Portugal is asking for a bail out.
Portugal's prime minister said Wednesday his country has asked for financing assistance from the European Union due to its high debts and difficulty raising money on international markets.
The amount is €80 billion, with the Wall Street Journal reporting €90 billion.
Germany is already backing the bail out.
Of course the help will have a catch, that infamous, vague term, austerity. So far this has been an attack on workers, wages and social safety nets.
The U.K., which has cuts social safety nets, workers will contribute £4bn to the Portugal bail out....in order to cut social safety nets, workers and wages.
The Treasury said the UK was not planning to offer bilateral assistance to Portugal in the way that it did to Ireland.
But it confirmed that Britain could be required to provide a loan of up to about £4.4bn – 13.6% of the €37.5bn remaining in the EU "disasters fund" after it was drawn upon by Ireland – as well as 4.5% of any IMF loan.
Earlier in March, Portugal voted against austerity measures and the Portugal prime minister resigned.
Seems the ECB, EU and the infamous IMF are putting together an austerity plan for Portugal which will take 2 to 3 weeks.
The Economist has a new article showing the grand results of austerity on Greece and it's none too good.
The real source of gloom is the shorter-term impact of austerity. A year ago the plan forecast that GDP would shrink by 4% in 2010 and 2.5% in 2011. Instead it fell by 4.5% last year and IOBE predicts it will decline by 3.2% in 2011. The unemployment rate has risen from 9% in mid-2009 to 14.2% in the last quarter of 2010, and is expected to average 15.5% this year.
Austerity means nothing, when
Austerity means nothing, when you consider that Portugal was implementing its toughest austerity program in thirty years and still got downgraded by the credit agencies. The question is always going to be, vaguely, how much austerity is enough for the agencies to put down their canons?
Funny thing is that the credit agencies then used, not Portugal's lack of austerity, but lack of growth as a reason for downgrading them further, talk about a catch 22, doomed if you do and doomed if you don't.
One thing is for sure, Spain is next, and then who else? Belgium? The UK isn't doing too well, nor is France, how bout the eastern bloc, Latvia is stuck in a debt bog, well I say just downgrade everyone, including the good ole US of A, don't think it can't happen.