Comments on: Portugal’s government collapse complicates Europe’s problems

By: JosephDrake

JosephDrake — Fri, 25 Mar 2011 20:01:41 +0000

The Portuguese tried to prevent a downward spiral by budget cutting and instead she has caused herself to fall apart. My brief comments on my blog at: http://roominhouseblues.blogspot.com/201 1/03/portugals-woes-lesson-for-us.html

By: MM_CAN

MM_CAN — Fri, 25 Mar 2011 14:59:14 +0000

The problem is not relative size of the economies, the problem is in obvious EU paralysis to quickly implement necessary measures to SOLVE the solvency of its members
and related to that the labour/pension/medicare costs (and related to that competitevness) problem.
That pose two problems: First, the excessive risk to the investors in potentially facing sovereign debt crisis (reflected in the cost of borrowing) and the limits the
ability of a single country to tackle the problem in the usual way – devalvation of the national currency.
That does not leave much confidence in the future of the Euro …
Regarding the US print shop, it is a surprise for me that everybody eagerly accepts the paper for their goods/services …. what leads to another problem how to replace USD as defacto world currency …

By: jslucas

jslucas — Fri, 25 Mar 2011 11:33:44 +0000

1. There is a consensus in Portugal that debts have to be paid to the creditors. This financial disaster is the result of PM Socrates’s mismanagement of public finances and a lack of competence in making the economy to grow. Unfortunately PM Socrates, heading a minority government, agreed an austerity package without support from the Parliament and without any consultation with the President as he is formally supposed to do so. It was an illegitimate manoeuvre. The Portuguese government fell due to an irregular policy process, a behaviour that could not be accepted by Portuguese lawmakers. Alternative measures could achieve the same targets. The greetings from Europeans colleagues he received yesterday in Brussels are an irony.
2. If Chanceler Merkel was heading a minority government after WWII, and had to negotiate with USA any repayment of debts, she would have asked the German Federal Parliament for support.
3. EU cannot make impose the adoption of policies in Portugal with political support. Joao Santos Lucas (Portuguese citizen, permanent resident in Singapore)

By: FBreughel1

FBreughel1 — Thu, 24 Mar 2011 19:57:08 +0000

Please have a look at these numbers:

European Union: 500 million people, GDP € 11 808 billion
Portugal: 10 million people, GDP 167 billion

Whatever Portugal’s politicians do has little effect on the Euro:
Suppose the entire country falls into the sea (which would be a tragedy because the Portuguese are extremely friendly), the EU income would fall by 1,4 %. Another example ? The US Fed is printing the entire GDP of Portugal every other month.
Let’s keep things in the proper perspective.