Germany fears another bailout as debt grows for Euro countries
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STEVE CHIOTAKIS: The Euro has taken another battering on the currency markets today. Fears are growing that Portugal may be the next Eurozone country to request a bailout.
Marketplace’s Europe Correspondent Stephen Beard is with us live from London to talk about it. Hello Stephen.
STEPHEN BEARD: Hello Steve.
CHIOTAKIS: I know Portugal is denying these reports that it’s going to need a bailout, but does the rest of Europe have the wherewithal to bail out another country.
BEARD: In the short-term yes. I mean the EU IMF bailout fund is worth about a trillion dollars. But look at the numbers. The Irish bailout, which should be finally agreed this Sunday will probably amount to $100 billion. Portugal, if it does get a bailout, would probably come to a similar sum.
The real problem would be Spain, which is double the size of Portugal, Ireland, and Greece put together. That might well be a challenge for the bailout fund.
Now today, the Spanish Prime Minister said it was absolutely out of the question that his country would need to be rescued. But investors don’t seem entirely reassured.
CHIOTAKIS: But Stephen, hasn’t the European Commission been talking about doubling the size of this bailout fund. Hasn’t that talk sort of calmed the markets?
BEARD: Not entirely, no, because there’s doubt about whether the key player here, Germany, would agree to that. Here’s Ruth Lee of the Arbuthnot Banking Group.
RUTH LEE: I would be absolutely amazed if Germany would agree to this because obviously they have to cough up most of the money. There seems to be a terrific fatigue in Germany for bailing other countries out.
BEARD: And not just fatigue, but also anger and fear. It’s been claimed that German’s are so alarmed about the debt crises and the future of the Euro that there’s not a single bank safety deposit box available in the country. Everyone of them is stuff with gold and silver.
The German’s have terrible memories of losing there savings in the past through inflation and currency collapse.
CHIOTAKIS: Stephen, thank you very much.
BEARD: O.K. Steve.
CHIOTAKIS: Marketplace’s Stephen Beard reporting from London.