"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or your arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that you were our countrymen."

Thursday, 7 April 2011

Portugal Down

One of the cats came and sat on my head and decided it was as good a place as any to start washing himself, bang, slurp, bang, slurp, until I woke up to the news that Portugal has finally asked for a bail-out.

Well, that's a relief. After all the denials and the 'yes, you will/no, we won't' chatter between the EU and Portugal over the past several months it was getting a bit tedious. If the Portuguese think they've finished with the rioting and flag-burning, wait until they hear the list of austerity measures and drastic cutbacks that will be demanded from them.

One thing that struck me is that watching it unfold has been like following a pre-prepared script - one that Ireland & Greece had already followed: 'EU urges bail-out on ...', 'stability of the euro-zone', '... doesn't need a bail-out', 'yes, you do', 'no, we don't', and so on. All very deja-vu.

Britain's contribution to the bail-out could be as high as £4bn (already paid in via the IMF and the EU's EFSM which Darling signed up to last May) but no doubt Osborne will make much of the fact that we won't be providing separate funds in any bilateral loan arrangements as we did with Ireland last year. Or at least, that's the theory.

Dominique Strauss-Kahn, head of the IMF, told El País newspaper yesterday that Spain was "safe from a bail-out". They'd better hang on to their hats - unemployment stands at 20%+ and youth unemployment (18-24) is a staggering 40%. Despite Strauss-Khan's assertiion, Spain is far from safe.

I've posted the graphic below before but it's worth repeating.  It shows who owes what to whom and how much - very incestuous banking practices.  (Note that Spain is exposed to about 33% of Portugal's debt - click to enlarge).

PS: If you're wondering why I'm complaining about being woken by a cat sitting on my head, take a look at the timing of this post.


  1. The next one will be El Gordo.

  2. It's all been a very neat and tidy toppling of dominoes so far, RH and Spain really doesn't look too clever, despite how much the politicos protest. There could be a surprise interruption though - Belgium? Ultimately, the bankers & markets will decide, not politicians.


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