Eurozone debt contagion has firmly ensconced itself in the core: an auction of €6B ($8.06B)...


Eurozone debt contagion has firmly ensconced itself in the core: an auction of €6B ($8.06B) of German 10-year bonds attracts what was apparently the worst demand on record. Total bids amounted to €3.889B, or 35% short of the total available. The yield was 1.98%.
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Comments (30)
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    Who would buy ANYTHING with a yield of 1.98%? Now the German low yield starts biting and people will move stuff back into dividend paying equities.
    23 Nov 2011, 05:52 AM Reply Like
  • Wexboy
    , contributor
    Comments (148) | Send Message
     
    The same bloody people who are buying US Treasuries at 1.93%, I guess...!!
    23 Nov 2011, 08:26 AM Reply Like
  • Jake Huneycutt
    , contributor
    Comments (1422) | Send Message
     
    US treasuries at 1.93% are a steal compared to German bonds at 1.98%. Not saying US treasuries are a great investment for a retail investor; but German bonds are much, much, much riskier than US treasuries right now.
    23 Nov 2011, 09:24 AM Reply Like
  • mP1
    , contributor
    Comments (386) | Send Message
     
    Did they fire the wizards who wrote the good news scripts for October ?
    23 Nov 2011, 06:07 AM Reply Like
  • credit_man
    , contributor
    Comments (180) | Send Message
     
    @truffeIpig
    your statement shows hows weak is your knowledge of who are the buyers of gov bonds...!!! certainly not the "people" you are refering to,,,,
    reality is that both primary dealers and real money accounts are on strike due to heavy losses on gov bonds activity as a whole
    23 Nov 2011, 06:48 AM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    "On strike" - lol. Ok, you must be a specialist. I do understand that the buyers of government bonds are largely banks including central banks (other Nations).
    23 Nov 2011, 06:55 AM Reply Like
  • User 353732
    , contributor
    Comments (5158) | Send Message
     
    The more Germany tries to create a Franco_German CoDominium over Europe to "save" the lesser nations and peoples, of course, the more it endangers itself.
    23 Nov 2011, 06:49 AM Reply Like
  • mP1
    , contributor
    Comments (386) | Send Message
     
    Its no longer a Condominum, France is silent...
    23 Nov 2011, 08:03 AM Reply Like
  • Kingscairn
    , contributor
    Comments (29) | Send Message
     
    I don't think it was Deutschlands idea .... They (Merkel) didn't want any part of it, the pressure to bail out the rest of Europe was intense !
    23 Nov 2011, 09:38 AM Reply Like
  • Kingscairn
    , contributor
    Comments (29) | Send Message
     
    What, no comments regarding the new necessity to increase the interest rates which will lead to higher service on the notes ?
    anybody ?
    23 Nov 2011, 09:38 AM Reply Like
  • change is the only constant
    , contributor
    Comments (2242) | Send Message
     
    I am reminded of the metaphorical circular firing squad designed to eliminate the sinners.

     

    Architects can actually see a system design flaw in two ways: 1) after they have made the mistake; and 2) in the classroom.
    23 Nov 2011, 07:09 AM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    Mostly it is 1) though since we can not foresee all problems. Same thing with testing a hypothesis in science.
    23 Nov 2011, 07:49 AM Reply Like
  • Humble Value Miner
    , contributor
    Comments (477) | Send Message
     
    if captain Germany doesn't want to change its 1800-style policy, captain will sink with the vessel.

     

    by the way German debt per person is 50K while Italy's is 30K
    http://bbc.in/rB9DXw
    23 Nov 2011, 08:24 AM Reply Like
  • Francis Meyrick
    , contributor
    Comments (78) | Send Message
     
    50 K? 30K? Oh, chickenfeed. The Irish owe per person Euro 390,964! Now who were the smart asses that lent all that loot?
    Great link.
    23 Nov 2011, 04:22 PM Reply Like
  • Lakeaffect
    , contributor
    Comments (1449) | Send Message
     
    So, the solution is to start the printing presses?
    23 Nov 2011, 08:33 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4291) | Send Message
     
    The proper solution is liquidation. The political solution is printing.
    23 Nov 2011, 08:51 AM Reply Like
  • dividend_growth
    , contributor
    Comments (2895) | Send Message
     
    This new development may turn Germany's prospect of Endsieg into Unconditional Surrender.
    23 Nov 2011, 09:07 AM Reply Like
  • Dr. V
    , contributor
    Comments (1168) | Send Message
     
    We pray.

     

    Merkel is the only one man enough to fight, that's hilarious!
    23 Nov 2011, 11:46 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1449) | Send Message
     
    This is the logical fallout from the decision to screw the CDS buyers who were trying to hedge their positions in PIIGS debt. Forced to take a 50% "voluntary" haircut by the ECB & friends, they are now backing away from the EZ debt, no matter who is the issuer.

     

    Private buyers of Greek debt didn't foresee that the entire EZ (including the good ol US of A) would array against them, forcing them to take 50% haircuts with no CDS payouts, while the Central Banks took no haircuts on the same debt. Similar thing happened to MF Global, where Corzine was betting that the EZ simply would not allow PIIGS debt to default, because the ECB owns so much of it. Well, he learned the hard way the rules of debt collateral and senority have been entirely re-written beginning with the bankruptcy of GM in 2009.

     

    The unintended consequences of these kind of manipulations will reverberate through the financial system for quite some time. More events like these are coming. They are the result of the politicians, bureaucrats and technocrats getting overly confident in their powers to control things that are out of their hands.
    23 Nov 2011, 09:26 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4291) | Send Message
     
    +1000.
    23 Nov 2011, 09:34 AM Reply Like
  • droverk
    , contributor
    Comments (12) | Send Message
     
    your point about debt seniority in the two cases is a very good one.
    i can see an argument for bailing out the gm workers but what, if anything, has been given in support of discriminating between public and private greek bondholders?
    23 Nov 2011, 03:37 PM Reply Like
  • Pro65
    , contributor
    Comments (4) | Send Message
     
    News of failed German bond auction is highly misleading. it failed because the government offered lowest yield on record. with Eurobonds looming on top, who in their right mind would buy.
    23 Nov 2011, 09:34 AM Reply Like
  • Dr. V
    , contributor
    Comments (1168) | Send Message
     
    That is again, a perfect example of Germany's inability to make a sound financial decision. They were 39% short of the total available, they haven't a clue, have they?
    23 Nov 2011, 11:51 AM Reply Like
  • credit_man
    , contributor
    Comments (180) | Send Message
     
    @huneycutt
    a steal for a USD based investor? what about currency risk?
    how can you compare bund and T without a call on FX?
    wexboy is right they are the same client type in USD and in EUR.real money accounts that need "liquidity"
    that type of auction accident happened plenty of time in the past in the US.
    23 Nov 2011, 09:56 AM Reply Like
  • Wexboy
    , contributor
    Comments (148) | Send Message
     
    A steal?! I'll ignore currency risk - depends on your home currency, and you can hedge it anyway (well, if you're an institution). First, German inflation is at least 1% lower than US inflation, so Bund real yield is that much better than that of the US. Second, I think we all know which country and central bank have the better fiscal/monetary discipline today, and most definitely in the future... Third, I wouldn't actually buy any bonds at these kinds of yields!!
    23 Nov 2011, 11:47 AM Reply Like
  • marpy
    , contributor
    Comments (1703) | Send Message
     
    The only way to get Germany to wake up and realize that it is not insulated from the Euro problems is to kick its rear end and that is what the market is doing. Now lets see if more kicking is in order or if they are willing to listen to other ideas!!!!!
    23 Nov 2011, 04:22 PM Reply Like
  • Dr. V
    , contributor
    Comments (1168) | Send Message
     
    Doubt it, carrot and stick is all they know. Remember who we are dealing with here, the only thing missing when they invented the microwave, was the chair.
    24 Nov 2011, 08:27 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
     
    More market turmoil. Looks like risk assets heading much lower yet.
    23 Nov 2011, 05:11 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13369) | Send Message
     
    Germany is tied to the Eurozone whether they like it or nor much the same the US is tied to Fannie Mae, Freddie Mac, Citibank, BofA, AIG, etc. Eventually they will suffer with them and will have to bail them out if only to help itself from becoming deluged in the storm.

     

    The EU needs to learn 2 things, fiscal and monetary restraint and the benefit of shared risk. Getting both at the same time is very hard to do. Offering EU bonds or guarantees may only encourage more profligate spending. Further austerity may lead to a further meltdown in economics if the economy contracts faster than the savings it generates and if interest rates rise. Rates must fall and austerity must kick in at the same time.
    23 Nov 2011, 09:20 PM Reply Like
  • Dr. V
    , contributor
    Comments (1168) | Send Message
     
    Moon you are correct, it is a most necessary evil.

     

    Actually, like a tumor that can't be removed, for fear of death.

     

    Shared risk is a non started for Germany. They enjoyed knocking the bottom out of the periphery for 10 years, but are now not willing to take their turn in the barrel.
    24 Nov 2011, 08:31 AM Reply Like
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