Portugal, Spain Worry Contagion from Ireland
A country, which once recorded more than 30 percent GDP growth, is now threatening European Union for its liquidity problem and soaring debt costs. Though the Ireland authorities are repeatedly telling that they do not need any bailout from the European emergency fund, markets are not in a position to believe. It seems they recall the same type of confident announcements by Greece Prime Minister George Papandreou that his country only needed assurances from the EU but not monetary aid. Then, ultimately Greece had to claim the financial aid from the EU and the IMF worth 110 billion euros.
Worries of Portugal and Spain
Finance ministers of Portugal and Spain are worried that Ireland crisis will spread to their countries if the Ireland does not move fast to assure the markets. Portugal’s debt costs are already going up. Spain is also almost ready to follow suit.
Portugal finance minister Fernando Teixeira dos Santos is quoted by BBC News as urging Ireland to do the right thing for the Euro and accept bail out. Spain’s Treasury Secretary has also reportedly asked Ireland to act quickly to cool down the market’s worries about uncertainties prevailing on Ireland’s capacity of debt repayment.
European Union president Herman Van Rompuy has warned that the failure of the Eurozone is meant to be the failure of EU. He has urged European countries to act together in difficult times, as EU’s existence hinges upon the success of the Eurozone in overcoming the crisis.
It was the European Central Bank that helped Ireland from going bust with its financial aid through buying its debt. Almost all banks of Ireland are now in the hands of the government due to their enormous burden of property loans that were on the verge of default due to financial crisis in 2008. Ireland banks are suffering from liquidity problems also as admitted by its Europe minister Dick Roche.Continued on the next page