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Treasurys maturing in the next seven to 30-years fell Thursday as investors prepared for a seven-year Treasury sale and after Standard and Poor's lowered its rating on Japan's sovereign debt. Treasury traders said that ratings agency S&P's downgrade of Japan's long-term credit rating to AA- from AA was helping to put pressure on longer-term U.S. government debt, which sold off sharply Wednesday. Seven- to 30-year Treasurys weakened Wednesday after the Federal Reserve pledged it would continue with its $600 billion bond buying program, triggering fears about the possibility of eventual runaway inflation in the U.S. Thursday's news on Japan added...

Analysts and pundits provide various reasons for the bull market in Gold. This includes emerging market demand, low interest rates, money printing, central bank accumulation, central bank policies and falling gold production. These are all good reason but there is one reason which stands apart and will drive precious metals to amazing heights. It is the impending sovereign debt default of the west, led by the great USA. Government finances have reached a point where default and/or bankruptcy is unavoidable. After all, we’ve already started to monetize the debt. The inflection point is when total debt reaches a point where...

What Might Trigger the Euro’s Demise By Desmond Lachman Friday, December 3, 2010 Filed under: World Watch, Boardroom, Economic Policy The Greek, Irish, Portuguese, and Spanish governments already have tenuous holds on power. A deepening in their economic crises could give rise to populist governments ready to dump the euro. Last week, the European sovereign debt crisis took a decided turn for the worse. No longer is the crisis confined to relatively small economies like Greece, Ireland, and Portugal. Rather, it has now spread to the systemically more important high-debt countries like Spain and Italy. These developments have attracted the...

Why did Eurozone officials push so hard for a bailout of Ireland? On the face of it, it was a very strange dynamic. Irish government officials had been insisting that they were well-funded through at least the first quarter of next year. Without any current need to roll debt, Ireland could afford to be indifferent as its spreads blew out. The yields on Irish debt may have blown out, but it wasn’t costing Ireland anything. The pressure for a bailout of Ireland did not come from Ireland itself—it came from Eurozone officials. If anything, Irish Finance Minister Brian Lehnihan’s announcement...

[snip] Mr Delors told colleagues that any crisis would be a “beneficial crisis”, allowing the EU to break down resistance to fiscal federalism, and to accumulate fresh power. The purpose of EMU was political, not economic, so the objections of economists could happily be disregarded. Once the currency was in existence, EU states would have give up national sovereignty to make it work over time. It would lead ineluctably to the Monnet dream of a fully-fledged EU state. Bring the crisis on. Behind this gamble, of course, was the assumption that any crisis could be contained at a tolerable cost...

From this metric the United States is in far worse shape than any other country listed. The USA is even worse off than Greece. Unfortunately, there is no mention of monetary systems in the report and the analyst clearly ignores the fact that the EMU is a vastly different monetary system than that in the USA. I strongly disagree that the sovereign debt crisis is a global issue. It is primarily a European problem caused in large part by their flawed currency system. There is no default risk in the USA as I have explained before. What the United States...

Europe’s PIIGs are in a poke, but U.S. states and municipalities risk their own sovereign debt crisis. Europe’s PIIGs are in a poke, but U.S. states and municipalities risk their own sovereign debt crisis, with a huge liquidity risk from short-term debt. According to the Federal Reserve, at the end of the first quarter of 2010, state and local governments had $2.8 trillion in outstanding debt. This massive figure doesn’t count unfunded pension liabilities (which, except for a few governments in immediate distress, face a longer-term solvency crisis), but does include $465 billion of debt issued on behalf of nonprofits...

Europe's €30 trillion headache European banks have amassed €30 trillion in liabilities and face a serious funding threat over the next two years as authorities withdraw emergency support, according to a new report by Standard & Poor's. By Ambrose Evans-Pritchard, International Business Editor Published: 6:00AM BST 29 Jul 2010 The rating agency said banks are at risk of a vicious circle as sovereign debt fears and financial stress feed off each other. "Banking sector woes are eroding sovereign credit-worthiness, which is in turn reducing the real and perceived capacity of governments to support weak banks," said S&P. "The collective funding...

Japan’s ruling Democratic party (DPJ) has taken a shellacking at the polls, leaving prime minister Naoto Kan the leader of a weakened minority government. Kan’s government is caught in a set of pincers that very probably will be felt by others, and soon: Japan’s sovereign debt is enormous, so large that it has been downgraded by S&P and is threatened by future downgrades. Hoping to close the deficit, Kan promised to double Japan’s national sales tax, from 5 percent to 10 percent. Unlike a VAT, which is largely hidden from consumers, Japan’s consumption tax, as I understand it, is imposed...

US Ends June With $13.2 Trillion In Debt, Adds $210 Billion In Total Debt, On Track To Breach Debt Ceiling In Under Six Months Submitted by Tyler Durden on 07/06/2010 16:25 -0500 In case one is wondering why the House Democrats attached a document to the emergency war supplemental bill that "deemed as passed" a non-existent $1.12 trillion budget, which basically allows the ruling party to start spending money for Fiscal Year 2011 without the constraint of an actual budget, here is the answer: on June 30, the US closed the books with just over $13.2 trillion in total debt,...

Spain is in the throes of the worst economic crisis in its recent history. Reeling from the collapse of a debt-driven construction boom, Spain entered recession in the second quarter of 2008 and posted six consecutive quarters of negative growth. Although the economy grew by 0.1 percent during the first quarter of 2010, Spain’s growth prospects are poor and any pick-up could be short lived. Spanish GDP fell 3.6 percent in 2009, and a package of harsh austerity measures announced since then will undermine any economic recovery during the foreseeable future. The International Monetary Fund (IMF) says there will be...

German-Spanish whispering wars hit euro zone Fri, Jun 18 2010 * German, Spanish officials leaking against each other * German sources said Spain on brink of EU bailout * Spanish countered with bank stress tests By Paul Taylor PARIS, June 18 (Reuters) - A whispering war between German and Spanish officials has exacerbated the euro zone's debt crisis this month, keeping financial markets on edge and exposing deep frustrations in Berlin and Madrid. European diplomats say the background to the leaks and counter-leaks lies in pressure from Germany -- Europe's economic powerhouse and main paymaster -- for Spain to take...

Spain Now Showing Very Serious Signs Of Systemic Stress Gregory White Jun. 9, 2010, 10:52 AM The situation in Spain is getting worse by the minute as international banks are now unwilling to lend to many Spanish regional banks, or cajas, in the interbank markets. What is of more serious concern is why banks have halted lending. It is not just because they are worried about issues of banking solvency, now lenders are concerned about the viability of Spanish sovereign debt, according to Cinco Dias via FT Alphaville. If banks are no longer willing to take Spanish sovereign debt as...

<p>SAN FRANCISCO (MarketWatch) -- The financial crisis never really went away.</p> <p>The debt mountain that brought down some of the world's biggest banks and dragged the international financial system to the brink of disaster has simply shifted to governments. Now, it's threatening countries around the globe and if left unchecked could rip the very fabric of Europe's economic system and wreck economic recoveries in the U.S., China and Latin America.</p>

The European Commission on Tuesday said it will probe credit agencies and even suggested it might take over the job of rating countries’ sovereign debt. No question, Moody’s (MCO), Standard & Poor’s (MHP) and Fitch failed miserably in analyzing mortgage securities, slapping AAA ratings on home loan packages that often turned out to be filled with junk. Issuers pay the agencies for their ratings, a clear conflict of interest. So there’s been favorable talk of a state-run ratings body, and not just in Europe. Ezra Klein, liberal blogger for the Washington Post, liked the concept, writing that, if anything, “a...

Metal$ are in the pits Posted: 2:10 AM, April 11, 2010 There is no silver lining to the activities of JPMorgan Chase and HSBC in the precious-metals market here and in London, says a 40-year veteran of the metal pits. The banks, which do the Federal Reserve's bidding in the metals markets, have long been the government's lead actors in keeping down the prices of gold and silver, according to a former Goldman Sachs trader working at the London Bullion Market Association. Maguire was scheduled to testify last week before the Commodities Futures Trade Commission, which is looking into the...

From the WSJ: LONDON—The yield on Greek 10-year bonds rose to nearly 7.6% Thursday, a fresh record high, increasing chances that Greece may need a bailout as concerns about Greek banks and the nation's solvency mount. Note that Greece's deficit this year as a percentage of GDP is about equal to ours in the United States. Note also that our Ten Year is trading 3.84% this morning. If it blows wide as Greece's did, it's too late. I know I'm sounding like a broken record on this, but...... Washington, listen up - our debt ratios may look "better", but only...

Sovereign debt crisis at 'boiling point', warns Bank for International Settlements The Bank for International Settlements does not mince words. Sovereign debt is already starting to cross the danger threshold in the United States, Japan, Britain, and most of Western Europe, threatening to set off a bond crisis at the heart of the global economy. By Ambrose Evans-Pritchard, International Business Editor Published: 6:31AM BST 08 Apr 2010 Bond investors are waiting for Governments to lay out clear plans for deficit reduction "The aftermath of the financial crisis is poised to bring a simmering fiscal problem in industrial economies to the...

Eurozone could risk 'sovereign debt explosion' Europe's governments are at increasing risk of an interest rate shock this year as the lingering effects of the Great Recession drive debt issuance to record levels and saturate bond markets, according to Standard & Poor's. By Ambrose Evans-Pritchard, International Business Editor Published: 6:30AM GMT 12 Mar 2010 "Debt-related sovereign vulnerabilities have increased, particularly in the Eurozone, where we expect government borrowing will rise to further new peaks," said Kai Stukenbrock, the ratings agency's European credit analyst. "The resulting fiscal pressure from a sustained increase in financing cost could be significant in our view."...

PIMCO's El-Erian: You Fools Don't Realize That The Sovereign Debt Crisis Goes WAY Beyond Greece Today, we should all be paying attention to a new theme: the simultaneous and significant deterioration in the public finances of many advanced economies. At present this is being viewed primarily – and excessively – through the narrow prism of Greece. Down the road, it will be recognised for what it is: a significant regime shift in advanced economies with consequential and long-lasting effects. To stay ahead of the process, we should keep the following six points in mind. /snip Many metrics speak to the...