The Part About Paying

After a period of denial that lasted much longer than we ever imagined, the concept of not being able to pay marched through Europe. The US manufactured insanity over the debt ceiling deserves some of the blame. Prior to our month long hype, a window was opening for Greek restructuring fire-walled from Italy and Spain. The result was a classic "right for the wrong reason" position in notes and bonds. Many had suggested buying for the possibility of US missed payment (or even downgrade)- neither obviously occurred. Bonds went parabolic on the  Euros taking center stage since Tuesday and the global growth rout in equities.

The 5 year continues to paint a bleak picture on GDP. The front end can only be described as broken. 3 month LIBOR is setting over the 2 year note. More monetary pornography should be expected. Pan-Euro bonds will find their way into the lexicon. QE3? I don't see it, as previously executed. the US debt markets are too rich for in coming supply without steady equity destruction. We've known for a year they could not pay. Time for everyone to chill.

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