First it was
which took 110 billion Euro bailout package. Irish republic’s 85 billion euro bailout package was announced last month. Many experts were thinking about the next victim, may be Greece Portugal or ! But in this moment it looks to me that the problem is over, if not at least for short-term. Spain
Let talk about the sovereign debt problem. But first see the budgetary deficit of some EU countries.
Govt. Deficits (%)
* Figures of 2009
Actually this deficit is not something which suddenly comes out, it was there but in those time the other surrounding environments were not like what it is now. Except some countries like
Germany, e.t.c the other countries are facing the heat. Let see the GDP growth rate --- Netherlands
Though matter is gradually improving as we see in the GDP growth rate. But unless the economic situation of the world changes in a big way it is very hard to improve these figures.
Markets were worried about the European Bond sales this week. let see some figures ---
After gap of December
sold $2.53 billion T-Bill, now they are fortunate to sold bonds below the yield of 5%. Because if I am not wrong the rate of borrowing of IMF and EU moneys is more than 5%. On the other hand in Greece Italy’s Treasury selling both domestic and international investors showed their interest, it reflects why is better than it’s neighbors. Italy is the only country between them which sold their 3-Year T-Bill in lesser yield than it previously sold. Hungary
Now this type of thing makes me smile too much. Few weeks ago Moody’s downgraded
by two notches reason was fiscal- sustainabity , now looking at the lower yield I think there is big difference between the working areas of these Rating Agencies and real world ! Hungary
Now these bond selling of the above countries made the way for problematic countries to issue their bonds.
Portugal’s bond selling was not an exam but definitely it shows Portugal’s ability to raise fund as such it has raised 1.249 billion Euros by selling 4-Year & 10-Year Bonds which yields 6.719% recently it’s yield was at high of 7.3%.
Next it is
Spain which raised 3 billion Euro in a 5-Year Govt. Bond selling whose average yield was 4.542%. Spain’s finance minister told that Portuguese bond sale helped to prepare the ground of ’s debt sale. But they cannot forget that debt sell get supported too from Chinese minister’s speech of Chinese buying of Spanish debt. Spain
The problem with the EU is the EFSF’s fund, now many proposals came that the 440 billion Euro bailout fund to be increased, some said, some of ECB’S bond buying activities should be replaced by EFSF’s bond buying activities, other proposal is to reduce the interest of this EFSF’s rescue loan, so that weaker nations benefited from it.
The problem is to boost the rescue loan or to improve the position of EU nations,
needs to commit more. Though German chancellor said that they will stand by the EURO. While not only the ruling coalition but also many ordinary Germans are not really eager to support many of this EU nations. Germany
Euro-area finance ministers will discuss the bailout issue in next week meeting in
Spain & episode over? Many think that it is a matter of time for Portugal Portugal & Spain to join next after . Ireland
I think it is better to look on the latest borrowing costs which proves lot of things. But it will be wrong to see the problem through the vision of some rating agencies and news reports.
Moody’s and Standard & Poor’s expressed concern about deteriorating fiscal condition of US as such they didn’t think that there will be any change in Sovereign debt rating of US.
I was thinking what will happen if sovereign debt infection crosses from one side of the
Atlantic to the other side !
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