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EU Draft Says Spain And Portugal Need Far More Deficit Cuts, Warns Of Debt "Snowball" Effect, Sends Portuguese Spreads Wider
A new to be released EU report warns that far more deficit cuts will be required. The report focuses on Spain and Portugal, and especially on the year 2011. According to the report a "snowball" effect may hit Spanish and Portuguese debt, and that the fiscal challenges for the two countries are "daunting." And as these kinds of reports tend to be self-fulfilling prophecies, Portuguese bonds have shot lower, and the spread to Bunds is +12.5 bps at the day's wides, or 271 bps. We anticipate many more such reports to come out about every country in Europe that has been forced to establish austerity measures, which basically means every country in Europe. And somehow the force is still strong with Keynesianism in the US, which is still deluding itself into believing it will be able to squeak through the cracks with no deficit cuts.
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if only the europeans were as fiscally prudent as the americans...LOL
Deficits, we don't have any deficits, if I simply push this button right here "delete" on the national debt computer.
I just appreciate the CB's willingness to drag this thing out and give me more time to prepare for the obvious.
Meanwhile futures positive on such wonderful news.
It really does beggar belief? Spain up 1% ... France (apparently holds a lot of Spanish debt) up 1.9% and Germany (apparently holds a lot of Spanish debt) up 1.2%
What goes on here??
The stock market decoupled from the economy a while back.
It's not measuring economic strength anymore, it's tracking political pull.
We have a spill cam...wonder if we can get a riot cam...at least until the US realizes it has to start doing the same.
"which is still deluding itself into believing it will be able to squeak through the cracks with no deficit cuts."
If the US government drastically cuts spending, current system will collapse almost immediately, of course it's going to happen anyway but it seems like you are "deluding" yourself into thinking that will work.
I love seeing people thinking they are going to get "out", there is no "out".
The reason Europe is collapsing is simple, the global credit system is not generating the required yield to sustain itself, it's not collapsing due to too much spending... it is collapsing due to not enough. It's a one way system. The system either expands exponential or it collapses, this is not rocket science.
Cutting in some of the secondary markets could help sustain themselves a little longer, but that is not an option for the US... the US consumer is the fuel... the fuel started getting shut off going on 3 years ago.... when the US government is no longer in a position to take up the slack of the US consumer, the system will collapse into a heap of a mess.
As suggested earlier, the EURUSD daily chart is giving bullish signals.
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
At 1.2318 I think its time to re-short the old EURO
"And somehow the force is still strong with Keynesianism in the US, which is still deluding itself into believing it will be able to squeak through the cracks with no deficit cuts."
Interesting idea of kynesianism, indeed: expanding deficit in running the printing machines of the FED red-hot in order to give to Wall Street junkies more monopoly-money to amuse themselves... Maybe I'm wrong but I wouldn't call it keynesianism.
Let people sleep well. The deep causes of the current crisis are a bit more depressing than Keynesianism.
Lambasting Keynesianism at least gives the impression things can be put on right tracks. It is only about throwing to the rubbish bin a failed economic theory.
People in here still believe that they are going to find new sponsors to fund their liberty project as their ancestors were given the opportunity in the 19th century. Indians are pretty scarce these days though.
No, it's just that maybe I studied too long ago and I don't want to make sterile academy, but things are to be called with proper names. If Keynes would be living now I'd like Bernanke to be closed in the same room with him: he wouldn't come out alive.
For example, if back then the TARP had been given directly to the house owners to pay back their subprime mortage to the bank, these move could possibly have sustained consumes, since these people with lower to middle incomes have a higer propension to consume. These people seing their real income rising and with less fear of loosing their homes, had consumed more than they actually did. The State had entered in the credit position instead of the bank and could have diluted the debt on a longer time span via taxation. This schema I could call a keynesian one: then one could argue if it would work or not, but this is another issue.
Instead the State expanded debt to make the Fed to print money given to the banks which, instead of using it to stabilize the subprime mess, started again to play casino inflating new bubbles: as a result the bank got the money AND the houses of the "subprime owners" AND are now major creditors of the same State which bailed them out. There are many names to call this, mostly to be found in the Criminal Code, but "Keynesianism" is not among these.
Regards
Bailing out the homeowners would be equally as bad as bailing out banks.
The solution here is to cut costs: reducing the price of housing, reducing the tax burden, reducing the debt burden (likely to zero), and increasing our efficiency so that we are no longer getting our asses kicked by global wage arbitrage.
But the nice lady from the IMF told me this morning that there is no chance Spain will default, and no reason to restructure Greek debt.
It must be true. I saw it on CNBC.
From the only country in the world that fully repaid the Marshall Plan assistance, I would like to make a 24/48 h prophecy here. Moodys and S&P will downgrade Portugal and Spain still this week to inflate the cushion of the news about the UK Budget next tuesday (22) and the subsequent catastrophic events.