This is the Day

This is the day I have been waiting for. The bulls stuck their hand into the cookie jar one too many times - yesterday they were buying major calls even though the indicators were flashing caution - but this time the lid snapped shut.

The yield on the Irish 10-year bond has jumped back up 29 bps today. According to my broker, Allied Irish Banks' (AIB) subordinated debt is offered today with yields in the 20s.

If I could borrow AIB, I would be interested in doing the moral hazard capital structure arb (buy the debt and short the stock). You could get a free option on a bailout.

Anyway, the situation with the European credit crisis causing a falling Euro is the scenario I envisioned last Thursday.

As bad as the U.S. sovereign and states'/munis' sutuation is, Europe is probably worse. I'm looking for the situation to see-saw back-and-forth (a sawtooth pattern) where at any given time one continent's problems are recognized and the other's is ignored.

One continent seems to consume the entire attention bandwidth of the global investing community!