Chart of the Day - European debt crisis escalates dramatically

Bulls and bears make money; pigs get slaughtered. That old phrase comes to mind, looking at the eurozone debt situation, not to mention MF Global and Mr. Corzine's troubles. Porcine or otherwise, it's startling to see how badly things have turned for the worse. Below is a chart with info from Chart of the Day illustrating the debt costs of the "PIIGS" - Portugal, Ireland, Italy, Greece and Spain. It's another perspective on what may lie ahead for the euro, as well:

Chart of the Day - European debt crisis escalates dramatically
November 11, 2011

All the European austerity and bailout plans have not managed to stem the European debt crisis. In fact, the severity of the crisis has only increased over time with Italy, the world's eighth largest and the euro zone's third largest economy, now becoming the latest European nation to likely require a bailout. Today's chart helps illustrate the risk of European debt by plotting out the 10-year government bond spread (versus the German Bund) for all the PIIGS (i.e. Portugal, Italy, Ireland, Greece, and Spain) from 2007 to the present. For example, the Greek 10-year government bond yield (light blue line) is currently a whopping 32.5 percentage points greater than that of the relatively stable German Bund. That is a far cry from where it was back in the summer of 2009. However, even more important is the status of Italy (dark blue line). Italy has €1.9 trillion ($2.6 trillion) of debt outstanding. This level of debt is greater than that of all the other PIIGS combined. Due to the severity of the situation, the European Central Bank may ultimately be forced to print a significant amount of euros – something they are very much ideologically opposed to doing.

Notes:

Where's the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron's recommended charts of Chart of the Day Plus.

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