Portugal Pleads for Bailout

Country is third EU victim of debt crisis
By Rob Quinn,  Newser Staff
Posted Apr 7, 2011 1:19 AM CDT
Portugal's Prime Minister Jose Socrates discusses the need for a bailout in an address yesterday in Lisbon.   (AP Photo/Jose Sena Goulao, Pool)
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(Newser) – Portugal is biting the bullet and admitting that it desperately needs a massive bailout from its European Union partners to stay afloat. Caretaker prime minister Jose Socrates told the nation that the decision to seek a bailout was "a last resort" as interest rates on its short-term debt skyrocket, reports the Guardian. Analysts believe the bailout will cost the EU some $114 billion.

Portugal, which will have to commit to an economic adjustment program in exchange for the funds, joins Ireland and Greece on the eurozone's casualty list. The bailout request was widely expected, and analysts see it as a positive move because it will prevent a Portuguese collapse that could have made Spain the next target for markets searching for signs of weakness. "This is good news. We've been saying for a while that Portugal's finances were not sustainable at these rates," a Goldman Sachs economist tells Reuters. "We think the contagion stops here."

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