Irish Bailout Flops--PIIGS CDS Surge

Well, it's back to the drawing board for the EU elite. Their bazooka style bailout for Ireland seems to have bombed with the market as all of the PIIGS CDS close higher following the announcement. About the only alternative for the EU is to send in the ECB to buy all of this debt. If the ECB is not in the mood for debt monetization, the Fed could step in and legally buy foreign government bonds (yes, they have the power to do this).

Below are the current 5 year CDS for the PIIGS:

• Ireland--CDS hits a new all time high of 601 bps, and this is after the official bailout!
• Portugal--up 6% to 536 bps, indicating it is only a matter of time before they, too, get a bailout.
• Spain--up a staggering 8.2% to 350 bps. You can add them to list of countries waiting in line for an EU bailout.
• Greece--down 1.7% to a banana republic-like 970 bps.
• Italy--up a mind-boggling 13.8% to 246 bps. I wonder, how do you say default in Italian?
• Belgium--yes, I know, Belgium is not yet part of the PIIGs, but it soon will be. Belgium CDS up 15% to 186 bps.

And yet, after all of this bad news, the market reclaims most of its intraday losses. Amazing. You can thank the Fed and its POMO for today's stick save.

Here is a great video by Euroskeptic Nigel Farage who slams the EU elite.


Black Swan Insights

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Irish Bailout Flops--PIIGS CDS Surge