Thursday, November 10, 2011
The Third Largest Bond Market in the World is Imploding
I have been warning for days that stocks are the last to "get it" and that this latest rally should not be trusted.
Well, by the look of things, stocks are finally waking up to what the credit and bond markets have been telling us for weeks: That the European debt-implosion has now shifted from a relatively small problem (Greece) to a MAJOR problem (Italy).
Remember, worldwide exposure to Greece is roughly $280 billion. Worldwide exposure to Italy is more than THREE TIMES this. Italy is the third largest bond market in the world (behind Japan and the US). So when it implodes, the whole financial system shakes.
Well, according to Barclay's Italy has now gone "mathematically beyond the point of no return."
Italy is the REAL systemic risk today. The Italian ten-year note just cleared 7.2% earlier this week. Once it clears 8% it's GAME OVER for Italy. And the EURO will go down.
Labels: Euro crisis, Euro default, Italy
