Wednesday , 17 April 2024

European Debt Problems Continue to Escalate

With stocks at record highs and the U.S. economy improving, the European debt greece-dominoscrisis seems like a distant memory….[While] Europe is no longer the market’s focal point, however, that doesn’t mean the euro zone’s financial problems have gone away.

So writes Ian Wyatt ( in edited excerpts from his original article* entitled The European Debt Story No One Is Telling You.

[The following article is presented by  Lorimer Wilson, editor of and and the FREE Market Intelligence Report newsletter (sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Wyatt goes on to say in further edited (and paraphrased in some instances) excerpts:

[As] we’ve seen before, European debt problems spread like wildfire – every time one country’s debt problems worsen, it impacts several others.


The Latest: Portuguese bond yields spiked to 8% last week amid rumblings that the country will need a second bailout. Turmoil among Portugal’s three main political parties has fueled fears that the country may not be able to satisfy terms of its current $102 billion bailout from 2011…

Unemployment: 17.6%

Update: The country’s austerity measures are working. Portugal’s fiscal deficit has fallen to 6.4% from 10.1% in 2010 but with thousands of workers losing their jobs, the country’s Socialist Party wants to put an end to austerity – which would be a violation of the current bailout agreement. Should that happen, Portugal could plunge even deeper into recession and become the second country (along with Greece) to request a second bailout.

In addition to Portugal’s problems, here’s what’s happening in four of Europe’s largest economies:


Debt/GDP: 90%

Unemployment: 10.8%

The Latest: Fitch downgraded France’s credit rating to AA+ from AAA last week, citing forecasts of even higher indebtedness.


Debt/GDP: 157%

Unemployment: 27%

The Latest: The mayor of Athens was assaulted by workers protesting the country’s recent austerity measures. Greece recently [eliminated] 15,000 civil service jobs and reduced wages for thousands of others even as the country approaches a 30% unemployment rate.


Debt/GDP: 127%

Unemployment: 10.8%

The Latest: Standard & Poor’s downgraded Italy’s credit rating to BBB on July 9 as the country’s economic prospects grew even weaker. It might not stop there – the firm said another downgrade could be coming later this year or early next year. Fears of a bailout are starting to grow.


Debt/GDP: 84%

Unemployment: 25.8%

The Latest: Yields on 10-year Spanish bonds surged to their highest level in 11 months due to lack of demand at an auction of 4 billion euros of debt.


All of the [abovementioned] problems have a domino effect. We’ve seen before that European debt problems spread like wildfire. Every time one country’s debt problems worsen, it impacts several others and the worse Europe’s debt problems get, the more exposed U.S. banks and other businesses become to the contagion.

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

* (© 2013 Wyatt Investment Research & Business Financial Publishing LLC; Click here to sign up for Daily Profit today!)

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One comment

  1. There are now too many other BIG fiscal “players” in the global marketplace for the USD to continue to stay THE worldwide standard forever; and when little by little deals are made in other currencies, the USD will begin to slip at which time PM’s and their value vs. the USD, will also change dramatically in what I call the upcoming US Dollar Tipping Point.

    Depending upon what causes the shift in the USD’s value (a War or a new ongoing resource transaction for oil sales or just two Countries that decide they can no longer “afford” to trade between each other in USD’s), the value of PM’s will respond accordingly! Think of this as a One-Two combination “fiscal punch” that will leave those holding only USD reeling, while at the same time those still holding PM’s will remain even more secure than ever before.


    I believe the practice of selling naked shorts (buying Gold with freshly printed paper money) is what is responsible for the current low prices of Gold. Too soon investors will wise up, probably due in part because other Countries Central Banks are now using their own paper USD to purchase Gold (and other PM’s), which will then lead to the value of the USD reversing its current upward trend!