Saturday, April 6, 2013

Portugal Waffles on Austerity

Promised 78 billion Euros by the ECB, Portugal had agreed to limit it's budget deficit to 3 percent of GDP.  Forget that promise.  It won't happen.

The high court in Portugal said "no" yesterday to a plan to trim government employees compensation and that is the end of the 3 percent plan.  Back to plan B.  Portugal now says 5 percent is doable.  Not that it matters.

Portugal's debt was 124 percent of GDP before the ECB stepped in.  It will be 150 percent within two more years on its way, no doubt, to over 200 percent within a decade.  This, of course, assumes there is someone out there willing to buy this worthless stuff.

All the other Eurozone countries are on a similar trajectory, including France and Germany.  The US is on a similar path, perhaps as a sympathetic show of unity.

The ECB magic elixir is that the cure for too much debt is more debt.  Austerity is thrown into the mix, one supposes, for comic relief.

Ridiculous economic policies in the US and in the Eurozone are bearing fruit.  Their economies are stagnant at best and collapsing at worst, while their sovereign debt levels continue to explode.

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