Posts Tagged ‘spanish debt crisis’

Spanish Bond Yields Rise

April 6th, 2012 Comments off


The yield on Spanish government 10-year bonds has risen another 13 basis points, now standing at just over 5.8 percent.  This is in line with the deteriorating economic and fiscal situation in Spain. Madrid has recently enacted draconian government spending cuts. However, the conundrum is this; previous government spending was unsustainable, but the most recent cuts are a massive fiscal drag, which will also exacerbate the government deficit in its annual spending. Investors know this, which is why Spanish bond yields are rising.

With the highest official unemployment rate in the Eurozone (23 percent)and the economy continuing to contract, there is increasing concern that the center of gravity in the Eurozone sovereign debt crisis has migrated from Greece to Spain. In the meantime, the European Central Bank continues its policy of stealthily monetizing debt throughout the Eurozone through its printing press.



Spain Debt Crisis: Borrowing Costs Soar

November 17th, 2011 Comments off

The debt crisis contagion in the Eurozone continues to metastasize. With Italy’s ten year government bonds above the red line of 7 percent yields despite a new government, Spain is now approaching that same zone of danger. Spanish government bonds with ten year maturities are very near the toxic level of 7 percent. With the two largest PIIGS nations in the Eurozone on the verge of insolvency, it is quite clear that the attempts to a avoid a contagion from the Greek debt crisis have been a monumental failure.

The politicians in Europe are so desperate that they have actually ditched democracy in a last ditch effort to avert a catastrophic implosion of the Eurozone.  Appointing  unelected governments and forbidding popular votes on economic and fiscal policy , not to mention eroding national sovereignty are the last refuge of the bumbling European politicians. The latest developments in the Spanish debt crisis show that these desperate measures are likely to be as dysfunctional as all other previous efforts to forestall an inevitable disaster from occurring.


Officer Larry of the NYPD is on his way to Zuccotti Park in lower Manhattan to arrest peaceful protesters involved with the Occupy Wall Street movement. Being a public spirited member of the New York Police Department, Officer Larry does remind us that there is a global economic crisis underway that rivals the Great Depression of the 1930s.





Spain’s Credit Rating Lowered By Fitch

October 7th, 2011 Comments off

More developments on the Eurozone sovereign debt credit ratings front. Fitch, one of the big three credit ratings agencies, lowered its rating on Spanish government debt by two notches, from AA plus to AA minus. As recently as 2010, Fitch rating Madrid’s debt at AAA.  This credit rating cut follows on the heels of the decision by Moody’s to drop Italy’s credit rating two levels.

With the sovereign debt crisis in Europe cascading out of control, and a severe Eurozone banking crisis now developing, one has to be obtuse to believe that the global financial and economic crisis that began in 2008 has been “resolved.” Sovereign credit ratings are dropping with monotonous regularity, and a growing cadre of economists are suggesting that the Eurozone, U.K. and U.S. are already in the midst of a double-dip recession.

With negative economic growth and growing public debt to GDP ratios, how are these  nations going to resolve their sovereign debt crisis?