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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: pogohere who wrote (113772)	9/7/2010 8:26:11 PM
From: pogohere	Read Replies (1) of 116555

European Bond Spreads by CalculatedRisk on 9/07/2010 09:03:00 AM After the WSJ story last night on the European stress tests, here is an update on a few European bond spreads: The 10-year Ireland-to-Germany bond spread has risen to 376 bps. This spread is larger than during the financial crisis in May when the spread peaked at 306 bps. The 10-year Greece-to-Germany bond spread is now 946 bps, just below the peak level of 963 bps in May. The 10-year Portugal-to-Germany bond spread is now 351 bps, just above the peak in May of 349 bps. European Stress Tests and more by CalculatedRisk on 9/06/2010 09:30:00 PM From the WSJ tonight: Europe's Bank Stress Tests Minimized Debt Risk We've discussed this several times - as an example, in Part 5D of the sovereign debt series, "some investor guy" wrote: Q1. Was there much sovereign stress in the European bank stress tests? NO. The most glaring oversight, in the opinion of the author and many other analysts, is assuming there would be no sovereign defaults, and thus not showing any losses on the bank’s long term holdings (in the banking category vs the “trading book”). According to the Committee of European Banking Supervisors, the sovereign stress scenario results in “39 billion euro associated with valuation losses of sovereign exposures in the trading book “. “The haircuts are applied to the trading book portfolios only, as no default assumption was considered, which would be required to apply haircuts to the held to maturity sovereign debt in the banking book.” calculatedriskblog.com philstockworld.com THE EUROPEAN STRESS TEST WAS A FRAUD pragcap.com

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