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Euro Problems

From the FT:
Spanish and Portuguese debt and equity markets were hard hit by Greece-related doubts among investors, partly because Madrid and Lisbon ran up budget deficits to dampen the effects of the economic crisis and partly because of fears for eurozone cohesion.

“In a country with such high unemployment, how will it be possible to reduce the public deficit?”

The reality is that there are a number of countries that do not have any margin left to support their economy in this situation.  Should we see a "double dip" or something similar it would be a serious problem.  Any idea of bailout could only make things worse in the longer term.

European Central Bank Governing Council member Ewald Nowotny called talk of a euro zone breakup "absurd" and tried to play down the sharp fall in the euro. 

In the article you find words like "austerity program", "budget consolidation drive", "get their public finances in order", ability to pay debt", "default".  It's all fault of the speculation, some say, but the risk of social unrest could exist.  Greece, Portugal and Greece are so far targeted.  But Ireland and Italy are in similar situations.  Is there a risk of contagion?  Investors are not retreating from their expectation that the gap between Europe’s laggard periphery and its recovering core — Germany, France and the smaller countries of northern Europe — would keep widening.(NYSE:NYT)
Peripheral governments will not have the stomach to push through tough reforms.  This is the bet.  Raise taxes and cut spending in countries that are lagging behind others in the recovery is very tough.
In Brussels, turning to the I.M.F. is seen as conceding that the monetary union cannot care for its own.  Isn't this true may be?  If the answer is yes, what is the fate of the euro?

The crisis unfolding in Europe has some parallels to the debt crises that hit Latin America and Asia in the past writes the Washington Post
OK a crisis, but this is way too much I think........

When I saw the market recover from the heavy losses late Friday I thought there was some news coming from Europe.  But no, it was only a technical reaction.  They scared out shorts trying to give a little bit of balance to this market.  Some talk about a crash as imminent.  Rosenberg says the S&P is going to dive to 900.  He was wrong several times in the past.  This time?

Disclosure: no positions