ECB Forced to Buy Portuguese Bonds, a Sign of Things to Come?

According to Zerohedge (my new favorite site by the way), the European Central Bank was essentially forced to buy Portuguese bonds to keep their cost of borrowing low and sustainable, thus delaying the inevitable default:

The ECB was forced back into the market as Portugal’s cost of borrowing on 10-year debt jumped to a fresh euro-era high of 7.63 per cent, traders said. The ECB temporarily suspended its bond buying programme in the middle of last month.

European policymakers and investors say Portugal’s cost of borrowing for 10-year debt is unsustainable above 7 per cent amid warnings that Lisbon might struggle to refinance €9.4bn of maturing debt by the end of the second quarter

The ECB buying, which was in small amounts, reversed the move higher as yields fell back to 7.34 per cent.

And that is from the Financial Times.

A sign of things to come?

Bernanke has already stated that he won't buy municipal bonds and state and local government debt to prevent state bankruptcies (which should be legalized).  While Bernanke and his cohorts probably won't directly buy said bonds and debt, that won't stop them from buying up assets on other bank's balance sheets to free up room for the banks to do it.  Thus perpetuating state's insolventcy. We can only hope that someone tracks these purchases if they should ever occur.

If you want to know more about the muni-bond crisis, check out what the vilified Meredith Whitney has to say about it.  I happened to watch her 60 minutes special last December, it was as awesome as it was frightening.

Sorry, I gotta put this up:

 If you don't know about it, read here.  I am not going to lie, I took a picture of myself like this once and sent it out to a girl.  The difference was that I was eighteen and a freshman in college, not a 46 year old Republican in the U.S. House of Representatives.