The next domino, Portugal reveals that its National Debt is 114% of GDP not 82%

Cassandra Syndrome

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Portugal is the next target of the bond vigilantes. It has been telling major porkies on its figures of late as well.

With Ireland now a lost cause, the next country which will see its bond yields surge to new records is Portugal. And just so vigilantes don't miss the hint, the Portuguese opposition party has stated that the country's budget deficit and public debt are "higher than those reported by the government." The claim is that Portuguese debt is about 30% higher than claimed by official statistics: instead of 82% of GDP, it is actually 112%. With bankrupt Greece having lied about virtually every aspect of its comatose economy, it is not as easy to dismiss the announcement as merely political bickering, and is sure to leads to at least a modest double digit basis point jump in Portuguese spreads. And once Portugal is rescued, just after New Year's, then it will be time for those last two countries of the peripheral block: Italy and Spain. And after them, it's the core's turn.
Vigilantes Home In On Portuguese Beacon As Opposition Claims Government Understated Debt And Deficit Figures By About 25% | zero hedge

The IMF and EU have finite funds. They have at most €400 Billion left. It will soon become mathematically impossible for the Euro to survive and for countries to service debt.

Endgame is approaching fast.
 


Aindriu

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We should never have joined the Eurozone in the first place - it was ridiculous decision.

At least when we had the Punt we could set our own interst rates and devalue if necessary. Now we are just a colony of the great Franco/Germanic super state. Even Lenihan admitted that we gave away our sovereignty when we joined the EU.
 

Mister men

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Yes for jobs.
 

Cato

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The IMF and EU have finite funds. They have at most €400 Billion left. It will soon become mathematically impossible for the Euro to survive and for countries to service debt.

Endgame is approaching fast.
Is it not possible for the ECB to just turn on the printing presses? I know this causes as many problems as it solves but it pushes the endgame further down the road.
 

Kevin Doyle

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Is it not possible for the ECB to just turn on the printing presses? I know this causes as many problems as it solves but it pushes the endgame further down the road.

Thats what they'll do, just as they did in the US. Both will sink under future crippling dept and hyperinflation.
 

Skin

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Is it not possible for the ECB to just turn on the printing presses? I know this causes as many problems as it solves but it pushes the endgame further down the road.
So what exactly is your point? Keep the endgame away long enough until you are retired and living in the Bahamas on borrowed money, while your children and grandchildren can pick up the tab and sort out the mess?
 

HarshBuzz

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Thats what they'll do, just as they did in the US. Both will sink under future crippling dept and hyperinflation.
no they won't Kevin (QE here has been much less dramatic than in the US)

the mentality of the ECB is Teutonic and they will not set out to destroy the currency (at least deliberately ;))
 

HarshBuzz

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Greece has had to be bailed out, now Ireland, who is next, Portugal? Hunagry? Spain?

No, your right, no drama here!
we're talking about QE

what are you talking about?
 

Cato

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So what exactly is your point? Keep the endgame away long enough until you are retired and living in the Bahamas on borrowed money, while your children and grandchildren can pick up the tab and sort out the mess?
I wasn't suggesting it as a good idea, I was asking a question (hence the '?' at the end of the sentence) as to what they will do when the rescue kitty runs out. As I said it, QE, creates as many problems as it solves and is not a real solution - it's effect is just to push the problem, albeit in a different manifestation, to a later date. It doesn't solve anything, but doesn't mean that they may not try it.

That being said I think the Germans will hold the line on it. Either way the future of the Eruo looks a little shaky.
 

Tea Party Patriot

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Portugal is the next target of the bond vigilantes. It has been telling major porkies on its figures of late as well.



Vigilantes Home In On Portuguese Beacon As Opposition Claims Government Understated Debt And Deficit Figures By About 25% | zero hedge

The IMF and EU have finite funds. They have at most €400 Billion left. It will soon become mathematically impossible for the Euro to survive and for countries to service debt.

Endgame is approaching fast.
Unless the Germans pull out I can see the ECB trying to print their way out of this, which in essence will collapse the Euro. Don't say they have at most €400 billion when the printing presses can be rolled out like they are doing in the US.

Its not a good idea to do it, but mark my words it will be on the way, put your cash in gold.
 

Kevin Doyle

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no they won't Kevin (QE here has been much less dramatic than in the US)

the mentality of the ECB is Teutonic and they will not set out to destroy the currency (at least deliberately ;))
I agree that QE here hasn't been anywhere near as monstrous as the US but if a domino effect begins with Portugal, Spain and Italy having to seek bail outs the EU could be forced to print ever increasing amounts of currency.

Its almost canabilistic they way the bond vultures are dead set on destroying the very means of financial support that allows them to operate.
 

HarshBuzz

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I agree that QE here hasn't been anywhere near as monstrous as the US but if a domino effect begins with Portugal, Spain and Italy having to seek bail outs the EU could be forced to print ever increasing amounts of currency.

Its almost canabilistic they way the bond vultures are dead set on destroying the very means of financial support that allows them to operate.
if Spain and\or Italy go, it's game over for the Euro

your highlighted statement doesn't make much sense to me - care to explain it further?
 
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MPB

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I agree that QE here hasn't been anywhere near as monstrous as the US but if a domino effect begins with Portugal, Spain and Italy having to seek bail outs the EU could be forced to print ever increasing amounts of currency.

Its almost canabilistic they way the bond vultures are dead set on destroying the very means of financial support that allows them to operate.
And to think we have the capacity to make paupers of the bondholders.

It would make you think our leaders were on their side, would,nt it? :rolleyes:
 

Sham96

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Portugal is the next target of the bond vigilantes. It has been telling major porkies on its figures of late as well.



Vigilantes Home In On Portuguese Beacon As Opposition Claims Government Understated Debt And Deficit Figures By About 25% | zero hedge

The IMF and EU have finite funds. They have at most €400 Billion left. It will soon become mathematically impossible for the Euro to survive and for countries to service debt.

Endgame is approaching fast.




Ray Kinsella (ex Irish central bank and IMF) gave an interview on Bloomberg earlier and he made the same points. The bailout won't work. The contagion will spread. The Euro project is over
 

feargach

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Pedro Passos Coelho told a meeting of his Social Democratic Party items like state-run companies' debts were not included in the overall public debt, which the government puts at 82 percent of gross domestic product this year.
On the face of it, this looks suspiciously like a load of cack from a rightwing opposition.

I don't know the specifics of the Portuguese situation, but in the normal run of things, a state-run company's debt is distinct from the national debt. Usually, if a state-run company goes insolvent, the state itself is not legally liable for the debts.

Otherwise, it makes no sense for the company to exist at all. It would be better off as part of the civil service.

Now, of course, it may be the case that Portugal's government has offered an unconditional, unlimited, irrevocable guarantee on all state companies. If that were the case, then the story might be accurate.

That would then beg the question as to why the ECB inspectors allowed it.

It looks highly fishy to me. If anyone can provide evidence that the Portuguese government is liable for the debt of every state-run company, then I'll take it seriously. Otherwise it just looks like a disloyal opposition (which is itself responsible for much of the economic mismanagement in Portugal in the last several years) attacking their own country in a bid to take it over again.
 

HarshBuzz

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Usually, if a state-run company goes insolvent, the state itself is not legally liable for the debts.
<cough>Anglo<cough>

<Achooo!>INBS<Achooo!>

<snuffle>AIB<snuffle>

etc
 

MPB

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On the face of it, this looks suspiciously like a load of cack from a rightwing opposition.

I don't know the specifics of the Portuguese situation, but in the normal run of things, a state-run company's debt is distinct from the national debt. Usually, if a state-run company goes insolvent, the state itself is not legally liable for the debts.

Otherwise, it makes no sense for the company to exist at all. It would be better off as part of the civil service.

Now, of course, it may be the case that Portugal's government has offered an unconditional, unlimited, irrevocable guarantee on all state companies. If that were the case, then the story might be accurate.

That would then beg the question as to why the ECB inspectors allowed it.

It looks highly fishy to me. If anyone can provide evidence that the Portuguese government is liable for the debt of every state-run company, then I'll take it seriously. Otherwise it just looks like a disloyal opposition (which is itself responsible for much of the economic mismanagement in Portugal in the last several years) attacking their own country in a bid to take it over again.
Have the ECB a rule against giving irrevocable guarantees?

Does Brian Lenihan know?

Come to think of it does Jean Claude Trichet know?
 

Twin Towers

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We should never have joined the Eurozone in the first place - it was ridiculous decision.

At least when we had the Punt we could set our own interst rates and devalue if necessary. Now we are just a colony of the great Franco/Germanic super state. Even Lenihan admitted that we gave away our sovereignty when we joined the EU.
It wasn't for want of being told.
 


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