Spain

Spain is involved in two stories today that point to the difficulties that surround sovereign governments that are overindebted in foreign currency. There are a ton of Spanish-language links for that reason.

There have been a lot of people talking about Argentina as if it were the model for other governments in sovereign difficulty to follow. Yes, Argentina's decision to default was realistically the right call given the crushing debt load. And…

Rising tensions in Europe continues to be a dominant force in the foreign exchange market, with the euro briefly dipping below the $1.30 level for the first time since mid-February.

I thought I'd point out that the already severely undercapitalised Spanish banking system is being crushed by the spike in Spanish sovereign yields. I continue to expect Europe to continue the extend and pretend approach, creating…

I am increasingly worried about what is happening in Spain. It seems that the crisis there is hitting a flashpoint with no obvious means of turning things around. Over the past few days, I have been reading and listening to Spanish media…

Spain has really hit the wall now. Given what we know of how the sovereign debt crisis has proceeded. The likelihood that Spain can escape from the rise in yields without ECB or EU-wide intervention is slim.

The LTRO's provided more than 1 trillion euros of liquidity. An under-appreciated aspect of the virtuous cycle, was the bank balance sheets improved not just because of cheaper cost of capital, but because there was a significant rally in…

The German 2-year note has dropped below Japan's for the first time ever, with the German 2-year note yielding 0.109%, a record low. Japan's 2-year note yield is 0.111%. Meanwhile, the 10-year bund is at 1.638%, nearing the record low of…

This week's weekly commentary on markets and the economy features Spain. In my view, the potential for downside economic and portfolio risk has increased markedly as we realise that Spain is at risk and there is no plan B in the euro zone.…

The more Spanish officials talk about the budget the less credible it seems. The 10-year yield fell 11 bp on Friday when the budget first presented before the weekend. Now as more detail emerge as it goes to parliament, 10-year yields are…