Greek Fire, Part 15

What, you thought with the bailout announced over the weekend this mess was over?  I keep telling you guys, Greek Fire is unquenchable by mortal means, and the bond market already believes that Greece will be going up in flames sooner rather than later.  Tyler Durden:

Look up the word ludicrous in the dictionary and you may just get a picture of the Greek bond curve. The 2 Year spread has exploded by over 400 bps just today, and is now back to 14% - the market is now convinced that even with €110 of additional money the country is done for in just over one year. The problem, as we pointed out earlier, is that the IMF can not appeal for greater assistance without appearing totally clueless (which it is), while any additional funding requests will may finally provoke the US taxpayers into recognizing they are being fleeced to save a country 5 thousand miles away.

Gosh, yeah.  You know the International Monetary Fund is paid for mostly by us, you know.   Fourteen percent on a 2 year bond is the equivalent of "Yeah, right.  Sure you'll pay us back, Greece."  They're not buying it.  Literally.

Meanwhile the the Dow tanked today (off more than 200) as the news is swirling that Spain is the next of the PIGS (Portugal, Italy, Greece and Spain, for you keeping track at home, sometimes Ireland is thrown in as the second I, making it PIIGS) countries to be served up roasting over an open fire.

Investors and analysts say the lack of progress in tackling the banking issue underscores the Spanish government’s shortcomings in addressing its broader problem: crushing fiscal deficits arising from high unemployment and a persistent recession.

Spain risks falling into the same trap as Greece, these investors say, unless it takes more forceful action. It could find itself unable to raise money on the private markets at acceptable interest rates — even though its government debt burden, as a share of the overall economy, is only half what Greece carries.

“Any further wavering could lead to a much more critical situation,” said Xavier Vives, an economics and finance professor at the IESE business school of the University of Navarra. “A year ago, the government didn’t even want to think about reforms. Now, under pressure from financial markets, they are at least talking about reforms. But the government really needs to get going.”

Hmm, massive delays in banking reforms leading to major economic problems across the board...sound familiar?

The Greek Fire, unquenchable and epic, continues to consume the country and is spreading to its neighbors.  And there's a pretty good chance we're going to get burned here in the states as a result.