Foreigners Shun Europe’s Bonds, and Debt Piles Up

The New York Times reports:

Greece. Ireland. And now, it seems, Portugal.

While the circumstances that have driven these debt-ridden members of the euro zone to the brink differ, they share one common characteristic: All three countries aggressively tapped their domestic banking systems for more debt long after they had been shut out of international bond markets.

With its 10-year debt trading close to the historic high of 7 percent reached last week, Portugal will try Wednesday to sustain what many have come to see as nothing more than a form of bond market charades when it attempts to raise up to €1.25 billion, or $1.62 billion, in long-term financing — debt that is expected to come largely from the country’s already depleted banking system.