Last night Portugal finally caved.Its PM said to the nation that he had requested a bailout from the EU, following a massive surge in short-term borrowing rates.
A key firewall has failed. Now the periphery is down to one last holdout, and that’s Spain, which is the big one.
Obviously, Spain is freaking out as evidenced by the latest comments from economic minister Elena Salgado. “(The risk of contagion) is absolutely ruled out,” she’s quoted by Reuters as saying to national TV.
Of course, every time anyone has said anything like this, it’s come back to haunt them, and how can you rule something like that out? You can’t.