European shell game running out of shells

This morning stocks are rallying again on the fumes of bailout funds expected out the IMF meetings this week. Nonsense aside, Spanish bond yields are back above the completely unpayable level of 6% this morning. At the same time, the Spanish stock market (IBEX) ended just 1.3% above its March ’09 closing low and 3.1% above its intraday March ’09 low. March 2009 lows remain within the realm of probabilities for the other highly correlated global stock markets. Equity investors who have no exit plan in advance, place their financial health in grave danger.

James Bianco, president of Bianco Research LLC, Lincoln Ellis, managing director at Linn Group, and Barry Knapp, head of equity strategy at Barclays Capital Inc., talk about Spain’s non-performing loans and the outlook for the nation’s auction of two- and 10-year debt.  They also discuss why this game is likely to blow out the next phase of the global credit crisis.  Here is the direct video link.