Vigilantes Home In On Portuguese Beacon As Opposition Claims Government Understated Debt And Deficit Figures By About 25%

Tyler Durden's picture

With Ireland now a lost cause, the next country which will see its bond yields surge to new records is Portugal. And just so vigilantes don't miss the hint, the Portuguese opposition party has stated that the country's budget deficit and public debt are "higher than those reported by the government." The claim is that Portuguese debt is about 30% higher than claimed by official statistics: instead of 82% of GDP, it is actually 112%. With bankrupt Greece having lied about virtually every aspect of its comatose economy, it is not as easy to dismiss the announcement as merely political bickering, and is sure to leads to at least a modest double digit basis point jump in Portuguese spreads. And once Portugal is rescued, just after New Year's, then it will be time for those last two countries of the peripheral block: Italy and Spain. And after them, it's the core's turn.

From Reuters:

Pedro Passos Coelho told a meeting of his Social Democratic Party items like state-run companies' debts were not included in the overall public debt, which the government puts at 82 percent of gross domestic product this year.

He said that the "true" total public debt stood as high as 112 percent of GDP, while the budget deficit should be at 9.5 percent of GDP, far above the minority Socialist government's target of 7.3 percent for the end of the year.

"The state has for many years been removing from the budget a series of activities, which has made a large part of our numbers fictitious," he said in televised remarks.

Government officials were not immediately available for comment. They have previously denied similar allegations by smaller opposition parties, saying that the statistical and budget data were regularly monitored by Brussels.

And just to validate that Europe has become a cesspool of fraud and lies (which is not to say America is any better), Eurostat just announced what everyone has known for along time: that the Greek deficit as a % of GDP was not 13.6% but 15.4%. And that is likely not the last revision.

While lying is now the new normal in Europe, and is therefore not surprising, the only question we have is whether the opposition leak was predicated by greater financial "interests", which now seek to bail out as many countries of the periphery as fast as possible, just so the fate of all of Europe's deficit countries is controlled by the ECB, and not by China, which has recently been stirring about taking over the ECB's role as patsy of last resort.

h/t Mark's Market Analysis

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knukles's picture

Run for the exits!  The EU is fucked!  Again!

Sudden Debt's picture

As a European myself... I think so to.

We simply have the biggest retards as presidents and people in power.

Last Friday, the big Silver fund, a fund that was created by European countries as a plan B for the pension funds 10 years ago, compaired ITSELF to TITANIC! (the fact that the governments took money from that pension fund to save the banks has nothing to do with it...)

Later that evening, our President announced that ALL pension funds are in top shape and we don't need to worry.



DoChenRollingBearing's picture

As an American myself, I would have to respectfully disagree.

It is beyond question (IMO) that Obama is the biggest peckerwood among the G-7 heads of state.

Shameful's picture

It's not like any presidents/prime ministers matter.  They answer to their bosses, who most certainly are not the people.  Otherwise would we see such a continuity of agenda.  After all Barry ran on a platform to change from what W was doing...turns out he loved it and increased it.  Much like the next empty suit will continue the agenda.  Presidents/prime minsters are like underwear, they get changed when the stains and stink gets so bad that people start noticing :)

oh_bama's picture

You sure obama is the biggest clown?

JJJones's picture

Actually knuckles, we are all screwed... again.  It is the same crooked system that controls all of the central banks.  Governments have sold their sovereignty in return for unlimited funding by the CB's.  The people pay the freight and as long as they accept that, that is how it will be.

ATG's picture

What's so funny about these Greek and Portuguese debt or deficit to GDP ratios is that Germany, Japan, Luxembourg, Netherlands, Switzerland, UK and USA exceeded them by percentage or total, while China and Russia were 7 and 30%

chrisina's picture

All these numbers are meaningless.


First public debt shouldn't be measured relative to GDP as (hopefully) not the entire GDP of a country goes into paying for the public debt but only public revenues (taxes). A country with 80% public debt and 40% public revenues (ie 200% public debt/ public revenues) will be in a better position to honour its payment obligations than a country with80% public debt and 20% public revenues (ie 400% public debt/public revenues).


Second, we've seen in this crisis that governments all over the world have taken a bad habit of gradually bailing out private debtors, ie transfering private debts to the public balance sheet. Obviously, that process is far from finished so really what should count is not public debt as a percentage of GDP, or better public revenues, but TOTAL debt (public + private) as a percentage of GDP.


Third, external debt doesn't mean much as long as one doesn't take into account the other side of the coin, ie foreign assets. What really counts here is the Net International Investment Position (NIIP) ie foreign assets minus foreign liabilities which is rarely being discussed in the (dumb) mainstream media but gives a far better idea of the vulnerability of a nation's financial exposure to the outside world and shows who are the real debtor and creditor nations.


(NB: as you can see, Portugal, Spain, Greece and Ireland are all at the bottom of the list).

Calvin Jones and the 13th Apostle's picture

What will happen to Spain?  If what Roubini says is true, does that mean we are all screwed?

Eternal Student's picture

What you mean "we", white-man? (An old joke in case you're not familiar with it).

Are you referring to this article:

Yes, we're all screwed. But some of us are more screwed than others, and some will be screwed first before the debt tsunami really hits.

If you're nimble, you might have a chance to preserve some wealth. But you've got to know what you're doing, what's going on, and why.

Oh, and this Europe stuff is just a warm up, IMO. Going long on popcorn isn't a bad idea.

Orly's picture

Spain owes a trillion Euros?  Unbelievable.

Sudden Debt's picture

Luckely for them they have a strong industrial base that....

let me try again.

Luckely for them they have a strong ... Ibiza and Salou?

I don't know those guy knew they where fucked A DECADE AGO!!

EscapeKey's picture

That's the first time I've heard anyone claim their (Spain) public sector debt was a significant issue. Private debt, absolutely, due to a collapsing housing bubble. But public debt is manageable:

€455.95 billion 43.1% GDP (Nov. 2009) or $653.10 billion[7]


A Man without Qualities's picture

The public debt is a huge problem in Spain, and one of the key concerns is the obligations of the autonomous communities, much of it not on the official balance sheet.


I'd recommend reading Edward Hugh on the Spanish economy - in my view, nobody has a better grasp of the issues they face.

chrisina's picture

And what do you think will happen to all this private debt when all the cajas gradually get bailed out by the Spanish Govt? It will become public debt.


Moreover public revenues (taxes) are dwindling down in Spain as unemployement keeps rising (now above 20%) and GDP keeps shrinking. Plus the demographics of Spain is terrible. Public debt as % of public revenues in Spain is one of the highest in the world.    


Finally, Spain's international exposure is one of the worst in the world with its Net International Investment Position (foreign assets minus foreign liabilities) making it one of the largest debtor nations in the world.


And we've seen nothing yet. Wait until its real estate bubble crashes. Spain has one of the worst bubbles in the world (measured as average house prices vs average incomes) and with an absolutely astronomical stock of unsold houses and flats (6 years worth of that shit). In the good years those crazy Spanish real Estate developpers and bankers were building more new homes in Spain than what was being built in France, Germany and Italy COMBINED.


Spain's financial situation is CATASTROPHICAL. It's by far the worst of all G20 nations.It will be the biggest shoe to drop first. When that happens, everyone can run for their lifeboats.       

4shzl's picture

It may not get that far.  I've always felt that France is where the spirit of revolutionary change lies closest to the surface.  Could it be that a former football (soccer) star will turn out to be a latter day Zola (think "J'ACCUSE!")?

Note the Guardian article cited below provides a link to the incendiary interview with Eric Cantona in its third paragraph:


Alienated Serf's picture

I think we should wait and see with the Irish, they have a long history of fighting oppression.  I found this little tidbit from RTE, nothing like punishing the poorest of the poor for the mistake of the banksters.

"The Government said the support would be provided 'under a strong policy programme which will be negotiated with the Irish authorities by the Commission and the IMF, in liaison with the ECB'.

He (Cowen) also said that Ireland's minimum wage would have to be re-examined by the Government as the level had increased beyond the rate of inflation in recent years."

StychoKiller's picture

So, let me get this straight:  Ireland has to suffer under austerity AND declining wages?  Sign me up!  I love it when they stick it in AND then BREAK IT OFF! :(

midtowng's picture

If Spain goes down then the Euro will have to be restructured and/or changed. This meltdown won't go to "the core" because the Euro will bust before that happens.

Eternal Student's picture

And what, precisely, do you think will be the impact from the derivatives based upon this debt? If you think the core is going to escape from damage by that, I would have to disagree.

Mongo's picture

Here is one politician speaking his mind...

Wynn's picture

this should go viral

hellboy's picture

Brave man.. Im guessing it will go viral but for the wrong reason.. most people will just watch the 10second clip in an ever growing lust for "entertainment".. it'll probably end up on failblog or something like that... sad world

Nikki's picture

The room was empty save 3.. It reminds me of Ron Paul or Alan Grayson. No one wants to believe their message, so they refuse to listen.

Horatio Beanblower's picture

The Irish PM, Brian Cowen, will be making a statement at 2015 Dublin time.  That's in 18 minutes.


I hope the treasonous bastard utters the words 'I resign'.

Shameful's picture

Gee, I'm hoping he unfolds his bank statement showing the payoff on camera and shouting "I'm rich bitch!".

Atomizer's picture

You have to understand noise vs undisclosed agenda's.

World Bank Bonds & Investment Products

The TV tells you its all about humanitarian purposes.

Black Flag - "TV Party" SST Records



Horatio Beanblower's picture

The Irish PM's statement should be live on Sky News in 10 mins -


The bailout is reportedly less than 100 billion Euros. 

digalert's picture

"the state for many years has been removing (Fannie) from the budget (Freddie) a series of activities, which has made a large part of our numbers ficticious"

I can't believe it, why would those in europe mislead?

DisparityFlux's picture

Irish deckhand chumming for the debt shark to the captain of the ECB:

You're going to need a bigger bank, bowsie.

ZeroPower's picture

And once Portugal is rescued, just after New Year's, then it will be time for those last two countries of the peripheral block: Italy and Spain. And after them, it's the core's turn.

Assuming the EU exists in it's present form. I highly doubt it. 

Youri Carma's picture

Ireland-rescue costs up to €100 billion, 20 November 2010, (Der Spiegel) (Google trans from German)

EscapeKey's picture

This makes me feel sick. So, from now on, bond vigilantes can force the hand of governments by putting pressure on yields?


kengland's picture

Soros has perfected this....where have you been

EscapeKey's picture

So, that's it then. Either we accept those leeches, or the system collapses?

Remind me again why the French invented the guillotine?

kengland's picture

You have it backwards. The systems collapses on itself because of the idiots who got us here. The fact that a Soros or anyone that can put on some sizable leverage to make some money off it is not a problem. I would do it too if I could.

Cheeky Bastard's picture

Wrong. Soros trades currencies, not bonds. He is event-driven and macro; nothing to do with bonds. Plus you do understand he would need to either short 10s of billions of cash or go long 100s of billions in CDS spread to singlehandedly move a market in any sovereign debt.

doolittlegeorge's picture

"only institutions need apply."  tis true...

Orly's picture

Nice to see you again.


Eternal Student's picture

Twas ever thus. Even during Weimar. The Bond markets are huge, and now we have the global derivatives market which make that look like small potatoes. Now you're starting to understand. Except that it's not a situation where you either accept the leeches or collapse. Ponzi schemes are not sustainable. Period. Even if you accept the leeches, it's still coming down. The only question is when.

bob_dabolina's picture

Bond vigilanties can do whatever they want because governments can't keep their houses in order.

Would you lend money to someone who has lied to you? Someone who spends wayyyyyy more than they take in? Someone who doesn't appear to be productive?

If you would than I have a bridge I want to sell you.

Jim Billy Bob James IV's picture

As Tony Robbins says:


"It might be a good time to sell everything and sit this one out"



Or perhaps Marc Faber:

"We are doomed, we are all doomed"

EscapeKey's picture

The only quote you need is:

Gold (or silver), bitchez.

Eternal Student's picture

There is no safe haven. PM's get dumped during margin calls in order to raise cash.

If you're looking to go long somewhere, I'm doing wheat berries. And I have a wheat grinder.

kengland's picture

So what. Swap lines bictches

Sudden Debt's picture




4shzl's picture

Ruh-roh!  They're using the "R" word.

European Union finance ministers said a rescue agreement for Ireland will create a capital fund for the country’s banks and may end up “restructuring” the financial industry.

Sounds like it's time to get-the-fuck-out-NOW . . .




MyKillK's picture

Has anyone else noticed that over the last year or so there's been this perfect balance, cycling between "oh shit the US has financial problems!!" to "oh shit the EU has financial problems!!"?? It's like the race to the bottom is a big coordinated farce designed to keep this game of musical chairs going for as long as possible.


Ireland and Greece are going to be all the rage in the financial world for next two weeks and then something will pop up in the US and divert our attention for a month and then something will happen back in the EU. It's getting rather tiresome.