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buffalonate (93.99)

Is Italy Default Inevitable?

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November 08, 2011 – Comments (11)

I just sold all of my stocks today and decided to go short.  Italy's debt is 120% of GDP and their bond yields just keep rising and are into junk bond territory now.  THE ECB said today that they can't print money so when Italy defaults how are they going to recapitalize the banks again?  If Italy balances their budget would that help or are they in a death spiral?  The way their bond yields are rising I vote death spiral. 

11 Comments – Post Your Own

#1) On November 08, 2011 at 8:52 PM, MichaelMolenaar (< 20) wrote:

Yes, it's just a matter of time.

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#2) On November 08, 2011 at 10:13 PM, motleyanimal (87.23) wrote:

The problem with Italy is that they are too big to be bailed out.

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#3) On November 08, 2011 at 10:26 PM, alstry (34.92) wrote:

Italy is chump change compared to the $23 Trillion dollar bailout of Wall Street.....

With a quadrillion of notional credit default swaps....the printing has just begun.

Doesn't Zimbabwe have a $100 Trillion dollar bill?  and that is just one bill.

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#4) On November 08, 2011 at 11:59 PM, memoandstitch (< 20) wrote:

Even though it is inevitable, it is not imminent.  I would not short the stock because of Italy at this time.

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#5) On November 09, 2011 at 1:14 PM, leohaas (31.85) wrote:

For the short term, your timing is impeccable. Congratulations! I was considering to do the same, but failed to execute.

Long term, I believe Italy will at some point default. The problem is figuring out when.

My question for you: how long do you plan on staying short?

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#6) On November 09, 2011 at 2:17 PM, buffalonate (93.99) wrote:

I put $100,000 in 3X short funds yesterday and have already made 10% profit on them.  It just seemed so obvious that crap was going to hit the fan when their bond yields kept going up.  I couldn't understand why on earth the market kept going up yesterday in the face of the horrible news out of Italy. 

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#7) On November 09, 2011 at 2:26 PM, buffalonate (93.99) wrote:

I sold all of my short etfs after a 10% gain today.  I am all cash now.  I am already regreting selling though.  I know they have a bailout fund that Italy can borrow from but from what I hear the war chest is not enough to handle the job.  I will probably buy back into a short fund but I won't use leverage this time because some new type of bailout idea could make the markets temporarily happy.

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#8) On November 09, 2011 at 2:33 PM, Frankydontfailme (27.20) wrote:

Nice call. I agree with you about cautious shorts. You're not nearly the only one short and so short-covering rallies are really what are controlling the markets. Bursts down and up.

I was hoping the market would rally (and still think it might) to test the years highs. Then it would be an easy short :)

Otherwise I'm sticking with gold and silver.

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#9) On November 09, 2011 at 2:33 PM, Frankydontfailme (27.20) wrote:

Nice call. I agree with you about cautious shorts. You're not nearly the only one short and so short-covering rallies are really what are controlling the markets. Bursts down and up.

I was hoping the market would rally (and still think it might) to test the years highs. Then it would be an easy short :)

Otherwise I'm sticking with gold and silver.

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#10) On November 09, 2011 at 4:06 PM, chk999 (99.97) wrote:

Nice call!

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#11) On November 09, 2011 at 5:15 PM, leohaas (31.85) wrote:

Excellent work, buffalonate! Don't worry about the extra couple of percent you could have made. You cashed 10% in one day. Focus on that. You should sleep like a baby, tonight. I'll add you to my favorites.

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