Portugal requests EU bailout

[J]

How about: The bailout will be covered in full by the bailout fond, who is not even close to being exhausted? It is a bit disingenious to look at Ireland as a lone nation state in this.

Sure, and how do they pay back the bailout loans when they're still running a deficit and will continue to do so for the foreseeable future?

[Thanas]

How about: The bailout will be covered in full by the bailout fond, who is not even close to being exhausted? It is a bit disingenious to look at Ireland as a lone nation state in this.

Sure, and how do they pay back the bailout loans when they're still running a deficit and will continue to do so for the foreseeable future?

The EU will cover it.

[J]

Hmmm...so if I understand you correctly, you're assuming the EU will continue funneling money to Ireland indefinitely, or at least long enough that it won't matter?

[Thanas]

Hmmm...so if I understand you correctly, you're assuming the EU will continue funneling money to Ireland indefinitely, or at least long enough that it won't matter?

Sure. If necessary, the debt will simply be split among the member nations. It is not as if Ireland is large enough to bring the whole EU down. Heck, Germany alone could probably shoulder the burden.


The rating agencies and the guys speculating on it are just vultures however and make me yearn for a Roman-style solution.

[koputusx]

The rating agencies and the guys speculating on it are just vultures however and make me yearn for a Roman-style solution.

What is a Roman-style solution?

[Atlan]

The rating agencies and the guys speculating on it are just vultures however and make me yearn for a Roman-style solution.

What is a Roman-style solution?

Decimate them?

[Pelranius]

The rating agencies and the guys speculating on it are just vultures however and make me yearn for a Roman-style solution.

What is a Roman-style solution?

Decimate them?

But then what about the remaining 90%?

[J]

Hmmm...so if I understand you correctly, you're assuming the EU will continue funneling money to Ireland indefinitely, or at least long enough that it won't matter?

Sure. If necessary, the debt will simply be split among the member nations. It is not as if Ireland is large enough to bring the whole EU down. Heck, Germany alone could probably shoulder the burden.

And if Ireland were the only nation in trouble you'd well be right. But it isn't. There's currently three nations drawing from the EU bailout fund with more to follow.

The rating agencies and the guys speculating on it are just vultures however and make me yearn for a Roman-style solution.

Why do you hate the free market? Are you an unwashed Euro-commie?

[Thanas]

Hmmm...so if I understand you correctly, you're assuming the EU will continue funneling money to Ireland indefinitely, or at least long enough that it won't matter?

Sure. If necessary, the debt will simply be split among the member nations. It is not as if Ireland is large enough to bring the whole EU down. Heck, Germany alone could probably shoulder the burden.

And if Ireland were the only nation in trouble you'd well be right. But it isn't. There's currently three nations drawing from the EU bailout fund with more to follow.

And it is still nothing Germany alone cannot shoulder. Now, if France would be in trouble, then yes. Otherwise, as long as France and Germany stay intact, the EU survives.

Why do you hate the free market? Are you an unwashed Euro-commie?

Probably.

[FTeik]

The rating agencies and the guys speculating on it are just vultures however and make me yearn for a Roman-style solution.

Why do you hate the free market? Are you an unwashed Euro-commie?

If we truly had a free market we would have left the banks to deal with their losses on their own. Instead we allowed them to take the rest of the economy hostage. Of course it helped, that they are also owning most of the debts accumulated by the various countries.

Come to think of it, a take-over by the communists might not be such a bad idea

http://www.youtube.com/watch?v=Se8jrJ24Oh8

[Falarica]

And it is still nothing Germany alone cannot shoulder. Now, if France would be in trouble, then yes. Otherwise, as long as France and Germany stay intact, the EU survives.

I'd assume if France was wobbling the UK would help Germany shoulder the debt. Possibly in the form of bilateral loans as in the case of Ireland. There is also the (small, ~€60 billion) European Financial Stabilisation Mechanism (which is not the Eurozone European Financial Stability Facility, ~€440,000 million).

[Starglider]

And it is still nothing Germany alone cannot shoulder.

Why would the German population want to continue to give massive amounts of money to peripheral nations, on top of the already significant direct subsidies they get from the EU? Even if Germany could pay for the necessary bailouts (which is highly dubious in the case of Spain) why should they? Having a weak currency for export competitiveness is not worth the haircuts that will eventually have to be taken, nowhere near.

[Thanas]

And it is still nothing Germany alone cannot shoulder.

Why would the German population want to continue to give massive amounts of money to peripheral nations, on top of the already significant direct subsidies they get from the EU? Even if Germany could pay for the necessary bailouts (which is highly dubious in the case of Spain) why should they? Having a weak currency for export competitiveness is not worth the haircuts that will eventually have to be taken, nowhere near.

Because the concept of a political union does not involve abandoning the weaker members when the first crisis comes rolling along.

[J]

It's official. We now have a PIG roast.

Bloomberg link

Portugal Agrees to $116 Billion Rescue With Extended Budget Deficit Target
By Joao Lima - May 3, 2011 5:48 PM ET

Portugal reached an agreement with officials preparing its European Union-led bailout that will provide as much as 78 billion euros ($116 billion) in aid and allow more time to reduce the country’s budget deficit.

The three-year plan set goals for a budget deficit of 5.9 percent of gross domestic product this year, 4.5 percent in 2012 and 3 percent in 2013, Prime Minister Jose Socrates said in Lisbon today. The government in March targeted a deficit of 4.6 percent this year, 3 percent in 2012 and 2 percent in 2013.

“The government was able to obtain a good agreement,” Socrates said in comments broadcast live from his official residence. “Naturally there are no programs of financial assistance that are not demanding and that do not imply a lot of work. That does not exist.”

Portugal in April became the third euro-region country to request EU aid after Greece and Ireland. Officials from the International Monetary Fund, European Commission and European Central Bank arrived in Lisbon last month to prepare a rescue package. That hasn’t prevented Portuguese bond yields from climbing to euro-era records.

The difference in yield that investors demand to hold Portugal’s 10-year bonds instead of German bunds reached a euro- era record of 6.48 percentage points yesterday. The 10-year bond yield reached 9.76 percent on April 29, the highest since the euro was adopted in 2000.
Tax Increases

Portugal has already raised taxes and is implementing the deepest spending cuts in more than three decades as it tries to narrow its budget gap and curb debt.

Socrates today said the agreed plan does not involve more cuts in public-sector wages or in the minimum wage. State workers will not be fired and the government will not sell shares in state-owned savings bank Caixa Geral de Depositos SA as part of the agreement, he said.

Consultations with Portuguese political parties will now follow, Socrates said. He did not provide details on the interest rate that Portugal will be charged for its aid plan.

EU finance ministers said in an April 8 statement that the program for Portugal will include “an ambitious fiscal adjustment,” an “ambitious privatization program” and measures to maintain the liquidity and solvency of the financial sector.

Portugal on April 23 revised its 2010 budget deficit to 9.1 percent of GDP from 8.6 percent after the government added three highways to its accounts.

Deficit Target

The government in March reported an 8.6 percent deficit for 2010, missing its target of 7.3 percent. Accounting changes ordered by Eurostat, the European Union’s statistics agency, forced the state to add more than 2 billion euros to the 2010 deficit for impairment costs stemming from the 2008 seizure of Banco Portugues de Negocios SA and also for charges linked to the public-transportation system.

Portugal’s public debt swelled to 93 percent of GDP in 2010 from 68 percent in 2007. The country’s statistics institute on March 31 estimated public debt will reach 97.3 percent of GDP this year.