- Associated Press - Wednesday, November 24, 2010

DUBLIN | Anger and fear about Europe’s seemingly unstoppable debt crisis swept through the continent Wednesday. Striking workers shut down much of Portugal, Ireland proposed its deepest budget cuts in history and seething Italian and British students clashed with police over education cuts.

Amid it all, analysts were deeply skeptical about the future, saying even the desperate efforts of governments, the European Union and the International Monetary Fund (IMF) might not be enough to prevent countries from defaulting or banks from going under.

The Irish Stock Exchange saw a bloodbath in bank stocks as investors pushed the panic button and bond traders were betting that it would only be a matter of time before Portugal and possibly Spain would be the next countries begging for outside help.

In Lisbon, strikers all but closed the airport, stranding passengers who couldn’t get in or out of the country.

Government policies have “sent people into poverty and misery,” said union leader Manuel Carvalho da Silva, noting that Portuguese civil servants will see wage cuts averaging 5 percent next year.

A protester sprays a message on a government building Wednesday as students protest against tuition fees at Whitehall in London. Thousands of British students participated in the demonstration. (Associated Press)
A protester sprays a message on a government building Wednesday as students ... more >

Italian students occupied university buildings and piazzas to denounce education cuts being debated by Parliament, clashing briefly with police in Rome and blocking five main bridges over the Arno River in Pisa.

In Britain, students decried government plans to triple tuition fees.

While Irish bank shares plummeted for a third straight day amid fears investors would be wiped out, yields on Portuguese and Spanish government debt shot up sharply because of rising concerns that their debt loads will prove unsustainable and put them next in line for European bailouts.

Irish Prime Minister Brian Cowen announced Wednesday he now expects the EU-IMF bailout loan to total 85 billion euro ($115 billion). Some experts accused Ireland of minimizing the true scale of its financial disaster, saying Ireland probably needs a bailout of 130 billion euro ($175 billion) because of looming defaults on residential mortgages.

“The government is completely in denial about the amount of money they’ll have to borrow,” said Constantin Gurdgiev, a finance lecturer at Trinity College Dublin.

He compared Ireland’s plight to that of Greece, which received a 110 billion euro ($145 billion) EU-IMF rescue bailout in May.

“Our economy is more than three times overindebted than Greece. If Greece is insolvent, where does that put us?” Mr. Gurdgiev asked.

Eurasia Group, a New York-based research and consulting company, warned that the problems of the 16-nation eurozone won’t stop with Ireland. It predicted a rescue plan for Portugal could be unveiled early next year, when Portugal must sell government bonds to finance spending.