First Greece, Now Italy, Portugal Next?

While most investors are focused on Italian politics - the parallel currency 'mini-BoT' fears and potential for a constitutional crisis - Spain is now facing its own political crisis amid calls for a no-confidence vote against Rajoy. However, 'Spaxit' remains a distant concern for investors as another member of the PIIGS peripheral problems is starting to signal concerns about 'Portugone'?

And the fundamental data confirms Portugal is next in line for a debt crisis...

As Statista's Brigitte van de Pas notes, on average, European Union countries had a gross government debt of roughly 81 percent of GDP in 2018.

This average disguises real differences between EU countries. Whereas Greece had a government debt of 177.8 percent in 2018, Estonia had a debt of only 8.8 percent - the lowest in the entire EU zone.

Infographic: Who Has The Highest Debt? | Statista

You will find more infographics at Statista

While, the high Greek debt is well-known, a number of other countries however also have a debt that is higher than their own GDP. The Italian debt, for example, is lower than the Greek but still significant, at over 130 percent of GDP. 

Portugal, in third place, had a debt of 122.5 percent.

One small positive note though: all three countries had even higher debts in 2017, and the European Commission forecasted a slow, but further decrease of their government debt in 2019. Whether this holds true for Italy, with their newly-elected government of Movimento 5 Stelle and Lega remains to be seen.

Comments

Heros Yen Cross Mon, 05/28/2018 - 03:50 Permalink

How did you do that "I like you/mouth shut" with the reply?  Down right masonic.  Ahh, you must have edited the comment while I was replying...

Most of the US side of my family certainly don't like me any more even if I do keep my mouth shut.

In reply to by Yen Cross

directaction Four Star Mon, 05/28/2018 - 06:49 Permalink

I was in Portugal not long ago. Drunk and doped-up homeless strewn about all over the city, graffiti on nearly every flat surface, heroin shooting galleries all over, one across from our hotel, clusters of sub-saharan black Africans occupying parks and clumped on sidewalks, cackling at passersby.

Portugal is no longer a great nation, that's for sure. It's an awful mess.  

In reply to by Four Star

Manipuflation Yen Cross Mon, 05/28/2018 - 04:13 Permalink

How I did I know you were here Yen?LOL  I might have a hell of a deal on Phillips vodka forthcoming.  Retail is fascinating if you can see the numbers and know how the markdowns work.  Someone must have ordered up a shitload of Phillips vodka and now we have a pretty large amount of overstock vodka that has been marked down to one cent over cost.  I saw this happen last week with Jack Daniels at $8 a bottle for one hour.  I had the wife go in just an hour after that markdown occurred and there was only bottle left.  There were two markdowns on that item that cost a lot of money to the company. 

I've figured it out now.  It's internal and now what I am going to do is wait for the second markdown because I can see it if I pay close enough attention.  Someone is ordering up a shitload of booze and I can and will find out with documentation.  I already know who it is that is doing it.(I think I know but I have to prove it first)  I don't know who else is involved yet though or how deep it runs.  

I have integrity.  I want the best price too but I can't steal.  If I do then I am no better than they are and everything I've said on ZH over the years is null.  I'm not that guy.  

I'm the newest member of management but I'm not new to finances and managing.  If anyone doubts me, I stated way back in November of 17 that I would find out why there are millions of dollars of shrink/theft in just one store.  I'm pretty close now.

My WMT is simply a microcosm of the world as it is.  Maybe everyone thinks that good old Mani is dumb and I play that part but I have been on the planet for a while.  I want people to think I am dumb.  I'm Simple Jack.   

In reply to by Yen Cross

halcyon Yen Cross Mon, 05/28/2018 - 03:57 Permalink

Portugal is a sideshow. No crucial interlinkahe and size is not too big.

Spain and France are not.

Look at BNP Paribas, Santander, Credit Agricole and Societe Generale.

The EU bank problem is still not solved and sovereigns are not strong enough to cover them.

EMU is toast. It is just a matter or time and method.

In reply to by Yen Cross

ItsAllBollocks Mon, 05/28/2018 - 03:25 Permalink

... ever noticed how every time government debt is mentioned the ones the debt is owed to are never EVER mentioned?

I wonder just how many people actually know to whom it is owed and for that matter, why...

Anyone willing to have a guess?

hooligan2009 ItsAllBollocks Mon, 05/28/2018 - 03:42 Permalink

central banks, pension funds, insurance companies and pooled vehicles investing on behalf of retail investors. hedge funds take speculative positions. derivatives traders use rehypothecated government debt as collateral security on long and short positions.

the "real" investors in government debt (promises) are those that use government debt to pay pensions.

a government debt crisis means no or reduced pensions for all.

In reply to by ItsAllBollocks

hooligan2009 ItsAllBollocks Mon, 05/28/2018 - 04:15 Permalink

well, since tax is complusory, the largest "shareholders"/"stakeholders" are taxpayers with their ownership equivalent to the corporate tax rate - 18% for companies in the UK, 12% in Ireland - you could add direct health insrance to that tax rate, since companies in the UK pay around 12% per employee.

for pooled fund vehicles investing in goverment debt, retail investors.

central banks are owned by goverments, though claim independence via ownership by major banking cartels.

the Fed owns around 12% of US goverment debt,

https://www.newyorkfed.org/markets/soma/sysopen_accholdings.html

the ECB owns around 6 trillion bucks worth of government debt, the BoJ the same in yen equivalent; 

i follow this guys work, he is a bit of an economic "yoda".

https://www.yardeni.com/pub/peacockfedecbassets.pdf

insurance companies are owned by shareholders, those shareholders might be pooled fund vehicles, other insurance companies and, increasingly, passive index tracking funds.

so, who owns the central banks like Bank of England whose Governor is appointed by the UK government, or the Fed, whose Chair must be approved by the senate and the house? or the ECB whos president must be approved by the European Council of Leaders?

you might argue that central banks are owned by the voters, that have monetized the debt issued by goverments who themselves are voted in. voting a (welfare) pay rise has always worked out well hey?

In reply to by ItsAllBollocks

Singelguy ItsAllBollocks Mon, 05/28/2018 - 05:32 Permalink

Most of that debt is owed to the ECB. They have been buying up sovereign debt to the tune of €40-60 billion PER MONTH for more than 2 years. The ECB has essentially destroyed the bond market in Europe. There are no other buyers. When the ECB finally stops the QE, interest rates will skyrocket almost overnight. Why is there so much sovereign debt? The EU is one giant social welfare state, and the mass migration costs are exceeding their tax revenues. All the bureaucracy costs a fortune as well.

In reply to by ItsAllBollocks

shortonoil ItsAllBollocks Mon, 05/28/2018 - 10:07 Permalink

Most of the world's banks, and wealth are owned by a hand full of families. The Warburgs, Sores, Rockefeller, Rothschild, Fugger, the British Royal Family, and about half a dozen others. They hold the majority of the world's wealth and debt. These are the elite that everyone likes to refer to as those that run the world. They have held their wealth through family managed trusts for several centuries. It took a couple of years to run this down. A good place to start, if you're interested in doing your own research, is the the Pilgrims Society. You rarely, if ever, find their names in the media.

In reply to by ItsAllBollocks

hooligan2009 Mon, 05/28/2018 - 03:25 Permalink

now add on unfunded state pension liabilities, government guarantees (that are also debt) then add state, city and government debt, then add the government guarantee (the first around 75,000 euro) on retail banking deposits and you might get a more honest picture.

my guesstimates for government debt within the EU

italy 580% of gdp

spain 535% of gdp

germany 425% of gdp

france 480% of gdp ...

hooligan2009 Easyp Mon, 05/28/2018 - 03:51 Permalink

the spending by goverments has been on consumption, not investment - people have been taxed out of an ability to generate ideas - this is why I hate socialism so much - it removes free will, innovation and impedes the progress of science and technology.

reverting to low or no taxes would solve the debt problem over the long term, by making it less significant.

governments can only help progress by getting out of the way of it and by getting rid of as much debt/false/undelverable promises as possible.

In reply to by Easyp

Singelguy hooligan2009 Mon, 05/28/2018 - 05:38 Permalink

Agreed. Government in europe needs to implement a 5 year plan to gradually reduce regulation, reduce the size of government, reduce government welfare, and lower taxes. Taxes are bad enough but the regulations are insane. For example, the EU has 1200 rules on the importation of bananas! Why? There are 10,000 civil servants in Brussels who need to justify their paychecks, so they sit around dreaming up new rules, regardless of how ridiculous they are, and the unelected EU commission is crazy enough to implement them. 

In reply to by hooligan2009

gmak Mon, 05/28/2018 - 05:19 Permalink

The idea of the PIIGS is still relevant. Just because the media stopped talking about it when the EU began blowing their bubble, doesn't mean that the rot was cured.

Let it Go Mon, 05/28/2018 - 06:14 Permalink

A melt down of the euro could bring about a liquidity crisis which could turn into a trap. In a liquidity crisis, people who feel they cannot get reasonable returns on physical or normal financial investments place their assets in short-term cash bank accounts, high-risk stocks, or hoard it rather than making long-term investments.

This could become a liquidity trap which can and often does lead to no growth and deflation but maybe not this time. The wild card, in my opinion, is related to the diminished confidence so many people have towards fiat currencies. The fear money was about to become worthless which is explained in the article below could unleash inflation across the globe.

 http://Liquidity Trap's Wild Potential To Unleash Inflation.html

Stick in the Mud Mon, 05/28/2018 - 15:58 Permalink

This is an interesting Kabuki show: 1) threaten to leave the Euro zone, 2) ECB does "whatever it takes" 3) ECB continues QE and buys all sovereign debt at near-zero interest rates. The ECB has set the start of 2019 for the end of QE. With a new election coming in Italy around that time, I predict the ECB will try to save the situation by continuing QE indefinitely, or even increasing it.

Next will come Portugal. Then maybe Spain. These rotating crises will keep QE going until the day of reckoning arrives (Euro inflation). Then the creditor countries will get really pissed off, stop QE, and all hell will break loose.

Then will come the day of Jubilee when the ECB just writes off all of that zombie debt. By then, the total zombie debt may be 200% or 300% of Euro GDP.

The country that gets stiffed the most will be Germany. A lot of those zombie loans facilitated German exports. Germany will go back to the Deutsche Mark and the Euro experiment will then be finished.

It would be easier to just end the experiment now. This, however, would require more foresight and will than the elites of Europe have.