German CDS debt spreads hit record as economy crumbles

[RedEarth]

German CDS debt spreads hit record as economy crumbles

The cost of bankruptcy protection on German debt has reached an all-time high on spill-over from the financial crisis in Eastern Europe and mounting concerns about the stability of Germany's banking system.

By Ambrose Evans-Pritchard
Last Updated: 7:59PM GMT 24 Feb 2009

Credit default swaps measuring risk on five-year sovereign debt touched 90 basis points on Tuesday and looks poised to rise above French debt for the first time.

The spike follows a warning by Deutsche Bank that Germany’s economy will contract by 5pc this year as industrial exports collapse at the fastest pace since the Great Depression.

Norbert Walter, the bank’s chief economist, said there was a risk of an even deeper slump if the economy fails to stabilize by the summer. “A bigger contraction can’t be ruled out,” he said.

......

“German CDS spreads are going massively higher. German bank exposure to Eastern Europe, although less than Austria, is still very high. The markets have started to price in a de facto bail-out of Eastern Europe and they think that Germany that will have to pay the bill,” he said.

The rating agency Standard & Poor’s said in a report on Tuesday that the region was “shuddering to a halt”, with a number of countries were “crumbling under the weight of high foreign currency debt.” It is unclear whether they can roll over debts as Western banks retreat to their home market.

S&P said foreign debt is 115pc of GDP in Estonia, 103pc in Bulgaria, 93pc in Hungary, all far above danger level. “All the ingredients of a major crisis are in place,” said Jean-Michel Six, the group’s Europe economist.

http://www.telegraph.co.uk/finance/economics/4800828/German-CDS-debt-spreads-hit-record-as-economy-crumbles.html

[fasttense]

1. OK, ok, ok, let's quit beating around the bush

and pretending it's not happening. Let's just call it the 2nd Republicon Great Depression and be done with it. Everyone is thinking it, everyone knows it, they are just not saying it...the 2nd Republicon Great Depression.....the 2nd Republicon Great Depression.....the 2nd Republicon Great Depression.....the 2nd Republicon Great Depression.....the 2nd Republicon Great Depression.....the 2nd Republicon Great Depression.

See, the world didn't blow up, nothing changed. You too can call it the 2nd Republicon Great Depression with impunity.

[JohnWxy]

2. It's the coming REpublican Deregualtion Dystopia -

http://www.geocities.com/jwalkerxy/Republican_Dystopia.htm