When PIGS fly there is less pressure to raise mortgage rates

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PIGS is an acronym for Portugal, Ireland (and could include Italy), Greece and Spain.  These countries have been in the news because of their relative small population and high precentage of debt to their Gross Domestic Product.   There are concerns these countries, especially Greece, may default on their government debt.

A default in any category of investment causes a ripple effect for similar investments.   If one country defaults, there is concern and a worry about investing in the sovereign debt of other countries.   Canada has a larger population than Portugal (near 11 million), Ireland (under 5 million), Greece (near 11 million) and is smaller than Spain (near double Canada's population)

On March 15, 2010 there are more meetings with the Eurozone Finance Ministers to discuss financial support for Greece, the current hot topic of foreign debt solvency.   If they are able to come to terms and Greece is able to meet the conditions of financial support, it may avert more than anticipated mortgage rate increases in Canada.

In a global economy, investment money may see Canada as a safe haven and investment money flows to Canada Bonds- without a price premium for the uncertainty about sovereign debt.    But, if Canada is not seen as a safe haven, especially while the government of Canada is borrowing money during deficit spending- that puts pressure for rates to go up.

So, let's hope those European PIGS can fly, so we do not get the sovereign debt worries becoming a contagious financial swine flu of higher than anticipated mortgage rates in Canada