Wednesday, 6 April 2011

Bailouts, Bailouts everywhere.

Portugal has confirmed that it will become the 3rd European country to be bailed out in recent times. Greece started the new trend (well, ignoring the U.S. for a moment) followed late last year by Ireland, and now I wonder how many other EU members are contemplating asking for a handout.


In the middle of last year the euro-zone bloc established a €440 billion fund, called The European Financial Stability Facility (EFSF), to assist member countries in financial strife. Now whilst this is a great idea in times of crisis, it should be questioned whether countries, particularly smaller ones that feed off EU membership will become more and more careless in regards to the management of their economies, if they know they can factor in this fund when deciding what direction to take. Now it should be noted that Prime Minister Sócrates resisted a bailout for almost a year and also that Portugal's monetary amount, whilst not finalised in total yet, will almost certainly not reach the levels of the previous two; nevertheless, a bailout is a bailout.


This further brings attention to the fact that EU member countries are largely unable to solve their own problems through currency manipulation due to sharing a central bank with all their buddies. Whether this is a good or bad thing remains to be seen, however there is a reason the UK has chosen to continue using their own currency and this is definitely an important factor. I guess as long as the majority of the largest member countries are still able to help out the little ones without getting too pissed off, it should be alright. Will be interesting to see what happens if a powerhouse like Germany or France gets in trouble and needs a bailout... who will be there to save them? Obviously nobody wants to think of this scenario in fear of sounding pessimistic, but if it happened to the largest economy in the world it can happen to anyone.

35 comments:

  1. People these days don't know how to lead a nation.

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  2. europe has it better than the usa :(

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  3. Seems like so many big corporations and countries ask to be bailed out, makes you wonder where all this bailout money is coming from.

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  4. Damn, I don't know what the future will be like for the Western Economies

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  5. All these bailouts of entire countries is making me sick. Not to say my country is any better off.

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  6. ...and the Governments say that the recession is over?

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  7. Fascinating. Makes me think of how American states mirror some of the european countries in leeching.

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  8. Seems that the governments of the world found a solution to the depression: "Print more money!" Cause that is how economics works, right?

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  9. I had no idea about this. not about the recent news, but about it as a whole. thanks for the heads up

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  10. Damn this economy is really fucked up. Pardon my french but it really is fucked

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  11. Here in New Zealand we've just had an insurance company get bailed out.

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  12. shit just keeps getting worse doesn't it?

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  13. i never understood where the money from these bailouts came from.. i know Australia has had very little participation in the programs that arrange these things but then Australias dollar now outranks the us dollar. What a failure of society.. they just keep pumping money into the economy almost as if they don't care the kind of effect it can have.. 4-6 years ago the aussie dollar was maybe 60 american cents..

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  14. the handouts seem like begging to me... dunno..

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  15. This just makes me wonder where the money comes from. Seriously. Terrible economy = Money everywhere?

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  16. Next stop Spain. Except Spain is literally the gorilla in the room as far as indebtedness is concerned. Their property price explosion and subsequent implosion is at eyewatering proportions.

    The Brits apparently won't be lending to Portugal, they don't have a 'special relationship'(have banks in hock). They do however have a very special relationship with Spain (the British and German banks are up to their eyes in Spanish property debt).

    When Spain comes looking for a bailout, we will either see the end of the Euro with Germany pulling the plug or we will see a Eurozone wide solution.

    Once the bond markets are finished with the Euro they will move on to the next weak link, The UK.

    When European Debt crises ends we will either see the end of Europeans integration for at least a generation or a major step towards a united European superstate centered on the Eurozone countries.

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  17. there's no real safety in this.. Germany somehow allways pays the most - even though it has 1.4 billion € depth allready.

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  18. Would you like to write a blog about why these PIGS countries are in need of bailout? I find your blogs very informative so if you have time I'd definitely read it :)

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  19. that's the proof that capitalism don't work...
    everyone is in debt, even born in debt...

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  20. ;/ Economy is pretty bad at the moment for most part.

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  21. The dept is just one side: when the countries try to save some money by rising taxes, cutting salaries etc etc the people are on the streets or start striking.

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  22. They are moving towards a great depression 2 and then things will only get worse until they bring in the one world currency to `save` us.

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  23. The Bailouts outs WERE important. but lets not forget to give ourselves bonuses.

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  24. i could need a private bailout :3

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  25. Germany = EU, the rest is irrelevant

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  26. yeah this sucks the economy is bad in most places now. seems like we should all follow the asians

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  27. I'd love if someone would give me a bailout.

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  28. Seems like the establishment of this fund has just provided an easy answer for countries with only moderate economic hardships. The bailout has become the simple answer, even though it just entails throwing money at the problem. Yes, it could work given the right overall economic situation, but there have to be other programs with it to make sure that money actually goes to help restore the situation.

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  29. our government is failing... other government is failing... time for post apocalyptic scenario to start NOW

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  30. shit i need a bailout i been struggling more then these banks i can barely afford my interwebs

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  31. there will come a day when only money will be worth so much

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  32. We need good ol' Empirialism again! That help out the worlds economies and give us wars worth fighting not just terrorist hide and seek

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