Portugal, Spain, Italy Debt Sales Reach Panic Levels

[marmar]

from 24/7WallStreet:




The panic that EU default trouble could move beyond Greece to the sovereign paper of Portugal, Spain, and even Italy grew today. News reports say that some EU officials now think a bailout of Greece will have to involve some level of defaults. Fear has spread that a global economic slowdown will make it impossible for other southern Europe nations to meet obligations.

Spreads on Italy, Spain, and Portugal debt hit their highest levels since the EU was formed.

Bloomberg writes, “There’s pronounced risk-off sentiment,” said Michael Leister, a fixed-income analyst at WestLB AG in London. “You can clearly see the market is worried. We are seeing a self- fulfilling prophecy, where yields increase due to contagion and then the market gets worried about the high funding costs, as do the rating agencies.”

Just a week ago, it looked like a private/public sector bailout of Greece would calm markets concerned about contagion. It has only taken that week to throw bond markets back into turmoil

-- Douglas A. McIntyre


http://247wallst.com/2011/07/11/portugal-spain-italy-debt-sales-reach-panic-levels/#ixzz1RnUM0YZk

[Sarah Ibarruri]

1. I'm a bit confused. Anyone care to give a simple explanation of this? Thanks! nt

[IndyPragmatist]

2. Portugal, Spain, and Italy are in the same boat as Greece

They have massive debts and need to make some major changes to how they operate. Spain has well over 20% unemployment, Portugal has more debt than they can hope to pay off, and Italy has too many problems to count.

But I'll mention a couple...
They also have a very sizable debt, and it's looking like they won't be able to pay it off without help.
They have the biggest geographic difference in education, standard of living, etc between the north and south of any post-industrial nation. The north is similar to most modern European nations with lots of public transportation (although it's not very reliable), strong education systems, and a thriving economy. The south has high unemployment, poor schools, even less reliable transportation, and they are at the mercy of the mafia. The students from the south tend to go to college in the north, or in other European nations, and never return. They are replaced by uneducated and low skilled immigrants from northern africa.

[Sarah Ibarruri]

6. Is this related to what happened here? nt

[HereSince1628]

3. "We are seeing a self-fulfilling prophecy..."

That is so richly stuffed with truth that it can't all be grasped in a single thought.

[hadrons]

4. Interesting that the "big money"/Wall St. solutions AREN'T working ....

and yet there the only ones being used

[FiveGoodMen]

5. Oh, they're working ...

[WatsonT]

7. I wonder when Germany is going to call it quits

[Javaman]

8. Germany is about the only nation at the moment keeping the rest of Europe

together.

If they call it quits, then it's the dirt nap for Europe.

[WatsonT]

9. And I can't imagine they're too happy about having to support all these debtor nations

Germany like the rest of Europe has a good sized government, social programs etc. But unlike many of these nations they seem to be financially responsible and pay their taxes.