Yesterday, The Wall Street Journal had an article titled "Turmoil Spreads in Europe." The subtitle is "Bond Market Selloff Hits Nations Seen as Healthy, Raising Specter of Contagion."
An excerpt:
Europe's debt troubles on Tuesday spilled over to top-rated nations that had been largely untouched by the crisis—including Austria, the Netherlands, Finland and France—in an ominous sign for European policy makers.
My comments:
I continue to believe that "contagion" already exists.
Also, the broader implication of the European situation - and one that is entirely lacking recognition - is whether the overall concept of sovereign debt is (in the process of) being repudiated. If so - and it appears too early to definitively answer - the implications are massive.
Here is what I wrote about both of these issues in a January 10 article titled "10 'Front and Center' Problem Areas That Pose a Threat to the Economy" :
European debt crisis: This situation appears to be unresolved in many respects. In fact, it almost appears to be a slow-spreading contagion. One interpretation of this overall situation is that it may signal a repudiation of (sovereign) debt. Should this interpretation prove accurate, it would not bode well for our highly-indebted global economy.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1230.63 as this post is written
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