In an article in today's Financial Times, Portuguese finance Minister Fernando Teixeira dos Santos was discussing the implications of the current simultaneous credit crises in Greece, Portugal, and Ireland.
In reference to the broader framework of the problems faced in Europe today he said the following:
“This has to do with the eurozone and the stability of the eurozone, and that is why contagion in this framework is more likely. It is not because markets consider we have similar situations. They are only similar in what concerns markets, but as I said they are very different.
“Markets look at these economies together because we are all in this together in the eurozone, but probably they could look different if we were not in the eurozone. Suppose we were not in the eurozone, the risk of the contagion could be lower.”
I know very little about what I imagine to be the byzantine political machinations of European state finance. It is impossible for me to gauge how serious finance minister Fernando Teixeira dos Santos is about the statements he made earlier today. Does he believe this scenario could actually unfold —or is he merely using the statements say. But if we give him the benefit of the doubt, and take the statements at face value, the implications for the future of Europe—and for the global financial system—are vast.
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