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.