Spanish banks are now below the early May lows [May 4, 2010: Spanish Banks Spanked as Contagion Risk Rises] before some 750B euros were pledged to contain the issue (not to mention ECB changing its policy to now buy government bonds). (Click to enlarge)
As for the euro? Again I cannot stress how these moves of such velocity simply should not be happening in currency markets. Quite amazing.
At some point, this euro swan dive is going to be a massive boon to European - namely German - exporters.
Can you imagine such talk in the United States of Debt?
Via Bloomberg: (My comments in parenthesis)
- Chancellor Angela Merkel’s Cabinet is meeting to tie up a “decisive” round of budget cuts that will shape government policy for years to come, fueling disagreement with U.S. officials who favor measures to step up growth.
- The program, a mixture of revenue-raising measures and spending cuts, include a levy on air travel, reductions in tax breaks for the energy industry and a wholesale restructuring of the armed forces, Merkel told reporters in Berlin today.
- Equivalent to about 2.7% of last year’s gross domestic product,...
- “The last few months showed, in connection with Greece and other euro countries, the overriding importance of solid finances,” Merkel told reporters in Berlin today at the end of a two-day Cabinet session called to discuss budget tightening. “Solid finances are the best form of crisis prevention.” (I thought almost unlimited government spending was? Hmm! Obviously a culture clash.)
- Merkel’s government is reining in its deficit and urging fellow euro-region states to do likewise to thwart a sovereign- debt crisis. The savings risk further alienating voters angry at Germany’s 148 billion-euro share of a European plan to backstop the euro.
- German 10-year bunds rose, pushing the yield down to a record low today, as concern the debt crisis may spread boosted demand for the perceived safety of the 16-nation currency’s benchmark securities.
Outrageous quote of the year:
- "We need to take a path that shows we only spend a sum that amounts to our revenue," Merkel said.
If only she was born in the U.S., we'd be looking at the Tea Party Candidate for President, 2016!
Disclosure: No positions