@Aurelija's

If there was a way to summarize the previous week it would be either a picture of a Thanksgiving turkey or this graph:


With the situation getting worse in Europe now even Germany is safe haven no more. As the graph shows, the tight correlation between the German bond yields and the German stocks broke down this week, as the stocks fell in unison with the bond yields rising. Indeed, with the terrible German bond auction this week and talks that Japan is dumping German bonds, the German markets are no longer protected.

But if Germany is not safe haven any more - then all Europe has gone Greek now. This is broadly reflected by the rating agency action - further downgrades of Portugal, Belgium, warnings on France which now stands to lose its AAA rating. And, despite ECB still present actively buying the bonds of the periphery sovereigns, the yields just keep rising and rising...


Unfortunately it's difficult to see at this point any solution. The quick fixes in the form of liquidity provision is not a panacea, as the recent history showed.