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12035
“Portugal, Spain Hit By Investor Fears Over Debt”
by AP - Barry Hatton   
November 24th, 2010

LISBON, Portugal  - Portuguese and Spanish borrowing costs rose sharply Wednesday as investors worried that their debt levels will prove unsustainable, putting them next in line for a European bailout.

As a major public sector strike in Portugal further undermined market confidence there, the interest rate on the government's 10-year bonds broke through the 7 percent barrier in morning trading. The 10-year Spanish bonds rose to 5.08 percent at mid-morning from 4.91 percent at the start of trading.

While both countries are not at any immediate risk of bankruptcy, those rates are making their already heavy debt loads more expensive to finance. The higher cost to roll over debt is eating away at any progress the governments make in their public finances through austerity measures.

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