Wednesday, April 6, 2011

Portugal Death Watch Is Over

Because the funeral has begun.

We've been running the Greece/Ireland and now Portugal death watch since the European crisis began 1 year ago.

With Greece and Ireland accepting their bail outs during 2010, the death watch and spotlight has been on Portugal through all of 2011. 

Week after week we heard riveting speeches by Portugese leaders across the board who told the world that their balance sheet was sound, and they would not need help from the EU and IMF.

The bond market, of course, paid no attention to the non-sense as it heard the same exact rhetoric from Greece and Ireland last year.

Things changed only hours ago when the Portugese Finance Minister said

"It is necessary to refer to available funding mechanisms in the European framework".

They have taken out the white flag.  The Portugese bail out has officially begun.

Next up will be Spain, which is twice as large as Greece, Ireland, and Portugal combined.  If the first three bail outs can be compared to Bear Stears, Countrywide, and Indymac during the US financial crisis, Spain is the equivalent of Lehman Brothers.  It will be the first true test for the market and will most likely arrive before year end.

Buckle up, because after Spain falls the bond market will begin to eat away at Japan, the UK, and finally the U.S. of A.  All losses will be papered over with a printing press, and the final price for gold and silver at the peak of the mania years from now will be truly staggering.

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