Some of you may have noticed that El Pais ran a piece earlier today pointing out (and it stands up bigtime) that foreign investors have piled into the country’s Sovereign debt as never before. Foreign investors’ holdings of Spanish government bonds and bills increased by a record of almost €21 billion in November – the last audited month.

El Pais calls this ‘a result of increased investor confidence’, which for me is a statement in and of itself representing the triumph of confidence over the facts. If the money going into Spain’s future is dumb money, then it is sure as Hell going in there in a very opinion-leading manner. My flared nostrils don’t believe it: there was an absolute increase in outstanding Spanish public debt to almost one trillion euros during 2012, the banking system exposure to property debt via the cajas remains mind-boggling, and the country shows every sign of disintegrating before our eyes.

My sense is that the money going in there is smart money…perhaps even too smart for its own good.

Peripheral/ClubMed bonds did well across the board today. Italy’s yields fell to the lowest since May last year, and Spain’s 3.79% level was the lowest since December 2009. Of course, in today’s murky world of muddy liquidity pools and speed-of-light disguised purchases, some of the big money will have plunged in before the yields fell.

I think this directionalising cash has two objectives. First, get the suckers in there and then sell on your investment at a shallow margin that makes sense for you and looks discounted to the buyer. But second – and probably this is the biggie – take a position waiting for one or more of Greece, Italy, Spain or Ireland to default.

The “smart” money may be right or wrong. But if it’s right, that’s going to create all kinds of problems for Wall Street…where, oddly enough, most of the default insurance is held.

Stay tuned: this is just one of the many markers on the newly-resurfaced road to ruin that we are going to see from now until May 2014.

Earlier at The Slog: Reason No 6,513 why neoliberal globalism sucks