A daily blog on the thrills, spills, and frequent absurdities of the world's one and only 'non-imperial empire' - as Barroso himself called it - the European Union.

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Wednesday, 6 July 2011

Does Portugal Need a Second Bailout?

Eurosceptics have been right for the last twenty years.

In all the coverage of Moody's downgrading of Portugal's credit rating to below junk, it is very easy to miss this little nugget: Portugal, like Greece, may yet need a second bailout in order to get its finances back on track. It hasn't been in any of the British newspaper headlines, which have focused solely on the downgrade itself, but Moody's has been quite clear: without a further EU-IMF bailout, Portugal will not solve its debt crisis.

The Guardian writes that there is a growing sense of despair in Brussels. It seems broadly accurate. The Netherlands threatens to deport Poles and other eastern Europeans who refuse to find work and the Danes significantly boost their border presence, and now the euro comes under a renewed assault as the bailout of yet another country has been called into question, at the same time as the legality of German participation is brought before their Constitutional Court.

The bailouts are an abject failure; that much has been proven. Schengen and freedom of movement is under a sustained assault from 'populists' (i.e. democrats) who are facing up to the fact that Utopia has no place in a modern European state. And, to make matters worse for the European elite, elected and unelected, the German government, the chief paymaster of the bailout scheme, may have been stumping up the cash illegally, against that country's constitution, which was put in place after the Second World War and will not be breached lightly.

That might explain the increasingly bizarre reactions from EU officials: Barroso weighed in earlier and deployed an argument that's usually reserved for national democrats and 'populists' in the European Parliament, lambasting the ratings agencies as 'anti-European.' Wolfgang Schaube called for the 'oligopoly' of the ratings agencies to be broken, and Greece said that there was 'no justification' for the measures.

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