A curious thing happened today. Nobody showed up to buy German debt.
There is little chance of a German default – in the secondary market, German debt carries a lower interest rate than US Debt, and lower than most of Europe (except England).
About 1/3 of the debt offered for sale had no bids, which will force Germany to offer a higher interest rate or take other actions.
It may just be that there is no money at all to lend to Europe, even the “safe” part, or it may be payback for Germany opposing the idea of allowing the European Central Bank to just turn on the printing press to bail out the banks of France and England.
“No plan of operations extends with any certainty beyond the first contact with the main hostile force” – Helmuth von Moltke the Elder, 1871
For addtional reading,
http://in.reuters.com/article/2011/11/18/sovereign-dealers-idINL5E7MG23J20111118
List of Accredited Auction participants in the German auction:
http://www.bundesbank.de/download/kredit/kredit_bietergruppe_mitglieder_en.pdf