CHART OF THE DAY: Look How The CDS Market Is Calling Europe's Bluff

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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.

chart of the day, portugal cds, nov 2010

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