Portugal says no to austerity

whiteonion

Portugal says no to the suggested austerity measures and the prime minister will resign. There will be a general election in about 2 months, what will happen next? http://www.ottawacitizen.com/business/Portugal+rejects+austerity+measures+prime+minister+resigns/4492819/story.html?cid=megadrop_story

ednwireland

EU finance ministers go into another crisis mtg about bank debt probably

Gulliver

What happens next? Ireland gets the blame. The fact that our previous government caved so quickly to the austerity measures will be used as a rod to beat the Portuguese.

ei.sdraob

whiteonion wrote: »

what will happen next?

Next the EU will try to enforce a Tourist tax on Portugal, because we all know Tourism is responsible for Portgal's issues, just like we all know Corporation taxation led Ireland to where it is :rolleyes:

Boskowski

Gulliver wrote: »

What happens next? Ireland gets the blame. The fact that our previous government caved so quickly to the austerity measures will be used as a rod to beat the Portuguese.

'Caved so quickly'?

We're spending annually 55 billion Euro while taking in 32 billion Euro. That's going over budget by 71%.

Quite frankly I fail to see how an attempt on coming down from that can even be phrased 'austerity'. A more appropriate description would be 'stop the budgetary suicide'.

Some people's attitude seems to be along the lines of Ireland being the naughty adolescent demanding more pocket money and Europe being the overly strict parent or something.
Unfortunately this is the real world and the ECB does neither have large fields of money trees nor does it have the obligation to fund our madness. It would have been entirely possible for us to reject 'austerity' measures. I wonder where that would get us and tbf so far all we have done is paid lip service, made a few token gestures and avoided tackling the real issues.

nOddyseus

Already being discussed here:

http://www.boards.ie/vbulletin/showthread.php?t=2056145515

Permabear

This post has been deleted.

Boskowski

Permabear wrote: »

This post had been deleted.

While I have to agree with that - and knowing your point of view very well - you will notice that what got us into this situation is the fact that structures and processes between the capital world and the political world have failed us on many levels.

Politicians (and they weren't socialist politicians) have tried to appease everyone and especially the boomtown businesses as their primary objective seems to be hanging on to power and foster milking the system by their interest groups and the corporates have done to death just that.

I see your point but what I have observed over the last twenty years or so (in many countries) is that in fact conservative, liberal and capitalist oriented governments milk the place to death in search for a greedy buck for their corporate paymasters and then it's up to the more left governments coming in after that to consolidate the place so that it can start all over again.

Which ****s up the position of the left parties in the first place as they can never really implement left politics but all they can do is mop up the place which leads the electorate to believe the left have deserted the workers.

So on paper you're right but in the real world a very different pattern seems to emerge.

ei.sdraob

@Permabear while you a right about socialist driven out of control expenditure being a problem in likes of Greece and Portugal

Here in Ireland the situation is much more complex and tragic.

We have 3 large socialism caused problems:

* out of control expenditure
* socialization of banks (larger liabilities than above which grows the worse the economy gets)
* and now an attempt to make businesses who have stayed out of the mess and are not responsible pay for the mistakes of others via targeted corporation tax

while we seen during the boom incredible socialization of the gains, we are now seeing just a large socialization of the losses

irishh_bob

Permabear wrote: »

This post had been deleted.

do you see the news on portugal putting a halt to the euro,s ( totally unpredicted ) four month straight bull run ?

Denerick

Portugal -> Spain -> Belgium -> Italy -> DEUTCHMARK/FRANC ETC.

Very real possibility of this IMO.

old_aussie

Why are so many EU countries going bust?

Is it poor government regulators/management in individual countries or the combined effect of being a member of the EU and it's one policy for all members?

Surely individual countries need individual policies.

murphaph

Boskowski wrote: »

While I have to agree with that - and knowing your point of view very well - you will notice that what got us into this situation is the fact that structures and processes between the capital world and the political world have failed us on many levels.

Politicians (and they weren't socialist politicians) have tried to appease everyone and especially the boomtown businesses as their primary objective seems to be hanging on to power and foster milking the system by their interest groups and the corporates have done to death just that.

I see your point but what I have observed over the last twenty years or so (in many countries) is that in fact conservative, liberal and capitalist oriented governments milk the place to death in search for a greedy buck for their corporate paymasters and then it's up to the more left governments coming in after that to consolidate the place so that it can start all over again.

Which ****s up the position of the left parties in the first place as they can never really implement left politics but all they can do is mop up the place which leads the electorate to believe the left have deserted the workers.

So on paper you're right but in the real world a very different pattern seems to emerge.

Not everywhere. The UK had a Labour "giveaway government" which is now being mopped up by the Tory/LibDem coalition. I suppose you could argue that New Labour aren't actually a socialist party!

Basically we have seen fiscal irresponsibility by both left and right (and in Ireland's case centre) governments with the availability of cheap credit over the past decade. We must remember however that NOT all countries went on a spending spree, Germany being the most notable exception. German wage restraint now means that Germans are paid poorly compared to states they are now expected to bail out.

I expect people can see why that might stick in their craw a bit.

Portugal will see soon enough that their maths, like Ireland's, don't add up and I believe they have a 5bn bond to repay in a month so let's see what happens then. These governments that have followed populist giveaway and pro-cyclical policies have been elected by their own people who wanted these suicidal policies. We now have to pick up the pieces but we MUST get our spending under control and fast or the debt/interest will overwhelm Ireland (and Portugal etc.) for a generation. Should our children suffer for our 42" Plasma TVs?

Denerick

old_aussie wrote: »

Why are so many EU countries going bust?

Is it poor government regulators/management in individual countries or the combined effect of being a member of the EU and it's one policy for all members?

Surely individual countries need individual policies.

There is a simple explanation; we spend too much money and receive too little. I have no problems with the State having a presence in the region of 50% of the economy so long as it doesn't create a deficit. Deficits catch up with you. The French haven't had a balanced budget since the 70s. They are on a slippery slope, but not in as much danger as some.

Zubeneschamali

Boskowski wrote: »

the ECB does neither have large fields of money trees

Actually, they have something even better: a printing press where they can push a button and print more money.

Iwasfrozen

Zubeneschamali wrote: »

Actually, they have something even better: a printing press where they can push a button and print more money.

You mean quantitative easing? They've already done that.

Euroland

whiteonion wrote: »

Portugal says no to the suggested austerity measures and the prime minister will resign. There will be a general election in about 2 months, what will happen next? http://www.ottawacitizen.com/business/Portugal+rejects+austerity+measures+prime+minister+resigns/4492819/story.html?cid=megadrop_story

I hope Portugal would pull out from the Euro zone, and we would be the next.

Euroland

Boskowski wrote: »

'Caved so quickly'?

We're spending annually 55 billion Euro while taking in 32 billion Euro. That's going over budget by 71%.

Quite frankly I fail to see how an attempt on coming down from that can even be phrased 'austerity'. A more appropriate description would be 'stop the budgetary suicide'.

The solution is simple: slash social welfare by 40% and limit it only to 3 years in a row; slash public sector salaries on average by 30% (more at the top less at the bottom); reduce other expenditure; default on or re-structure bank debt with haircuts up to 95%; etc.

And , of course, after that, pull out from the Euro zone. We need own monetary system.

Boskowski

ei.sdraob wrote: »

@Permabear while you a right about socialist driven out of control expenditure being a problem in likes of Greece and Portugal

Here in Ireland the situation is much more complex and tragic.

We have 3 large socialism caused problems:

* out of control expenditure
* socialization of banks (larger liabilities than above which grows the worse the economy gets)
* and now an attempt to make businesses who have stayed out of the mess and are not responsible pay for the mistakes of others via targeted corporation tax

while we seen during the boom incredible socialization of the gains, we are now seeing just a large socialization of the losses

I cry foul!

I can see where you might be coming from but surely you cannot pin the above on socialism? What's the next then we pin on socialism? If Ireland fail to qualify for Euro 2012 would that be also socialisms fault?

At best I would understand had you said something like 'misguided, out of context attempts on certain socialist implements', but surely these weren't applied in the context of socialist policies. These things happened for all the wrong reasons and had nothing to do with actual socialism.

If anything these things happened due to lack of political culture, outright corruption and rampant unrestrained capitalism.

meglome

whiteonion wrote: »

Portugal says no to the suggested austerity measures and the prime minister will resign. There will be a general election in about 2 months, what will happen next? http://www.ottawacitizen.com/business/Portugal+rejects+austerity+measures+prime+minister+resigns/4492819/story.html?cid=megadrop_story

This OP makes me glad we didn't vote on it as I think we would have done the same. Once the bank guarantee was issued in 2008 the horse had already bolted so voting against it would have brought on some very very painful cuts.

Euroland wrote: »

The solution is simple: slash social welfare by 40% and limit it only to 3 years in a row; slash public sector salaries on average by 30% (more at the top less at the bottom); reduce other expenditure; default on or re-structure bank debt with haircuts up to 95%; etc.

While in principal this is all well and good, in practice it would likely make things even worse by talking that level of money out of the economy quickly. Also since the ECB holds most of our debt but it wasn't them who originally loaned most of the money our banks it would seem very unfair that they pay for our mistakes and the mistakes of others.

Euroland wrote: »

And , of course, after that, pull out from the Euro zone. We need own monetary system.

Discussed to death but I'll be at the top of the queue to move my money into Euro rather than this new currency as it would be worthless. I've yet to have anyone I'd trust explain how a new currency would be a good idea.

Denerick

If anything these things happened due to lack of political culture, outright corruption and rampant unrestrained capitalism.

How does that follow? If capitalism was rampant and unrestrained it would mean that the State would be a tiny share of the economy - maybe less than 10%. If anything the power of the State to influence and direct the economy was significant... in the vein of tax breaks for developers, wage rises for the public sector etc.

Whatever else you want to say, you cannot claim that these distortions were the fault of 'unrestrained capitalism' but instead of excessive interference by the State in areas where it was not directed by utilitarian policy but instead by spontaneous populism.

Boskowski

Euroland wrote: »

The solution is simple: slash social welfare by 40% and limit it only to 3 years in a row; slash public sector salaries on average by 30% (more at the top less at the bottom); reduce other expenditure; default on or re-structure bank debt with haircuts up to 95%; etc.

And , of course, after that, pull out from the Euro zone. We need own monetary system.

I agree on your first points, but I fail to see why we need to pull out of the Eurozone. If anything - quite frankly - its a good thing that we're not left to our own devices with regards to financial policies. Its obvious the Irish political class cannot be trusted with money. At all.

The only reason why I have some sort of hope we'll be brought back into a reasonable debt and spending frame is because we're part of the EU and the Eurozone. I wouldn't trust the Irish political class one bit to turn things around unless outside pressure was applied.

Boskowski

Denerick wrote: »

Whatever else you want to say, you cannot claim that these distortions were the fault of 'unrestrained capitalism' but instead of excessive interference by the State in areas where it was not directed by utilitarian policy but instead by spontaneous populism.

I can subscribe to that. I cannot subscribe to the notion this' got anything to do with socialism.

Denerick

Boskowski wrote: »

I can subscribe to that. I cannot subscribe to the notion this' got anything to do with socialism.

Socialism is one of these 'buzz words' that gets bandied around a lot. Libertarians would regard most/if not all State interference in the free market as an example of socialism, which I suppose in a literal sense it is.

I prefer to work from the basis of social democracy and/or liberal economics. The political social democrat will interfere and distort in order to effect some preconceived plan; namely to increase equality, reduce poverty, raise educational standards etc. etc. while the political liberal would prefer the market and the invisible hand to do all the running.

What we had in Ireland was neither of the above. For a decade we splurged in a pointless counter cyclical stimulus which increased the expenditure base, reduced the tax base, and fueled an already frightening property bubble.

Like anything else in Ireland, I don't think we can ascribe anything to ideology. So you are right to say that this was not socialism, while I am right to say that neither was it capitalism; instead it was just raw populism.

Thing is, Irish people were by and large very happy with it. Their wages increased and quite a few ordinary people got very rich by the whole experience. Which is why I find the bleating and moaning by most Irish people to be self indulgant and amnesiac.

ei.sdraob

Boskowski wrote: »

I cry foul!

Socializing losses is not very capitalist

20Cent

ei.sdraob wrote: »

Socializing losses is not very capitalist

Or Socialist.

ei.sdraob

20Cent wrote: »

Or Socialist.

but but its in the name

Monty Burnz

This will be an interesting experiment as what happens to Portugal in the coming period may mirror what would have happened had the ULA/Shinners etc. got their hands on the levers of power here. They haven't had a sovereign default yet though, so we are still a few steps away.

The ULA/Shinners assured us that everything would be fine - we'll see how it all pans out.

Boskowski

ei.sdraob wrote: »

but but its in the name

Well, the word is really just used in a sarcastic context here and whoever coined that phrase didn't mean to imply a connection with actual socialism. I'm pretty confident about that.

But of course I'm poiting out the bleedin' obvious here.

Although a lot of people seem to be parroting this and seem to really think such a move would be a symptom of actual socialism when it is in fact the perversion of that.

PeterIanStaker

We're going to have to default and/or let the toxic banks fold.