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FEATURE: Sick men of Europe
27 April 2011
The Eurozone has been plagued by a sovereign debt crisis for more than a year. Now that the long-term arrangements have been agreed and Portugal has at last sought EU help, Global Investor/isf asks whether a cure has been found
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Euro
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PIIGS
sovereign debt
On the April 6 Portuguese caretaker Prime Minister José Sócrates made the “inevitable decision” to seek help from the European Financial Stability Facility (EFSF), the Eurozone’s nation state bailout fund. It was an important event as it marks the last domino in the chain, following Greece and Ireland but ahead of Spain and Italy, before the crisis would turn into something so expensive that it would truly test the ties that bind the European Union together.
That Portugal asked for funding was not a surprise to the markets. As Paul Brain, leader of fixed income at Newton, says: “There should be a sense of relief as many believed that without a government, with funding issues mounting and the ECB (European Central Bank) about to raise rates, the chances of Portugal getting funding from the markets was getting remote.”
Despite needing an estimated €80 billion ($115 billion), there was only...
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