ECB Looms and ERM risks rise!

A while back we started talking about the risk to breakup of the European Exchange Rate Mechanism (ERM). Of course the usual howls of disbelief we usually get when we look in the opposite direction of the consensus. But the reality is, spreads are widening fast among the various sovereign bond markets in Europe the market is pricing in risk-- something that isn't supposed to happen within the ERM.

"Spain was warned on Monday by S&P about its high levels of public and private debt, while Greece and Ireland were told on Friday that their deteriorating public finances could lead to downgrades.