PIIGS to be expanded-PIIGSS next?
Is the word PIIGS to be extended with another “S”? Slovenia, the little nation and a part of former of former Yugoslavia, is showing similar signs to several of the other PIIGS countries. PIIGSS here we come. Facts by Edward Hugh.
Slovenia is in the news. According to press reports (and here) solving the problems which have accumulated in the country’s banking system may well mean the country is next in line for some sort of EU bailout assistance. Speculation was fueled last week when ECB Governing Council member and Bank of Slovenia Governor Marco Kranjec said that the country may well eventually need assistance, even if for the moment it will not be necessary. Sounds a lot like the other denials we have heard just before the “happy event”.
“We do not exclude anything … but for now this is an entirely hypothetical question,” he told his conference audience,”Conditions (in the Slovenian banking sector) are going in the bad direction, but for now I do not see a reason that Slovenia would need to ask for (international) help.” He also made the point that “Yields on our (Slovenian) debt are very high but poor availability of (financial) resources is even more worrying,”
If the bailout materialises (and it seems to me likely it will) this will put the country in the same group as Spain and Ireland, who are to receive EU assistance for their banking sectors (even if Ireland’s share is still to be negotiated) as a result of having credit driven construction booms which were incentivised by excessively lax monetary policy at the ECB.
Full article here.