Germany Buys Itself First-Class Ticket on Titanic

[Purveyor]

When the Titanic sank in 1912, even its first-class passengers ended up in the sea. Germany’s failure to attract bids for all the bonds it wanted to sell yesterday suggests investors are growing wary of lending to even the euro region’s most creditworthy nation.

Germany’s 10-year borrowing cost dropped to a record 1.64 percent on Sept. 23 as bunds offered a refuge from the debt crisis. The rate now exceeds 2 percent, driving the gap with U.S. Treasuries to a 30-month high, after bids at the sale of securities repayable in January 2022 fell 35 percent short of the 6 billion euros ($8 billion) offered yesterday.

Bunds are losing the haven status they share with Treasuries as Germany rules out common bond sales to solve the debt crisis, and argues against the European Central Bank becoming the lender of last resort. As recently as Nov. 10, bunds yielded 28 basis points less than the American debt. Ten- year yields advanced to a four-week high of 2.26 percent today in London.

“The Titanic and the single currency cannot continue in its current form,” said Stuart Thomson, who helps oversee about $121 billion at Ignis Asset Management in Glasgow. “Safety lies in another ship, RMS Political Union, which is just over the horizon. It remains to be seen whether the third-class passengers of the peripheral economies and the second-class passengers of the semi-core will be willing to decamp from their current luxury liner to this cramped tramp steamer.”

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http://www.bloomberg.com/news/2011-11-24/germany-buys-itself-first-class-ticket-on-titanic-euro-credit.html

[RUMMYisFROSTED]

1. Good ole Bloomberg!

:patriot:

[Fokker Trip]

2. It`s baaaad when people won`t buy your bond offerings.

Happened to NYC just as part of their fiscal crisis in the 70`s (60`s...not sure but back then lol)

Things are falling apart over there very quickly now. Hope they get the process slowed down a bit.