What is truth?

With all eyes focused on Japan, it’s easy to miss significant events elsewhere.

For example, the sovereign debt crisis is still unfolding in Europe, and the “agreement” in Brussels last week solved nothing even though one might not know it from looking at the Euro.

Please consider Portugal yields rise, government warns of political crisis

Portugal’s government blamed higher rates paid at a debt auction on Wednesday on the opposition’s refusal to back its latest austerity plans, warning a political standoff could force it to seek a bailout.

Portugal’s plight has become yet more complicated by the fact that the main opposition Social Democrats have refused to back the government’s latest austerity plans, which are aimed to ensure the country meets its budget goals.

“Failure to approve the new measures in the budget plan would push the country to external help,” Finance Minister Fernando Teixeira dos Santos told parliament’s budget committee. “Current market conditions are unsustainable in the medium- and long-term.”

Prime Minister Jose Socrates warned on Tuesday that his minority government would be unable to continue if the country’s long-term economic strategy, which includes the latest austerity measures, was not passed in parliament.

“Yield levels in Portugal still trade above their snowball level — where the level of interest charged means their level of debt stock is going up — and that means that longer-term the situation, despite their best efforts, is getting worse not better,” said rate strategist Charles Diebel at Lloyds Bank.

The Portuguese, who are facing higher taxes, lower social benefits and a likely return to recession this year, have stepped up protests against austerity. But it was not clear they want a change of government.

Moody’s cut Portugal’s sovereign debt rating by two notches to A3 late on Tuesday and said it might have to downgrade again given the impact of high borrowing costs and the difficulty of meeting tough fiscal targets.

The yield on Portugal’s 10-year bonds was at 7.67 percent while the spread to safer German Bunds stood at 456 basis points, up from Tuesday’s 446 basis points. Risk premiums hit euro lifetime highs last week.

Portugal 10-Year Government Bond Yields

Yields are about 20 basis points below the levels reached last week, but these rates will sink Portugal in due time. Portugal will need a “bailout” whether or not the country gets it political act together.

However, it’s important to note that is it not really Portugal that will be bailed out, but rather German, French, and UK banks (just as with Ireland and Greece).

How long these countries are willing to put up with this remains to be seen

source: http://globaleconomicanalysis.blogspot.com/2011/03/portugal-warns-of-political-crisis-and.html.

The Irish public have been deceived ,they thought were voting for change but instead they got more of the same for the next two years according to the new governments 5 point plan . When these two years are up we will be utterly brook and the rats will then leave the ship when nothing else is left for them to take .Our airports will be privatized, our ports, our natural resources and our roads will be sold off along with the ESB, Board na Mona, board Gas and maybe  our forests too  .We might then stand up and make the changes our political masters won’t make!

Comments on: "Portugal Warns of Political Crisis and Need for Bailout" (1)

  1. […] Portugal Warns of Political Crisis and Need for Bailout (thepressnet.com) […]
    For instance, the EU and the IMF agreed to bail out Ireland’s banks for $114 billion, but only if the Irish cut $4 billion over the next four years, raised payroll taxes 41 percent, cut old age pensions, increased the retirement age, slashed social spending, and privatized many public services. When Ireland recently asked for a reduction in the onerous interest rate for this bailout, the EU agreed to lower it 1 percent and spread out the payments, but only on the condition of yet more austerity measures and an increase in Ireland’s corporate tax rate. The newly elected Fine Gael/Labor government refused.

    To pay back its own $152 billion bailout, however, the Greek government took the deal. But the price is more austerity and an agreement to sell off almost $70 billion in government properties, including some islands and many of the Olympic games sites.

    But the “deal” will hardly repay the debt. Unemployment in Greece is 15 percent, and as high as 35 percent among the young. Wages have fallen 20 percent, pensions have been cut, and rates for public services hiked. Growth is expected to fall 3.4 percent this year, which means that Greece’s debt burden is projected to increase from 127 percent of GDP to 160 percent of GDP by 2013. “Your debt will continue to increase as long as your growth rate is below the interest rate you are paying,” economist Peter Westaway told the New York Times.

    fulle article at :http://www.ikners.com/?p=2303

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