As everyone eagerly awaits the finalization of a Greek debt deal, another Greece is popping up right under our noses. Portuguese yields are spiking across all maturities. Above is the graph of Portugal's 10 year sovereign borrowing rate breaching 17%. Compare the 1.82% rate for the US and a 1.79% rate for Germany.
The bond markets are signaling: Portugal is in crisis.
'Disasterous' is the only way to describe its economy:
The European Commission forecasts that Portugal’s national debt will reach 100 per cent of gross domestic product this year, up from 83 per cent in 2010. Its budget deficit is expected to remain stuck at about 6.4 per cent of GDP, according to Deutsche Bank, and the Bank of Portugal expects GDP to shrink by 3.1 per cent this year, twice as bad as last year’s figure. Some economists think a 5 per cent contraction is not out of the question. Unemployment is soaring. The national jobless rate is 13.2 per cent and the youth unemployment rate, at almost 31 per cent, is the euro zone’s fourth highest.