Doomsayers: Portugal is Next in Line after Irish Bail-Out

Finance | November 22, 2010, Monday // 10:43|  views

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Following EU agreement on a bail-out package for Ireland, analysts in Europe and the United States have voiced fears that the country's problems might spread to other euro zone members with large budget deficits such as Spain and Portugal.

"I think it means Portugal is next (to request help). I don't know if it will happen before the end of the year or after, but it's almost inevitable now," said Filipe Garcia at Informacao de Mercados Financeiros in Porto.

Nouriel Roubini, the NYU economics professor who correctly predicted the financial crisis in 2008, warned of more pain ahead for the European sovereign debt crisis in a CNBC interview.

"The next one in line is going to be Portugal. Due to the severity of Portuguese debt problems, Portugal is going to lose market access—and that means they are going to require IMF support as well."

"Now you have a bunch of super sovereigns— the IMF, the EU, the eurozone—bailing-out these sovereigns...There's not going to be anyone coming from Mars or the moon to bail-out the IMF or the Eurozone."

According to Roubini Spain is the real "elephant in the room."

"You can try to ring fence Spain. And you can essentially try to provide financing officially to Ireland, Portugal, and Greece for three years. Leave them out of the market. Maybe restructure their debt down the line...But if Spain falls off the cliff, there is not enough official money in this envelope of European resources to bail out Spain. Spain is too big to fail on one side—and also too big to be bailed out."

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Tags: EU, Spain, Portugal, property bubble, banks, Brian Cowen, irish, European, European Union, Eurozone, Republic of Ireland, finance minister, Brian Lenihan, debt crisis, corporate tax rate, Irish government, Patrick Honohan, International Monetary Fund, ECB, EU-IMF troika team, ireland, Dublin, IMF, European Central Bank, European Commission, Simeon Djankov, Eurozone finance ministers, bailout, Bulgaria, Cyprus, Republic, UK, Sweden, PM, Celtic Tiger, Global Financial Crisis, EU Finance Commissioner, Olli Rehn, bail-out


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