Eurozone Debt Crisis: Portugal Admits 'it Could Need Eu Bail-Out'

[interestrateripoff]

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8134921/Eurozone-debt-crisis-Portugal-admits-it-could-need-EU-bail-out.html

Fernando Teixeira dos Santos, the Portuguese Finance Minister, has warned that the fall out from concerns over Ireland's public finances could create a contagion effect among its neighbours.

"The risk is high because we are not facing only a national or country problem," he told Dow Jones news wires, in reference to the possibility that Lisbon will need international financial assistance.

“It is the problems of Greece, Portugal and Ireland. This is not a problem of only this country. This has to do with the euro zone and the stability of the eurozone, and that is why contagion in this framework is more likely.

“It is not because markets consider we have similar situations. They are only similar in what concerns markets, but as I said they are very different.”

He added: “Markets look at these economies together because we are all in this together in the euro zone, but probably they could look different if we were not in the euro zone.

“Suppose we were not in the eurozone, the risk of the contagion could be lower.”

The Portuguese minister insisted that Portugal was improving its finances as it struggled with burgeoning public debt and deficit levels and later tried to back away from suggestions Lisbon was poised to call for help.

"Such a request is not imminent, there are no contacts, be it formal or informal," he said. "The rest are rumours and speculation."

Got to love this bluff here, if Portugal wasn't in the Eurozone it would never have been able to borrow the money it has on the implicit guarantee that the German taxpayer will cover any defaults.

Looks like it's brown trouser time across Europe as too many politicians realise that the policy of ever expanding debt is unsustainable.

It would appear that the game is well and truly afoot now.

[geezer466]

Form and Orderly line please form an orderly line!!!!!

Stop lurking in the shadows Murphy get in line.....

[Errol]

There's no shortage of money. As long as we can feed the printer with paper we can make as much as we want!

PRINTY PRINTY

PRINTY PRINTY

etc etc.

[Guest spp]

The old dollar euro seesaw again

The £ must be feeling a little left out atm...when do we get a bailout?

Debt is designed for default as fiats are for debasement. FOA

[Yoss]

There's no shortage of money. As long as we can feed the printer with paper we can make as much as we want!

PRINTY PRINTY

PRINTY PRINTY

etc etc.

Nice thing about the paperless economy is that less trees get hurt buy the Printy Printy.

[sammysnake]

Apart from Germany, are there any solvent economies left in the Eurozone?

If I were a German taxpayer, I'd be very nervous indeed

The Euro to big to fail my ****...

[ralphmalph]

The stupid thing is that if they do not go for a bailout they have to pay for the other bailouts. Ireland had to contribute to the Greek bailout, so if Ireland has a bailout Portugal would have to contribute so ergo they will all want a bailout to get their grubby hands on more German cash to waste.

[OnlyMe]

href="https://www.housepricecrash.co.uk/forum/uploads/post-273-0-18913000-1289859371.jpg">

Edited November 15, 2010 by OnlyMe

[Charlie The Tramp Returns]

Apart from Germany, are there any solvent economies left in the Eurozone?

If I were a German taxpayer, I'd be very nervous indeed

The Euro to big to fail my ****...

It will fail as Germany will decide it`s had enough, Murkel will get the chop and the DM will be back.

[MinceBalls]

The stupid thing is that if they do not go for a bailout they have to pay for the other bailouts. Ireland had to contribute to the Greek bailout, so if Ireland has a bailout Portugal would have to contribute so ergo they will all want a bailout to get their grubby hands on more German cash to waste.

Dominos then?

Whats UP with the markets then.... all seems hunkydory considering it looks like a steamining pile of sh1t from here.

[Charlie The Tramp Returns]

Which hands belong to the Kinnocks ?

[aussieboy]

Which hands belong to the Kinnocks ?

I believe the UK would be one of the three donor stars... rather than one of the nine recipients.

(btw yes I got your joke.)

[Mr. Miyagi]

The euro is facing an unprecedented crisis after another country indicated last night that it was at a “high risk” of requiring an international bail-out.

Angela Merkel

'If the euro fails, then Europe fails,' warned the German Chancellor Angela Merkel last night

Portugal became the latest European nation to suggest it was on the brink of seeking help from Brussels after Ireland confirmed it had begun preliminary talks over its debt problems.

Greece also disclosed yesterday that its economic problems are even worse than previously thought. Last night, the German Chancellor Angela Merkel raised the spectre of the euro collapsing as she warned: “If the euro fails, then Europe fails.”

European finance ministers will meet in Brussels tomorrow to begin discussions over a new European stability plan that is expected to lead to billions of pounds offered to Ireland, Portugal and possibly even Spain.

David Cameron said he was thankful that Britain had not joined the euro, but indicated his displeasure that taxpayers in this country faced a £7 billion liability in any bail-out package.

The veteran Conservative MP Peter Tapsell warned that the “potential knock-on effect” of the Irish crisis “could pose as great a threat to the world economy as did Lehman Brothers, AIG and Goldman Sachs in September 2008”.

Ireland has resisted growing international pressure to accept EU financial assistance amid concerns that this would lead to a surrender of political and economic sovereignty.

However, the German government is expected to signal today that Ireland may have to accept a £77 billion bail-out, along with a loss of economic and political independence, as the price of preserving the euro. Mrs Merkel said the single currency was “the glue that holds Europe together”.

Her words came as fellow eurozone members Portugal and Spain rounded on Ireland. They fear that international concerns over the euro will lead to so-called market contagion spreading to them.

Fernando Teixeira dos Santos, the Portuguese finance minister, said: “There is a risk of contagion. The risk is high because we are not facing only a national problem. It is the problems of Greece, Portugal and Ireland. This has to do with the eurozone and the stability of the eurozone, and that is why contagion in this framework is more likely.”

Mr Teixeira dos Santos added: “I would not want to lecture the Irish government on that. I want to believe they will decide to do what is most appropriate together for Ireland and the euro. I want to believe they have the vision to take the right decision.”

He later sought to clarify his comments, insisting that Portugal was not preparing to seek assistance.

Greece had earlier added to the growing uncertainty when it said it would breach the conditions for the bail-out it was granted by the EU earlier in the year. The Greek government said its debt problem was much worse than previous dire forecasts.

Eurostat, the EU statistics agency, said Greece’s 2009 budget deficit reached 15.4 per cent of gross domestic product, significantly above its previous figure of 13.6 per cent.

George Papandreou, the Greek prime minister, said new European-wide taxes might now be needed to fund bail-outs.

“We need a mechanism which can be funded through different forms and different ways,” he said. “My proposal is that taxes such as a financial tax or carbon dioxide taxes could be important revenues and resources for funding such a mechanism.”

Yesterday, Irish ministers continued to insist publicly that they did not require a European bail-out to help meet the cost of repaying the country’s debts. However, reports suggested that Ireland might require help to shore up its banks.

Jean-Claude Juncker, the head of the Eurogroup of finance ministers, said the eurozone was indeed ready to act “as soon as possible” if Ireland sought financial assistance. But he stressed that “Ireland has not put forward their request”.

Ireland suffered the worst recession of any major economy and has amassed government debts of more than €100 billion (£84 billion). It has an unemployment rate almost twice as high as Britain at 13.2 per cent and currently has a record deficit equivalent to 32 per cent of its gross domestic product.

Senior figures at the European Central Bank yesterday lined up to insist that the Irish accept international help to reassure investors that the euro was secure.

Miguel Angel Fernandez Ordonez, the Bank of Spain governor and a member of the ECB’s governing council, said: “The situation in the markets has been negative due in some part to the lack of a decision by Ireland. It’s not up to me to make a decision. Ireland should take the decision at the right moment.”

Telegraph link

I'll give till Christmas.

[Charlie The Tramp Returns]

However, the German government is expected to signal today that Ireland may have to accept a £77 billion bail-out, along with a loss of economic and political independence, as the price of preserving the euro. Mrs Merkel said the single currency was “the glue that holds Europe together”.

It appears Angela you are using cheap glue, don`t bother even using super glue, even that would not hold you together, the Euro Zone is doomed, listen to Charlie.

[_w_]

Here's something that makes sense, although I think this 'loophole' has been used for ages already by both Portugal and Spain.

http://www.businessi...bailout-2010-11

Tinfoil hat time, courtesy of reader Brendan Moroney who writes in, speculating that Ireland has found a loophole that explains why there's not been a bailout yet, and why the rest of Europe is so eager to have it take a bailout:

The Government of Ireland may have identified a legal loop-hole in the Euro support agreement put together for the occasion of the Greek Bailout back in May 2010.

This loop-hole has allowed Ireland's banks access billions of Euros of funding from the ECB over the past few weeks (Sept. 2010 to present), without the ECB having the power to force any of it's structural change on to Ireland.

Realising too late what is possible under the agreement, European's financial leader are falling over themselves to pressure Ireland's Government to cease subverting the support mechanism in such a manner and instead to row-in behind the spirit of the agreement. Hence the pressure over the past week-end for Ireland to access funding directly.

The ECB, never intend itself to be a no-strings-attached clearing house for Irish banking obligations.

The Government of Ireland has withdrawn from the bond market during this same time-frame. Budget figures have been announced for 2011 and Irish banks are availing of agreed support from the ECB.

It is the European Central Bank that is in uncharted waters and feels suddenly that it has lost control. What it intended to be a stability pact has emerged as a de-stabalising pact where a country with 1% of the economy of Europe is eating 15% of the funding of Europe.

Until Euopean leader have the opportunity to reform this recent agreement, the Euro seems to be the hostage of Ireland.

This basically makes sense, and it dovetails nicely with what Channel 4 econ reporter Faisal Islam tweeted earlier, that per his sources, most of the pro-bailout pressure was coming from the ECB, rather than Berlin.

[Guest spp]

Apart from Germany, are there any solvent economies left in the Eurozone?

If I were a German taxpayer, I'd be very nervous indeed

The Euro to big to fail my ****...

Depends how hard they want to play...

The EU CBs have healthy looking gold reserves.

[wonderpup]

Until Euopean leader have the opportunity to reform this recent agreement, the Euro seems to be the hostage of Ireland.

Now if true that is downright funny

Maybe the 'Oirish are not so thick after all.

[Si1]

However, the German government is expected to signal today that Ireland may have to accept a £77 billion bail-out, along with a loss of economic and political independence, as the price of preserving the euro. Mrs Merkel said the single currency was “the glue that holds Europe together”.

would be interesting to see Ireland run like Holland or Germany - would the people accept it?

[Pauly_Boy]

So are they trying to say that in return for the money, Ireland would have to give up political powers ?? Has that happened to Greece?

Why don't they just goto the IMF?

[GordonBrownSpentMyFuture]

However, the German government is expected to signal today that Ireland may have to accept a £77 billion bail-out, along with a loss of economic and political independence...

So are they trying to say that in return for the money, Ireland would have to give up political powers ??

[leicestersq]

So are they trying to say that in return for the money, Ireland would have to give up political powers ?? Has that happened to Greece?

Why don't they just goto the IMF?

I think that what is happening is that Ireland must give up some powers. In particular, if you are going to borrow a large amount of money, the lenders will insist that you pay it back, or they wont lend it to you.

So that means that they will be forced to balance their budget. From what I have heard on these boards from Irish contributors, it wont be the hardest job in the world to do that. They just need to pare benefits and bloated public sector salaries back to a generous level, and they will be running a fiscal service and be able to service a debt.

[getknk]

so what's predicted for Euro?

below $ dollar parity?

[interestrateripoff]

Here's something that makes sense, although I think this 'loophole' has been used for ages already by both Portugal and Spain.

http://www.businessi...bailout-2010-11

Too funny for words, unbelievable how many of the others in trouble are doing the same?

The ECB, never intend itself to be a no-strings-attached clearing house for Irish banking obligations.

Pure comedy genius.

No wonder Ireland is in no rush to get a bailout.

[interestrateripoff]

It appears Angela you are using cheap glue, don`t bother even using super glue, even that would not hold you together, the Euro Zone is doomed, listen to Charlie.

Once they fudged the membership criteria it was game over, long term it was doomed unless the imbalances where corrected.

[aa3]

It might be doomed in the long run but so far the ECB can handle bailing out the 3 amigos, Greece, Portugal and Ireland without much problem. Now obviously they are going to attach a ton of strings and get control of their future borrowing..

Spain presents a bigger problem because it is about twice as large as the three amigos combined. But so far Spain is holding up very well, I have not seen a good analysis of Spain's debts.