European Soveriegn Debt

One of the top headlines around the world today is the resignation of Portugal's Prime Minister after his government's austerity plans were voted down by opposition parties. Rather than prescribe their own medicine after suffering the effects of too much borrowing and spending, they'd rather stick their hand out to the EU. What ever happened to accountability? This is fuelling speculation that the government could collapse; add on a rumor that Ireland would miss a coupon payment, and interest rate speads are widening. In related news, a report from Standard & Poor's estimates that European banks might need as much as 250 billion Euros in fresh capital if there is a severe economic downturn and a sharp jump in yields.

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