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Portugal Denies Pressure From Eu Partners To Agree Bailout

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http://www.guardian.co.uk/business/2010/nov/26/portugal-denies-pressure-eu-partners-euro-bailout

Portugal insisted this morning that it was under no pressure from its European Union partners to accept a multimillion euro bailout that could prevent the crisis in the eurozone spreading to its neighbour Spain. But financial markets were left unimpressed, with stock markets across Europe tumbling while bond yields soared.

After Financial Times Deutschland reported eurozone nations and the European Central Bank were urging Portugal to follow Ireland and capitulate to financial aid, the office of the Portuguese prime minister José Sócrates said it was "totally false" that the country was under such pressure.

Spain, whose borrowing costs have shot to alarming levels above 5%, also distanced itself from speculation that it wanted Portugal to agree a deal. "What Spain wants is for Portugal to pass its budget and fulfil its stability programme," a source told Reuters.

The premium charged by investors to hold Spanish 10-year government bonds over benchmark German bunds hit a new record high this morning. The Spanish-German yield spread widened to 266 basis points from 256 basis points yesterday. The yield – or rate of return – on 10-year Spanish bonds jumped to 5.25%, the highest since 2002.

Other European 10-year bond yields also rose, with the Irish yield rising to 9.4% and Portugal to 7.1%.

Deja vu?

I'm sure we had this with Ireland, we don't need a bailout, we are not in any talks to have a bailout, no one is forcing us to do anything. Help we need a bailout.

Fred the Shreds view of if your going to panic, panic first?

I'm sure this time we can believe Portugal doesn't need a bailout.

Could we see another bailout before Christmas?

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most definitely.a succession of denials is a key indicator.

did you have sex with that woman?

no.

did you have sex with that woman?

no.

brilliant,I love denials.

At least your not trying to define what the word is "is".

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http://uk.reuters.com/article/idUKTRE6AO1NY20101126

European officials denied "absolutely false" reports Portugal was under pressure to seek a bailout and Spain ruled out on Friday needing help to manage its finances, despite fears of a spreading euro debt crisis.

The Financial Times Deutschland quoted unidentified sources as saying some euro zone states wanted Portugal to seek aid in order to avoid Spain, the fifth largest EU economy, from having to follow suit.

"If Portugal were to use the fund, it would be good for Spain, because the country is heavily exposed to Portugal," the paper quoted a source in Germany's finance ministry as saying.

EU Commission President Jose Manuel Barroso dismissed the FT report, echoing a vehement denial by Portugal.

"I can tell you that it's absolutely false, completely false," Barroso said, adding that an aid plan for Portugal had neither been requested nor suggested.

A German government spokesman said Berlin was not pressuring anyone to request financial help and said it expected Portugal's austerity measures -- due to be passed later on Friday -- to work.

A Spanish government source told Reuters that neither was Madrid pushing Lisbon to seek help.

So this is a Spanish bank bailout then...

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8162118/Euro-slides-as-Portugal-bailout-pressure-builds.html

The European Central Bank is pushing Portugal to become the third eurozone country to accept an EU-IMF “rescue” because of concerns that a Portuguese debt crisis will sink its Iberian neighbour Spain.

The EU and eurozone fears that Spain, Europe’s fifth largest economy, is too big to bailout and that a Spanish crisis would tear down the European single currency.

Major European stock markets fell sharply, unsettled by the news and talk of the EU bailout fund being doubled. Spain's Ibex led the way losing 2.3pc, while bourses in London, Paris and Frankfurt were down between 1.3pc and 1.7pc. The euro hit $1.3204, its lowest since late September.

ECB getting worried over the money it's had to lend to the Spanish banks?

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if every country is exposed to the others, then the answer is they all default, recalculate the balance sheet, sack 80% of the banks execs, and everything will be just fine.

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ECB getting worried over the money it's had to lend to the Spanish banks?

http://ftalphaville.ft.com/blog/2010/11/26/417081/gobbling-93-per-cent-of-eurozone-liquidity/

A datapoint in the (now age-old) story of eurozone bank reliance on the ECB.

CreditSights have on Friday estimated that banks from peripheral members — Greece, Ireland, Portugal and Spain — have tapped a whopping 93 per cent of net liquidity from the eurozone’s various central banks, and the European Central Bank. In other words, stripping out banks in countries — such as Austria, Finland and Germany — that are net placers of deposits with the eurosystem. Which would leave just 7 per cent of net current liquidity going to those stronger countries.

The ECB is now caught in that tight spot. It wants to end its slow-drip (or should that be rushing gusher?) of eurozone liquidity. But it cannot do so without hurting those weaker states. Indeed, talk of an ECB exit was probably one of the things that helped contribute to recent Irish turmoil.

Nice chart at the link.

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Spain is they key. If that goes the EZ will need to accept full financial integration or the Euro will break. I'm certain they will not allow the Euro to fail, no matter the cost. Germans will be very very pissed but they will have no choice. Bondholders will be forced to take a haircut on Spanish bonds I expect.

if every country is exposed to the others, then the answer is they all default, recalculate the balance sheet, sack 80% of the banks execs, and everything will be just fine.

No it won't be fine. But they won't allow it to happen, just dump the debt on all counties, UK included.

Edited by Peter Hun

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8161003/Eurozones-440bn-rescue-fund-does-not-need-to-be-bigger-says-Brussels.html

The European Commission, which heads up the EU, has suggested that the size of the European Financial Stability Facility (EFSF) be increased, amid fears it might not be able to accommodate Spain should it be the next to seek international support, according to German newspaper Die Welt.

Germany is said to be unwilling to expand the fund, designed to help troubled eurozone countries by issuing bonds backed by guarantees from fellow governments.

"This is absolutely false," a spokesman for the Commission said of the reports.

So we even have denials about the rescue fund not being big enough.

Soon the EU will be denying it even exits.

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Now look here boys, will you kindly stop going on about this!!

If Portugal was in trouble the coffee I am drinking sitting outside this cafe would be costing me more than 70 cents wouldn't it?

"Yes Laura".

I've just checked .... 65 cents.

Oh sh!t, spiralling deflation is here :(

Edited by Laura

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8161003/Eurozones-440bn-rescue-fund-does-not-need-to-be-bigger-says-Brussels.html

So we even have denials about the rescue fund not being big enough.

Soon the EU will be denying it even exits.

When the denials of the denials start is when you've really got issues.

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Now look here boys, will you kindly stop going on about this!!

If Portugal was in trouble the coffee I am drinking sitting outside this cafe would be costing me more than 70 cents wouldn't it?

"Yes Laura".

I've just checked .... 65 cents.

Oh sh!t, spiralling deflation is here :(

Can you wake up and smell that coffee please.

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Pettis nails it:

  1. Greece will be forced to default and restructure its debt, and the restructuring will come with a significant amount of debt forgiveness. The idea that it can grow its way out of the current debt burden is a fantasy. Remember that when countries are in conditions of financial distress, they face systematic disinvestment and capital flight, and as a consequence are never able to grow at anywhere close to the necessary rates – especially since any growth they do manage to achieve generally comes from additional fiscal spending, which simply runs up debt further.
  2. Greece will not be the only defaulter. Spain, Portugal, Ireland, Italy, Belgium and much of Eastern Europe will also face severe financial distress and possible default. History suggests that when a country is experiencing a solvency crisis, growth comes only after debt forgiveness, and many or most of those countries will also be forced into debt forgiveness.
  3. Political radicalism in these countries will rise inexorably as a consequence of rising class conflict. As Keynes pointed out as far back as 1922, the process of adjusting the currency and debt will primarily be one of assigning the costs to different economic groups, and this is never an easy or conflict-free exercise. Of course the less stable a government becomes as a consequence of this adjustment, the more likely it is to prefer very short-term solutions.* This Sunday, by the way, Catalans are likely to vote in an election in which the “current Socialist-led coalition government in Spain’s northeastern region will fall, a slap in the face for Spain’s prime minister, José Luis Rodríguez Zapatero,”, according to an article in Wednesday’s New York Times. There will be a lot more of this sort of thing in the next few years.
  4. So why not bite the bullet and just get it over with? Because the European banking system would not survive even the best-case restructuring scenario. As a consequence we are fated to witness several years of difficult economic adjustment while everyone pretends that these countries, under the right policies, can work their way through their debt burdens. What will really be happening is that European banks will aggressively rebuild their capital bases, with the unwilling help of the poor household sector, until they are sufficiently well capitalized to begin taking the write-offs. Only then will we recognize that some countries cannot repay their debts.
  5. As an aside the European junk-bond market might take off. With banks crippled in their lending activities, Europe’s financial markets will probably go through a process much like that which the US experienced in the 1980s. American banks at that time were unable to fulfill their traditional lending function as they struggled to clean up their LDC and energy loan portfolios, leaving the way open for the likes of Drexel Burnham to create a massive junk bond market. This process will be helped to the extent that European policymakers try to avoid paying for the adjustment by liberalizing bank-lending practices.
  6. Several countries, most notably Spain, will be forced to choose between giving up sovereignty to Germany, suffering extremely high rates of unemployment for several years, or giving up the euro. They will almost certainly choose the third option. There are still a lot of people who say giving up the euro is “unimaginable”, but that just shows a weak imagination. I especially remember in 2000 Domingo Cavallo dismissing the stupidity of foreign investors who imagined Argentina might be forced to suspend payments and devalue the peso – which it did in late 2001. More recently, on April 30, Cavallo warned Greece: “Don’t even think of abandoning the euro, whether temporarily or definitively, because that will provoke a financial catastrophe in Greece and various other countries in Europe.” Now there’s some useful advice, especially when you consider the huge surge in growth and the fall in unemployment Argentina experienced after it devalued.

This has been said before, but in a way this crisis is the European equivalence of the American Civil War. Once the dust finally settles Europe will either be a unified country with fiscal sovereignty firmly established in Berlin or Brussels, or it will be fragmented with little chance of reunion

http://mpettis.com/2010/11/chinese-inflation-and-european-defaults/

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Total global financial meltdown if this happens, the current monetary system has ended and it can't be fixed.

Eh? If what happens?

Banks rebuilding their capital bases over say 5 years (i.e. at proles expense) and then taking capital haircuts and Germany (and a few others) being booted out of the system that only benefits them?

How is that total global financial meltdown? and what do you mean?

You've lost me. :huh:

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Spain is they key. If that goes the EZ will need to accept full financial integration or the Euro will break. I'm certain they will not allow the Euro to fail, no matter the cost. Germans will be very very pissed but they will have no choice. Bondholders will be forced to take a haircut on Spanish bonds I expect.

No it won't be fine. But they won't allow it to happen, just dump the debt on all counties, UK included.

If a debt cant be repaid through wealth creation, then it cant be repaid.

Indeed if a country needs to borrow to keep going, its already busted.

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http://www.bbc.co.uk/news/business-11845046

European Commission President Jose Manuel Barroso has dismissed reports that Portugal is next in line for a financial rescue package.

Mr Barroso said the reports were "absolutely false, completely false". The Portuguese government has made similar denials.

Speculation that Portugal would follow the Irish Republic in asking for help has been rising this week.

Portugal approved its 2011 budget on Friday, which aims to cut its debts.

The budget seeks to cut the country's deficit from 7.3% of economic output this year to 4.6% in 2011.

Even better the European Commission President denies Portugal needs a bailout.

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I fear that Laura may have had a hand in provoking this indecent exposure from Spain.

But to be fair, when Laura ordered that deflationary coffee, she was not to know that France is indecently exposed to Spain - to a far greater extent.

(I seem to remember Spain 85bn exposure to Portugal, France 200bn or so to Spain.)

Those horror property clips on You Tube must be giving the French nightmares.

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http://www.guardian.co.uk/business/2010/nov/26/portugal-denies-pressure-eu-partners-euro-bailout

Deja vu?

I'm sure we had this with Ireland, we don't need a bailout, we are not in any talks to have a bailout, no one is forcing us to do anything. Help we need a bailout.

Fred the Shreds view of if your going to panic, panic first?

I'm sure this time we can believe Portugal doesn't need a bailout.

Could we see another bailout before Christmas?

It's perfectly possible we could see the entire European banking system go into complete meltdown before Christmas.

If I had any large amount of cash in the system, I would be quietly withdrawing it right now

Edited by tallguy

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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