Moody’s Investors Service on Tuesday became the first rating agency to cut Portugal below investment grade, causing the 10-year Portuguese government bond yield to leap more than 1 percentage point to euro-era highs.
The agency cited worries that administrative problems and slow economic growth might prevent the Portuguese government from hitting ambitious targets to shrink its budget deficit over the next three years under a 78 billion euro international bailout.
But Moody’s also said efforts by the European Union to have private investors bear part of the burden of supporting Greece, through a “voluntary” rollover of maturing Greek debt, threatened investor confidence in Portugal as well.
If investors believe the EU may follow the Greek model and pressure them into bearing part of the cost of future aid to Portugal, they may become less willing to lend to Lisbon, reducing the chance that it can resume borrowing from markets in 2013 as planned, Moody’s said.
Saner heads in Europe are sounding the alarm:
Government bureaucrats in centralized Euro-capitals, picking winners and losers in a so-called free market never works.
There seems to be a trend going on in European countries with nanny-state socialist tendencies recently:
Thousands of people last night filled Puerta del Sol, where demonstrators have used Twitter to attract supporters to a makeshift camp in the central Madrid plaza, mirroring the use of social media that fueled the recent protests in Tunisia andEgypt. They’ve plastered buildings with posters and slogans and are holding political discussions throughout the day.
Spain’s Socialist government, which faces regional and local elections on May 22, turned against its traditional base to push through the deepest budget cuts in at least three decades and overhaul labor and pension laws. The collapse of Spain’s debt-fueled property boom left the country with an unemployment rate of 21 percent, and 45 percent of young people out of work.
“The rich are getting richer and the poor are getting poorer,” Pepa Garcia, a 34 year-old unemployed actress, said in an interview yesterday at the Puerta del Sol. “People should be indignant; some banks are getting rescued with our money while we’re almost drowning.”
Spain’s bank-rescue fund has committed around 11 billion euros ($16 billion) to lenders suffering from the collapse of the real estate market. Savings banks need another 14 billion euros to meet new capital requirements, the Bank of Spain estimates. The government is pushing lenders to raise those funds from private investors, with the national rescue facility known as FROB acting as a backstop.
The Socialists are set to suffer a setback in most of the regional elections, polls show. The party will be beaten in the region of Castilla-La Mancha, which it has controlled for three decades, and may lose the city of Barcelona for the first time since Spain’s return to democracy in 1975, according to a poll by the state-run Center for Sociological Research on May 5.
[Spanish Prime Minister Jose Luis] Zapatero has angered traditional supporters by slashing public wages, freezing pensions and seeking to change wage- bargaining rules as part of his efforts to cut the euro-region’s third-largest budget deficit and shield the Spanish economy from the sovereign debt crisis.
There are lessons to be learned here in the United States, as more and more people become dependent on a government check for support. The government should always be considered temporary help to your situation, because as fast as the government gives, so can it take away.
It’s the firm belief of bureaucracies with control of the citizenry’s treasure that the allotment of said treasure is to the benefit of societies, and the healer of all of a nation’s ills.
In Greece, not so much:
The eurozone’s first ever bailout of a debt-laden member country is failing and will need to be renegotiated exactly a year after the €110bn (£96bn) rescue package was agreed for Greece.
Following secret talks in Luxembourg on Friday between Athens and some of the key EU players, it emerged that Greece will not be able to meet the terms of last year’s rescue and is hoping to ask the eurozone for more funds.
As Britain made clear it did not want to offer any more support for Greece as part of an EU package or a bilateral loan, investors remain unconvinced of the ability of Athens to sustain its €340bn debt load.
Signalling that his government will struggle to finance itself on the bond markets by next year – which was part of the deal struck with the eurozone and the IMF – the Greek finance minister, George Papaconstantinou, said: “We will either go out to markets or use the recent decision by the EU that allows the European fund to buy Greek bonds. The markets continue to disbelieve in our country.”
Greece is known for government-subsidized, 50-year old retirees and citizens dependent on government money. Turns out that’s not such a good thing.
When the European Union and the United States collapse under the weight of its debt and political impudence, we can’t say we weren’t warned:
American politics could use a few Nigel Farages, or at least the Republican party could anyway. The Democrats are beyond saving.
The government’s bill for bailing out Fannie Mae and Freddie Mac might reach as high as $363 billion by 2013, the Federal Housing Finance Agency said Thursday.
The twin mortgage giants have already sucked in $148 billion in order to stay afloat, and according to the new projections, that number might reach $221 – $363 billion by 2013.
The Treasury Department has been supporting the foundering Fannie (FNMA) and Freddie (FMCC) since the twin mortgage giants entered financial difficulty following the implosion of the mortgage-backed securities market.
The two companies essentially have been given a blank check from the government since Treasury lifted the $200 billion funding limit for each late last year.
While the Obama administration and the Democrats in Congress are more than willing to excoriate the private sector bankers and traders for whatever blame they share in the current economic crisis, not a word is spoken about Fannie and Freddy, and the looming disaster they pose for the nation’s balance sheet—-all at the expense of taxpayers.
One of the Congressional enablers of this mess is Barney Frank. He needs to be voted out of office and the good people of Massachusetts’ 4th district have a clear alternative.
I’ll let Sean Bielat’s recent campaign ad speak on behalf of the arrogance and idiocy that is Barney Frank, who was minding the store while the housing market collapsed:
In any other year, the notion of being able to vote Barney Frank out of office would be insane. But this is unlike any other year. As with so many races across the country, if getting insane liberal Democrats out of their entrenched political ratholes was ever possible, now is the time.
Other bloggers have been pushing this race as a potential pick-up for the GOP and momentum is building. We know about Frank lending his campaign $200K, and that doesn’t happen when you’re confident down the stretch. And kudos to Stacy McCain who’s been pounding the table for Sean Bielat for weeks.
Voters in Massachusetts’ 4th Congressional district have a clear choice–more of the same, with $386 billion bailouts to GSEs that promote left-wing social engineering, or some real change.
Andy Kroll digs into the CBO’s assessment of the Home Affordable Modification Program:
The core of that program is the Home Affordable Modification Program (HAMP), a multibillion-dollar effort that’s done next to nothing to alleviate the ongoing foreclosure crisis. (Read this and this for more.) A year into HAMP, only 170,000 people have received permanent reductions in their monthly mortgage payments. (By contrast, foreclosures last year set a new record, with 2.8 million.)
Now comes the news, via the nonpartisan Congressional Budget Office, that HAMP, which was initially projected to spend $50 billion helping homeowners, will only spend 40 percent of that, or $20 billion.
What that means for beleaguered homeowners is that far less help is on the way from an already wounded program. Which shouldn’t come as a surprise. Whereas Obama himself said in February 2009 that the Making Home Affordable program “will help between 7 and 9 million families restructure or refinance their mortgages,” the Treasury Department’s goal, in the case of HAMP, has always been to “offer” 3 to 4 million modifications to homeowners—with no guarantee for help.
Forget for a minute, the already flawed idea that subsidizing the losses that homeowners are taking on their homes (most of which are unrealized), given that homeowners who are late paying their mortgages after having overextended themselves, knowing full well that they would not have the capacity to carry the debt. Subsidizing them to forestall the inevitable has always been a loser’s game, a game that unfortunately, the Federal government loves to play.
Forget all of that.
Either Barack Obama really has no concept of how markets work, or of how the private sector operates, because his statements as to the alleged benefits of the program are so off the mark, so out of touch with reality.
Does anyone really still believes a word he says about say, healthcare reform?