Portugal has recently asked the IMF for financial aid. According to Dominique Strauss-Kahn, Managing Director of the IMF, now the IMF and ECB are ready to provide urgent financial aid for Portugal and to hold talks with the Portuguese government about the program aimed at solving Portugal’s economic problems. The aid package is preliminary estimated at €80B.
The IMF and ECB already have some experience in providing financial aid. The examples of Ireland and Greece can help us to anticipate their next steps: At first they will offer Portugal to create a stabilization fund, which will turn out to be unacceptable. Then they will offer their own stabilization plan, which will be tougher than the national one. In this case the responsibility for the unpopular measures will be placed on the EU and IMF bureaucrats. However Portugal will get the funds at low interest from the EU Stabilization Fund.
It is the toughness of the future program (which is going to be imposed) that explains why Lisbon didn’t want to ask the IMF and ECB for any financial aid. Portugal’s huge budget deficit, high unemployment rate (over 11%) and declining GDP made the government introduce a package of austerity measures aimed at reducing the budgetary spending. However, the parliament didn’t approved the measures, thus making Jose Socrates resign. The situation was aggravated by numerous rating agencies, which lowered Portugal’s credit ratings.
However, most EU leaders feel optimistic about the situation. They hope that Portugal will become the last country to suffer a debt crisis.
FOREX. EURUSD has recently updated November’s high and keeps rallying. According to the Department of studying Masterforex-V trading system , the currency pair is forming wave c(C ) of H4. The current resistance is located at 1,5144, the local high of November 2009. In order to make a mid-term trend reversal the price will need to come out of 2 sloping channels and break below the MF pivot in order to initiate an H8 downward momentum. Its “Moment of Truth” and a downward FZR of the same wave level (H8) will indicate a possible reversal in the form of a classic correction ABC pattern while the MF pivot and sloping channels will act as support levels.
