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Now that the second charter member of the PIGS has turned into a reluctant recipient of EU-IMF largesse, the question is not whether there will be more bailouts, because they are inevitable. The whole Irish exercise is not about rescuing Ireland’s public finances, but restoring confidence in the bond market and saving the hides of all the European banks on the hook if the Irish banks go bust. Portugal will be the next domino. The surest sign came from Portuguese Prime Minister Jose Socrates himself, When he emphatically declared on Monday that his country doesn’t need a bailout....
What really worries the eurocrats is not small Ireland or Portugal, but much larger Spain. And anyone expecting these aid packages to soothe the bond vigilantes hasn’t seen anything yet.... Throw in the fact that the fiscal situation in Greece is actually deteriorating and the Greeks may not qualify for the next tranche of their financial aid, and what seemed like a serious threat to the euro zone’s survival turns out to be only the tip of the iceberg.
And Spain could turn out to be the sovereign equivalent of the Titanic.
