Who is Causing Economic Panic? UH, PIIGS!

The sovereign debt crisis has focused heavily on the PIIGS: Portugal, Italy, Ireland, Greece, and Spain. However, the UK and Hungary should always be mentioned in the same breath. So, when asked which countries are ground zero of the sovereign debt crisis, we should say, “UH, PIIGS!”

You may be shocked to learn politicians are great liars all over the world. The government in Hungary is now reporting the previous government understated the economic problems plaguing the country. Hungary’s Prime Minister Viktor Orban┬ásaid, “It’s a very grave situation.”

Global investors are selling first and will ask questions later. The cost of insuring against losses on Hungarian sovereign debt jumped 83.5 basis points to 391.5. Hungarian bonds also fell as default is now considered a real threat.

Although much of the mainstream media would like us to think the sovereign debt crisis will be contained or cleaned up quickly, based on historical data of sovereign debt default cycles we are in for a long scenic drive.

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