The problem of public debts

Today I would throw to the fore a complex issue: how it will affect our current and future investments debt bubble is forming in Spain and other countries like Greece. In all cases the problem is not only public debt but uncontrolled and persistent deficit. In the case of Spain and Greece this can be compounded with the emergence on the political scene more or less populist formations, at least, be projected on the debt market ("Lenders") recover reasonable doubt whether the 100% of your investment and the agreed interest. I will not go to talk politics and what these new political actors do or fail to do. What interests us is to prepare for his appearance on the scene and to take into account the possible consequences on our investments.

In today's post I would like to launch a reflection on a first circle of influence of a possible bursting of the bubble of public debt and budget deficit in Spain and Greece. With an eye to Italy, Belgium and Japan (although these countries do not have much dependence on external funding). My reflection is over whether to restructure our portfolios leaving out major holders of government debt, such as banks and insurers. A "default" public doubt (and "default" I refer not only to the total collapse of the state, but also to change the original conditions with which the debt was released, either by interest payment deadlines return, deficiencies, partial discount, etc) can have disastrous consequences. Even though these terms are renegotiated and are agreed upon by almost everyone, as happened in Argentina. This will entail losses for banks and insurance companies will lower their profits and dividends, in addition to a cascade of effects of greater significance.

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Translated by Google from: futuroybolsa.blogspot.com.es