Summarizing The Reactions To The Portuguese Bailout

Tyler Durden's picture

Following weeks and months of lies that Portugal does not need a bailout, that is is not Ireland, Greece, Algeria, Tunisia, Egypt, Middle Earth, Uranus, etc, the country finally realized it is bankrupt, unless it comes, hat in hand, bagging for a bailout from Jean Claude Trichet (who now is scratching his head how to spin this latest sovereign default as bullish ahead of tomorrow's rate hike). Which it just did. Reuters has compiled the reactions by those who felt like sharing their views on this foregone conclusion.

KEY POINTS: * Portugal's situation worsened last month after the government resigned, sending bond yields soaring, sparking a series of rating downgrades and a warning by local banks that they may no longer be able to buy government debt. * "In this difficult situation, which could have been avoided, I understand that it is necessary to resort to the financing mechanisms available within the European framework," said Finance Minister Fernando Teixeira dos Santos.

VASSILI SEREBRIAKOV, SENIOR CURRENCY STRATEGIST, WELLS FARGO, NEW YORK:

"It's somewhat puzzling this lack of euro reaction to Portugal admitting it needs aid. I guess the market is viewing this news as a foregone conclusion. This is a big financial step for Portugal and it's obvious that Portugal cannot finance itself. As to why the euro doesn't care, there are other themes playing out in the market. Investors are obviously focused on the ECB rate hike on Thursday. And in an environment where yield is the market's main focus, investors are bidding up the euro because of the prospect of more interest rate increases."

DAVID LEDUC, CHIEF INVESTMENT OFFICER, STANDISH, A DIVISION OF BNY MELLON ASSET MANAGEMENT, BOSTON:

"In general, we've been concerned about Portugal's fiscal challenges and not only think they need short-term financial help but also a high probability that Portugal has to restructure their debt.

"We remain concerned about it and the political difficulties add a challenge to what they have to do.

"The political stress and economic difficulties highlight the severe challenge Portugal and other countries have in pursuing austerity packages. When you can only control fiscal policy, not monetary policy, then you don't have all the levers available. When you only can cut and can't do other things to make yourself more competitive, such as devaluing your currency, that's a challenge."

DAVID DIETZE, CHIEF INVESTMENT STRATEGIST, POINT VIEW FINANCIAL SERVICES, SUMMIT, NEW JERSEY:

"In some ways it is a positive -- I think Portugal was in denial. On this side of the pond no one understood exactly how Portugal was going to be able to dig out of its problems without getting aid. We have seen Greece and Ireland ultimately have to go hat in hand, and traders every day have been looking at the widening spreads between the German sovereign debt and the Portuguese sovereign debt and wondering how it all ends."

ERIC GREEN, CHIEF ECONOMIST AND HEAD OF RATES STRATEGY, TD SECURITIES, NEW YORK:

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centerline's picture

"In some ways it is a positive"  - LOLOLOLOLOLOL

SheepDog-One's picture

'In some ways it is a positive'...hmm guess he must be looking at a gold chart.

Highrev's picture

The "positive" is that it's small potatoes compared to the problems the U.S., Japan and China have.

VASSILI SEREBRIAKOV, SENIOR CURRENCY STRATEGIST, WELLS FARGO, NEW YORK:

"It's somewhat puzzling this lack of euro reaction to Portugal admitting it needs aid.

Put that next to the U.S. Federal Gov., the States and Locals, the trash that the Bernank has on his balance sheet (and the major U.S. banks) and I think it's a lot less "puzzling".

 

 

Cleanclog's picture

Worries about Portugal are interesting and expected.  But look at Oakland, California.  With a $45 million deficit, city council considers an $11 million dollar parcel tax measure to put before voters, and Mayor suggests Oakland could loan itself the $11 million and make it up if tax passes to collect the tax the next year. http://bit.ly/fOVhWp

How can they lend themselves $11 million they don't have.  Yet another creative way to increase debt.  Stop stop stop already!

Ahmeexnal's picture

Portugal's denial was identical to a wino stating time and time again "I don't have a drinking problem". Now that Portugal has come out of the closet, it's "GIMME MY BOOZE!".

Major war is about to break out between EU members.

It's already priced in. BTFD!!

FeralSerf's picture

It's only a problem when one runs out of his beverage of choice.  The wino, his muscatel; Portugal, her euros.

dark pools of soros's picture

no worry..  Bernake will put them all on the NIghtTrain..

willien1derland's picture

+1 - of COURSE it is POSITIVE - the ability to reckon & gauge reality is of vital importance to survival - See Charles Darwin Origin of Species...survival of the fittest...or perhaps the most positive - tragic irony...poetic justice - your call folks...Time to visit the Mr. Xanax....Goooz Frabah.... 

Urban Redneck's picture

Darwin wrote about evolution in the natural world.

All the BS about teaching Darwin is indicative of the failure of our education system, as the history of humanity is an ongoing attempt to nullify the applicability of the theory of evolution to the human race.

In the natural world there is no mechanical or biomedical engineering to lengthen the lifespan or increase the reproduction of inferior species.

In the human world there is the printing press, which enables the inferior bernankus stupidus  to not only survive longer than it otherwise would (in a natural world), but to reproduce in any location with a central banking facility. 

chistletoe's picture

Actually, that was a fascinating comment.

Herbert Spencer and others popularized an economic theory called

"Social Darwinism" in the late 1800's

(also called "laissez-faire capitalism") which became the basis,

or rationalization,

for the rise of the extreme wealth of the 1900's robber barons.

It was only the intervention of the US government under Teddy and others,

bringing the rise of government regulation,

which rescued our country from class warfare.

 

How times do change!

gorillaonyourback's picture

exactly, if you're a masochist and like austerity shoved up you ass, its a big positive. lololol

you ever wonder when the piigs are go to say to the ecb "take this austerity and shove it, it aint workin here no more" i mean really default and start printing its own money

Ancona's picture

No reaction? They had better react, because the dominoes are starting to fall. The conclusion to this will not be pretty.

Cdad's picture

Well, the criminal syndicate known as Wall Street just staged an S&P breakout...and no one showed up.  So I guess failing to react to things is the new thing.

You know, the complete lack of participation in this market is just sad.  This once great nation...

SheepDog-One's picture

Dang, they staged a market rally, and no one showed up? And there was Timmah and Bernanke dressed in their best belle of the ball evening gowns waiting to greet everyone, so sad. The markets once the pinnacle of world economy now lay in ruins, only participants a small group on each others speed dials, with no hope of anyone trusting them in the least bit ever again. Print that, Bernanke!

Highrev's picture

Post March 2009 highs on the Dow and the Composite.

Breakouts higher in the financials.

Cdad's picture

with no hope of anyone trusting them in the least bit ever again.

Dog,

And despite the truth of your statement, the layoffs still have not come, and the prosecutions are nominal...basically, three insider trading cases involving a nominal number of individuals.  This is how we know we are still in crisis, Dog.  

Unless and until the criminal syndicate known as Wall Street is right sized and cleaned out of its criminal elements, including the thousands of individuals involved in mortgage/MBS fraud, there is no reason for capital to form and move into equities.  And so the Bernank can "print that," but his printing only leads to a greater and greater measure of distrust. Thus, he can never exit the Ponzi scheme...and his counterfeit dollars represent the investment of the last greater fool in.

There is no replacing "trust" in any financial entity.  


Caviar Emptor's picture

The people and governments of the earth had long since annihilated each other using nuclear waste and biological agents. But the HFT bots still dutifully fired up each morning and traded with one another. By the end of each week the market ticker was always green, a color that no longer existed in the world. 

cosmictrainwreck's picture

I just love it, Cdad, how you always say: "the criminal syndicate....." :)

Cdad's picture

Right now, criminal syndicate bankers have essentially formed a new party, having gotten together with crony capitalist corporations and soft headed DC politicians.  I call that new powerhouse the new American Marxist/Banker party

These things need fixing.  Until they are fixed, I shall continue to call them what they are.

SheepDog-One's picture

Its all good man, here suck up a bunch more Hopium smoke.

ZeroPower's picture

Hey look, EURUSD >1.43s!

If its not a full 100bp higher tomorrow from the ECB, might be the end of the squeeze..

slaughterer's picture

EURUSD >1.43 blew through the pivot that GS gave us in last weekend's "kick start."  Gee, thanks for that good advice, squid.

Highrev's picture

Currently in a daily profit taking zone and just below very long term horizontal support/resistance.

This is a big level for the EURUSD.

Bullish above, bearish below big.

 

Add: It's been said that the USD is trading an equally important level. ;-)

 

oogs66's picture

Maybe we can turn the good bank/bad bank into good euro/bad euro. For every current euro you get some good euros backed by germany and holland and France. And some less good euros backed by the rest. They can have separate interest rates etc and politicians can be happy because they didn't have to abandon the euro.

camoes's picture

I said it already and say it again it's the BUY ANYTHING THAT HAPPENS F'CKING DIP SCHEME! Tell your friends and family!

Mae Kadoodie's picture

"traders every day have been looking at the widening spreads between the German sovereign debt and the Portuguese sovereign debt and wondering how it all ends."

well.. wonder no more.

FunkyMonkeyBoy's picture

Why the need for aid? Sell all that gold you have portugal.

After all, what's the point in having all that gold, if not for times in need like these? Well?

26 Jan 2011:

Value of Reserves: $18.21 billion 


Holdings Total: 421.6 tons 

DoChenRollingBearing's picture

No, MUCH better for Portugal to get a bailout and keep their gold!

Hahaha, Germany!

SheepDog-One's picture

Seems countries gold reserves are simply for when the people riot and the leader takes off with the gold in the cargo hold.

youngman's picture

There is a lot more gold buyers in Portugal tonight as they just found out their government was lying to them....LOL

sabra1's picture

do the germans know about this?

PY-129-20's picture

Yes, we know about this. And all those German media whores (think of CNBC alikes) are finally admitting that there is a problem with the bailout parade. Even the financial media is printing more Euro-critical articles lately.

dark pools of soros's picture

who's the German Becky Quickie???

Misean's picture

In denial!?!?! OMFG! Thank you Dr. Phil! Now we have whole countries that create a positive by admiting a negative! ROFLMAO!

SheepDog-One's picture

'Encounter group therapy' world economic model!

TaxEstate's picture

I can summarize the stock market's reaction in one word: Yawn.

SheepDog-One's picture

Nukes could be raining down from the west to east coast, and the DOW would be up +40.

TaxEstate's picture

Yes, great for GDP as the rebuilding process begins. Perhaps all Amercians just need to burn down their homes, and drive their cars off a cliff- that will bring back prosperity to America.

SheepDog-One's picture

Nah, now WW3 begins, its kicking off in the mid east big time. ALL this BS from 2008 on was for the global elites to suck up all the wealth, now its time for world war and mass population reduction. Everything else is smoke and mirrors hiding from the real truth.

PY-129-20's picture

You could create a great campaign - support your nation today and drive your car off a cliff!

M.B. Drapier's picture

What's up with the tightening in IIGS sov. debt at the moment? ECB buying again?

falak pema's picture

portugal is peanuts like greece...now Spain...where the rain falls mainly on ...is another financial plane

Herman Strandschnecke's picture

'The Rain In Spain Fall(out)s Mainly on The Plain'

claycalhoun's picture

Spain next??

 

....... and then ? Italy maybe?

 

........and then ? 

 

The whole debacle is a fraud of gigantic proportions!!

claycalhoun's picture

Who is going to default and give up the Euro, nobody until the Germans decide to go back to the deutschmark

willien1derland's picture

Not to mention that the Greek banks are the PRIMARY lenders to Eastern Europe - and the French Banks hold the majority of Greek Sovereign Debt

claycalhoun's picture

Looks like it's inevitable that this is going to end in 'defaults'

monkeyfaction's picture

It's only a matter of time before they have to ramp up the Euro printing presses to Bernanke speed.

I'm betting there will be no rate rise tomorrow either.

CheapKUNGFU's picture

All your bailouts are belong to us, make your time...

on gold, they claim to have 18.2 billion, but are we sure its atually inside the country in BULLION?

next up, Spain, then Italy...