Sunday, May 2, 2010

Prepare yourself (and your portfolio) for a coming debt crisis and a Chinese hard-landing (crash) 2010 - Greece should have been kicked out(update 9)

Except they were bailed out by the EU/IMF/Germany. Essentially Greece haa already has defaulted as their bonds (10yr) are now junk sitting in no mans land with yields that peaked at 7.5%

No one wanted them.

Now the Greek goverment has to raise money, as part of the austerity plan set out by the EU/IMF, this means a brutal tax regime, funding cuts and general financial/social mayhem. Just to save the necks of a stupid corrupt goverment.

All and all it won't make much difference (the bailout), as the Greek situation sits as the top of a massive problem for the EU, whilst spreads (on debt) widened for both Spain and Portugal. Even as the Greek bailout took place.

The one to watch is of course Spain, a trillion dollar ecomomy with a debt to GDP at 11.20% (probably higher) and unemployment running at 20.05%

Spain will be like an A-bomb on the markets if bond auctions collapse and the country goes into a default spiral.

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