Domino Effect: Who Is Next in the Euro Crisis?

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The whole of Europe has its fingers crossed that the bailout of Ireland will contain the country's financial mess within its borders. But if the island's economic woes spread onto the mainland, it's looking like Portugal and Spain will be the next to fall.

At the moment, neither nation is willing to admit they need a handout. Portuguese Prime Minister Jose Socrates insists that his debt-plagued country "has no need for any aid," promising to cut its deficit down from its current high. And Spanish Foreign Minister Trinidad Jimenez is adamant that the Irish aid package will surely "stabilize" the eurozone.

But analysts aren't buying it -- many doubt that Portugal and Spain will be able to stick to their guns regarding austerity measures.  And investors don't seem to be any more convinced.

Portuguese 10-year bond yields have been on the rise for months, and spreads on Spanish 10-year bonds just hit record highs. Because yields rise when bond prices slump, high yields indicate investors' lack of confidence in the government's ability to pay them back.

The prevailing theory right now predicts a domino effect, whereby Ireland's debt crisis infects and topples Portugal, which then in turn fells Spain. But who's to say Spain will even wait for Portugal to collapse?

Business Insider's Joe Wiesenthal noted on November 23 that with Spanish yields at record highs, "the main event may come sooner than people are expecting."

But unlike its smaller struggling counterparts, Spain has a relatively large economy -- so it may very well be too big to bail out.

Which could mean that if Spain falls apart, the EU's center cannot hold, and the euro will come crashing down.

Europe's economic future appears precarious, to say the least. So while it's impossible to say what comes next for these countries in crisis, it's not a bad idea to see where their stocks currently stand. (Click here to access free, interactive tools to analyze these ideas.)

Here's a list of Spanish and Portuguese stocks to keep on your radar over the coming days. The list has been sorted by annual performance ...



Annual Performance

Portugal Telecom (NYSE: PT  ) Wireless Communications, Portugal


Repsol YPF (NYSE: REP  ) Major Integrated Oil & Gas, Spain


Telvent Git (Nasdaq: TLVT  ) Computer Based Systems, Spain


Telefonica (NYSE: TEF  ) Telecom Services, Spain


Banco Santander (NYSE: STD  ) Foreign Bank, Spain


Banco Bilbao Vizcaya Argentaria (Nasdaq: BBVA  ) Foreign Bank, Spain


Interactive Chart: Press Play to see how analyst ratings have changed for all the stocks mentioned above.

Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

The Fool owns shares of Telefonica. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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