Blog 6

Portugal on Callapse!

The European central bank have already helped Portugal by buying its government debt, This uncertainty creates panic in investors which shows there is no stability. Standards of limit plunge and prices become more competitive. This shows there is risk and risk does not help MSW. The Euro has dipped because of the uncertainty that portugal need a bailout from the EU. In lecure 4 we learnt about syndicated loans,which could spread risk of borrowing between the banks. This is generally used by the government as it would be a big bailout. This is what happened in the case study discussed in the lecture, When five japanese banks financed a takeover of the third largest broker. But the UK government will eventually want their money back from bailouts. The uk have to be carefull when doing this, as we are in a credit crunch and a domino will start to take place. The market is a "bear" one at the minute and everybody is hibernating so to speak and watching what they spend and no-body is borrowing money out, But if there is no fuel (money) to keep the machine oiled it will not work. Costs cannot be cut too hard and too fast it needs to be kept at a happy medium. The crisis that happened in the breakdown of Greece, One contributor was allowing civil servants to retire on full pensions after serving 20 years, their pension system could not stand this, The budget is published tomorrow it would be interesting to see what happens with the UK's state pension. Confidence needs to be maintaind with key stakeholders and customers to keep uncertainty within the market to a minimum so not to cause panic, As this situation can only get worse before it gets better.