Making Way for the Era of Sovereign Default

American investors returned from their Labor Day holiday to face another laborious trading day on Wall Street. As your California editor pecks away at his keyboard this afternoon, the Dow Jones Industrial Average is down more than 200 points to within spitting distance of 11,000.

For the first three trading days of September 2011, the Dow has tumbled more than 600 points — or about 5% — the worst three-day start for the month of September in the history of the US stock market. (Thanks to CNBC for this utterly meaningless statistic).

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Gored by the Debt Bulls

Much to this woman’s disgust…

Naked PETA Protester

…and, no doubt, to the exhilaration of those watching her and her furless activists parade the streets in PETA’s annual “running of the nudes,” the official Running of the Bulls again took place in Pamplona, Spain, this week. Actually, today was the last “run” in the eight-day event. And, as one might reasonably expect, the hemorrhaging did not issue solely from the bodies of the beasts. A few of our fellow bipeds also managed to spill a pint or two in the name of…ummm…“tradition”?

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A Glimpse into the Future of the Sovereign Debt Crisis

The canary in the coal mine is choking…

Greek stocks tumbled to new 14-year lows this morning, as Greek bond yields rocketed to new all-time highs.

The Yield on 10-Year Greek Government Bonds

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Greece: The Wile E. Coyote of Sovereign Debt

When it comes to Greece, really, its like this:

Wile E. Coyote

At this moment, theres no telling what will happen to Wile E. and his Acme rocket. Maybe hell be shot off course, straight down into the canyon bed. Or the leather straps will break, and hell helplessly roll over the cliffs edge. Most likely, the rocket will explode right where it rests, reducing Wile to a black stick figure of smoldering soot.

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Sovereign Debt Default: Learning from Argentine Mistakes

Argentina is for economists with a sense of humor, if there are any left. Its for anyone who likes a good drink and a good laugh. And for anyone who wants a peek at the future.

What do defaults look like? Look at Argentina. The Argentines pulled off the biggest default on sovereign debt in history. In 2001, they defaulted on $132 billion in loans. Later, they negotiated a settlement that left lenders with their worst haircut ever.

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