TEXT OF INTERVIEW
STACEY VANEK SMITH: Portugal is the latest country to have its debt downgraded. Following on the heels of Hungary and Ireland. And now the cost of insuring against a default by the Greek government has soared to an all time high. That following a newspaper story saying Greece will try to renegotiate its debt by 2013.
Our European business correspondent Stephen Beard joins us live now to talk about this. Good morning Stephen.
STEPHEN BEARD: Hello Stacey.
VANEK SMITH: What has this newspaper been saying?
BEARD: That the Greek government’s looking a plan to renegotiate the interest rates on some the money it’s borrowed and postpone repayment on some of the loans. It’s called rescheduling, restructuring — it’s default by another name and would be the first time since the second world war a development European country has defaulted. The Greek government we should say, has denied the story.
VANEK SMITH: I thought Greece had been bailed out, that it didn’t need to renegotiate.
BEARD: It’s been bailed out by the European Union and the IMF until 2013 so it doesn’t have to go the market to borrow until then, but the bailout expires then and Stephen Lewis of Monument Securities says that’s when the trouble will begin.
STEPHEN LEWIS: There’s not a lot of confidence that the hard-pressed countries will be in any better position to service their debt in three year’s time then they are at present.
BEARD: And there’s a bigger and more immediate problem of contagion — the question — will this now affect this lack of confidence or will this affect other heavily indebted countries in the Eurozone that haven’t been bailed out. Like Spain — Spain has to borrow $400 billion next year. If investors get nervous and refuse to lend, Spain will need bailing out and that would put the whole Euro Project under unprecedented pressure.
VANEK SMITH: Stephen Beard in London, happy holidays!
BEARD: Yes and you Stacey.
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