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Debt crisis escalates in Europe; fears grow about Spain[/size]


LONDON -- The debt crisis in Europe escalated sharply Friday as investors dumped Spanish and Portuguese bonds in panicked selling, substantially heightening the prospect that one or both countries may need to join troubled Ireland and Greece in soliciting international bailouts.

The draining confidence in Western Europe's weakest economies threatened to upend bond markets, destabilize the euro and drag out the global economic recovery if it is not quickly contained. It also underscored the mounting problems facing countries that during the past decade have both over-borrowed and overspent, and are now in danger of losing investor faith in their ability to make good on their massive piles of debt.

The perceived risk of debt defaults in Portugal and Spain drove their borrowing costs to near-record highs Friday, with the interest rate demanded on Portuguese bonds at a point where it could effectively cut the Lisbon government off from raising fresh cash to run the country.

As a result, Portugal was coming under pressure to immediately request a bailout from the European Union and International Monetary Fund. Officials in Lisbon responded by pushing through a painful round of budget cuts meant to reassure investors and rejected claims that they needed an emergency lifeline. Italian and Belgian borrowing costs also rose Friday.

The bigger fears, however, surrounded eroding confidence in Spain, whose faltering economy is more than twice the size of the Greek, Irish and Portuguese economies combined - meaning that a bailout there could run into the hundreds of billions of dollars.

Coupled with the pending bailout for Ireland and possibly Portugal, analysts said, a Spanish rescue could severely deplete the $1 trillion stability fund set up by the E.U. and IMF this year to contain the crisis. That could complicate the E.U.'s ability to mount a defense if another member nation were to need assistance.

At the same time, it remained unclear whether the stronger members of the 16 euro countries - particularly Germany, the region's economic powerhouse - are willing to dig deeper into their pockets to help shore up their troubled neighbors.

German officials were sending mixed signals. Axel Weber, president of Germany's central bank, suggested Thursday that the stability fund could be beefed up if needed. But on Friday, other German officials balked at the notion. Investors have also been rattled by a German proposal to have bond holders around the world - who have thus far effectively been guaranteed against losses - absorb some of the financial pain for future bailouts.

"There is neither a reason to consider [more funds] now, nor have there been any efforts by the European Union or by other parties to discuss this issue with the federal government," Steffen Seibert, spokesman for German Chancellor Angela Merkel, told reporters in Berlin. "This is a non-issue at the moment."

Depending on the severity of the crisis, the fallout for the United States could be relatively limited. U.S. banks hold about $133 billion in debt from Ireland, Spain, Portugal and Greece, only slightly more than banks in tiny Belgium. By comparison, German banks are liable for $515 billion, and French banks for about $400 billion.

A greater danger is that a full-blown debt crisis in Europe could put new pressure on the region's banks, tightening credit and potentially slowing growth in one of the world's largest economic engines. It could also send the euro plunging against the dollar, making the greenback stronger on world markets and undermining the efforts of the Obama administration to boost U.S. exports overseas.

"For now, the U.S. is kind of insulated," said Simon White, a partner at the London-based research firm Variant Perception. But whether it stays that way, he said, "depends on how deep the crisis goes."


Some analysts said investors might be overreacting to the risk in Spain. Spain's budget deficit is slightly less than those of the United States and Britain relative to the size of its economy. Overall Spanish government debt is below the European average, and Madrid has made surprising progress in cutting spending this year.

On Friday, Spain's Prime Minister Jose Luis Rodriguez Zapatero blamed speculators for the deepening crisis there. Predatory investors, he suggested, were placing financial bets against the country's ability to service its debt, causing an unwarranted market panic. However, the Bank of Spain asked lenders to publish more details of their exposure to the nation's hard-hit real estate market in an attempt to calm markets.

"I should warn those investors who are short-selling Spain that they are going to be wrong," Zapatero said in an interview on Spanish radio. He added that there was "absolutely" no possibility that the government would request a bailout.

Later Friday, bonds from Spain and Portugal recovered slightly, but investors were still demanding significantly higher interest rates than those for debt issued by more stable countries, such as Germany.

Yet unlike in Portugal, where fears center on the country's ability to rein in runaway public spending, the crux of concern in Spain is that nation's huge banking sector.

Like Ireland, which asked for an emergency bailout last Sunday, Spain is suffering from a real estate bust - and uncertainty about just how much that has damaged its banks' balance sheets. Any full-blown financial crisis would require massive new funds from the cash-strapped government to shore up the banks.

Though the financial system in Spain is still considered relatively sound, the shocking swiftness of the deterioration in Dublin's situation - with snowballing bad loans and a run on the banks in recent weeks - has spooked investors about a replay in Madrid.

"What caught investors by surprise in Ireland was the speed with which pressures built up in the Irish banking sector," said Julian Callow, chief European economist at Barclay's Capital in London. "That now has forced investors to focus on the common elements" with Spain.

Told ya.

than nigga Cap28 STAYS NEGATIVE.


He never posted anything positive on this board.

He's educated, but he MUST be Fat and Butt-a.ZZ ugly to talk the way he does on the regular.

lighten up cap.

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You have NO SOLUTIONS[/size]

Your Brain consistently think Negative,

It must sux to be you, because everything you say = its all bad.

You must be an illegal immigrant in the U.K.

You still in your immigrant Hostility stage, which means LIFE for you in the U.K. is a struggle.

Right now i am totally dissillusioned with nigeria and the people running it, they have nothing to offer the nigerian people or future generations to come except unemployment, more crime, more poverty and more collapsed institutions. We are now entering the second and possibly final stage of enslavement and we will not get out from under it until the ordinary working masses revolt and overthrow the elite which is running nigeria.

This nigga STAY NEGATIVE.

This mofo don't know the meaning of happiness.

so he pushes it all upon Nairaland.


sad a.r.s.e nigerian in the UK

you DUMB F-U-C-K-S are in here arguing on whose is the POOREST

While the White Man and his Friends (YOUR LEADERS) run away with your resources.

leaving everybody like the above pictures.

sad.

Divide and conquer is always in fashion

CENSORSHIP!

and

a Passive public

= ZERO ADVANCES


**************************

Nigerians censor other Nigerians like you wouldn't believe.,

Usually the people that are censoring are censoring the PROGRESSIVE that would advent Change.

yet nigerians, I believe, are stuck in the 1800's.


sorry.

MandingoII Why are you still posting here? You can do the most damage by being active in American politics. The republicans have been very open in terms of acting on Africans. They are looking to cut the budget. Lets start with aid to outside countries.

They say your Elites take the U.S. funds and stuff it in their Swiss Bank accounts leaving your people high and dry and wanting.

ugh, they Black?

very few replies in here.

so in reality you HATE being you?

Or are you ashamed of being you?

I'm just asking.

I think the question should be,

Why is Nigeria a HELLHOLE?

Heres is your chance Nigerians to convince me why Nigerians are special, worthy of a mention?

I often think about moving out of the United States but every time I ask questions about other countries I get no answers or dishonest ones. I do not want to invest in a air line ticket without some idea of what I would be walking into.

May I ask to you like being as American?

Yessir!!!!

i love being a Black man in Amerikka

anwser the question

She thinks she's BETTER than him because of her wealth.

She USED him for his sex.

Now she acting all upset that it was all a scam.

what she's thought?

she knew she was a paymaster - but she wanted to keep it in AFRICA and thereby not SHAMING herself in the U.K.

Old wrinkly dry woman will be buying sex for the rest of her life.

She will be back in Africa looking for Mandingo Sex.

Why?

What are your country's Accomplishments?

Do your ethnicities get along - Do you treat other ethnicities with respect?

More importantly, do your government treat you and other ethnicities with respect and equality?

Nigeria do not have oil.

that is shell's oil.

Just so you know.

KENYA is MORE CORRUPT THAN NIGERIA

http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results

SO stop the bull crap.

this is a done deal.

let it go people.

FRAUD IS FRAUD.

sup Seun?

when u been mydude

In my view if at least one powerful black nation can emerge in africa and become industrialised in the next 50 years we will stand a chance of survival against the coming onslaught of white supremacy but in order to do that we have to totally change our current mindset, we have to sever all links with the white supremacist ideology and do what the chinese and japanese did - rediscover our own identity and start to build on that. We need to be mentally and physically disciplined in order to do that - the first step is organisation - we need to organise and come up with a blue print that will enable us to move forward as a powerful continent or nation capable of competing on the world stage as an equal partner and not as the proverbial poor relative.

Zimbabwe already accomplished this

and you see how WESTERN MEDIA turned it around on them.

even nonthinking blacks were on the MEDIA'S side.

, and there is Cap28 again with his drivel.

you do not write like most Brits

kiss my Blacks ARSE

Man, that site DEBUNKED his lies ONE syllable at a time.

oops, Mandingo thought you were away Guess not!

oh boy! Don't forget we're just visitors. Behave yu self.

Visitor?

You must be nutz.

THIS is my BOARD!

Everywhere I go, I set up house.