Taxpayers won't have to pay for BES bailout

In Portugal, fear is rampant. Many citizens have cancelled their vacations, and those that have not done that yet are taking other precautions in the aftermath of Banco Espírito Santo's decline. Most of all, the people who have money in BES are buying stock or investing their savings in subordinate debt.

Coelho's government knows that the nation is an international focus right now, and it has announced a novel bailout plan. The goal? No citizen will pay a single euro out of pocket to bail out BES. Instead, Portugal will use EU bailout money that is allocated from all banks to help struggling banks. Thus, taxpayer money is safe while major investors such as the Espírito Santo family, Crédit Agricole and other international investment shops are losing their shirts. Also, investors who bought risky subordinate debt will get hit hard, but they knew the risks. Overall, investors should be cautious about where they put their money and know what products and risks are involved. As we?ve seen, people often chase big profits and pay big prices when the risk outflanks the rewards.

People need to act with maturity, evaluation each investment and above all understand that the role of government (in other words, taxpayers) is not to bail out every poor, risky and expensive investment decision. The Portuguese government was smart to avoid this situation, because they are showing investors that they need to evaluate their decisions thoroughly without relying on a government safety net.