Portugal of course has already been bailed out, but so was Greece. Now Portugal's debt is being labeled "junk" by one of the ratings agencies. As worthless as the ratings agencies services proved to be during the economic crisis, they still mean something when borrowing money.
For the euro, Greece, Portugal and even Ireland are all small countries so as a percentage of the European Union they are not critical. Added together it becomes more of a problem. If they tip the balance and push one of the weaker links such as Spain or Italy over, then there's a problem. We're not there yet but that is the direction. The first round of bailouts simply kicked the can down the road as did the second Greek bailout. BBC News:
The credit ratings agency Moody's Investors Service has downgraded Portugal's debt to junk status.
The agency said there was a growing risk the country would need a second bail-out before it was ready to borrow money from financial markets again.
Moody's was concerned that if there was a second bail-out, private lenders might have to contribute.
