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Survival Games

The latest, frantic efforts of the European Governments over the course of this weekend and before the crucial opening of the Asian markets tomorrow are reminiscent of a last ditch attempt at survival.

Which directly begs the question, can Europe survive Greece and it's fellow PIIGS ? Can IMF for that matter?

The projections for the combined aid needed for only three of the PIIGS, Greece, Portugal and Spain comes close to 400B Euro, a staggering amount if one considers the ongoing fiscal jeopardy currently present in quite a few EU countries besides the usual identified culprits.
 
Can government guarantees against loans taken out by the European Commission to aid ailing states provide the assurances the bond vigilantes have been gunning for?

Would that be enough to stem the prevailing fear of default and contagion or will end up sucking the blood out of the whole block and finally push them into a vortex of wealth destruction?

Only bright spot in the whole EU mess is that the current European woes help to keep US bond yields low, a prerequisite for any economic expansion Stateside. At the same time though one can not fail but aknowledge the added 50bps some issuers of junk bonds have been called to pay ( 8.5% before this week's volatility)
as well as the reduced exports a stronger dollar brings to the US corporate sector. (also lost exports since EU makes up 14% of US exports excluding oil and the weak Euro makes them more expensive)

It is an interconnected nightmare and the questions are many.

And Gold keeps rising. Is that the final answer?

'We all live on a placid island of ignorance in the midst of black seas of infinity....' H. P. Lovecraft 



Disclosure: Euro short, Gold long