The bailout of Ireland has not been nearly enough to cause capital markets investors to believe that Portugal and Spain are out of trouble. The concerns about sovereign defaults has only grown. Each nation has launched plans for austerity programs. But, each has a weak economy which could slip back into recession without government stimulus.

The five-year Spanish CDS spread widened by 25 basis points to 350 basis points, according to Markit. The Portuguese spread widened to 545 basis points from 502. Each of the nation’s must now be concerned that they will suffer the fate of Ireland which faced interest rates made borrowing money in the open market impractical.

Douglas A. McIntyre