Saturday, March 26, 2011

Decisive days....Saturday 26

An earthquake measuring 4.0 on the Richter scale shook the western Algarve this morning but caused no damage. It was a mild and untroubling event compared with the shattering problems of the past few days that seem set to continue well into the future.

The President of the Republic, Aníbal Cavaco Silva is expected to call for a snap election in late May or early June. This has been requested by all the political parties, including the centre-right Social Democrats (PSD).

The PSD leader, Pedro Passos Coelho, told the President he wanted an election as soon as possible. He said he was optimistic that his party would win an absolute majority.

The political turmoil has heightened concerns that Portugal will need an EU bailout. Even as EU leaders in Brussels agreed their comprehensive new plans aimed at calming markets and making the euro less vulnerable, Portugal's 10-year bond yields rose to 7.80 percent, a record high that shows investors fear the country might not be able to pay off debts that are coming due.

Portugal must make a large debt repayment in May, while the country is still in political limbo, and an even larger one in mid-June, probably shortly after a new government takes over from the current caretaker.

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