- The charade continues. Greece is about to be rescued. Yeah right! Everything is ok. Go back to sleep. Calamity or successful resolution of the Eurozone sovereign debt crisis? You decide!
Investors fear mounting losses in Portugal as second rescue looms!
By Ambrose Evans-Pritchard, http://www.telegraph.co.uk/
Portugal is fighting a losing battle to contain its public debt and may be forced to impose haircuts of up to 50pc on private creditors, according to a top German institute.
A report for the Kiel Institute for the World Economy said Portugal would have to run a primary budget surplus of over 11pc of GDP a year to prevent debt dynamics spiralling out of control, even in a benign scenario of 2pc annual growth. “Portugal’s debt is unsustainable. That is the only possible conclusion,” said David Bencek, the co-author, warning that no country can achieve a primary budget surplus above 5pc for long.
“We won’t know what the trigger will be but once there is a decision on Greece people are going to start looking closely and realise that Portugal is the same position as Greece was a year ago.” Yields on Portugal’s five-year bonds surged on Thursday to a record 18.9pc, reflecting fears that the country will need a second rescue from the EU-ECB-IMF Troika. Three-year yields hit 21pc.
Antonio Saraiva, head of the Confederation of Portuguese Industry, said the first loan package of €78bn (£65bn) did not acknowledge the vast liabilities of public companies, which have been shut out of global capital markets.
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