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Threat of a Debt Ceiling Bloodbath Pushes the Wall of Worry Higher

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While the dismal news from Spain creates a deeper, darker "financial hell."

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"Lloyd's Wall of Worry" rises to 21 blocks this week as alarming headlines from Spain collide with ongoing fears that Obama and Congress won't call a debt ceiling truce before the August 2 deadline. (Check out our Debt Ceiling Countdown Clock, at the top of this page.) The upshot: despite Bernanke's encouraging remarks from this morning, investors remain cautious and watchful; it may time to look for good buys.

For more on how to use this column as an investing tool, see "What is Lloyd's Wall of Worry?" below, or check out the graphic version of this page. For a look at the the specific worries making investors nervous this week, keep reading.


U.S. ECONOMY:
Not too hot. Not too cold. Just right…Not.

UNEMPLOYMENT: The economists describe it as "structural" and say that we must be patient. Of course when the economists start losing their jobs, the unemployment problem will then be "catastrophic" and in need of immediate action.

U.S. DEBT CEILING: Women and children, avert your eyes -- this may just be a bloodbath after all.

INVESTOR SENTIMENT: Is there a mercy rule for stock market inflicted psychological damage?

ECB: The suggestion box is officially out, as the most powerful financial governing body in Europe asks for advice on how to deal with the metric chuck-ton of toxic debt currently ravaging the region. Welcome back to the Dark Ages, Europe.

QE III: A taboo now in July. Will be manna later in September.

POLICY MISTAKE:
Spin the wheel! Who will be first? The US, the EU or China? Spin the wheel....

HOUSING CRISIS:
The residential housing quicksand deepens….

GREECE: Ten years of hard partying has left one colossal bar tab. Either pay the bill or start a brawl? Let the plate smashing begin!

SPAIN: This just in -- the disastrous debt load in one of the country's banking regions is actually twice as bad as estimated. I give up! The Economic Gods need to create new words to describe this new, deepest, darkest level of financial hell.

ITALY: Leave us alone until the autumn. Summertime is too bella for the ugliness of economics. Arrivederci!

INFLATION:
From here it will break big -- higher or lower is the question.

ARAB SPRING:
New Guy! New Guy! The Republic of Sudan enters the awakening as springtime moves its way down the African continent.

LIBYA: Mo-Mo is just daring NATO to put boots on the ground while at the same time working backroom deals to end the war. He's crazy like a fox, a really old, megalomaniacal fox.

JAPAN: Rumors spreading of a V-Shaped financial recovery bursting from the land of the rising sun. Talk about just what the doctor ordered.
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No positions in stocks mentioned.
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