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Generational Dynamics Web Log for 17-Apr-2012
17-Apr-12 World View -- Europe fiscal crisis worsens as Spain's bond yields push through 6%

Web Log - April, 2012

17-Apr-12 World View -- Europe fiscal crisis worsens as Spain's bond yields push through 6%

Plans go forward for Israel's attack on Iran's nuclear facilities

This morning's key headlines from GenerationalDynamics.com.

Europe fiscal crisis worsens as Spain's bond yields push through 6%
Switzerland's bonds sell at negative interest rates
Plans go forward for Israel's attack on Iran's nuclear facilities
Palestinians deliver an ultimatum to Israel on settlements
Argentina's president announced plans to nationalize largest oil firm

Europe fiscal crisis worsens as Spain's bond yields push through 6%

Spain 10-Year bond yields at 6.07% on 16-Apr-2012

Spain 10-Year bond yields at 6.07% on 16-Apr-2012

The story of Greece is being repeated with Spain, as bond yields (interest rates) continue to increase, indicating that investors are betting that Spain is going to have to be bailed out. And since investors in Greek bonds had to take a 74% "haircut" (losing 74% of their investments) when Greece was bailed out, investors in Spanish bonds should expect no less. The European Central Bank (ECB) has "printed" €1.1 trillion since December and poured it into European banks in its LTRO program, particularly Spanish banks, allowing them to use the money to purchase Spanish bonds, in order to drive down interest rates. But the LTRO money has run out, and now politicians are beginning to demand that the ECB pour another flood of money into the banks. Once again, this will only work until the money runs out. Nonetheless, ECB chairman Mario Draghi will make an announcement on Tuesday, and it may be a new liquidity flood of some kind. Reuters

Switzerland's bonds sell at negative interest rates

Switzerland's six-month Treasury bills have been in such high demand that the purchase price of one of the bonds is larger than the nominal value of the bond, meaning that they're being purchased for negative interest rates (yields), in this case -0.251%. Why would anyone purchase a bond where they know they're going to lose money? Mainly because Swiss bonds are considered safe (as opposed to other countries' bonds). Switzerland is not in the eurozone, and has its own currency, the Swiss franc. Switzerland is a financial center and is a big exporter of precision products, meaning that it won't have to borrow money. If an investor has a lot of cash and wants to put it somewhere safe, then Swiss bonds are a reasonable choice. Bloomberg

Plans go forward for Israel's attack on Iran's nuclear facilities

A major Israel TV station on Sunday night broadcast a detailed report on how Israel could go about attacking Iran’s nuclear facilities, possibly this summer. Dozens or hundreds of planes will take part in the mission: attack and escort jets, tankers for mid-air refueling, electronic warfare planes and rescue helicopters, with concerns about advanced SA-17 and SA-22 anti-aircraft systems that Russia has sold to Iran. The attack, the report said, would presumably trigger a war in northern Israel, with missile attacks (presumably from the Iranian-proxy Hezbollah in Lebanon). "There will be no tranquility and peace anywhere in Israel," said the reporter. Times of Israel

Palestinians deliver an ultimatum to Israel on settlements

Palestinian Authority Prime Minister Salam Fayyad, representing President Mahmoud Abbas, will meet with Israel's Prime Minister Benjamin Netanyahu in Jerusalem on Tuesday afternoon, and will prsent a letter stating demands that have to be met for negotiations to resume. The message will charge Netanyahu with draining the Palestinian Authority of all authority it gained in the agreements Israel and the PLO signed over the years. The message will stress that the current situation is unbearable and will demand that Netanyahu freeze all settlement construction and express publicly his willingness to negotiate on the basis of the 1967 borders. According to reports, Fayyad is delivering this letter to Netanyahu very reluctantly, since he considers the action to be a worthless publicity stunt. Haaretz

Argentina's president announced plans to nationalize largest oil firm

Argentina's president Cristina Fernández de Kirchner announced plans on Monday to seize control of leading energy company YPF, taking control away from Spain's Repsol. Kirchner has previously nationalized private pension funds and the country's flagship airline, Aerolineas Argentinas. Kirchner is angry at YPF because Argentina was forced to begin importing oil in 2010. Reuters

(Comments: For reader comments, questions and discussion, see the 17-Apr-12 World View -- Europe fiscal crisis worsens as Spain's bond yields push through 6% thread of the Generational Dynamics forum. Comments may be posted anonymously.) (17-Apr-2012) Permanent Link
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Generational Dynamics Web Log for 17-Apr-2012 17-Apr-12 World View -- Europe fiscal crisis worsens as Spain's bond yields push through 6%

Europe fiscal crisis worsens as Spain's bond yields push through 6%

Switzerland's bonds sell at negative interest rates

Plans go forward for Israel's attack on Iran's nuclear facilities

Palestinians deliver an ultimatum to Israel on settlements

Argentina's president announced plans to nationalize largest oil firm

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Generational Dynamics Web Log for 17-Apr-2012
17-Apr-12 World View -- Europe fiscal crisis worsens as Spain's bond yields push through 6%