Please consider Portugal Says It Has Negotiated a Bailout Loan of $116 Billion
Portugal has reached agreement with the European Union and International Monetary Fund on a three-year bailout loan of 78 billion euros or about $116 billion, the caretaker Prime Minister Jose Socrates said on Tuesday.Good Deal or Impossible Deal?
Mr. Socrates, who now faces a snap parliamentary election on June 5, hailed the package as a victory, saying it included more lenient terms than those imposed on Greece and Ireland.
�The government has obtained a good deal. This is a deal that defends Portugal,� Mr. Socrates said.
�Some of the parameters look a little softer than expectations such as the higher deficit target and longer time line,� said Vitaly Serebryakov, currency strategist at Wells Fargo in New York.
The deal is expected to be approved at a meeting of euro zone finance ministers in mid-May, in time for the European rescue fund to raise money for Portugal by June 15, when the country needs to meet a bond redemption of 4.9 billion euros.
- Portugal gets a 3-year loan
- Portugal needs to cut this year's budget deficit to 5.9%
- Portugal deficit will shrink to 4.6% in 2012
- Portugal deficit will shrink to 3% in 2013
I have three questions:
- Does anyone possibly think Portugal can pay back $116 billion in three years?
- Does anyone in their right mind think Portugal's budget deficit will be 3% in 2013?
- Given that Portugal is crowing about getting better terms than Ireland or Greece, how long will it take for Ireland and Greece to start bitching?
Portuguese 2-Year Government Bond Yield
I have a final bonus question.
If the bond market does not believe the deal, why should I?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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