by Calculated Risk on 4/08/2011 09:04:00 AM

An update on the bailout for Portugal from the Irish Times: Portugal told to implement reforms ahead of bailout

Europe's rich countries pushed Portugal to make deeper-than-planned budget cuts in the heat of an election campaign in exchange for an emergency aid package estimated at €80 billion.
...
In an unprecedented intervention in national politics, euro-area finance ministers said Portugal can win relief by mid-May as long as it makes cuts that go beyond measures that failed to pass parliament in March and led to the government's downfall.

"We stand ready to negotiate immediately this ambitious program, which should comprehend an ambitious fiscal adjustment, structural reforms," said European Central Bank president Jean-Claude Trichet ...

Last month's austerity plan "is a starting point", European Union economic and monetary commissioner Olli Rehn told reporters ... "It is indeed essential in Portugal to reach a cross-party agreement ensuring that such a program can be adopted in May."

So what the voters just turned down is a "starting point" now. Ouch.

And from Jack Ewing at the NY Times: European Bank Stress Tests to Hit German Banks Hard (Pay)

Banks that fail a planned health checkup by European regulators in June will be required to present a recovery plan that could force some weaker institutions, particularly in Germany, to raise more capital ...

The authority said in a statement Friday that it expected any bank “showing specific weaknesses in the stress test, to agree with the relevant supervisory authority the appropriate remedial measures and execute them in due time.”