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Portugal Considers Paying Public Workers In Treasury Bills Instead Of Cash

Tyler Durden's picture




 

As reported late on Friday, just as the market closed, the Portuguese constitutional court decided that several provisions of the country's 2013 budget were not constitutional. According to the high court, cuts in wages and pensions of public employees were unfair (there's that word again) because they targeted only the public sector. The court rejected plans to cut one of the 14 paychecks that public workers usually get each year and to slash 6.4% from pensions for retirees.  This coincided with the government warning that the court's decision would put into question the country's ability to fulfill its €78 billion international bailout program, which in turn would send bondholders of Portuguese sovereign debt scrambling for the exits as suddenly the country may find itself in the ECB's "dunce" corner, with Draghi preparing to pull a "Berlusconi" on a government which can't even whip its judicial branch in line. However, of more immediate concern is how will the government now plug a hole of up to €1.3 billion in its €5.3 billion 2013 budget. A solution has, luckily, presented itself: bypass the unconstitutional provisions by paying government workers not in cash, but in government bills!

From the WSJ:

The Portuguese government is considering a plan to pay public workers and pensioners one month of their salary in treasury bills rather than cash after a high court ruled out wage cuts, a person familiar with the situation said Sunday.

 

"This is one of the ideas being considered," the person said.

 

By paying one month of salary in T-bills to public workers and pensioners, the government would save an estimated €1.1 billion in expenses, narrowing the budget gap significantly.

Incidentally, this plan makes perfect sense: with every central bank openly monetizing its debt, it has effectively made debt and cash equivalent.

Now if only Portuguese public workers had access to the same shadow transformation pathways and government bond repo collateralization opportunities afforded to the big banks, then every bill thus obtained would be able to serve as a source of nearly infinite rehypothecation potential, and thus, a DIY fractional reserve banking system provided to every individual.

Coming next: the full convertibility of Spanish Spiderman towels backed by the full faith and credit of the Rajoy kickback scandal, and fully convertible into chorizo.

All joking aside, the fact that this absurd option is even being contemplated shows just how deep into the rabbit hole event horizon the modern completely insolvent financial system has traversed. 

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Sun, 04/07/2013 - 12:42 | 3418598 JustObserving
JustObserving's picture

Portugal could have paid in Bitcoins but they hit $159 today  - up from $46 before the Cyprus crisis.  Maybe, workers can be paid in gold and silver as they are quite cheap.

If silver had gone up as fast as Bitcoin during the last 3 or 4 weeks, it would be near $100 an ounce.

http://bitcoincharts.com/charts/mtgoxUSD#rg180ztgSzm1g10zm2g25zv

Sun, 04/07/2013 - 13:05 | 3418668 GrinandBearit
GrinandBearit's picture

No question it's bubble.  ALL bubbles crash.  How long can it last?

Sun, 04/07/2013 - 13:08 | 3418673 ebworthen
ebworthen's picture

If Silver were nebulous sparks in a wire somewhere it would be at 1 cent/ounce.

Sun, 04/07/2013 - 14:58 | 3418999 thisandthat
thisandthat's picture

Yes, I'm pretty sure the 900 mil needed (after taxes; 1350 mil, before) would be a breeze to get, in bitcoins (and a blessing for speculators)...

Sun, 04/07/2013 - 12:37 | 3418599 q99x2
q99x2's picture

Maybe a platinum trillion coroa would do the trick.

Sun, 04/07/2013 - 12:40 | 3418600 akak
akak's picture

I will gladly pay you ten years from Tuesday for a day's labor today.

Sun, 04/07/2013 - 14:12 | 3418847 Ghordius
Ghordius's picture

+1 all a question of... maturity

Sun, 04/07/2013 - 14:16 | 3418860 knukles
knukles's picture

He says whilst the EU leaders all sit out in the public square playing with themselves, cross-eyed, drooling....

Little Billy:  Mommy, mommy look!
Mommy:  (covering little Billy's eyes) You never saw that Billy, that never happened...

Sun, 04/07/2013 - 12:44 | 3418606 Smiley
Smiley's picture

Fully fund thier pensions for the next 100 years with the T-Bills while you're at it along with the rest of their benifits.  It's the government that they make up the infrastucture for, surely the promise notes are worth the rock solid value of a politician's word!

Sun, 04/07/2013 - 12:44 | 3418609 surf0766
surf0766's picture

Here take this shit cause no one else will. All your money are belong to us. Communist/marxist/Socialist/NWO they all want the same thing.

 

Your Money !

Sun, 04/07/2013 - 12:43 | 3418612 max2205
max2205's picture

If only GE paid a month of salaries and bonus in stock can there be justice

 

Let them eat debt!

Sun, 04/07/2013 - 12:51 | 3418625 Fix It Again Timmy
Fix It Again Timmy's picture

Ich bin ein Lisbonian....

Sun, 04/07/2013 - 14:59 | 3419000 WmMcK
WmMcK's picture

Is that like a "Pastel de Belem"?

Sun, 04/07/2013 - 17:53 | 3419620 DriveByLurker
DriveByLurker's picture

"Lisbonian" - isn't that a porn genre?

Sun, 04/07/2013 - 12:54 | 3418635 hooligan2009
hooligan2009's picture

excellent...we now have an ackowledgement that monetary policy and fiscal policy are one and the same!

spot the difference between a t/bill or government bond and a bank note!!

hint banks notes don't pay interest because they are (supposedly) a transmission mechanism and a means of transferring ...errr....value ..yanno.. some civil servant says "i pay the bearer on demand the sum of .." or "in God we trust" ...my god, not your god that is..

two questions...

why not cancel the central banks holding of government bonds..i mean really...who loses in this book entry (debt already issued for cash already out there)?

why does a government not issue same day/overnight tbills as cash? would get interest rate down to double O, triple O fuck all blank and save heaps of money!

kind of puts what cash actually is, in a new perspective..if people recognise same day tbills as cash..all you need is a to issue undated tbills...yanno...perpetual zero coupon bondss which are after all what cash is ...of course..whethr cash is worth the paper it is printed on is another matter entirely..but then again, governments that never repay debt and pay interest for the privilege aren't any difference..perpetual zero value creators!

 

 

Sun, 04/07/2013 - 13:04 | 3418664 Bam_Man
Bam_Man's picture

Some good points you made in there.

However cash today is much like a zero-coupon bond discounted at a NEGATIVE rate (inflation and default risk).

Sun, 04/07/2013 - 13:39 | 3418759 hooligan2009
hooligan2009's picture

very true..

inflation means spend now or pay more later..on the essentials of course..luxury goods well..are they going up in price if you think that most people on food stamps cant afford to run a car?

of course...according to the calculation fro the urban cpi, essentials (food, utilities) are a smaller component of inflation than those non-essential items like ipads, galaxy phones and well you get the picture.

i am reminded of the movie "East of Eden" with jimmy dean..might have to buy a hill of beans soon.

 

Sun, 04/07/2013 - 13:19 | 3418644 ebworthen
ebworthen's picture

Can we all pay 6.4% or 10% or 20% less every month on the mortgage and health insurance?

The social contract is broken, societies are being torn down.  Why work and pay bills?

Sun, 04/07/2013 - 13:02 | 3418647 czarangelus
czarangelus's picture

If it's got Washington's face on it, that's to whom it belongs. The only real money is metal. Silver from the Goddess, gold from the God.

Sun, 04/07/2013 - 13:04 | 3418658 Bingfa
Bingfa's picture

We've all been warned, the people actually paying attention...

AD NAUSEAM.....

There's nothing worse than an Alcoholic coming to a party ..late and drunk

Sun, 04/07/2013 - 13:40 | 3418765 hooligan2009
hooligan2009's picture

its worse if its your wife!

Sun, 04/07/2013 - 13:03 | 3418662 put_peter
put_peter's picture

Euro reinvented!!! But no confiscation this time!!

Sun, 04/07/2013 - 13:17 | 3418696 forrestdweller
forrestdweller's picture

a treasury bill-gold sandwich, for only 1,99.

Sun, 04/07/2013 - 13:18 | 3418707 They Tried to S...
They Tried to Steal My Gold's picture

I'm gathering Portugese Sausage may be the next currency used......

Sun, 04/07/2013 - 13:31 | 3418742 morning
morning's picture

here we go...

Sun, 04/07/2013 - 13:38 | 3418753 Mark123
Mark123's picture

Did Mugabe try this?  It is elegant indeed....but can the recipient sell the treasury bill on reciept, or do they have to hold for some period of time?  I can't imagine that they will keep their value.

Sun, 04/07/2013 - 13:43 | 3418768 hooligan2009
hooligan2009's picture

redeemable in euros!

hey, are tbills treated as government debt or are they treated as monetary policy instruments in satisfying terms of the Maastricht Treaty or the way the ECB treats them for collateral purposes?

Sun, 04/07/2013 - 13:48 | 3418778 thewayitis
thewayitis's picture

 

   Puck you Portugal.....

Sun, 04/07/2013 - 14:54 | 3418978 WmMcK
WmMcK's picture

What are you Fillipino?  Peolple don't talk like that in Brasilia. /<sarc>

Sun, 04/07/2013 - 14:11 | 3418842 Sid James
Sid James's picture

In Britain we call those IOU's.

Sun, 04/07/2013 - 14:59 | 3418997 FieldingMellish
FieldingMellish's picture

In Portugal its called toilet paper.

Sun, 04/07/2013 - 14:59 | 3419004 css1971
css1971's picture

You have read the small print on a five pound note?

Sun, 04/07/2013 - 14:17 | 3418862 FIAT
FIAT's picture

I hope europe collapses soon, so I can move to the first country that starts rebuilding while the'kwa comes tumbling down.

Sun, 04/07/2013 - 15:04 | 3419019 Dangertime
Dangertime's picture

And risk free-market discovery of the interest rates on those bonds?

 

I think it will be discovered rather quickly what the value of those bonds are when people start trading them for tangibles.

Sun, 04/07/2013 - 15:06 | 3419024 Chris88
Chris88's picture

Somehow this comes to mind:

 

http://www.youtube.com/watch?v=7GSXbgfKFWg

Sun, 04/07/2013 - 15:22 | 3419065 ekm
ekm's picture

It is an absolutely great idea.

All GM union workers should get paid with GM stock shares, also.

Of course, none of them buys any GM cars they themselves produce.

Sun, 04/07/2013 - 15:43 | 3419150 Arturo
Sun, 04/07/2013 - 17:31 | 3419504 orangegeek
orangegeek's picture

Portuguese bonds.  Really? 

 

How about Portuguese buttons?

Sun, 04/07/2013 - 19:45 | 3420042 andrewp111
andrewp111's picture

This is no different than California paying its bills in scrip, which it does from time to time.

Sun, 04/07/2013 - 19:27 | 3419989 MeelionDollerBogus
MeelionDollerBogus's picture

in Soviet Eurozone, bank runs on you!

No chance to run, no place to hide

Sun, 04/07/2013 - 23:01 | 3420646 jonjon831983
jonjon831983's picture

Grab it from the roll of tbill toilet paper, plent where that came from!

Mon, 04/08/2013 - 01:24 | 3420874 MFLTucson
MFLTucson's picture

Lets see, US treasuries that are at 2% with huge risk of failure versus nothing.  They are the same so why bother?

Mon, 04/08/2013 - 07:52 | 3421186 TalkToLind
TalkToLind's picture

All of your public payroll are belong to us.

Mon, 04/29/2013 - 08:43 | 3509514 KingofthePaupers
KingofthePaupers's picture


Tyler Durden: A solution has, luckily, presented itself: bypass the unconstitutional provisions by paying government workers not in cash, but in government bills! From the WSJ:
The Portuguese government is considering a plan to pay public w...orkers and pensioners one month of their salary in treasury bills rather than cash after a high court ruled out wage cuts, a person familiar with the situation said Sunday. By paying one month of salary in T-bills to public workers and pensioners, the government would save an estimated €1.1 billion in expenses, narrowing the budget gap significantly.
Jct: And by paying 12 months worth, like Argentine Solution Provinces did, would save them 13 billion!

Incidentally, this plan makes perfect sense: with every central bank openly monetizing its debt, it has effectively made debt and cash equivalent... Coming next: the full convertibility of Spanish Spiderman towels backed by the full faith and credit of the Rajoy kickback scandal, and fully convertible into chorizo... All joking aside, the fact that this absurd option is even being contemplated.
Jct: So Tyler doesn't even understand what he just explained to us so well!

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