO QUESTIONS ASKED]

LISTEN...

MFG Facts

A talk with the founder of MFG Facts website. MFG Facts s a repository for truthful information and commentary on the MF Global bankruptcy. It is intended to be a source for all interested persons. MFG Facts does not represent an organization or commercial interests.We do not collect information on users. If you subscribe to updates , the information you provide will be used for that purpose only. The e-mail address you enter is not public, shared in any way, or displayed on this site. It will always be private. We can't stand spam as much as you!We have no interest in who you are. Our only purpose is the truth behind and around the MF Global bankruptcy.
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http://www.youtube.com/watch?v=LaobXsB1fnA&feature=youtube_gdata

http://www.youtube.com/watch?v=LaobXsB1fnA&feature=colike

[Duke of Dorset]

Notice how no one minds when the company issues gargantuan debt, pays it all out as dividend, then goes bankrupt which then bankrupts employees..hmmm

THE RETURN OF DEBTORS PRISONS: Collection Agencies Now Want Deadbeats Arrested

As if life wasn't already tense enough for Americans who can't pay
their debts, collection agencies are now taking advantage of archaic
state laws to have some debtors arrested and sent to jail.

More than one-third of US states allow debtors to be arrested and jailed, says Jessica Silver-Greenberg in the Wall Street Journal.

http://finance.yahoo.com/blogs/daily-ticker/return-debtors-prisons-collection-agencies-now-want-deadbeats-172417607.html?l=1

[roger]

Ah...Change, ever tried to stop the clock?
We are at the apex of Capitalism, it has accomplished
it's objective of growth,now starts decay.
The global grab for world resources is already on,
and we are only 312 million population out of 7 billion,
add to that severe climate change.And there is no pill
for dysfunctional human brains.

[We slipped on a peel and we can't seem to get up]

Tuesday, November 22, 2011
The United Banana Republic of America
The outright corruption and thievery at the highest levels of business and Government have gotten to the point at which its hard to not think of our country as little more than a glorified banana republic. I remember that I had a friend in business school who's father was an ambassador to a Central American country. My buddy told me that Central American high level bureaucrats at official cocktail parties achieved honor, social status and bragging rights based on the relative amount of U.S. aid that each guy diverted into their own pocket. I get the feeling that the same thing happens now among the banking and business elite, as they achieve social status based on the amount of taxpayer and investor money that they walk away with. Obviously this is predicated on their ability to plant key people into key spots in the Presidential administration. With the Bush administration it was defense companies, who had their de facto President sitting in the office of the Vice President (that would be Cheney). In the current administration, it's Obama's chief of staff, a former JP Morgan director, the Treasury Secretary - who is in effect a big bank puppet - and the Chairman of the CFTC - a former Goldman Sachs partner and butt-buddy of Jon Corzine.

http://truthingold.blogspot.com/2011/11/united-banana-republic-of-america.html

[Michael Panzner]

Rich B.: Not really sure, except it creates yet another layer of uncertainty in an increasingly risky world. That said, I expect many of the instruments created and agreements struck during the boom times will eventually be worth less than the paper they are printed on.

[Discount Air Jordan]

In the current administration, it's Obama's chief of staff, a former JP Morgan director