When the PIIGs have Wings

Here we go again. The Euro is descending and there does not appear to be a parachute. Portugal's borrowing rate is going through the roof and Ireland does not look like it is going to be able to meet the recent Euro bail out requirements  (See FT Here). The Spanish economy, or rather, what is left of it, looks like it will need a massive transfusion of Deutschmarks  Euros in the near future.

The PIIGS, are perhaps better known as that friendly, "lets-party!" group of nations, Portugal, Ireland, Italy, Greece and Spain. Like us, they blew all their money on "Services" while letting those boring old manufacturing industries wither on the vine.

Luckily though for the bankrupt PIIGS,  they have their bosom buddies in dear old Deutschland. Kindly Angela Merkel will no doubt chastise the errant Europhiles, but she is always there like a good auntie, ready with the credit card.

To be fair though, this is only reasonable. After all, it is the Germans who enjoy all that slave-like dedication to work, over-time and hard labour. The Germans can get on with their toiling.  Meanwhile the PIIGS can do what they are truly superb at doing, and all they need to do that, is a nice new credit card from the Bundesbank.

I keep telling my oily rag German friends, "You know it makes sense".

I tell them that in fifty years time we can all look back on this and laugh.

For some reason though, at the moment, they do not seem to be particularly amused.

The PIIGs: Who is Next?

Robert Peston may have a funny way of speaking but he does seem to have a good grip on the Euro crisis. He is very pessimistic about the long term outcome. See Here

From the look of it, Portugal is already on the slide with bond yields already at 7% (Irish bond yields are still at over 8% and that is after the bailout package). Obviously those who buy bonds are none too confident that their money is safe and the rate has been cranked up to appeal to their greed rather than common sense.

So at what point do the Germans chuck their hand in?

They, after all are the only reason the whole thing has not collapsed already. Greece and Ireland are the smallest of the sick men of Europe. It has been difficult enough as it is.

God help us all if (say) Spain or Italy went down. If Portugal fails to make it through the next two weeks without holding the begging bowl out I cannot see the Germans continuing to issue blank cheques.

Going back a few months, when this crisis first broke out I picked up a report that Germans were closely examining their high denomination Euro notes. Evidently you can tell which country printed what. The report stated that the rattled Germans were only accepting notes printed in Germany.

I don't expect anything has changed.