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Next week has all the hallmarks of an interesting week in European history,

“With the euro zone’s three weakest issuers coming to market next week in the space of two days it ramps up the tension, said Orlando Green, strategist at Credit Agricole in London.

“There has to be some repricing to get (the auctions) done, but will it be enough? That depends on investor appetite.”

Reuters

The blitz next week will set the tone for follow along debt issues of 2011 in Europe.  While I expect they get some of these bonds placed with the help of China and the ECB, they will know that the real market has probably closed afterwards.

That is when things start to get interesting in Europe. The states wont be able to afford the rate that the market will demand.  It becomes a stand-off, with the Sovereign stuck between an unmovable market, and an unstoppable flow of cash out the door.  Something will have to give in the smaller states without the capacity to exist with out debt rolls in the near term.

If you have funds to pay bills, as a state you are going to quietly sit back and wait and watch to see which of your neighbors cracks first, and what solution was provided for them.  This is going to be like watching ten kids hold their breath until they start to turn blue and pass out.   Which one runs out of cash first?