Portugal: Help I need a bailout!

Things were fairly quiet over the holidays but now that people are back to work, they are once again turning their attention to some outstanding problems and here outstanding does not mean excellent.

 

As reported back on November 24, 2010, speculation has it that Portugal is next in line for a bailout. Newspapers have been filled with reports of the Euro recently falling because of Europe’s "looming debt crisis". Investors are showing a growing lack of confidence for the Eurozone. Apparently Germany and France are pressing the country to formally seek a bailout as a bid to calm the markets although the European Commission has stated there are no talks currently being held.

 

For years the acronym PIGS has been bandied about standing for Portugal, Ireland, Greece and Spain. This acronym also has the variation of PIIGGS where the second I stands for Italy and the second G stands for Great Britain. This term simply encapsulates the common opinion in financial circles about the fragile nature of the economies of the countries in question and the danger they represent for the overall health of the Euro. Certainly the dip in the value of the Euro is an indication that others in the world do not necessarily have confidence in the EU. Let’s not forget that public confidence is absolutely paramount to the successful running of any business or for that matter, a country. Investment is needed for capital to support business to grow the economy. No confidence, no investments, no business, no growth, just stagnation and decline then bankruptcy. Not a pretty picture.

 

Financial pundits have pointed out that Athens and Dublin made their situations and the subsequent corrective actions messier and more painful by waiting to seek European aid until they had no choice. Lisbon is seeing a call for aid as some sort of nation disgrace and is going to repeat the same mistake as these countries. When the hammer comes down, it is going to come down all that much harder and will the average Portuguese have the stomach to tighten their belts? Let’s not forget the response of the Greek public when austerity measures were forced on them. May 2010 saw huge protests in the country (click for pictures) and Portugal could very well see the same thing.

 

But is all of this the tip of the iceberg? In the Nov 24/2010 article Ireland on the brink: Can pigs fly? the following was pointed out:

 

 

Yes, 2011 will more than likely see Portugal asking for a bailout but what about this last remaining letter in the acronym PIGS? If the Eurozone is having problems with international investors over the problems with Portugal, just what are those investors going to do if Spain goes under? To the lifeboats! Abandon ship! Women and children first!

Click HERE to read more from William Belle. 

 

 

Wikipedia: PIGS (economics)