European Theater

"The hard part of playing chicken is knowing when to flinch."
--Captain Bart Mancuso (The Hunt for Red October)

As was well portrayed in Wall Street II, the entities really pushing for government sponsored bailouts during the credit mkt meltdown were a) the holders of securities in impaired institutions, and b) sellers of credit default swaps in those impaired institutions.

Same thing now with the EU bailouts. Are Germany, France, UK doing these out of the kindness of their hearts? No way. Banks headquartered in these countries have $1.5 trillion in sovereign exposure to these countries. It's also pretty safe to say that a goodly number of related institutions have written credit default swaps in these bonds and stand to lose big time in the event of default.

And when the US steps up and says it is ready to support ECB in bailout efforts, you can be sure that domestic banks are on the hook for big money as well.

position in Treasuries