From IceCap Asset Management:
While the first round of bailouts started with the banks themselves, the next round spread to the very same countries who bailed out the banks to start with. Fast forward (a mere 2 years) to today and Greece, Ireland and Portugal are now showing the fissures within the European system. The next round of bailouts has the potential to crack the fissures wide open. So, here we go with round 3 of European bailouts which will consist of bailing out Greece, then Ireland and then Portugal yet again. Yes, this is the classic definition of insanity at its best. The risk now however with round 3 is that the Greeks have now informally played the “we’re leaving the Euro” card. The Irish and the Portuguese will watch closely to see if the Greeks get what they want. If the Greeks are successful (and they will be), the Irish and the Portuguese will demand even better terms for their bailouts. We do not blame anyone for becoming dizzy with this ongoing story. All you need to know is that the ride may continue for a while longer, yet at some point, someone will leave the Euro. And when this door opens, the rush to the exits may surprise everyone.
Full report:IceCap Asset Management Limited Global Markets May 2011