The Irish bailout has been all over the news this week, but the real risk in Europe doesn’t lie in Ireland, or Greece, and not even in Portugal. Spain is the real risk. Spain is much larger than Ireland and may in fact be too large for the E.U. to bailout. Investors are becoming increasingly nervous about the prospect of a default in Spain as evidenced by the record wide spreads in Spanish government bonds relative to German government bonds.
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Jeremy Jones, CFA is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Jeremy is a contributing editor of youngresearch.com.