The Telegraph UK
written by By Bruno Waterfield in Brussels and Robert Winnett
Monday November 15, 2010
The euro is facing an unprecedented crisis after another country indicated that it was at a “high risk” of requiring an international bail-out.
Portugal became the latest European nation to suggest it was on the brink of seeking help from Brussels after Ireland confirmed it had begun preliminary talks over its debt problems.
Greece also disclosed yesterday that its economic problems are even worse than previously thought. Last night, the German Chancellor Angela Merkel raised the spectre of the euro collapsing as she warned: “If the euro fails, then Europe fails.”
European finance ministers will meet in Brussels tomorrow to begin discussions over a new European stability plan that is expected to lead to billions of pounds offered to Ireland, Portugal and possibly even Spain.
David Cameron said he was thankful that Britain had not joined the euro, but indicated his displeasure that taxpayers in this country faced a £7 billion liability in any bail-out package.
The veteran Conservative MP Peter Tapsell warned that the “potential knock-on effect” of the Irish crisis “could pose as great a threat to the world economy as did Lehman Brothers, AIG and Goldman Sachs in September 2008”.
Ireland has resisted growing international pressure to accept EU financial assistance amid concerns that this would lead to a surrender of political and economic sovereignty.
However, the German government is expected to signal today that Ireland may have to accept a £77 billion bail-out, along with a loss of economic and political independence, as the price of preserving the euro. Mrs Merkel said the single currency was “the glue that holds Europe together”.
Her words came as fellow eurozone members Portugal and Spain rounded on Ireland. They fear that international concerns over the euro will lead to so-called market contagion spreading to them.
Fernando Teixeira dos Santos, the Portuguese finance minister, said: “There is a risk of contagion. The risk is high because we are not facing only a national problem. It is the problems of Greece, Portugal and Ireland. This has to do with the eurozone and the stability of the eurozone, and that is why contagion in this framework is more likely.”
Mr Teixeira dos Santos added: “I would not want to lecture the Irish government on that. I want to believe they will decide to do what is most appropriate together for Ireland and the euro. I want to believe they have the vision to take the right decision.”
He later sought to clarify his comments, insisting that Portugal was not preparing to seek assistance.
Greece had earlier added to the growing uncertainty when it said it would breach the conditions for the bail-out it was granted by the EU earlier in the year. The Greek government said its debt problem was much worse than previous dire forecasts.
Eurostat, the EU statistics agency, said Greece’s 2009 budget deficit reached 15.4 per cent of gross domestic product, significantly above its previous figure of 13.6 per cent.
George Papandreou, the Greek prime minister, said new European-wide taxes might now be needed to fund bail-outs.
“We need a mechanism which can be funded through different forms and different ways,” he said. “My proposal is that taxes such as a financial tax or carbon dioxide taxes could be important revenues and resources for funding such a mechanism.” [<=== And these dumbass politicians can ONLY think of tax tax tax tax tax their citizens up the wazoo. Next they'll be taxing us for the air we breath! INSANE! These idiots have no creativity or rationale and choose to take the easy way out! (emphasis mine)]
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