In this week’s Off the Cuff with Mish & Chris podcast, Chris and Mish zero in on:
The Europe Disaster
- With the the yields on sovereign debt skyrocketing and Greece potentially rejecting the recently-announced bailout plan, is the European financial system in danger of collapsing in the near term?
- With the the yields on sovereign debt skyrocketing and Greece potentially rejecting the recently-announced bailout plan, is the European financial system in danger of collapsing in the near term?
- MF Global
- What’s the significance of the unexpected and instant collapse of this key broker?
- What’s the significance of the unexpected and instant collapse of this key broker?
Unlike during the past several weeks, the markets are now finally beginning to react negatively to the growing amount of bad data and developments. Portugal is looking like the next contagion victim. The dominoes are starting to fall, and bond spreads are beginning to rise out of control. The pace of the efforts to plug the increasing holes in the European dike should accelerate from here.
Chris estimates a much bigger bailout than is currently being discussed — somewhere in the range of $2-3 trillion — will be needed to meet the near-term needs for Greece. Yet Mish anticipates that money printing will exacerbate the sovereign debt yield problem, and he thinks it will be extremely hard for Germany to agree to increasing the size of the current bailout.
The fear here is nothing short of the breakup of the European monetary and banking system — and possibly the EU itself.
by travlin