Rocky Vega

The financial crisis that began in housing, and then with banks and insurers, has now moved onto the balance sheets of nations. And, among the fiscally unsound, it’s the euro that is suffering the most. It recently hit a 14-month low in dollar terms, and the ongoing uncertainty facing the EU continues to break records for pessimism.

According to MarketWatch:

“In early February, the cost of insuring against a sovereign default in Western Europe exceeded the price of similar protection against default by North American investment-grade companies. That was the first time this had happened, according to data compiled by Markit from the credit derivatives market.

“The move ‘symbolizes how credit risk has been transformed from corporate to sovereign risk, as the solution to the financial and economic crisis was government intervention,’ Hans Mikkelsen, credit strategist at Bank of America Merrill Lynch, wrote in a note to investors at the time.”

But it’s not just a European problem…

“Even though the current epicenter of the crisis is focused on the euro zone, the overall fiscal position of the single currency area is stronger than that of the U.S., the U.K. and Japan, he noted.

“‘Unless there is a radical change of course by those in charge of fiscal policy in the U.S., Japan and the U.K., these countries’ sovereigns too will, sooner (in the case of the U.K.) or later (in the case of Japan and the U.S.) be at risk of being tested by the markets,’ Buiter said.”

In response to these market pressures, Greece, and now Spain and Portugal, have begun austerity programs to rein in government spending and get deficits under control. As Daily Reckoning editorial director Eric Fry recently pointed out in the chart below, the US has similar debt funding requirements as the troubled EU countries… but has yet to start acting like the party’s over.

Visit MarketWatch to read more details on the second debt storm.

Best,

Rocky Vega,
The Daily Reckoning

Rocky Vega

Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.

  • Eamon

    This is already baked into the cake…such is the way within the Money Masters’ completely rigged kleptocracy. Maybe the Mogambo has some extra space in his Bunker of Paranoid Seclusion?

  • Pingback: Love Letters For Him

  • Pingback: Trackback

  • Pingback: Trackback

  • Pingback: Trackback

Recent Articles

Extra!
The Greatest Challenge Facing America’s Economic Dominance

Alasdair Macleod

Next month, for major countries will become full members of the Shanghai Cooperation Organisation (SCO). That will increase the population of SCO member states to 3.05 billion. But why should you care? As Alasdair Macleod explains, this move could have a very important impact on the US dollar. Read on...


On Sale: A Precious Metals Play with a Reliable Dividend

Dan Amoss

Precious metals get a bad rap from most investors. But in the midst of so much central bank money creation, they still provide an excellent hedge against inflation. Dan Amoss relays one great investment idea in this sector with plenty of upside potential as precious metals look poised for a significant comeback. Read on...


An Early Stage Opportunity in the Next Phase of 3D Printing

Wayne Mulligan

Over the last two years, few innovations have had as big of an impact as 3D printing. But as important as this technology has become, one new tech story is about to leapfrog over it. And as Wayne Mulligan explains, early investors in this new innovative technology could make a fortune by getting in early...


Laissez Faire
How to Get Free Airfare to Almost Anywhere in the World

Chris Campbell

Traveling the world can be expensive. Between airfare, dining costs and hotel accommodations, travel expenses can add up quickly. And the last thing you want on your vacation is to be stretched too thin. Chris Campbell explains how you can eliminate one of the biggest travel expenses entirely, with one simple trick. Read on...


1990s Flashback: A Blueprint for the Current S&P Rally

Greg Guenthner

The S&P finally closed above 2,000 yesterday - a new all-time high. And that has some investors comparing it to the heady days of the late 1990s, when the S&P soared through 1,000 and didn't bother to look back. But as Greg Guenthner explains, that run up wasn't without its pitfalls, and this one won't be either. Read on...


5 Min. Forecast
“Neofascism” in 2014 America

Dave Gonigam

The fall of the US dollar-based monetary system will happen much like Hemingway's description of how one goes bankrupt: "gradually, then suddenly." And, as Dave Gonigam explains, when the inevitable finally happens, there's one group of investors who will be happy they listened to folks like Jim Rickards. Read on...