Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Portugal Government Resignation Is Potentially A Very Big Deal

Politics / Euro-Zone Nov 10, 2015 - 06:10 PM GMT

By: John_Rubino

Politics

Portugal has entered a phase change, with potentially huge ramifications.

After handing a parliamentary majority to a coalition of leftist (i.e., anti-austerity, anti-euro, anti-NATO) parties, and then trying to prevent them forming a government, the country now looks likely to stand back and let it happen. Here’s an update from today’s Wall Street Journal:


Portugal Government Ousted Amid Anger Over Austerity

LISBON—A leftist alliance in Portugal’s new parliament ousted the minority conservative government on Tuesday, raising pressure on the president to appoint a Socialist prime minister at odds with the eurozone’s prevailing policies of austerity.

The vote rejecting Prime Minister Pedro Passos Coelho’s governing program, 11 days into his second term, follows four years of sharp spending cuts and tax increases imposed to meet the demands of the country’s bailout lenders. While the economy is growing again, it shrank sharply between 2011 and 2013.

The parliamentary rebellion was the latest sign of how austerity has altered Europe’s political landscape during years of recession and painful recovery: It has increased the popularity of smaller parties that pledge to restore cuts in workers’ and pensioners’ income, challenging fiscal restraints set by the European Union’s executive arm.

Tuesday’s vote, 123 to 107 against Mr. Passos Coelho, brought an automatic end to his government. President Aníbal Cavaco Silva had asked him to remain in office after his center-right coalition finished first in the Oct. 4 parliamentary election but lost its majority to an array of leftist parties.

Although the president could reappoint him as a caretaker prime minister until new elections, the vote strengthened a bid by the Socialist Party to govern instead.

The mainstream Socialists are joined in opposition by the Left Bloc, the Communists and the Greens—three far-left parties that oppose Portugal’s membership in the North Atlantic Treaty Organization and are willing to abandon Europe’s common currency.

Those parties have been fierce opponents of the Socialists and the conservatives during the four decades they have alternated in power. But after the October election, the far-left parties reached an agreement to support a minority government led by the Socialist leader, Antonio Costa.

“It is possible to improve family incomes without sharing the same opinion about NATO,” Mr. Costa said. “It is possible to alleviate the fiscal asphyxia facing the middle class even though we disagree about the nationalization of the energy sector,” he added.

If this sounds a lot like what happened in Greece last year, that’s because it is, only bigger. Like Greece, Portugal’s government debt has soared as a percentage of GDP:

Portugal debt Nov 2015

And after a huge contraction during the Great Recession, its GDP growth has been negligible. On the chart below, that’s not a 4% growth rate but 0.4%. This isn’t enough to put people back to work, and in the absence of a massive euro devaluation or huge increase in government spending, nothing is on the horizon to speed things up.

Portugal GDP Nov 2015

A majority of Portuguese voters have concluded that the old policies need to be scrapped and replaced with something that offers at least the hope of improvement. And to many in the new ruling coalation that apparently means leaving the eurozone (and maybe NATO), nationalizing some major industries, and ramping up deficit spending. To make all this happen Portugal would presumably go back to its former currency, the escudo, devalue it versus the euro and in that way partially default on its debts. In other words, the Grexit scenario on a bigger scale, with all the attendant potential for continent-wide chaos.

As startling as it sounds, this — or at least a few months in which it is threatened — is coming. And the only way to head it off is to preemptively devalue the euro. Which is yet another reason to expect vastly easier money and even more negative interest rates in 2016.

By John Rubino

dollarcollapse.com

Copyright 2015 © John Rubino - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in