In the excellent TV series The Sopranos there is an episode where mobster Tony Soprano tells a small-time gambler why he let him play and lose in the big stakes game. "I knew you could never afford it, but your wife had the sports goods store," he explains after stripping the store of its assets and bankrupting it.
The Sopranos is available in Portuguese. Viewers will find out more about their fate than from most media coverage now Portugal is the latest economy to fall into the clutches of the European commission and, possibly the IMF. It is a mobster's embrace, as Irish and Greek citizens can testify.
The Portuguese government is reportedly requesting an emergency loan of €80bn, following an auction of government bonds where interest rates reached exorbitant levels. However, judging by the experience elsewhere in Europe the interest rate charged by the EU will be no lower than the unsustainable rate demanded by the bond markets.
The Irish and Greek bailouts were billed as an extreme but necessary step to support the solvency of the state. They have failed. Both economies have suffered further downgrades by the international credit ratings' agencies since the bailouts were announced, and financial markets are still pricing in a likely default. The Lisbon government, like those in Dublin and Athens, is likely to find it has exchanged the uncertain and costly financial market debt for the certainty of exorbitant debt from the EU and the IMF. As a result, the state will be less able to repay the debt over the long run, and more immediately it will be less able to sustain the debt servicing costs. Read full article in the Guardian...
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A bailout behind closed doors
In a farewell blog post for the EUobserver, the Daily Telegraph’s Brussels correspondent Bruno Waterfield signs off with an attack on the EU-IMF’s impending €80 billion bailout and austerity programme for Portugal. “One of the bureaucratic mantras that you hear here in Brussels,” he writes, “is that the EU deals ‘with states not governments’”.
“This axiom gives the EU’s game away as a Union of state bureaucracies (civil servants, regulators, police officers, officials and diplomats) not peoples.
"It’s pacta sunt servanda or the process of locking important areas of political decision-making, from the economy to justice and security (policing our civil liberties), inside a bureaucratic, public-free zone of EU governance without government.”
Following the collapse of José Sócrates' Socialist administration after parliament rejected his EU driven austerity programme, “the Portuguese 'authorities', the unelected officialdom of the state, will negotiate with their 'colleagues' in Brussels.”
“The deal – just think how unpopular and unjust the Irish austerity diktat is – will be stitched up, copper bottomed and binding before the Portuguese people have the chance to vote on June 5.”