Nightmarish Market Factors: Stocks To Trade On News

LONDON — The messy deal to bail out Cyprus has averted the latest threat to the break-up of the euro but at the cost of raising new questions about the single currency’s long-term viability. Savers in other eurozone banks appear so far to be taking the freezing of balances over 100,000 euros in Cyprus’s two biggest lenders in their stride. Perhaps they judge that events in a tiny, far-away island with outsize banks and a reliance on deposits from Russian oligarchs hold little relevance for them.

European policy makers signalled flexibility on the application of an unprecedented bank tax in Cyprus, seeking to overcome outrage that threatens to derail the nation’s bailout. European shares and the euro fell.

  Anyone who wants to get an inside look at both the European banking system and the politicians in charge of fixing it need to only look at Spain’s Bankia. Bankia was formed in December 2010 by merging seven totally bankrupt Spanish cajas (regional banks that were unregulated). The bank was heralded as a success story and an indication that European Governments could manage the risks in their banking systems.

Bloomberg reports S&P Downgrades Spain, Citing Region Backtracking on Bank: Spain’s debt

By Marc Chandler:Shortly after the U.S. markets closed, Moody's announced it was slashing Spain's sovereign debt rating three notches to Baa3. This is one step above junk status. The euro, which had generally traded higher in North America, was softening going into the close. The announcement pushed it down further, but it still managed to finish the day above its 20-day moving average (~$1.2540) for the first time since May 1.

Italy's Prime Minister Silvio Berlusconi's days are numbered. He will likely be gone in a week. When it happens it will be a case of 2 down with Merkozy (France and Germany), Spain, and Portugal (thus 4) to go.

In the wake of Bankia bailouts to the tune of €19 billion, the second bailout in two weeks, yields of Spanish debt are soaring. Spread to German Bonds Hits 5.05 Percentage Points

So, the next domino falls in the Pan-European Sovereign Debt Crisis. As has been the casse for much of the Asset Securitization Crisis and the Pan-European Sovereign Debt Crisis, the ratings agencies have arrived to smoldering pile of ashes littered with charred bones and remnants of the putrid smell of burnt flesh with a fire hose and a megaphone yelling "Get out!