Tuesday, January 31, 2012

Zero Hour: Portugal

This isn't totally a dead blog, but with the Eurozone going back and forth around bailout policies intended to avert bankrupsies of member nations, but only prolonging the problem, it is hard to report factual data regarding government bond sales when much larger economies profess their willingness to continue with bailouts. It is a similar pattern we see in the U.S. with the Federal Government bailing out state mispending.

So I've been using interests rates of 25% as indicators that selling government bonds is an untenable way for a government to make money, and by that standard, Portugal has recently crossed the line for its 3 year bonds (source pending until I can find something more official, but a quick Google search will show 2-year bonds spiking over 20%, and 10 year bond spiking over 18%; 20% is still untenable in my opinion).

As I've written before, probably the rest of Europe can support deficit spending in Greece, Ireland, and Portugal, at least for awhile. If Spain and Italy follow, at that point there will be a shift in the economic organization of the Eurozone.