Events this week are more "Ripley’s Believe It or Not," or "Saturday Night Live," than financial market proceedings.

Italian 10-year bond yields screamed from mid-sixes to 7.48 percent on Wednesday, collapsing U.S. and European stocks. Then somebody bought a lot of those bonds to put out the fire, or gave orders to banks to stop selling, yield back to 6.89 percent. The European Central Bank says it is forbidden to buy sovereign debt to bail out nations, but the ECB is the last hope to buy significant time. And, on a continent in which everyone says one thing and does another, buying time is all.

Italy sold some one-year notes at auction this week, yield 6.09 percent versus 3.57 percent last month. Not a good trend. The U.S. pays 0.1 percent for one year.

French banks hold a France-killing $560 billion in Italian IOUs. As the Italian contagion grew this week, rumors flew that S&P would cut France’s AAA rating, which among other things would collapse the European Financial Stabilization Facility (EFSF). S&P denied the rumor, but did not explain upon what basis it has rated France AAA.

The EFSF is a self-bailout fund guaranteed by all 17 euro-currency nations. Those who need to be bailed are also guarantors. The guarantees are not "joint and several," with each guarantor liable for the entire amount. Instead, the guarantees are pro-rata to GDP. If some guarantees turn out to be worthless, creditors may not look to the surviving strong to pick up the trash left by the failed.

The EFSF is to sell its own IOUs to raise cash to execute the bailout promises to Ireland, Portugal and Greece, themselves EFSF co-guarantors. If this sounds like a series 2005 subprime CDO (collateralized debt obligation), you have been paying attention.

The EFSF has been trying for 10 days to sell $4 billion of its IOUs, and for several days could not; it finally moved them at a 1.77 percent premium to German bunds, up from a 0.51 percent spread in June. Marvelous. You are drowning, and you are tossed a lifeline by another swimmer nearby, also drowning.

The 17 euro-currency zone GDPs are as follows: The three official wrecks — Greece ($305 billion), Portugal ($228 billion) and Ireland ($203 billion) — total $736 billion.

The nine mini-members — Malta ($8 billion), Cyprus ($25 billion), Estonia ($19 billion), Slovenia ($48 billion), Luxembourg ($55 billion), Slovakia ($90 billion), Finland ($239 billion), Austria ($376 billion) and Belgium ($468 billion) — total $1.3 trillion. Most of the minis are in good shape. But Belgium has no functioning government, and Austrian banks made a lot of loans to Eastern Europe in Swiss Francs, which will not be repaid.

The remaining six nations in the euro-zone break into three groups: The healthy, Germany ($3.3 trillion) and Holland ($783 billion); the sick, Italy ($2 trillion) and Spain ($1.4 trillion); and the hopelessly exposed to contagion via shot-to-hell banks, France ($2.5 trillion).

The grand total is a big operation, $12.5 trillion GDP. However … the three officially insolvent, plus Italy and Spain (total $4.1 trillion), are to be bailed out by Holland and Germany ($4 trillion) and the minis? While hoping that France can huff, puff and bluff its way for a decade? Ain’t gonna happen. Just arithmetic. Nothing personal.

A lot of really smart people are trying to figure out the breaking point. Can’t be done. Like watching an inevitable car accident with a closing speed of an inch per day.

Markets may step on the accelerator at any time (bank run, anyone?). Or these boobs may stay on the Merkel Plan and let austerity run its course, which means recession throughout Europe, collapsing credit and then bank collapse. Unlike the U.S., Europe has understood for more than a century that banks are public utilities, but they forget that there are limits to capacity at the sewer plant. Once you have a sewer plant in trouble, be veeerrry careful with the valves.

Mercifully, since the world buys so little from us, we’ll be less impacted by global recession than anyone. No inflation, low or lower interest rates, Fed free to QE3, easy to sell Treasurys.

Born lucky.

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