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Eurozone prepares for another bailout

Stephen Beard May 17, 2011

Eurozone prepares for another bailout

Stephen Beard May 17, 2011

Jeremy Hobson: The European bailout of Portugal is official. EU finance ministers formally agreed on the terms last night. This means that so far three countries that use the euro have been rescued from potential default.

And Marketplace’s Stephen Beard reports all these bailouts are souring feelings among Europeans about their Union.

Stephen Beard: At a garbage collection center in Lisbon, workers are on strike, protesting the terms of Portugal’s bailout. They object to the deep cuts in public spending aimed at reducing the country’s debts.

Union organizer Luis Dias.

Juis Dias: Who is paying these debts? It’s the workers, the Portuguese workers, the Portuguese people. It’s not the banks, it’s not the government. We are.

Portugal enthusiastically adopted the Euro. But union official Ana Oliveira says the bailout has underlined the downside of belonging to the Eurozone.

Ana Oliveira: We cannot manage our deficit as we want. We cannot choose the economic policy we want. But we have to accept what is imposed by the European Union.

There’s even more dissatisfaction with the EU in Germany, but for different reasons. On the streets of Berlin, people complain about having to bail out other Europeans after they’ve failed to be as prudent as the Germans.

Man 1: We Germans also had to face a lot of social cuts in order to avoid to get into trouble as Portugal, Ireland or Greece now is.

Man 2: I mean it’s their problem, not ours. Why should we do something about it?

Many Germans feel betrayed, says Hans Olaf Henkel, former head of the Association of German Industries. He says the public voted for a currency union, but they got what Germans call a “transfer union” instead.

Hans Olaf Henkel: Which means that the German taxpayer in the future will also have to support Greece, Portugal, Spain, probably Italy and eventually France.

Supporters of the Euro say such fears are certainly exaggerated. But the single currency — which was aimed at bringing European countries closer together — appears to be having the opposite effect.

At the European Desk, I’m Stephen Beard for Marketplace.

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