Saturday, July 21, 2012

About Spain: Don't say you weren't warned!

Now I'm not saying that I am any smarter than the average market prognosticator but....

You can't turn on Bloomberg or CNBC these days without being told by some analyst that the U.S. economy is in decent enough shape and that stocks represent good value at current levels.

Of course there are headwinds they say such as the "financial cliff" facing the U.S. if the clowns in Washington allow spending cuts and tax increases to hit in the new year, a lack of jobs with no sign of better jobs creation anywhere in sight, potential for an economic slowdown in China, the U.S. economy double-dipping, food prices skyrocketing due to drought and of course that old standby the EU debt crisis.

Despite all of that the stock markets in the U.S. seem to shake it all off  rallying on good news and bad because, after all, Ben Bernanke is off in the wings waiting and willing to do more of what hasn't worked over the past few years. It's all enough to make a rational thinker wonder why it would start working now?

Here at The Political Commentator we are not so easily fooled or convinced of things. Our eyes have been on what we consider to be some of the more critical indicators which are the ones that the true arbiters of direction place their bets. That is sovereign debt and CDS swaps.

Specifically, as the laundry list of articles below shows, Spain has been of particular focus here because unlike Greece it is a country that may be big enough to actually bring the EU to its knees. If it's coupled with problems in Italy then EU armageddon might be an absolute certainty.

This chart shows that the global markets might soon be heading towards a harsh and turbulent endgame as the Spain 10-year government bond spiked well above 7.0% on Friday, a yield level deemed by most "experts" to be unsustainable!

Remember that just like at the racetrack those players with the best chance of winning watch the smart money and don't listen to the shills or follow the heard. The same thesis holds true in the financial markets.

Remember, you've been warned!

Recent articles from TPC concerning Spain and the rest of the EU PIIGS!

Global Bondageddon? – May 18, 2012

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