France, Germany Pressure Portugal to Take Aid; No Gov't in Belgium for 210 Days; Private Debt Placements in Portugal; Is China the Red Knight Savior? (MISH)

Sunday, January 09, 2011 2:39 AM

France, Germany Pressure Portugal to Take Aid; No Gov't in Belgium for 210 Days; Private Debt Placements in Portugal; Is China the Red Knight Savior? (MISH)

Portugal is the spotlight du jour in the sovereign debt crisis. Belgium is not far behind. On Saturday Reuters claimed Germany and France want Portugal to accept aid, citing Der Spiegel.

Germany and France want Portugal to accept an international bailout as soon as possible in order to prevent its debt crisis spreading to other countries, German magazine Der Spiegel reported on Saturday.

Without citing its sources, the magazine said government experts from both European heavyweights were concerned Lisbon will soon not be able to finance its debt at reasonable rates, after its borrowing costs rose at the end of last year.

Berlin and Paris also want euro zone countries to publicly commit to do whatever it takes to protect the bloc's single currency, including topping up a 750 billion euro ($968 billion) rescue fund if necessary.

Absurdity of "Stopping the Spread" Statement

This headline is making the rounds but nearly a day later I still cannot find anything about it in Der Spiegel.

Mish Note: See Addendum for Der Spiegel German reference and a reader's comments

I do have a few quick comments.

Note the absurdity of the statement "Germany and France want Portugal to accept an international bailout as soon as possible in order to prevent its debt crisis spreading". The fact that Portugal needs a bailout is 100% proof the crisis has spread. So are rising sovereign debt yields across the board relative to Germany. The only exception now is France.

Is this another Maginot line?

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