The overwhelming balance of opinion into the year end is that Europe is toast and unworkable. As an adjunct to this "it's hopeless- give up" analysis is the US is toast by association and/or a couple of years lag time. SUffice it say, we do not subscribe to this scenario.
Several times in my carreer, 1993, 2005, Jan 2009, and strangely, now, I have found myself in the "Billy Mumphrey Anomoly." Our usual skeptical and "negative" world view is over run by widespread fear. The plunging confidence puts us in the position of "cock-eyed optimist caught up in the high stakes game of world diplomacy and international intrigue." -[Seinfeld: The Doodle episode] In 1994, the Fed doubled the funds rate and a hard credit crunch hit. In 2006, our fears proved too early and the party continued into 2007 until 15 well telegraphed "micro-hikes" inverted the curve. In Jan. of 2009, we went naked long the SP contract into a 2.5 month landslide that required a daring double down at 666 around St. Patrick's Day.
The EZ system pipe may be a fragile duct taped conduit but plumbing it is. The sharp decline in shorter Spanish yields was overshadowed by 10 year focus. The term structure can be more important than the yield level in this delicate environment. That structure, combined with generational low rates provide strong support to the US. The credit crunch remains difficult and attenuated but time is marching forward. The confidence crisis is making new life of contract highs.
We look to experiencing 2012 as the majority of players spout apocalyptic views of 2013.