This is a remarkable chart that exposes what the market really thinks of the euro bailout.
Via Felix Salmon, it shows how the CDS curve for Portugal has changed this year from a normal slope (the black line), to a an inverted slope (green line), meaning imminent default, to the current square-root shaped slope (the red line).
What’s it mean? It means the market is confident Europe can prevent a Portugal default… for now. But all it will succeed in doing is kick the can down the road and push a default a few years back.