Tuesday, June 8, 2010

EU Bank Credit-Default Swaps Soar

The EU continues in semi-controlled collapse, emphasis on collapse.

The Markit iTraxx Financial Index of swaps on 25 European banks and insurers climbed as much as 14 basis points to 208, approaching the all-time closing high of 210 basis points set in March 2009, JPMorgan Chase & Co. prices show. Banco Santander SA, Spain’s biggest bank, increased 23 basis points to a record 258, according to CMA DataVision, reports Bloomberg.

Spanish lenders need as much as 50 billion euros ($60 billion) of capital, according to Banco Bilbao Vizcaya Argentaria SA. And, Spanish bank capital needs may amount to about 5 percent of the nation’s gross domestic product of about 1 trillion euros through 2013,  BBVA said yesterday.

The spread between Spanish 10-year securities and German bunds widened 10 basis points to 213 basis points, a level not seen since before the introduction of the euro in 1999.

The big question is, as Hans Palmstierna points out,  whether Germany will stay in the suicide pact with this group and agree to the mad printing of money, or will it at the last minute gain its senses and break free and re-launch the dmark. The end is near, and so the answer is near also. Stay tuned.

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