Italian and Spanish Bond Yields Tick Higher

Italian interest rates are up 11 basis points this morning.

Spain’s are also up the same amount.

That’s about 5% higher from Friday.

Tick tock.

Day 1. What happens tomorrow?

Bond Attack on Italy and Spain Begins

Spanish bond yields jump
Spanish bond yields jump

Yields are falling in the stronger economies and surging in the weaker ones. Bloomberg:

Spain’s 10-year bond yield jumped 14 basis points to 2.25 percent, set for the biggest increase since June 15. The yield on Italian 10-year bonds climbed 14 basis points to 2.29 percent, having earlier surged as much as 57 basis points.

“The market is seeking haven assets as some investors perceive Grexit risk as being higher now,” said Vincent Chaigneau, London-based global head of rates and foreign-exchange strategy at Societe Generale SA. “That said, we expect to see some stabilization soon. If the Greeks vote to accept the creditors’ deal, then talks can resume and I think most of them still want to remain in the euro zone.”

The Greeks will vote next week to stay in the Eurozone. If that quells bond markets, it may avert a collapse for a while. If it doesn’t, then this is the end game. Unless China keeps crashing and bringing down other markets with it anyway. China is down another 3.5% today.

Greece is out of bailout money; Spain is locked out of bond markets

The New York Times is reporting today (June 6) that Greece is running out of money to pay its immediate obligations. This is mostly because they’re not getting enough bailout money because the bailer outers don’t know if Greece’s next government will agree to the terms of the bailout, and Greece doesn’t have a government yet because the Greeks couldn’t decide whether or not they want to agree to those terms. So another election is scheduled for the 17th, elections cost millions of Euros which the Greeks don’t have, and in the meantime they have no money left.

The terms, by the way, are that Greece must commit suicide if they are to be able to collect on their bailout.

The budget gap is widening as the so-called troika of lenders — the International Monetary Fund, the European Central Bank and the European Commission — withholds 1 billion euros in bailout money earmarked for government financing while it waits to see whether new leaders elected June 17 will honor Greece’s commitments.

Even if the troika delivers that money, Greece will struggle to cover its obligations. It underscored a harsh reality that is playing out in other troubled euro zone economies. Prolonged austerity is making it harder, not easier, for governments like Greece to become self-reliant again.

What the New York Times isn’t telling you is that the ECB is making a nice profit off the so-called Greek austerity, which is only inflating Greek debt all the more. Yanis Varoufakis calls it “ponzi austerity”.

Meanwhile, Spain is complaining that nobody wants to lend Spain money anymore. They warn that if that happens and nobody lends Spain money anymore, they won’t be able to pay back the money they owe to other people who lent them money in the past. So they need new money to pay back previous lenders.

The Ponzi scheme is about to end! Quick! Somebody print some Euros for the love of the Eurozone!

Tomorrow there’ll be something about Italy. Just end this thing already and put Europe out of her misery.