Portuguese PM Jose Socrates requests EU bailout

[News_Editor]

Portuguese PM Jose Socrates requests EU bailout

2011-04-07 07:05:25 GMT+7 (ICT)

LISBON, PORTUGAL (BNO NEWS) -- The government of Portugal on Wednesday announced its application for a financial bailout to the European Union (EU).

Portuguese Prime Minister Jose Socrates said the financial bailout would ensure financing conditions for the country, to its financial system, and its economy, considering "the political situation and the constitutional limitations of the Government, as Government management."

Socrates also appeared on public television underlining that exterior financing had been a last recourse scenario, but the bailout was now of national interest.

The EU confirmed that Socrates had informed the President of the European Commission, Jose Manuel Durao Barroso, of Portugal's intention to ask for the activation of the financial support mechanisms.

Barroso also expressed confidence in Portugal's capacity to overcome the economic difficulties, with the solidarity of its partners, adding that the application would be processed in the "swiftest possible manner."

In late March, Socrates announced his resignation after opposition parties the rejected of his austerity budget. The country's parliament went on to leave him in charge of a caretaker government with limited powers until a scheduled election on June 5.

Socrates had previously stated that he believed in the the austerity budget was fundamental to protect the country's need of a foreign aid program in order to avoid the situation that Greece and Ireland are currently facing.

According to reports, Portugal's bailout could be worth as much as 75 billion euros ($107.5 billion), although some say it could be worth up to 80 billion euros ($114.6 billion). Greece and Ireland received a bailout of 110 billion euros and 85 billion euros respectively.

This month, Portugal will be facing a 4.23 billion euros ($6 billion) debt repayments, but the country has an estimated cash reserve of 4 billion euros ($5.7 billion). In June, a 4.9 billion euro ($7 billion) repayment will be due as well.

-- © BNO News All rights reserved 2011-04-07

[geriatrickid]

No.

Let the Portuguese clean up their mess by cutting entitlements first.

[Steely Dan]

The trouble is austerity is not a vote winner so successive governments increase the money supply faster than the underlying rate of growth. Monetary union means a one interest rate fits all policy is adopted so within the union Countries can't lower their own interest rates to make themselves more competitive.

A bailout is a cop out and does not address underlying structural problems, indeed whenever the IMF are called in they always impose austerity measures and what amounts to stict Austrian school economics.

The U.S and U.K have no such problems in lowering interest rates and printing money. They therefore resort to a bastardization of Keynesian economics and covertly default on debts by QE. This may be viewed as a virtue now but I strongly believe it just puts off the final default and the frightening thing with the U.S is it's far too big to be bailed out.

[flying]

Spain next?

[coma]

I bet EU countries such as France and Germany along with the UK are starting to wish that there was no European Union. Portugal,Greece, maybe Spain in the not to distant future, are becoming a major problem for the Union. Hence the dramatic fall in the value of both the Euro amd the UK pound. Punters earning those currencies for exchange out here in LOS must be livid right now.