Thursday, January 26, 2012

Portugal Pops

Portugal goes the way of Greece -
As the world awaits resolution out of Greece and the debt exchange offer which even if passed today would have to cram 6 months of actual work into 54 days, the global bond vigilantes are not sticking around, and continue to attack the next weakest link - Portugal, whose 10 Year bonds just passed 15% in yield, and were trading well below 50 cents of par with CDS hitting a new record of 1350 bps.

So if one does use Greece as a benchmark how long does Portugal have? As the third chart shows, the last time 10 year GGBs passed 15% was back in August. So Portugal has 6 months. Give or take.
The Real Effect
I would say that it's fun watching so-called "experts" predict recovery and the like only to fall flat on their face just a year later. The down side to that is that these are not companies, these are countries inhabited by people. Let's go back to late 2007 and Vicente Fox again -
NAFTA has been good, as a matter of fact we should have a new vision, go further, integrating and working together to build a better future for both. "That happened with Spain and with the European Union with them joining the union and having access to those huge cohesive bonds, they were able to overcome poverty and today Spain, or Ireland or Greece or Portugal are all very successful nations, what you need is a little bit of solidarity." Stewart then went on to ask "Would you like to see a North American Union with the U.S. Mexico, and Canada, you want Canada in there?" To which Fox responded "Yes long term, yes."
This interview was given where the little red circle is in the chart below. Note what comes next...
Namely a 50%+ drop in the markets. At this time, this sight and this author were being lambasted as "crazy", "conspiratorial" and "tin-foil hat wearing" What are you talking about? They would say. Market collapse? Tyranny? Uh yeah, that about sums it up.

More importantly, compare Vicente's observation of "poverty destruction" with the following -
...the EU's first summit of 2012, to be held on Jan 30, will focus on finding ways to kickstart growth and create jobs across the 27-country union, which is on the brink of recession and has average unemployment of 10 percent, rising to 45 percent among the young in countries such as Spain.
Half of these young people are unemployed. HALF.

Let that sink in for a second because the same is true over here. Most of the reason why we have not witnessed the proverbial crud hitting the fan yet is precisely because Europe is that much worse. Yet we have these liars on stage parading again telling you that it's "your fault" because you want services that you paid for. It's businesses fault, not Wall St., for not hiring you and being selfish. It's the rich people for not paying enough. Of course all of this is pure class warfare from ALL sides, not just the left.
  • The left would have you believe that it is noble to dwell in poverty because you aren't "hurting" anyone.
  • The right would have you believe that it is noble to steal because, 'We need it'.
Of course, the solution will be to plunge the American hemisphere into a totalitarian dictatorship just like Europe

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