Portugal becomes the focus after Ireland bailout

worldtraveller

Portugal's troubled finances became the focus for bond markets on Monday after Ireland requested an international bailout to tackle its banking and budget crisis.

Irish 10-year government bond yields fell on Monday and the spread over German Bunds narrowed after Dublin agreed an aid package to help tackle its banking and budget crisis.

"You can argue the bailout was already somewhat in the price but the question is who is next - Portugal and Spain are under the microscope - and at what point do you start thinking about selling some of the other stuff into strength?" said one trader.

Carsten Brzeski, economist at ING, said: "Will it prevent contagion? In the short-term, but not in the medium term. It only calms down markets and gives the other countries some room to breathe. Particularly, Portugal is not off the hook yet."

Telegraph.co.uk

"Next!! ....Form an orderly queue please"

Masomnia

This was always going to happen I suppose. Once Portugal is sorted Italy will be the next target... The vultures will be circling however many countries are bailed out.

AD9898_2

Like I've said for long time, the hole that should never have been dug started a decade ago, many warnings were given from various knowledgeable sources, all were ignored through ignorance and greed, the hole kept being dug.

Fast forward to Autumn 2007, the greedy and ignorant suddenly realised that the hole they had dug was a catastrophe, with no way out, the way to put off the inevitable was to, ironically keep digging hoping for a miracle.

Unfortunately the 'bed rock' in 'the hole' is only now starting to be exposed, panic stricken and blindingly hoping to be saved they carry on scratching away in the hole.

The day is coming where no more digging can be done, at that point, the inevitable collapse will be upon us.

The banks and the politicians through greed, corruption and lies have all but ruined us.

JP45

If markets turn on Portugal, Spain may be next after that.

This is surely the real fear. Portugal is one thing but if Spain were to need its own bailout, then as one trader recently put it:

Good luck with that.

That'll be like trying to hoist an elephant out of a septic tank with nothing but a smile. It simply cannot be done.

amcluesent

Run, don't walk, to buy any silver/gold you can get your hands on. There's about to be a generational transfer of wealth to the BRICs and manufacturing economies

Hank_Rearden

Out of curiosity - and I look to one of (what seem like a lot of) bankers/traders on this forum, isn't this just an opportunity to make serious money, a la Soros? I assume the reason that the Irish bond yields widened was because fund holders had to ditch them for portfolio reasons; so the traders/hedgies could buy at a low price, driven by market off-loading. Then when the totally expected (although not inevitable) happened, intervention>stability>yields drop/prices go up, they made a fortune. And so they move to the next target. Okay I'm over-simplifying, but have I got it broadly right?

Radiantsoul

It was never inevitable that the Irish government would be rescued and so the rise in interest rate spreads/fall in bond prices reflected a real risk. Speculators gained when sterling left the ERM, in that the feeling was sterling could not be rescued. It was a different underlying cause, but there is always a risk.

halight

If Other euro countrys line up for a bailout. Would the euro bank be able to print the money to bail them out ? Would this not be better than asking the other euro and EU countrys to foot the bill?

Just an idea? As the bills will really start to mount if other euro countrys need help.

worldtraveller

Portugal will come under pressure this week to accept a multi-billion euro bail-out from the European Union and International Monetary Fund. France and Germany are said to be anxious for it to seek help "sooner rather than later" to prevent a renewed eurozone crisis.

The bail-out could total up to €80billion, with Britain forced to accept a liability for a small portion of the money.

Ireland was forced to accept similar financial help last year after several weeks of resisting pressure from fellow EU members.

International investors are concerned about Portugal's debts and the EU is worried that the crisis may soon spread to Spain.

On Wednesday, Portugal will attempt to raise money on the international bond markets and this may prove the catalyst for talks over a bail-out. Yesterday, it was reported that preliminary private discussions had already been held.

Telegraph.co.uk

Oh no we're not! Oh yes you are...........!

worldtraveller

Portugal will go to the markets for up to 1.25bn euros (£1.04bn; $1.62bn) with a sale of four and 10-year bonds.

The auction will be closely watched as an indication of investor confidence, as markets see how easily - or not - the debt-hit nation can raise funds.

Yields, or the interest rate Portugal must pay to borrow funds, hit a recent fresh high on its 10-year bonds of 7.3%, before falling to 6.9%.

The country is now likely to offer very high yields to sell its debt.

However, bond buying by the European Central Bank (ECB) should stop yields rising so much that Portugal is forced to seek an EU bail-out.

BBC News

.....Yet! Smoke & mirrors.....smoke & mirrors! :whistle:

Degenerate

worldtraveller wrote: »

However, bond buying by the European Central Bank (ECB) should stop yields rising so much that Portugal is forced to seek an EU bail-out.

There's a beautiful irony to that; as if the ECB intervention isn't a form of stopgap bailout.