The Financial Times is reporting that Portugal is likely to need an extension of the three-year bailout plan it received in 2010. This is a disaster for the euro zone and I am writing this post to explain why. The most pressing issue is bailout fatigue in Germany. And this is important given that it is an election year there in 2013. But equally problematic is the mounting social unrest through the periphery. Here are some thoughts on the political and economic ramifications of peripheral countries requesting more bailouts.
First, there are five countries which should now be thought of as a part of the European periphery because of the level of economic and bond market distress. They are Greece, Ireland, Portugal, Spain and Italy. There are three other countries which are troubled but a...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.