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Foreigners Shun Europe’S Bonds, And Debt Piles Up

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http://www.nytimes.com/2011/01/12/business/global/12debt.html?_r=1&ref=business

Greece. Ireland. And now, it seems, Portugal.

While the circumstances that have driven these debt-ridden members of the euro zone to the brink differ, they share one common characteristic: All three countries aggressively tapped their domestic banking systems for more debt long after they had been shut out of international bond markets.

With its 10-year debt trading close to the historic high of 7 percent reached last week, Portugal will try Wednesday to sustain what many have come to see as nothing more than a form of bond market charades when it attempts to raise up to €1.25 billion, or $1.62 billion, in long-term financing — debt that is expected to come largely from the country’s already depleted banking system.

For Portugal, as it was for Greece and Ireland before their bailouts, borrowing at such high rates from lower-quality borrowers may demonstrate its economic sovereignty. But to an increasingly skeptical marketplace, borrowing on such terms reflects nothing more than the country’s unwillingness to accept the rude reality of its fiscal condition.

As a result, the Portuguese banking system takes on more debt, making it harder to restructure and thus requiring the government in Lisbon to impose more pain on its citizens, a dynamic that is now playing out in Greece.

“Eighty percent of Portugal’s debt stock is held by foreigners,” said Jonathan Tepper, an analyst at Variant Perception a research firm in London. “But the flow, now, is being financed domestically.”

As its interest rates moved above 6 percent, Greece bowed out of the markets and soon after had to accept a bailout.

Portugal has so far insisted that its financing needs for this year — about €20 billion, or 11 percent of its gross domestic product — are manageable, and compared to what Greek owed last year they are.

But with its gaping current account and budget deficits, combined with a negligible growth rate, the market consensus is that Portugal must soon accept a bailout from Europe and the International Monetary Fund. Analysts believe it will likely involve a package of €50 billion to €70 billion, smaller than the Irish or Greek bailouts.

All sides emphasize, however, that nothing can happen until Portugal feels it has no other choice and formally requests aid.

So the politicians are screwing the very people that vote them into power, to do the right thing.

God when the people wake up they are going to be really p155ed, still it won't be long before the x-factor is back on and all our troubles will be gone.

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http://www.beaconequity.com/predictions-2011-jim-rogers-marc-faber-and-richard-russell-agree-2011-01-11/#ixzz1AkVImZaZ

In his latest missive, Richard Russell, the octogenarian and dean of investment newsletters, wrote in his latest issue of Dow theory Letters, “expect the unexpected” in 2011.

Russell, who served in WWII as a foot soldier in the European theater, sees trouble brewing in almost any parts of the world, and is also concerned that the U.S. debt load is no longer serviceable.

“This year might even be a black swan year,” Russell writes. “Certain events are now in place, events that have never been seen before in human history … we are dealing with debts so monstrous, so huge, that most people can’t fathom them … The Muslim community is huge, and it has moved heavily into many European nations. The radical Muslims intend to express their world leadership … Dictators in North Korea and Burma and Iran and Africa are no longer safe in that they can no longer keep their populations ignorant and in slavery,” he added.

“There is a huge disparity between the wealthy and the poor. The poor greatly outnumber the wealthy. This has all the ingredients for revolutions in the age of instant and world-wide communication.”

The makings of a “black swan” event are in place for 2011, he concludes.

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Is this guy legit?

i mean

The Muslim community is huge, and it has moved heavily into many European nations. The radical Muslims intend to express their world leadership

Is the kind of thing i buy into, not the kind of truism youre allowed to shout from the rooftops on the msm.

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Guest UK Debt Slave

So the politicians are screwing the very people that vote them into power, to do the right thing.

God when the people wake up they are going to be really p155ed, still it won't be long before the x-factor is back on and all our troubles will be gone.

I really can't see the masses waking up and realizing just how badly they are being shafted

It's very depressing

Thank christ I never had kids. I'd hate my children to be living in this period of madness

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  • 285 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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