The past two weeks it was Spain, now it is back to Portugal, which overnight announced it is bailing out three banks to the tune of €6.65 billion. If at this point who is bailing out whom is becoming a confusing blur - fear not: that is the whole point. From AAP: "Portugal will inject more than 6.65 billion euros ($A8.49 billion) into private banks BCP and BPI, and the state-owned CGD to meet criteria established by the European Banking Authority. "In all, the state will inject more than 6.65 billion euros in these banks," though five billion euros is to come from an envelope worth 12 billion included in a financial rescue plan drawn up in May 2011, the finance ministry said. Portugal last year became the third eurozone country after Greece and Ireland to be bailed out, receiving an EU-IMF package worth up to 78 billion euros in return for a commitment to reform its economy and impose austerity measures." And surely that will be it, and Portugal will be fixed. Just like Spain was fixed, until someone actually did some math and found a hole up to €350 billion out of left field. Funny how those big undercapitalization holes just sublimate into existence, usually moments before client money is vaporized.

More:

European Union and International Monetary Fund auditors said in April Portugal was meeting debt-rescue targets and could be strong enough to borrow on financial markets next year but is in a deeper recession than thought. In neighbouring Spain, Economy Minister Luis de Guindos warned last week that 30 per cent of the country's banks faced similar problems, after Bankia called for the biggest banking rescue in that nation's history. Bankia, born out of the merger of seven spanish savings banks in 2010, is asking the state for 19 billion euros to repair its books, in addition to 4.5 billion euros already injected. Spanish banks are at the heart of fresh market fears that the eurozone's fourth-largest economy might have to seek an international financial bailout

And finally, it appears Timmah has been here too:

Spanish Deputy Prime Minister Soraya Saenz de Santamaria said the United States and Spain have discussed the possibility that direct loans from Europe's emergency fund could be a solution for ailing European banks.

Well, if the US has given a green light over German involvement, all is well then.