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Spain's Bonds Shoot to Scary Heights

But markets overall calmer amidst hopes of further rescue

By Kevin Spak,  Newser Staff

Posted Jun 19, 2012 9:55 AM CDT

(Newser) – The Spanish Treasury sold $3 billion in 12-month bonds today, but the price was, in the words of one economist, "brutal." The government was forced to pay a whopping 5.074% yield, up from 2.985% just last month, the New York Times reports. "The market is very uncertain that the euro will survive," one economist explained, "and if that is the case, you don't want to touch this debt with a barge pole." Others said the rates raise the specter of a sovereign bailout for Spain.

But the news wasn't all bad, as the rates on 10-year Spanish bonds inched down from yesterday's record 7.2% to 7%. Markets were "decidedly calmer," according to the Wall Street Journal, thanks to Greece's election results and speculation that further stimulus from the European Central Bank was on the way. There were also unsubstantiated rumors that the ECB was already buying Spanish bonds.

A picture taken on May 29, 2012 shows a euro coin with a Spanish national flag in the background.
A picture taken on May 29, 2012 shows a euro coin with a Spanish national flag in the background.   (Getty Images)
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COMMENTS
Showing 3 of 7 comments
MattHelm
Jun 19, 2012 3:47 PM CDT
If at this point anyone w/ any sense of understanding doubts the obvious fact that this global economic crisis was illumenati/NWO engineered they're simply stupid.  It like 9/11 & the subsequent  fake "war on terrorism" can directly be attibuted basically to the uncontrollable power of the internet/instantaneous sharing of information which made several smart  broke nobody(s) into overnight power player billionaire somebody(s) which in turn drastically reduced the power & influence of several groups of old money which took over when they killed JFK.  As crazy as that ^ may sound thats basically the condensed truth.  Simply because of the internet today's global citizen's social consciousness level is so far above where it was 30 yrs ago there's no comparison. 
reasonator
Jun 19, 2012 3:26 PM CDT
By the way, what this means for those who don't get it. Spain needs to borrow money, because like most of the rest of the Eurozone and the U.S., it can't seem to live within its means, cut back costs, and stop taking on massive debt. So the debt continues to grow and grow. But in order to convince lenders to lend them this money, they have to promise to pay back whopping huge returns on the bonds (the means by which the borrowing is taking place). So, when payback on those bonds start coming due, Spain will have to pay back a lot more in interest. And by then, it will just be forced to borrow even more (a Ponzi Scheme, essentially) to pay off those it owes, those who lent (invested) in the Spanish bonds.  Even with the high return interest rate, bond buyers (lenders to Spain's government) must still feel pretty uncertain whether they will ever see that money return to them. That's essentially WHY Spain has to promise such big returns, to lure the timid (or stupid) into buying their bonds.  It's a big mess, and one that is and will play out here in the U.S. The ONLY way out is to start following a budget, cut costs, and pay down debt. But sadly most of you will have none of it, and will want the government to keep borrowing and printing money until we run this thing into complete oblivion and despair.
Deleted
Jun 19, 2012 1:29 PM CDT
Every "solution" is a delaying tactic.  Greece and Spain are going down folks.  Then it's just a matter of who's next.
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Spain • European Union • eurozone • European Union debt crisis • Spain economic crisis • Spain bailout

 
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