Wednesday, November 23, 2011

Eurout of Here?

Europeans just seem determined to put a wet blanket on our Thanksgiving:

Investors began to fear the worst for the euro after unusually weak demand at an auction for bonds from Germany, the region’s largest economy. One analyst went so far as to put the currency on a “death watch.”
The Germans seem determined to march the Euro over the cliff, and nobody else seems to have a clue how to get out of the parade.  Of course if we pretend nothing is happening, maybe it won't - doesn't that usually work?

The bottom line is that a bunch of people are going to lose a hell of a lot of money - the MF global investors seem to have claimed the first place in line.  Others are trying to scramble to the back of the line or get out before everybody figures out where they are.
Investors had kept buying German bonds as they fled crisis after crisis in the region: first in Ireland, then in Greece and Italy, and now in Spain and Belgium. But Wednesday, 10-year bunds dropped significantly after the failed auction, pushing the yields above 2.05 percent, but perhaps more importantly above the U.S. treasury with the same maturity for the first time since early October.

“We are seeing the end of the euro currency as we know it,” said Brian Stutland of Stutland Volatility Group. “I don't see a single thing that causes the euro to rally other than the Fed announcing a ‘QE3’ in which they buy euro foreign debt.”