Eurozone crisis spreads: Portugal, Italy, Belgium hit by fallout from Irish bailout

[Hannah Bell]

In the wake of last weekend’s bailout of Ireland, the Eurozone financial crisis has rocked Portugal and begun to affect the day-to-day financing of Italy, Belgium, and Spain.

All four countries were compelled to offer record yields on 10-year state bonds Tuesday, as lenders demanded the highest returns since the introduction of the euro in 1999. Even French and German bonds were caught in the downdraft, as speculators demanded a full half-point higher interest rates compared to last summer...

In a report issued Tuesday, the Portuguese Central Bank warned that it was suffering a crisis of liquidity and was only being kept afloat by loans from the European Central Bank. For the first time a leading Portuguese politician, opposition leader Pedro Passos Coelho of the Social Democrats, conceded that the country may have to accept an EU-IMF bailout. This would make Portugal the third Eurozone country to receive such a loan, following Greece and Ireland.

In a major move to assuage the banks, European finance minister hurriedly agreed to a proposal put forward by Germany and supported by France at the weekend for an extension of the existing European emergency bail out fund, through the creation of a European Stability Mechanism (ESM).

The main element of the new agreement is the setting up of a fund to replace the existing €440bn ($583bn) rescue fund established by European governments in the wake of the Greek debt crisis in May of this year.

http://www.wsws.org/articles/2010/dec2010/euro-d02.shtml

[xchrom]

1. we live in such interesting times.

i see now why that phrase is considered a curse.

[Starry Messenger]

2. recommend.