|
It looks like
Greece will get its debt restructuring, which presumably delays its collapse
by a few months. So now the spotlight shifts to the other functionally
bankrupt eurozone countries which have no choice
but to demand the same deal.
Portugal, by
general consensus, is next in line. It hasn't blatantly lied about its
problems the way Greece has. And it hasn't accumulated quite as much debt as
Greece, though at 105% of GDP its government is still deep in the danger
zone.
But it
doesn't export much and runs truly massive trade deficits. In order to pay
down its debt it will need to generate trade surpluses going forward,
but without the ability to devalue its currency to make exports cheaper,
there's no way to accomplish this.
So as with
Greece, austerity leads to depression:
Bailed-out
Portugal's recession seen worsening
(AP) LISBON,
Portugal -- Portugal's recession will deepen this year under the weight of
austerity measures meant to reduce public debt, the bailed-out country's
central bank predicted Tuesday.
Portugal is
trying to free itself from a huge debt burden that forced it to ask for a
euro78 billion ($100 billion) financial rescue package last year to avoid
bankruptcy.
But the
Portuguese economy, one of the frailest among the 17 countries that use the
euro as its currency, is buckling under the austerity cuts and fueling
investor fears about the bloc's chances of recovery from its two-year-old
sovereign debt crisis.
The central
bank said in a report it expects the economy to contract 3.1 percent this
year. Last October, it forecast a 2.2 percent contraction in 2012.
As in
bailed-out Greece, the government faces a dilemma as it tries to cut spending
while at the same time fostering the growth it needs to settle its debts.
The jobless
rate has climbed to a record 13.2 percent, and trade unions have staged
strikes and protests against tax hikes and pay and welfare cuts.
Finance
Minister Vitor Gaspar told lawmakers Tuesday he
planned no new austerity measures this year. He said any funding shortfall
would be made up through the sale of state property and gambling concessions.
Portugal went
into a double-dip recession last year, contracting 1.6 percent, the central
bank said. The economy will be "virtually stagnant" in 2013, it
said.
The debt
crisis has caused Portuguese living standards to drop, with the central bank
estimating that disposable income would decline 11 percent between 2011 and
2013 -- the duration of the bailout agreement.
Depression,
in turn, leads to chaos:
Lisbon
Protests: More Than 100,000 Rally Against Austerity In Portugal
LISBON, Feb
11 (Reuters) - More than 100,000 people packed Lisbon's vast Palace Square on
Saturday in the largest rally against austerity and economic hardships since
the country resorted to an EU/IMF bailout last May, and organizers vowed to
step up protests and labour action.
The mass
rally occurred just four days before Portugal's international lenders were
due to start the quarterly evaluation of the bailout implementation on
Wednesday in the finance ministry building which overlooks the square by the
river Tagus. They come amid concerns Portugal may need more bailout funds, if
not a debt restructuring like Greece.
"We take
this opportunity here to make our own evaluation on behalf of those who
suffer daily," Armenio Carlos, head of the
country's largest union, CGTP, told supporters as the crowd chanted:
"IMF doesn't call the shots here!"
"We have
to step up the struggle," he said. Carlos promised the next wave of
rallies across Portugal as soon as on Feb. 29.
"The
country needs to remove the rope from around its neck," he said, saying
that Portugal should try to renegotiate its debt rather than impose more
austerity, an argument he has made consistently.
The peaceful
rally under the banners of the 750,000-strong CGTP, which last month refused
to sign a pact with the government on labour market
reform, showed that social strife is running strong and likely to grow even
though other unions agreed to the reforms demanded by the bailout terms.
The dynamic
of austerity leading to depression leading to regime change will continue
until Germany just gives up and bails out the whole eurozone
periphery.
|
