Why the Troikan Horse will do for the Portuguese what it did for the Greeks

This Portugal is not resting, it is an ex-Portugal. It is no more.

As the Troikanauts levitated themselves magically down onto Portugal yesterday, they knew what they’d land on: an extremely straightforward situation we economists call A Dead Horse. That is, the government has done everything asked of it, except grow the economy. Being by now almost completely mad, the Troika will therefore report back that the national horse has dieted most diligently, and thus little Alonso has been a very good owner. Unfortunately, little Alonso’s horse is still dead – and thus far, flogging it hasn’t produced any more signs of life than the Vegan diet did.

If there is no money with which to consume, and no credit available to folks with no money, the contemporary ‘model’ of capitalism simply cannot function. It will either produce a horse galloping forth on steroids, or a dead horse. Often it supplies both. This is Portugal’s tragedy.

Originally, the word model was taken to mean ‘perfect example’ – as in, the best available. In economic terms now, thanks to yet more consultancy bollocks, it means ‘a chosen set of modus operandi’. Its much wider usage until feminism reared up from the bath water was ‘female airhead in Vogue etc’. Belief in the currently favoured model of capitalism is very much on the same intellectual level as your avaerage stick-insect on that Tatler front cover.

“Close up now for the camera Neocon ducky, yes, yes, pout, pout…lunge, sideways on, give me wealth give me wealth yes, better, better, swivel darling swivel, trickle down a little, trickle for me….excellent….lips again sweetie, you want it, you want that money, think big screen telly sweetie, think very big screen…that’s it yes, that’s it…loosen the top buttons dear, deregulate….a little more, next button, deregulate…oh yes, great – great, now look down your nose at me darling, sneer, sneer..ooh you’re a bitch baby, bitch, give me ethics are for wimps…brilliant, yes…but you’re weighed down by taxes sweetie, weighed down, go baby go…kick off those shoes…be abandoned honey…terrific shot, terrific…wanton, gimme wanton, gimme retail thereapy, I want maxed out on the plastic darling, sad, you can do sad, no more plastic…on your knees now, closing in ducky, yes, I’m in your face for that mortgage payment…gimme fear oh fantastic these are going to be great, do homeless, homeless, on the floor, on the floor, writhe baby writhe. Excellent. OK Neocon, another great session, thanks. You’re the one darling, you really are. Fag lovey?”

It may seem an odd comparison, but Portugal is like the US, minus only the Bernanke. Both countries have the same problem: massive tax evasion, massive bureaucracy, massive political corruption, massive national debt, declining export markets following the rise of Asia, rapidly growing inequities of wealth, and a People being taxed to pay for the mistakes of the politico-financial elites.

Above all, both countries are failing to get a recovery going – because the rich with pots of money lack the spending power on their own to do that, and because the poor have lower job prospects and higher taxes. Bernanke’s solution has been to instigate two sets of quantitative easing – as its name suggests, designed to solve the liquidity constipation in an over-leveraged banking system. Because neither of them worked, he’s now considering a third go.

The Portuguese have received a totally different kind of assistance: moral outrage followed by austerity and anally strict monetarism. This has been tried so far in three countries. Because it hasn’t worked anywhere, Berlin-am-Brussels is insisting that it must continue.

I believe that this theory of triumph over adversity is often referred to as ‘one last heave’. Well, when I think of the stupidity and inhumanity involved, it certainly does make me want to vomit.

Last May – desperate to find another way to be austere – the Portuguese government suspended four of its fourteen public holidays for five years. As it happens, I’d abolish all bank holidays and simply give workers 75% back in extra holiday to choose for themselves (it would, studies have shown, increase productivity) but even I struggle for a parallel with four cancelled feast days in the context of Potuguese economic flatlining. Sewing a hole in the Lusitania’s last d eckchair as a response to being torpedoed? Not bad – but not the full ticket.

The bottom line is that falling tax revenue caused by austerity means Portugal is likely to miss its budget deficit target of 4.5% this year. They could be given more time to achieve it, but we mustn’t do that because your average Bundestag Big-Gob says if we do, Wolfgang Schäuble’s head would explode, and we can’t have that.

‘Alternatively,’ writes the Washington Post this morning – with no apparent irony, “the inspectors might demand more austerity”.

OK Gods, they’re mad now: time to start with the destruction thing.



44 thoughts on “Why the Troikan Horse will do for the Portuguese what it did for the Greeks

  1. Lest we forget Portugal is Britain’s oldest Ally. I don’t recall seeing a lot of Portuguese branded goods in the shops. However, I did my bit this morning by buying a bottle of port. Sadly my liver will give out long before i can make any noticeable impact on their exports. Saúde!


  2. The rich are because they don’t spend money (they spend somebody else’s money) The poor are poor because they have spent all their money. So, if you want to grow an economy, get the money to those who spend it.


  3. Driving out of Coimbra yesterday afternoon we were stopped by the traffic lights and immediately accosted by an old crone in a hi-viz vest ( is that not p? – sorry ’bout that). She was working the Northbound carriageway, her daughter and son were on the south-bound. They were pretending to be collecting for the “poor children”, but obviously for themselves.
    As luck would have it we returned southbound and the blonde daughter with her very short hot-pants was working the queue. Her man (husband / pimp) was by now slumped despondently on the pavement. No-one coughed up a cent, as people prefer to give food to the local charities to distribute amongst the truly desperate. Sooner or later I imagine the daughter would get a ‘lift’ off into a back lane, and ‘earn’ €10 max.
    This is degradation that the Troika have visited on this country, the men selling their women into prostitution then beating them on return and drinking the money in the local cafe. This is not true for the majority, who have hunkered down and are depending on their extended family, but a significant minority have no reason to hope the future will be any improvement on today.
    Coelho, the PM, also means rabbit. So Portugal swapped Socrates, their previous PM, for Pedro Coelho – Peter Rabbit. In the spirit of “Stalin to Mr Bean”, this oldest ally of Britain has sold itself. Our local shepherd was talking with me about Portugal’s decline. He said, “They are all robbers.” I asked him if that included Coelho. He lifted his arms as if taking aim with a rifle. “Rabbits are good for one thing only,” he declared, “the pot.”


  4. Anybody seen this?
    ‘China may be willing to buy-up more European debt to support the struggling region, Chinese Prime Minister Wen Jiabao said on Thursday as German Chancellor Angela Merkel arrived in Beijing for talks.’


  5. So let’s recap a little, and count the ways:
    1. The American way ~ by printing the bejasus out of your currency, and hoping and praying that because the dollar is reserve currency, no-one will flinch.
    2. The European way ~ with austerity till you bleed, whilst distributing IOU’s on which is written “Don’t worry the real money is coming soooooooon”
    3. The British way ~ with pretend austerity, with a couple of public sector care workers thrown onto landfill for visual effect. Whilst Boris does a jig on a wire to deflect attention from Mervyn King’s nervous breakdown.
    4. The Japanese way ~ by shoe gazing towards the floor for some 25 years hoping that if they don’t give the crisis eye contact, it will probably just slink away quietly.
    5. The Chinese way ~ by building dozens of cities, roads and airports that nobody wants because having 1.25 billion people with idle time on their hands would be the stuff that f**king nightmares are made of.

    Seriously, has anyone, anywhere got an effing clue? Methinks this is going to end badly.


  6. Portugal, with a miserable 10 million population, should integrate with a dynamic Brazil. Already many Portugese youth are headed there as well as Angola, Mozambique and possibly East Timor with its new found oil wealth. If they want to become croupiers in Macao they can probably go there too and if the girls are attractive they can compete with the classy Russian birds in the casinos and get many multiples of Eur 10.

    On a different issue John, governments cannot ‘grow’ an economy. Good policy can allow an economy to grow or facilitate the growth of an economy. Pedantic, I know, but it is a pet hate alongside the use of math instead of maths by English writers. I have had correspondence with a famous FT writer on this matter in the last week. She took it in good stead.


  7. Pingback: John Ward – Why The Troikan Horse Will Do For The Portuguese What It Did For The Greeks – 30 August 2012 | Lucas 2012 Infos

  8. ‘and a People being taxed to pay for the mistakes of the politico-financial elites.’

    How ironic that one of the few groups that can escape from rapacious taxation is the state’s employees. They get tax deducted at source, though some of course have juicy opportunities for personal gain which obviously come in brown envelopes.

    The only solution I can see to this is to reduce taxation to a level people are prepared to tolerate. Tricky if you are a socialist government.


  9. @kfc Also in same DT link:

    “Speaking in Austria, European Commission President Jose Barroso said that the ECB will do whatever is necessary to keep the euro going, reiterating what many European leaders have said in recent months.
    “We need to sustain the euro and I have no doubt we are going to do it,” Barroso said.”



  10. @william: Agree re JD’s summary. However, the next prick of the needle is likely to be equally vacant tant pis?


  11. OAH I agree. Some councils are whollly responsible for turning flourishing villages and towns into’Urban desserts’ . With their fanciful ideas such as (for economic reasons): traffic management, re value property and business tax, over price property tax, increase running costs I.E. fuel and then to top it all, remove a fair banking system for businesses struggling to cope with a, what could have been, a minor blip.So, in effect, they have indeed priced local businesses out of towns and villages. I think it is a fair thing to say that some who live in these desserts, and have money, are unable to collect it-accesss it -spend it, due to closure of Post offices. Lack of public transport and rising fuel costs- which are pricing people of Work, never mind business!

    I often wondered where that change came into play. I Have never used the word math, and it is also a pet hate of mine.


  12. The Portugees have great weather, great Golf courses, and apparently, access to women for €10.00.(?) You can understand why the men in power are keen to keep it close to the EU. It also, apparently boasts, a great freedom of movement for peadophiles and abductors, and great hiding places. Sorry I can’t oblige with stats and stuff, but I heard it mentiontioned in the UK Media.. They would NEVER lie. I believe the Portugees. Will, and Can- unlike the Greeks, become self suficient, there is nothing like poverty to bring out a will to survive, for those who have the mental capacity to do so. Some will just kill themselves. Some will kill others…


  13. Math or maths involves hard sums with symbols and maybe some trig to boot. The word that everyone, irrespective of which side of the pond they are, is struggling for is arithmetic.


  14. “It may seem an odd comparison, but Portugal is like the US, minus only the Bernanke. Both countries have the same problem: massive tax evasion, massive bureaucracy, massive political corruption, massive national debt, declining export markets following the rise of Asia, rapidly growing inequities of wealth, and a People being taxed to pay for the mistakes of the politico-financial elites.”

    Massive tax evasion in America would be news for me, because the IRS is not complaining about tax revenues, as far as I know. Democrats do complain about low tax rates for the filthy rich, however. Maybe a way to be more precise would be speaking about a U.S. tax code full of loopholes and opportunities for tax-dodging. But nowadays, you can’t find a straight, simple tax code anywhere.


  15. So far Austerity has wreaked the economy of every Club Med country that it has visited…..reducing massivly whatever tax revenues they did have coming in, while swapping tax payments from employees to dole payments going out. All it has done, in every case to to widen the economic disparity between these countries and Eurozone Core, doubled or trebled the cost of any possible solution and taken the Euro currency from being under threat, to utterly unsurvivable in two years flat.

    Portugal and Ireland stand to be the real loosers in the next Act…..both may have done all they could to please their Ober Masters…..and yet remain too small to shout loud enough for any handouts when the final Battle for Spain….and thus the whole EZ project really kicks off. (I rekon curtain up Sept 13th and “It’ll all be over by Christmas”).

    Lets hope that Greece has some oil and natural resources (that the currupt do not sign away for a cut)……or it would be in a totally similar position. But it is obvious that Austerity is utterly unsustainable there to, and ‘regime change’ hopefully through the ballot box…..starts to look more and more likely to me as I cannot see this present coalition lasting until Xmas now.

    Portugal’s real problem is geographic……whatever it does, when Spain goes bust or death spirals deep into unrecoverable recession, I cannot see any way that the Portuguese do not get sucked down as well. Pity….I like Portugal and have some good chums.


  16. Just been out to lunch … very rare treat which I planned to go Dutch on, but thankfully thwarted when my rich Dutch friend insisted on paying. It all started so well when two Metrolink tram inspectors fully understood that an old codger like me could forget his free bus/rail card and didn’t fine me £60. Then I get safely back home – still sans rail pass – only to discover Portugal has gone bust. JW, I would consider it a great courtesy if you could give me a heads up if Germany/France/Spain etc go too.(I like a nap between 4 p.m. and 4.30) Best wishes.


  17. Has anyone else noted the parallels between Austerity and Curiosity both are crawling over a desert landscape zapping anything which might have once have harboured life!


  18. @SITC.Time 4.35pm,GMT.Germany,Deutschebank shares poised for freefall,due to counterparty risk with Morgan Stanley:SocGen have called in auditors over Greek exposure,seeking extra capital from unnamed ‘Arab sources’:Spain,Botin family have convened a teleconference,due to accelerating fall in retail deposits:Italy,still on holiday..


  19. @GrahamD: ‘I rekon curtain up Sept 13th and “It’ll all be over by Christmas’
    You wish…..You haven’t allowed for the fact that the Karlsruhe will fudge and Merkel will ignore them anyway, what was it she said last time? “They are just one opinion”….
    A way to go yet, possibly years.


  20. Just watching RT and on the news it was stated that Merkel is in Bejing trying to convince Hu Jintao that the Euro is on the road to recovery.
    Got her hands full there then.


  21. @kfc. Oh indeed, which is why I couldnt resist that silly picture of “Baratso”. How he can still repeat that mantra with a straight face beggars belief. OTOH desperate times call for desperate measures so we wait for the ECB to act.


  22. Yup, we tend to differ on Karlsruhe, kfc. One of us will owe ‘tother a beer ! IMHO…….which may give us a bit more common ground…..is that Karlsruhe will say that it is Ok for the German President to sign ESM 1 and Fiskel Pact, which is what, after all, they are being asked, but that they will say that any further minute erosion of German Basic Law……Eurobonds, ESM as a bank, External Banking Governance, erosion of Bundesbank powers to ECB ( or any other bright ideas dragged up by Club Med since 29th June ( + Possibly something on inflationary QE by ECB..mebbe) etc…..would require a change in the German Constitution and thus a referendum.

    My reading is that even a very guarded OK would sink Spain, Greece and anyone else expecting an imminant handout pretty fast as markets would go bananas …..and turn any Super Mario Bazooka into a Pop Gun.

    The Universe will unfold ! ;))


  23. I would like to disagree with you on your statement about doing away with all holidays and give each individual the personal choice when they take their particular days off. I have no doubt that you are correct that this method would increase productivity but festival days, in my opinion, are one of the things that glue a society into one identity and having an identity is extremely important.

    Having lived a long time in Germany and the USA I can say with confidence if you ask either a German or an American what being German or American means for them they would have no difficulty answering you. This is especially significant in America where immigration, as it is in the UK, is relatively high. Ask a typical Brit what being a Brit means and you won’t get a coherent answer. Why is that? I think the fact that we no longer celebrate festive dates is a contributing factor. The only festivals we celebrate are Christmas (which has now become a calibration of consumption) and Easter, both Christian holidays, which disenfranchises great swathes of the population.


  24. @kfc….and as to China…I would have thought they would be very picky as to whose debt they buy and with whom they have contracts. If at all. Their own economy is now stalling so who knows?


  25. @GrahamD; I will happily buy you a beer if you are correct! It is going to be interesting which ever way it goes.
    I think the fudge will be to satisfy both camps as it were, if their ruling is complicated enough it will allow different interpretations giving Merkel the ‘gap’ she needs to squeeze though.


  26. Carys :”How ironic that one of the few groups that can escape from rapacious taxation is the state’s employees. They get tax deducted at source”

    Errrrmmm………….does anybody else think that statement contradictory?


  27. I was under the impression that Arithmetic was: ‘mental sums’ i.e. add -divide- multiply- times table stuff, and more complicated equations which required *working* like: algebra-trig-formulas etc would be called maths – as in mathmatics. Ah, well we live and learn.


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