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Spanish Domino Tipping

Posted by Larry Doyle on April 28, 2010 11:49 AM |

Spain’s credit rating was just cut by S&P from AA+ to AA. The outlook is negative. The Euro just made new 12 month lows to 1.3137 on this breaking news. Why is this news important? The economic contagion is clearly spreading across the EU. Is Ireland next? What about the granddaddy of them all, that being the United Kingdom? Could the pressures within the EU actually cause some countries to leave and the EU monetary union to crumble?

The size of the Spanish economy, which is considerably larger than both the Greek and Portuguese economies, makes these developments very serious. Is there any doubt the domino effect is well underway?


  • Mike

    U.K. must be on the phone with the rating agencies daily begging them not to cut their triple A.

  • divvytrader

    Italy sold 9+bln TBills yesterday and got a mere 1.02 bid to cover …. their 12mo Bills rate now 1+% vs .5% a month ago . Italy is a G7 country . Its 30yr trades within 25bps of our 30yr . USA has close to $500 billion in maturing TBills in April alone ! As ROW sees its governments having to pay more for cash to fund their deficits , can USA really avoid seeing its rates go higher WITHOUT rate hikes ?

    • Mike

      I thoroughly believe this story will FINISH with USA.

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