Portugal has again avoided default by being able to borrow more money to pay off soon to mature debts, so for the time being, at least the eurozone is stable.

But, it already seems like Portugal will not dig itself out of the financial mire and will, at some point, need a bailout. This becomes quite clear when one looks at the phenomenal interest rates which the Portuguese government has to pay on the new loans it has taken.

If, as widely expected, Portugal cannot rein in its massive deficit and curb its huge unemployment, then one can only expect a bailout. This becomes even more evident when one takes into account that the Portuguese government is struggling to implement austerity measures, largely due to opposition from the other side of the House along with protests by the general public.

If this is looked at while taking into account the projected jump in prices for grain and cereals, then the future certainly looks bleak for the nation and the eurozone in general. The EU, and in particular, the European Central Bank has always maintained that to avoid a train wreck, Spain cannot fall. We saw it last year, the dreaded contagion. To you and me, that means domino effect. Greece was on the brink of bankruptcy and had to be bailed out. This led to fears about the economy of Ireland, Portugal, Spain and Italy. Ireland, Portugal and Spain had deficits which were well into double figures and so the rot spread. Italy is slightly a different situation as the country’s deficit is relatively manageable, but its debts are sky high. Put simply, they have slowly racked up masses and masses of debt over the years.

After Greece, it was Ireland’s turn. The Gaelic island resisted all attempts by the EU to bully it into taking the bailout deal. To explain, the markets were getting more and more jittery and began to speculate about Portugal and Spain, so in order to soothe them, and take their minds off the Iberian Peninsula, the EU and the ECB threw some sweeteners in and made Ireland take the package. In the event it worked. We have not heard a peep out of the markets for a good two months, but now they are back and with a vengeance.

The EU has worked on the strategy of buying Spain as much time as possible to implement reforms, austerity measures and to bring down its staggering 22-odd % unemployment rate. In doing so, it has seen Greece and Ireland tap into the purposely set up kitty. It looks like it will not be long until Portugal follows suit. As we have said, unless Portugal reins in the deficit and somehow manages to reassure investors and attract them to its soil, then it will have no other option but to take a bailout. It was said from the beginning. Europe can afford to bail out Greece, Ireland and, at a push, Portugal. It always maintained that Spain was too big a mouthful to chew. The same goes for Italy. One only hopes that these two economies (and the rest) manage to regain some sense of direction and stability by the time the eventual feel-good effect wears off the market in the event of Portugal tapping into the kitty.