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Europe's debt crisis claims a new victim - Portugal
Topic Started: 25 Mar 2011, 12:15 AM (2,099 Views)
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Europe's debt crisis claims a new victim - Portugal

Keith Breene reported this story on Thursday, March 24, 2011 18:32:00

MARK COLVIN: In an embarrassing piece of political timing, just as EU leaders gather for a summit on Europe's debt crisis, that crisis has cost Portugal's Prime Minister his job.

He resigned last night after the Parliament rejected an austerity budget. The defeat means Lisbon is likely to be the next EU capital forced to take a bail-out.

And there are concerns that the problem could yet spread further.

This report from Keith Breene.

KEITH BREENE: Jose Socrates said he would resign if the budget failed so the waiting media knew what was coming. The vote had cost him his job but he said it would cost the Portugal a lot more.

JOSE SOCRATES (translated): What happened today in Parliament is not about me or the Government. It's about the country. And today I believe the country lost. It did not win. This political crisis at this moment will have grave consequences on the trust which Portugal needs to have when dealing with institutions in financial markets.

And so those who provoked it without any serous justification, and without offering alternatives, are from now on responsible for its consequences.

KEITH BREENE: Amid growing concern over Portugal's debt burden its borrowing costs have surged. But all five opposition parties voted against the austerity measures, which included spending cuts and tax rises.

Opposition conservative leader, Diogo Feio says the measures would have been too damaging.

DIOGO FEIO: I think Portugal needs stability. Portugal needs different way to the growth. And maybe this can be good news to Portugal. Let's see what happens.

KEITH BREENE: Economic analyst Paulo Casaca believes that by rejecting the Brussels approved austerity measures, MPs have made it likely the country will have to implement them anyway as condition of any bailout and now without the Prime Minister to head the talks.

DIOGO FEIO: I think there is a consensus on this point. But the great issue for me is who is going to negotiate the bail out? Because how will a caretaker government get through a series of measures that this bailout will require? And if it doesn't, if there is no bailout there is no trust in the country how are we going to do in the next few months?

KEITH BREENE: And the prospect of another bailout won't be welcomed by other European countries. Global market commentator, Satyajit Das says the bailouts are causing deep discontent, both among the smaller nations taking them, and the larger ones giving them.

SATYAJIT DAS: Essentially you're not bailing out Greece; you're not bailing out Ireland. You're bailing out the lenders, particularly the banks in Germany, France and Britain who are the major lenders to these countries. And you're paying for them with the normal taxpayers and citizens of Greece, Ireland, Spain et cetera absorbing this huge cost.

And we've already seen huge protests and continuing protests in places like Greece and Ireland and that's only going to get worse. So you have a political problem, both from the people providing the bailout, whose citizens don't want to do this, and basically the people who are being punished here, some would argue through no fault of their own, are not going to actually accept that either.

So you have a politically, extremely unstable position.

KEITH BREENE: So Portugal looks likely to be the third of the heavily indebted PIGS nations, Portugal, Ireland, Greece and Spain to be forced to take a bailout. The speculation now is whether the fourth, Spain, is next.

Professor Simon Tormey of the University of Sydney says that with a much bigger economy a bailout there could well be a game changer for the EU.

SIMON TORMEY: If Spain goes down you're really looking at a very big domino. I think they can cope with Ireland having trouble, Greece having problems, Portugal. But when you start looking at Spain you then start getting towards France, the UK and so on.

I mean there aren't any more big cheques to be signed here either we have really serious financial reforms of these countries or we begin to start thinking about dismantling the EU itself. So we're really heading for quite a major crisis here.

MARK COLVIN: Simon Tormey ending that report by Keith Breene.


http://www.abc.net.au/pm/content/2011/s3172963.htm
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Peak Debt: A term coined by Jaswant Jain in 2006. Debt taken on by an economy must reach a limit.
Then deflation is inevitable as consumption is reduced to repay the debt.

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Not suprising....8th oldest country in the world with a very high percentage over 65......4th in the EU....

http://www.oeaw.ac.at/vid/empse/download/empse08_02_2.pdf

http://www.unece.org/stats/documents/ece/ces/ge.11/2010/wp.6.e.pdf
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Dwindling births is ageing Portugal’s population
20/9/2008

For the first time in almost a decade, and according to official figures from the National Institute for Statistics (INE), the number of deaths registered in Portugal last year (2007) surpassed the number of births, leaving the country with dwindling natural demographic rates.

According to the INE, last year 103,512 people died, counter-balanced by 102,492 births, representing an aging population, prevented only from entering negative figures by a slight rise in the influx of immigrants, which rose by 0.18 per cent in 2007.

Only in 1918, 90 years ago, did Portugal experience such a demographic phenomenon, which coincided with the Spanish flu epidemic.

Last year 10,617,575 citizens resided in Portugal, 446,333 of which were legal immigrants. Of that total, 15.3 per cent were aged under 15, and 17.4 per cent over the age of 65.

“Portugal’s population has registered continuous demographic ageing, the result of a slump in births and extended longevity”, stated information from the INE.

Birth indexes showed an average of 1.33 children per woman, in comparison to the 1.36 documented in 2006, far from the 2.1 necessary to re-boost the declining population figures.

The average age for a woman to have her first child is presently calculated at 28.2, slightly higher than previous years. Furthermore, the number of marriages in Portugal is also on the fall, last year having registered 46,329 weddings, 1,528 less than in 2006.

Meanwhile the number of divorces continues to rise, with 25,255 legal separations having been filed last year. On average, those who divorced had been married 14 years.

http://www.theportugalnews.com/cgi-bin/article.pl?id=977-13
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http://www.bportugal.pt/en-US/EstudosEconomicos/Publicacoes/RelatorioAnual/RelAnuaisAnteriores/Documents/2008/caixa2108_e.pdf
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Gossamer
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Three years on and things are no better in Portugal. Banco Espirito Santo just announced a massive loss.

http://www.dw.de/imf-comments-on-portugals-banking-woes/a-17773783

Common sense is a curse - those who have it need to suffer dealing with those who don't have it.

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Dr Watson
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It's still standing though, isn't it? They've weathered the worst of the storm. The worst fears didn't come to pass.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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Massive
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Know a few portugese blokes who would lock u up in a room and make u see the truth for that comment .. Was only there a few months ago .... There's onlyone topic that comes up all the time and it had nothing to do with weathering a storm ..... Many doing it really tough over there and would probably go postal on ur complacency ..
Hopefully things improve for them soon

Government only just repealed rolling pay cuts off the last year or so as unconstitutional ... No backpay but no more cuts....

edit: and possibilty of increased taxation to make up the shortfall
http://online.wsj.com/articles/portugals-highest-court-strikes-down-wage-cut-1401484389
Edited by Massive, 31 Jul 2014, 01:04 PM.
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Gossamer
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http://www.marketwatch.com/story/banco-espirito-santo-sinks-50-as-trading-resumes-in-lisbon-2014-07-31?link=MW_home_latest_news
Common sense is a curse - those who have it need to suffer dealing with those who don't have it.

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Nelson
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peter fraser
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Gossamer
31 Jul 2014, 08:35 PM
No one seems to care.

http://www.bloomberg.com/quote/GSPT10YR:IND/chart

Any expressed market opinion is my own and is not to be taken as financial advice
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Gossamer
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peter fraser
31 Jul 2014, 10:03 PM
How did you come to that conclusion?
Common sense is a curse - those who have it need to suffer dealing with those who don't have it.

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Nelson
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