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Portugal’s Debts Are (Also) Unsustainable
Submitted by Erico Matias Tavares of Sinclair & Co.
Portugal’s Debts Are (Also) Unsustainable
Everyone seems to be focusing on Greece these days – a country so indebted that it needs even more loans to repay just a fraction of its gigantic credits. Clearly this is unsustainable and something has to give. Even the IMF agrees.
But what about the other Southern European countries?
Actually, Portugal’s financial situation is looking particularly shaky, and any hiccups could have serious cross-border repercussions from Madrid all the way to Berlin.
The prevailing narrative is that Portugal has been a star pupil compared to Greece, with austerity delivering much better results:
- The government, a coalition of a center party and center-right party that together have held the majority of parliamentary seats since the 2011 election, pretty much followed all the major guidelines demanded by its creditors (the famous “Troika”) pursuant to the 2010 bailout, and was even praised for it.
- Exports have performed exceedingly well given everything that was going on domestically and abroad; the managers of small and medium enterprises in Portugal are true heroes, operating in difficult conditions and with limited access to credit.
- Portugal has recently become a darling of international real estate investors and tourists.
- The country’s citizens have stoically endured a range of tough austerity measures with surprisingly little social disruption.
So it is understandable that hopes for Portugal’s future are much rosier than in Greece… AND YET ITS FINANCIAL SITUATION IS ALSO UNSUSTAINABLE!
We realize that this is quite a bold statement. So to support our argument we will use some simple math to show where government finances stand after five years of austerity.
Simple Math, Hard Truths
The Bank of Portugal (“BdP”), Portugal’s central bank, publishes debt statistics of key sectors in the economy on a quarterly basis. The link to the latest publication can be found here.
As of March 2015, non-financial public sector debt stood at €288 billion, or 166% of GDP. You may think that there’s something odd right there because you are used to hearing that the Portuguese government “only” owes 130% of its GDP. That’s because the media generally uses Maastricht treaty calculations, not the total amount that the government owes as a whole (which includes public companies, for instance). But what's 36 percentage points of GDP among friends?
OK, let's do some math:
- We start by dividing €288 billion by 166% to find out what nominal GDP the BdP used in its calculation: about €174 billion;
- Next, let’s assume that the cost of debt on all that government debt is only 1%. In this case, the annual interest expense for the government should be 1% x €2.88 billion, or €2.88 billion. We know that this is very low as the actual interest expense in 2014 was almost €7 billion (and likely not all of it, but government accounts can get quite murky);
- Then we assume that Portugal’s nominal GDP grows at 1%, which is not stellar but certainly better than recent years - from December 2011 to December 2014, the average nominal growth rate was actually -0.6% (BdP figures). So that’s 1% x €174 billion, or €1.74 billion;
- Finally, we compare the assumed interest costs with the nominal GDP growth: €2.88 billion vs €1.74 billion.
See what we are getting at here?
USING FAIRLY OPTIMISTIC ASSUMPTIONS, THE PORTUGUESE ECONOMY IS UNABLE TO GROW ENOUGH TO COVER THE INTEREST ON ITS GOVERNMENT DEBTS, LET ALONE AFFORD ANY PRINCIPAL REPAYMENTS!
As a result, government debt-to-GDP can only rise from here, especially as the government seems incapable of balancing the books.
Recent historical performance is particularly revealing:

Portuguese Government Debt as % of GDP
Source: BdP.
It should be obvious why Portugal’s creditors expect more austerity still: the government needs to generate a big budget surplus to at least stabilize the debt situation (and a gigantic one to actually start paying down the debt). But with an ageing population, sluggish internal demand and the recessionary impact of having to further reduce government expenditures in this context, the hurdle keeps getting higher. And if the global economy goes into a recession, the government’s debt ratios might just explode higher from here.
A Portuguese default could be much more problematic than Greece’s for a couple of reasons: i) despite trillions in central bank intervention and taxpayer funds at risk, it becomes undeniable that the Southern European crisis is far from being resolved – Mario Draghi’s “whatever it takes” was just not enough; ii) European taxpayers are primarily on the hook in case of a Greek debt haircut, but there are still plenty of private creditors left in Portugal – including from Spain, France and Germany. So things could escalate fairly quickly.
“But Portugal Can Grow its Way Out of this Mess!”
As any skeptic would argue: Portugal’s debt-to-GDP statistics are skewed because if the economy was operating normally the GDP would be much higher and the debt ratio would thus be much more manageable...
Sorry, but this is a speculative statement – and certainly not based on fact. That “normal” GDP was inflated by way too much debt, both public and private, accumulated over many years.
Of course anything can happen in these uncertain times, but there’s a large body of evidence suggesting that Portugal is in big financial trouble. Far from us wanting to be the prophets of doom here, but to come up with a viable solution we need to fully understand the problem first.
Consider the following:
- If the downturn had been purely cyclical, five years after the crisis the economy should have recovered much quicker. The fact that it hasn’t reveals some important structural deficiencies. This becomes even more apparent when looking at real GDP performance since 1988 (graph below). So the oddity at this point would be to see strong economic growth – not the opposite.

Portugal Quarterly Real GDP Growth Rate: 1Q’88 – 2Q’15
Source: www.tradingeconomics.com, BdP.
- People don’t pay attention to the “productivity of debt” as much as perhaps they should. In good times, one Euro of debt can generate more than one Euro of economic growth. However, once an economy hits the skids and starts taking on too much (unproductive) debt, that ratio becomes less than one. What does this mean? To generate one Euro of economic growth you now need more than one Euro in debt – or stated differently, YOU CAN NO LONGER GROW YOUR WAY OUT OF DEBT. Portugal’s experience since 2010 has been a little different because accessing the credit it needed to grow became increasingly harder. It was the private sector who did all the deleveraging as government debts skyrocketed, so much so that from December 2011 to March 2015 total non-financial debt in the country flatlined at €702 billion. And the impact on nominal GDP? A REDUCTION of €2.4 billion over that period (BdP figures).
- Even if Portuguese citizens and companies could borrow more, the country’s banking sector may not be healthy enough to address their needs. Almost 9% of total bank credit is past due or uncollectible (BdP figures). Not the best environment to stimulate growth.
- In a 2010 paper, Carmen Reinhart and Kenneth Rogoff argued that GDP growth slows to a trickle once government debt levels exceed 90% of GDP. While their work received more than its fair share of criticism (some of it unjustified, in our view), the authors observed a strong correlation between high debt levels and slower growth across a large sample of countries over many years. Purely judging by the experience of other countries, a 166% government debt-to-GDP ratio should most certainly curtail Portugal’s growth prospects.
- According to a recent McKinsey study, Portugal is one of the most indebted countries in the world, as shown the graph below – EVEN MORE THAN GREECE! This means that BOTH the government and its citizens need to tighten the belt, making the prospect of paying down those burgeoning government debts even more problematic.

Source: McKinsey Global Institute.
- The composition of that debt is also very important. Productive debt can be a good thing for the economy; non-productive debt is a whole different ballgame. Think about it in terms of borrowing money to finance an investment, which should generate a return and hopefully pay the debt by itself over time, or instead to buy a car or go on holidays, which can only be funded out of savings and/or future earnings. As unemployment rose, a lot of that non-productive debt became impaired, as we have shown above. It could get worse.
- Then there’s malinvestment, which is related to the point above. Austrian economists define it as “badly allocated business investments, due to artificially low cost of credit and an unsustainable increase in money supply”. Being in the Euro since 2000 gave Portugal an unprecedented access to credit at very low interest rates, resulting in a splurge in imported consumer goods and new highways up and down the country. Credits associated with malinvestment sooner or later need to be liquidated, which will also hit growth.
- Portugal has one of the highest income inequality ratios in the Eurozone. Therefore, a new round of austerity measures will disproportionately hit a large percentage of the population at the lower income levels. As we argued previously, a similar dynamic was one of the nails in the coffin of previous Troika bailout policies in Greece.
- Last but not least, those debt figures do not include contingent liabilities, such as pensions and healthcare costs over time. The graph below shows the dire situation of Portuguese demographics. Fewer and older people simply can’t pay ballooning debts. And as the recent Grupo Espirito Santo debacle has shown, the government may still have to incur further costs to help the country’s financial sector regain its footing.

Portuguese Population by Age Group (‘000s): 1985 – 2050 (at constant fertility rates)
Source: UN.
So what do bond investors make of all of this?
Evidently, that the European Central Bank has their backs, because 10-year Portuguese bonds are currently trading at only 186 basis points over German Bunds, compared to Greece at 1043 basis points and the US at 155 basis points (in USD of course).
But should they be concerned?
Here’s what José Socrates, Portuguese Prime Minister from 2005 to 2011, had to say about the country’s financial situation, soon after leaving office:
“For countries like Portugal and Spain, the idea that we now have to pay the debt is a childish idea. Sovereign debts, as it is taught in economics - that’s what I have studied for some time - are by definition eternal. Debts are to be managed. That’s what I studied. Of course we should not let debt grow too much because that’s a burden on expenses (…)”.
Yes. They should be very concerned indeed. And so should the rest of us.
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The whole western ponzi financial system in unsustainable. Stop manipulating markets and the price of precious metals already.
Solution to Europe's problems in 5 easy steps...
Dump the Euro...
Go back to your own sovereign debt-free currency...
Name the usurious counterfeiting villains...
Execute them...
Hail new-found prosperity.
NONE of them were or are debt free. But sovereign, that's the big deal. at least they can inflate.
Maastricht treaty calculations. amongst friends . is that anything like TTIP ?????
But WTF do I know anyway….
FROM CHAOS, ORDER
Hollande says let's do an EU Government
MOAR
http://www.bloomberg.com/news/articles/2015-07-19/france-s-hollande-prop...
And an EU Military force too.
Which will be as effective as U.N. peacekeeping forces.
I just wish the F’n Russians would quit moving their country so close to all of our new eastern EU bases.
The only way to grow yourself out of debt today is to grow enough balls to repudiate it.
yes.. yes.. it's all a banker ledger scam...
assets here.. liabilities there.. and you are in the f'ng middle,,
you might say "the cross-hairs".
“Portugal’s Debts Are (Also) Unsustainable”
No shit Sherlock..
Half of their population has moved from the unsustainable Paradise to crap locations where they can make ~$10,00. per hour.
The Germans, Dutch and Belch ( :-) FU Brussel Sprout/Wafflers) are standing by to buy up the property at the bottom.
FU EU.
"at least they can inflate."
No, they can't..
Only GS Mario can do that.
So they were just pretending, and pretending to get mad, and pretending to tell Greece what programs to eliminate.
How juvenile for such men and women of such years.
"We all know what to do, but we don't know how to get reelected after we have done it"
You forget all of their friends. Other than that it sounds like a sound plan.
Lol. People here are really fucking stupid.
That's Right! Squeeze the pimple already! The whole LEG is infected. Get it out!
Only then will there start to be a recovery.
I would also submit that most of the bond holders and "investors" are old dried up slugs anyway so who cares let them die broke, they can't take it with em anyway....Buck the Fankers!
Yeah because everyone is dying to trade their energy and resources for lire and drachmae and francs. They were so happy to do it that three quarters of Europe got together to ban any attempt to bypass the US dollar via a new pan-European currency which would also serve as a (highly effective) energy price (= dollar) hedge.
Euros buy Europe oil at favorable prices and without need of accumulating and spending dollar reserves. What is so terrifically hard to understand about this?? Every Greek and Portuguese person sure as fuck gets it.
Your reasoning is correct, but the problem is that it's only a part of the story. The other part is that with the Euro the northern European countries and especially Germany have structurally an undervalued currency, which entails huge export surpluses and low underemployment. For the rest of the Euro countries, especially the Mediterranean countries it's exactly the mirror image: huge trade deficits and high jobless rate. With national currencies, these imbalance were previously regulated by the anonymous market. Now there is no chance anymore for Greece and the others to grow out of their calamities.
Well just wanted to post this somewhere.
Clearly USA is 300% of it's fake GDP. I looked at bullets from 2009, and then look at what we have today: It maybe have improved and you can find FRED Charts that improved after the Recession... But US Debt is still about 300% of GDP.
And I don't even have to relook at the charts to say that. Plus the BEA IIP is like $32 Trillion foreign Ownership in the USA much worse.
Rest of World http://research.stlouisfed.org/fred2/series/WCMITCMFODNS (2014:Q1: 3,003.34 Billions of Dollars) Rest of the World; Credit Market Instruments; Liability, Level
Total US Debt http://research.stlouisfed.org/fred2/series/TCMDO (2014:Q1: 59,398.59 Billions of Dollars) All Sectors; Credit Market Instruments; Liability, Level
US TOTAL DEBT (update with FRED Charts to Current)
- Household Debt $12.9 trillion by Q2 2012
- US financial sector debt $15.6 trillion in 2009 (Mostly GSEs and Bonds)
- State and Local Governments $2.4 trillion in 2009
- nonfinancial businesses $10.9 trillion in 2009
- Federal Government $7.8 trillion in 2009 (Debt held by the public)
Total US Debt = $50.7 trillion in 2009 (but doesn't include federal bonds held within the government & doesn't include future
obligations, federal multiyear programs or trust liabilities). Seems like we could be talking about $100 Trillion
depending on how you add it up.
- $12.2 trillion Federal Government Liabilities after adjustment for investments in 2013 Table 6 Final Monthly Treasury Statement
- $16.6 trillion Federal Government Total Treasury Securities issued as of 30 September 2013 Table 6 Final Monthly Treasury Statement
http://www.bea.gov/newsreleases/international/intinv/iip_glance.htm ($26 Trillion foreign compared to $22 for US) (This is very interesting as Big Banks are growing strongly, but the number of total us banks is dramatically decreasing, like someone is gaming the system, Commercial Banks in the U.S. - FRED - St. Louis Fed)
http://research.stlouisfed.org/fred2/series/HNODSAQ027S $5.099 Trillion Households and nonprofit organizations; debt securities; asset, Level
http://research.stlouisfed.org/fred2/series/HCCSDODNS $3.148 Trillion Households and Nonprofit Organizations; Consumer Credit; Liability, Level
http://research.stlouisfed.org/fred2/series/HHMSDODNS $9.351 Trillion Households and Nonprofit Organizations; Home Mortgages; Liability, Level
http://research.stlouisfed.org/fred2/series/CMDEBT $13.199 Trillion Households and Nonprofit Organizations; Credit Market Instruments; Liability, Level
The FRED series Household Sector: Liabilities: Household Credit Market Debt Outstanding is now known as
Households and Nonprofit Organizations; Credit Market Instruments; Liability.
http://research.stlouisfed.org/fred2/series/BCNSDODNS $9.625 Trillion Nonfinancial Corporate Business; Credit Market Instruments; Liability
http://research.stlouisfed.org/fred2/series/TBSDODNS $13.851 Trillion Nonfinancial Business; Credit Market Instruments; Liability, Level
http://research.stlouisfed.org/fred2/series/DODFS $13.859 Trillion Financial Business; Credit Market Instruments; Liability, Level
http://research.stlouisfed.org/fred2/series/FGSDODNS $12.571 Trillion Federal Government; Credit Market Instruments; Liability, Level
http://research.stlouisfed.org/fred2/series/SLGSDODNS $ 2.936 Trillion State and Local Governments, Excluding Employee Retirement Funds; Credit Market Instruments; Liability, Level
http://research.stlouisfed.org/fred2/series/TODNS $42,558 Trillion Domestic Nonfinancial Sectors; Credit Market Instruments; Liability, Level
Z.1
http://research.stlouisfed.org/fred2/series/TCMDO $59.398 T All Sectors; Credit Market Instruments; Liability, Level
http://research.stlouisfed.org/fred2/series/HNOTASQ027S $95.548 T Households and nonprofit organizations; total assets, Level
http://research.stlouisfed.org/fred2/series/HNONWRQ027S $81.763 T Households and nonprofit organizations; net worth, Level
http://research.stlouisfed.org/fred2/series/HNOTFAQ027S $67.219 T Households and nonprofit organizations; total financial assets, Level
http://research.stlouisfed.org/fred2/series/NCBTSTQ027S $34.996 T Nonfinancial corporate business; total assets, Level
http://research.stlouisfed.org/fred2/series/FGCCSAQ027S $770 B Federal government; consumer credit, student loans; asset, Level (Doesn't Include the Private Debt which now is over $1.2 Trillion)
Good points.
In contrast, the US debt is something like $1.6 trillion. How do you do the math, with the approximately 2% GDP per year - how well does America fit into this equation?
..... Last thing I remember, I was running for the door I had to find the passage back to the place I was before. Relax, said the night man, we are programmed to receive. You can check-out any time you like, but you can never leave!
Classic...
Maybe you should consider writing some music for that. I bet it would be a big hit.
Hotel Mexifornia.
I'm working the chords out right now.
..this collaborative thought sourcing is way cool.
I have a line, maybe we can open with it?
On a Dark Deserted Food Aisle
Rumble in my gut.....
Warm some thing something....
Or some such?
In C #, like See Sharply...
Like this...
https://www.youtube.com/watch?v=mxkHQXb5nDc
..the good stuff starts with a D minor
the demeanor is cool.
First largo, then PRESTO....just like corrapse rock...
B flat.. wedding march.. death march.. whatever..
:-D
once upon a midnight dreary
whilst I stumbled drunk and weary
into a convenience store
though they had coffee brewing
in my stupor I was stewing
no booze was there
So I said nevermore.
OMG.. apologies to the long dead Edgar Allan Poe
One would argue that unfettered free markets/capitalism is a scam by nature. High Frequency Trading operating with impunity comes to mind.
Dont confuse the front-running (illegal) practice of HFT with free markets/capitalism. We live in a particularly corrupt age where oligarchs wielding Golden Sachs con and scam their way to even larger Goldman Sachs. Free markets/capitalism are nothing more than a proft-minded reflection of the market participant's value-systems.
Free markets inevitably drift toward monopoly. Our time only mirrors what took place when industrial (Rockefeller) and banking (Morgan) monopolies rose up in a prior era. Had they not been broken up they would still be around
You have it ass backwards.
Nature abhors both a vacuum and a monopoly.
You didn't get the memo, it's BAKED in, as with a cake, try to unbake a cake, try to pay off debt, it can't occur execpt in a central bankers american dream of extend and pretend then it's all good.
You can't change a tire going down the highway.
google 'saudi's change tire' and you'll see
OMG.. OMG now I have seen everything..
I can die now.
I just wish I could have lent them my DeWalt impactor.
.
https://www.youtube.com/watch?v=M_BxiwaWgnM
At this point we have to say fuck the Portuguese and all the rest of them as well.
https://www.youtube.com/watch?v=of8aH4cdo7Q
these guy's deserve a bit of a break.
At this point we have to say f....you honey bunny
Western?
When asked about this issue, the man on the US street replied . . .
PORCH-YOU-GALL??
IZ Dat by PAKAGHANISTAN???
How do you keep a one-armed portagee guy from hanging on a tree branch? You wave to him.
Buy Silver and GOld.... this is going down people.
Better find a way to muffle the jingle of all that PM. . . so when the MRAP comes for it, you have a shot @ evading the 'gold/silver collection agency'.
They'll call it the "Fair Money Act"...., and you'll be labeled as one of the "money cheaters" that put all us folks in this mess.., those evil 1%ers and gold bug hoarders.
Of course the 1%ers will capitulate and say they have turned in all their gold..., they now see the light and will retain their position as the overseers of the animal farm. You..., not so lucky.
..they have to come out of the beast get it..
they can't wear enough armor.
http://walden.blogs.sapo.pt/the-silent-culling-1002
A major culling is coming alright...
Read the Lord's warning to prophet Linda Newkirk from a few days ago about the incoming asteroid... judgement is about to happen! http://revelation12.caThanks, I had not known about the appearance of a second sun cleverly hidden behind the old one nor the conspiracy of lies to keep it a secret that only radical Believers are privy to. But now that I've seen the pics . . . !
Repent all you sinning mother fuckers, repent--y'all got but 2 days!
You have been warned.
1) Open an FX account
2) SHORT the Euro - vs. USD, JPY, GBP and whatever else looks good.
3) SET IT AND FORGET IT. 2016 - WINNING!
GREECE
PORTUGAL
ITALY
SPAIN
IRELAND
FRANCE
ANYTHING in strength IS ONLY as strong as it's weakest link, AND THIS FUCKING FIAT HAS MORE WEAK LINKS THAN A RUNNED-OVER JIMMY DEAN SAUSAGE PASSEL.
Draghi can print, orchestrate, and Merkel can do whatever..
THE EURO.........IS TOAST
And that's after 16 trillion in US aid to international banks.
until the Fed fabricates $500B (or may a $T or two) in swaps like they did in 2011,
Derivatives are worthless, you know.
Another illusion of the system.
Your guns wont collect anything but blood.
Portugal, along with Italy, Spain and France all share Greece’s structural problems- stagnating/declining economies, high unemployment and increasing debt levels. Working people will be expected to pay for all of this- gutting of pensions, higher unemployment/ declining wages, austerity and a continuing fall of living standards. How can an economy “grow” when the purchasing power of workers and consumers is being continuously eroded? What will be the economic “growth” areas in the other Greece’s in the EU- drug dealing, the world’s oldest profession, money laundering?
They need a large earthquake to break some windows. Oh wait, we are talking debt not growth, in that case they need a large earthquake.
I had a brother in law who tried to drink his way out of his alcoholism. It didn't turn out too well for him (God rest his soul).
I don't think borrowing your way out of debt will yield much in the way of different results than his.
As a side note ... by that time the statists will have thoroughly expunged God from our lives leaving no one to rest our souls.
Thats my retirement plan. Figure it will take 15 years or so to get pickled enough where I wont need to be embalmed. Saving the wife a few bucks anyways.
Why do you see the speck that is in your brother’s eye, but do not notice the log that is in your own eye?
Please, debts in the land of the free are much worse than in any other country. Kotlikoff has US debts and unfunded liabilities at $210 trillion or $1,720,000 per taxpayer - Greek debt is a paltry $65,000 per taxpayer:
Renowned economist Laurence Kotlikoff recently testified at the U.S. Senate about the runaway U.S. budget. How bad is it? Kotlikoff says, “I told them the real (2014) deficit was $5 trillion, not the $500 billion or $300 billion or whatever it was announced to be this year. Almost all the liabilities of the government are being kept off the books by bogus accounting. . . . The government is 58% underfinanced . . . . Social Security is 33% underfinanced . . . . So, the entire government enterprise is in worse fiscal shape than Social Security is, but they are both in terrible shape.” So, how much is America on the hook for in the future? Kotlikoff contends, “If you take all the expenditures that the government is expected to make, as projected by the Congressional Budget Office (CBO), all the spending on defense, repairing the roads, paying for the Supreme Court Justices’ salaries, Social Security, Medicare, Medicaid, welfare, everything and take all those expenditures into the future . . . and compare that to all the taxes that are projected to come in, and the difference is $210 trillion. That’s the fiscal gap. That’s our true debt.”
http://usawatchdog.com/financial-system-will-collapse-just-a-matter-of-w...
Just wait. The process of converting to a global government and global currency will wash all those dollar debts away . . . along with your savings ("1-time" wealth tax)and your right to keep and bear arms. Then we'll start being shown the "showers".
Got news for you! There isn't a country on this planet that can keep taking money from the worker and give it to the non worker.
I know people living off of pensions and ss that are living grand lives tons better than 99% of the people who crawl out of bed every morning to go to work. (most of them ex goobermint workers or ex goobermint contract workers)
How long do I need to carry these people on my back along with the ones on welfare?
there are two types of countries : those who have the Reserve and the others.
Those who have the reserve can do what they like as its a MONOPOLY system.
If the others do not like this EXORBITANT PRIVILEGE they have do DO something about it
Simple as that.
The gold exchange gave the US an exorbitant privilege; the floating rate "our money your problem", linked for ever to the Saud Oil Spring, made it even more exorbitant as now it was on a print to inifinity basis.
You don't have to be a rocket scientist to understand that.
Germany today is challenging that hegemony on a financial basis on the back of the Euro which "fixes" the rates of other Euro family members' currencies to that of Germany; making them uncompetitive and opening up their markets to the supercompetitve German production. So the Euro market has greatly benefitted Germany since Maastricht !
The whole LOGIC of this fixed rate tie up was that those other countries who had SACRIFIED their monetary rates to be fixed relative to the old DM would get something in return apart from exploding debts and unemployment.
If Germany were conscious of this asymmetric advantage, that the EZ has bequeathed them they would assume that it can only be sustained by ensuring the others a financial return via eurobonding.
All economies need a strong INvestment component in GDP for their employment to flourish. Without investment the economy shrinks. And eurobonding would allow these economies to INVEST in new infrastructure and plants and thus create jobs. Its EITHER that or its back to monetary freedom of each nation and end of Euro experiment.
But prior to that they HAVE TO STOP CASINO FINANCE in Europe like all over the world.
The bad part is this was all known 10 and 20 years ago. The goobermint already knew this but wouldn't dare touch all those juicy benefits. Of course, their predictions also had forecasted a shortage of workers for high paying jobs due to all the baby boomers retiring. Funny but true!! According to their 10 and 20 year old predictions all these college kids coming out right now should be walkin' right into high paying jobs. <sigh>
Houston, We Have A Problem..
Throw away, the biggest welfare bums in the history of the world live a life of private Carribean Island retreats etcetera are the executive management of WallStreet, mainly the big five. Why the 'merican taxpayer gave Citi group 2 Trillion back in 2008. That is they borrowed 2 T at interest to give away. As for the people on pensions they paid into or the unfortunates on welfare (wanna give it a try?) their take is inconsequential besides the corporate take. So unless you want to reduce pensioners and those on welfare to either starving to death or becoming highwaymen I'd say your looking for a scapegoat is looking in the wrong place.
So, we're right back to end game of failed neo-Keynesian societal theory...if government debt doesn't really matter why even track it? Furthermore, if government debt doesn't really matter why pay taxes at all?
Or work?
Just print bitchez and send me the damned check to use for stuff nobody will manufacture anymore even out of the kindness of their own hearts...because...they get Faaarrreeee! money for shit too.
The reality is, it does matter and it has to do with governments & oligarchs controlling YOUR individual labor and by virtue of that...YOUR wealth.
If Mutti has understood the predicament she will have to go eurobonding or leave the Euro.
It was that right from the beginning and " the Schauble clique was Barzini all along".
Even the Bernanke now out of office says that :
http://uk.businessinsider.com/ben-bernanke-on-germanys-relationship-with...
Sitting Bull traveled with Buffalo Bill Cody and his Wild West Show. He earned 50 bucks each week as the token indian, he sent most of the money home to his people.
50 bucks in 1885 would have been gold coin, two double eagles and one eagle.
2750 dollars per week in wages for old Sitting Bull just for riding a horse into the arena in full indian headdress.
Not bad.
Now, it's all one big shit show. No Buffalo Bill, no Sitting Bull, just one big pile of shit after the shit show.
Ahh yes here it comes liking gold more and more the Lower it goes .
Offshore Angola at present. So many from Portugal have come to Angola over the last few years due to the lack of work at home. Not a bad idea six months back but the crash in the oil price is altering the dynamic.
Is Portugal running out of fiat?
The U.S. finances its deficits with debt securities and artificial interest rates. If taxes increased by X% for the Afghan / Iraq wars etc, people would of given a shit alright. Taxes must increase in the future anyway. It has just shifted the burden to the next generation.
Did I get that right?
....but...but...Irelands boming according to a mate (Irish) of mine. These figures and tables must be wrong, because HE'S always right.
Meanwhile, back in the real world, Portugal will be just fine theyv'e got a great automobile ..oh wait NO, err...a great industrial...err. wait no, a huge booming financial sector...errr, wait No, a massive arms industry, err...wait no, errr, errr, ...
Yeh, fuck 'em the next Greece.
They do have C. Ronaldo...queerosexual of the year for the last five years....
FUCK ALL the little insignificant EU nations...There will be only one. Deutschland Uber Alles.
Suck on Muttis fat, cock like clit bitchez...
Good one , Heinz !
But what whould say your Red Army grand-father ?
Yes, the one that fucked your grand mother in 1945 !!!! Precisely that grand-father.
And judging by your bravado, you are willing your sister to go the sanme way !
Fuck you Hrauts, you reallly only inderstand one language.
And you will get it, well deservedly, for the third time
It would be easier to list the countries with debts that are sustainable.
Island!
You guys know my stance regarding FIAT and the financial sector, but lets be honest to ourselves at least. How many of us on ZH are wrong in our predictions when this EURO/DOLLAR and FIAT will implode? Everything I learned in university about Economics went out of the window with the Tspiras capitulation/Greek non-default and subsequent bail-out. Economic theory no longer exists. All we can say is "It will implode soon", but none of us can put a timescale. If you put a gun to my children’s head and asked me to give a timescale within 6 months either way when things will implode, or they'll be shot. If I was a betting man, I would bet on them being shot, because as of now, I don't have a fucking clue, due to the fact the markets are so rigged, manipulated and controlled by the central banks.
PS: If anybody does know when things will implode, please drop me a message.
PS: If anybody does know when things will implode, please drop me a message.
You are right, nobody can know exactly when this thing is going to blow up because we aren't privy to what is going on behind the scenes. And the TPTB have become very proficient with all of their methods of manipulating the markets and their lies to cover it up. But there seems to be a building consensus among honest financial experts and economists around the the world that the wheels are going to come off sometime this fall. Well we'll see...But from all the research I have done on this, it appears that we are months and not years away from the collapse.
"And the TPTB have become very proficient with all of their methods of manipulating the markets and their lies to cover it up."
What we miss using this language is what the borg is controlling. They are controlling people. Think about this. We all (myself included) bemoan the control of "the markets", but it's much more complex than that. What they control is faith. They control the narrative that people live our lives and make our plans based on. Faith. Vision. They control the language of all this. The markets are a subset of this, but their control goes to the heart of how our populations see ourselves. We have to change the story. Without that, all else is spitting in the wind. Hearts and minds. Hearts and minds.
It will implode when TPTB have 95% of their assets safely protected.
Then they say "pull it".
There will be clues. Like when the Rockerfeller Foundation sold energy stocks right before the price of oil was "pulled".
http://www.nytimes.com/2014/09/22/us/heirs-to-an-oil-fortune-join-the-di...
And they tried to spin it like they were concerned about "climate change", ha-ha-ha-ha-ha...
That was the time to sell oil.
The time to sell financials is before September.
While the IMF cries crocodile tears over Greece the bankers and hedge fund vultures are getting ready to dismember Portugal in leveraged buyout next it seems. They will have to wait for the dust to settle in Greece first though or tongues will start wagging about the rise of the Fourth Reich and the economic war it means to wage. After all this is what bankers and Germans do when they get up in the morning....
Bring it on!
One huge default.
Banksters vs the irate masses they stole from.
The problem is the media they own will never direct outrage to the banksters.
Instead they'll focus on some politico puppets as directed by our ZWO overlords and we will have more divide and conquer while they finish looting and pillaging the world.
A tyrant will NEVER let a good crisis go to waste. No, when this bitch is about to blow, .gov will announce its next scheme, involving global government, higher taxes, and the removal of the right to keep and bear arms.
Yes, and they'll call it the "Right of Self Protection Act"..., the absence of all guns in public hands will be the new great equalizer...
Another letter drops in PIIGS.
G down. P to follow.
Everything is great. S&P's to MOAR ATH's.
Well, if global debts increase when global wages are flat, for decades, it doesn't take a PhD to figure it out.
Ever wonder how much the American taxpayer has paid out over the years if you added all the interest payments they have made on the accumulated debt of the Federal government? Care to add in State and municipal debt? It must be an absolutely shocking number....in Canada that total is about 1 Trillion dollars paid by the taxpayer on the national debt. The federal debt stands at 650 Billion or so currently. Since Canada formed (1867) through 2008 expenditures over revenue , or the amount borrowed by all the various Federal governments over the years has amounted to 37 Billion. All the rest is the exponential quality of compounding interest....all owed to bankers.
It will last as long as it can. We are living in an artifically low interest rate, fiat currency paradigm. A slow death. If the FED raised rates to 5%, sold off its balance sheet, imagine the yield on a US 10 year note. Cost of borrowing would skyrocket. Time to cut spending, or raise taxes. Instead, there is a slow cancer eating away at the U.S.
We are beyond cutting spending or raising taxes now.
The government has become the economy.
It doesn't need the people.
Agreed, America can no longer “…continue to rely on our military in order to achieve the national security objectives we’ve set. We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well-funded.” I know, let's call it the S.A., or brown shirts.
Hatered of the rich will only lead to one conclusion.
A new saviour, a new Hitler who'll have the final solution.
The Fed is liberating the Beast from the pit.
More blood to feed the fallen ones.
It's all a function of interest compounding.
None of this sovereign debt is sustainable in the medium or long term. It's the Mafia's vig.
Debt is the dope, the money center banks the pusher, and countries are the junkies.
There's more bad shit parked off balance sheets than any hedging can cover and when the music stops, as it has in Greece, we are all toast.
The great reset is the only choice from here.
Seems like the concept is catchlng on...it went from individuals to cities, to counties, to states, to countries... die broke..
Eternal debt. It's whats for dinner.
8 years or so ago i received a call from a Portuguese friend in Aveiro (not too far from Lisboa ) asking to borrow 80k Euros.
He'd completed a lot of building work for several entities who were unable to pay and the bank were calling in his overdraft.
I traveled over there to ascertain the situation and despite him offering me a 50% share in a nice piece of land ( nursery garden ) i decided against risking it as he'd used this as collateral against the debt. The bank ended up confiscating the land.
I gave him 5k Euros non gratis to cover a couple of months mortgage and high tailed it out of dodge.
Last i heard he went out to Angola to earn a crust. Unfortunately he has to renew his visa every month at great expense as the Angolans are pissed off at the shabby way their colonial masters had treated them and make life as difficult as possible.
Oh yes he got divorced into the bargain.
HAPPY DAYS
You're a good guy. Sorry to hear what happened to your friend.
"He got divorced into the bargain."
Every cloud has a silver lining!
Rather than default these PIIGSters are becoming debt slaves for the banksters.
To stay in the Euro club the PIIGsters agree be sucked until their dead..
"the annual interest expense for the government should be 1% x €2.88 billion, or €2.88 billion"
Re-do the math then get back to me after you compare interest expense against nominal GDP growth.
Portugal, Spain, France, the world et. al. are all in the same boat. My comments the other day regarding Chancellor Merkel & Managing Director Lagarde's interactions may have appeared a bit curt. These women are both in very difficult positions. I do not envy either one of them. My comment about MD Lagarde's previous reference to the number 7 and her being captain of the ship may have been misinterpreted as either insensitive, politically incorrect or an attack on her French heritage. When in reality nothing could be further from the truth. It was merely a friendly jibe acknowledging both the power and responsibility of the position she holds as well as her joy while discussing the number 7. She too will have a difficult choice to make as a captain. Does she stay the course or change it to avoid the apparent inevitable?
And neither should the serious approach with my pointed proposal nor quote and source be seen as a slight or have any underlying malicious meaning directed either Chancellor Merkel or the German people.
There will be plenty of chances to change the financial course ahead. But will it be in time? And so both Chancellor Merkel and MD Lagarde should reconsider their courses together. We have all seen what happens to those in these positions when they go off course. Dominique Strauss-Kahn is one example. So I can empathize with both of them and their difficult tasks ahead in their respective roles. Sometimes humor can be used to break the ice or be seen as aggression when there is pressure in a difficult situation. Pressure makes diamonds. And is a catalyst in forging beauty.
In tense or uncertain situations humor can be risky but also a catalyst for resulting beauty. My faithful web footed German companion and I met a wonderful French couple and their beautiful daughter recently. My companion and their daughter are almost the same age and had no ability to verbally communicate with each other. The older members of the party struggled a bit with communication. But with some lighthearted humor and after sharing some points of culture, heritage and common interest it all ended as rewarding experience for everyone. Especially the fast and beautiful friendship that developed between the couple's daughter and my companion. Interestingly this happened and not a word was said between the two of them. I'm confident all of us would agree the younger generation's resulting companionship was the most beautiful part of the exchange.
Its really the tax revenue based on the 1.74B GDP growth (baseline tax rate increased by multiplier effect or none at all if it exits the region) to pay the expense of the 2.88B (clearly understated) interest costs. Therefore its more like 0.85B vs about 4B. Hence why the debt just keeps rising as this doesnt even account for the other expenses just debt servicing.
The whole world is bankrupt and everyone knows it. Slow day on ZH, huh?
So fucking what . Same goes for Japan. Debt doesn't matter.
Cancel all debt; why pretend it's even possible to repay? Drive a stake through the vampire of TBTF and carry on. People will find a way [it's human nature] once all the demons have been exorcised.....
BTW :) as a footnote:
José Socratesd former PM is now .... IN JAIL :) :)
And he will be for a long long time :
Charges before court: Corruption, Money laundry, and Tax evasion ...
https://www.youtube.com/watch?v=3XGAmPRxV48
The media has been working hard to keep a lid on the real EU facts. The real facts are that Greece is just one small problem in a debt ravaged southern Europe! Portugal is a state with mass youth migration, many heading for Brazil where their language is spoken and trained people are in demand. Ireland the same. Spain is an awful mess, set to get worse. The real secret in the EU is just how bad France really is, though the media has blacked that story out.
While the USA and Britian can print prosperity with dollars and pounds, the rest of the West is tied to the Euro, no room to devalue, less and less sovereign rights.
One useful exercise for a forensic economist would be to go back to the founding of the EU and study closely just the mechanism by which these nation acquired the debts that now burden them. Governments and private parties must have engaged in borrowing on a mass scale. What for, who decided, where did that money end up?
In the case of Greece, several billion ended up in German and American arms manufacturers. Borrowing billions for new tanks, submarines, fighter aircraft and anti aircraft missiles, the Greek government bowed to NATO pressure to meet NATO spending standards. Which Greece did, and few others outside Germany and Fracne did. Now Greece has modern submarines, what the fuck for! What possible use do they have. Turkey is a NATO member.
Wesley Clark wants internment camps for radical americans. (The End Game)
https://dublinsmick.wordpress.com/2015/07/19/retired-jewish-general-wesl...
(The End Game)
Yes indeed. This is the opening salvo I've been waiting for. All those small gubermint retards who signed up unwaveringly, singing the star spangled banner, waving the flag, chanting USA-USA, deciding unilaterally who was a patriot and who was not. (remember FREEDOM FRIES) calling people a traitor if they did not endorse the patriot act? Well the Chickens will inevitably come home to roost. Well intentioned morons believed laws to fight the abstract war on terrorism, would only be used against towel-heads, suicide bombers, Muslim converts et al. But alas the patriot act is wide ranging and all encompassing piece of legislation. When these flag-flying, front porch layabouts actually read the small print and realise the definition of radical is not only the enemy they've defined, but can just as easily apply to ORDINARY AMERICANS! Well it's already too fucking late. How many people on ZH, will come under radical American? God help us all. Human rights? There's too much human rights, Who needs those? The clock is ticking.
I was a rookie in a financial IT department in the 1973. I got to have lunch with three other “up and comers” with our director. He (director) had been chosen as a non-IT person to whip us (department) into shape. This, I learned later, was a motivational lunch that he liked to use on all people.
While chowing down one of my colleagues asked the director “..hey I hear you have a lot of experience in stocks. Any tips for us…” The director laughed and said “…after 32 years of this I learned all finance is the same. Doesn’t matter which part you are looking at. If everybody is piled into the same thing - stock, bond, debt, future, commodity, mortgage, etc, etc… It always ends bad. Stocks today are too “piled in" for me. Some idiot somewhere will pull the plug on his thing and it will all come crashing down. When that day will happen -who knows? So the rule is buy into good stuff (not the word he used) when nobody else wants to buy. It may sound easy but few of us can handle doing it because of the fear…” I did not buy until the middle of 1975 because of what he said and I was afraid and almost sold off multiple times.
So I plan for the worst in debt today because bonds are “…too piled into...’. I believe, someday (could be years) a black swan will blow away most of these soveriegn bonds. So what assets I don’t convert into hard assets will be wiped out. That is rule my first director talked about. It has worked well for me when I have the courage to use it…
O/T, but I see 1 man influencing the actions in the US.
William Ayers has had a lifetime of paid academic jobs to create a plan to destroy the US.
Bath House launched his campaign at Ayers' house.
Need we say more?
All Russia has to do is kick out all German companies doing business in Russia and then turn off the gas.
That would be the end of the Euro.
However, Germany today announced sending 10 German industrial giants to Iran for new business.
So it looks like US congress and Netayahu won't be Germany's best buddies anymore.
You're pulling my leg!! Not another country! Surely not! :p
Fortunately for the Portuguese, they don't sit on a pipeline route from Israel to Europe like the Greeks do.
Unfortunately for them, like the Greeks, the government lording over them is in hawk to the shysters' of what Herzl wrought.
Liberty is a demand. Tyranny is submission..
Germany's debts are also unsustainable and Deutschbank is the single greatest systemic risk liability ever created since LTCM. They couldn't print enough money without first running out of trees if that bloated whale suddenly beaches itself.
the ex-prime minister that called for the bailout 4 years ago is in PRISON already for 1 year
Numbers for both UK & USA appear to be false.
https://media.licdn.com/mpr/mpr/shrinknp_800_800/AAEAAQAAAAAAAALfAAAAJDQ...
http://www.zerohedge.com/news/2015-07-19/portugal%E2%80%99s-debts-are-al...
Average Household Mortgage Debt in UK is $110K British Pounds ... Outstanding mortgage lending stood at £1.265 trillion
Per Capital Household Debt = $29.5K Euros in 2013, ...The average total debt per household – including mortgages – was £53,718 (April 2015).
Total UK credit card debt in May 2015 was £61.7bn. Per household this is £2,311
- UK Household Debt $1.86 Trillion Euros in 2013 or 95.8% of GDP.
- UK Government Debt $1.4 Trillion in 2015
UK Corporate Debt ?
http://www.cityam.com/1411501631/debt-map
http://themoneycharity.org.uk/money-statistics/
https://en.wikipedia.org/wiki/List_of_countries_by_external_debt
- External debt, the total public and private debt owed to nonresidents
Here is a table on External Debt from Wikipedia based on WB, IMF & CIA World Fact Book Data.
Rank, Country, External debt, US dollars, Date, Per capita US dollars, % of GDP,
1, United States, $18,540,448,667,000, 2015, $58,437, 106%,
2, United Kingdom, $9,590,995,000,000, 2014, $160,158, 406%
3, France, $5,750,152,000,000, 2014, $86,317, 222%,
4, Germany, $5,546,869,000,000, 2014, $68,720, 145%,
5, Luxembourg, $3,472,282,000,000, 2014, $3,696,467, 3,443%,
6, China, $3,000,000,000,000, 2013, $2,220.57, 37.5%,
7, Japan, $2,861,488,000,000, 2014, $24,000, 60%,
8, Italy, $2,651,413,000,000, 2014, $43,621, 124%,
9, Ireland, $2,639,672,886,310, 2014, $52,227, 103%,
10, Netherlands, $2,526,895,000,000, 2014, $226,503, 316%,
11, Spain, $2,305,648,000,000, 2014, $52,045, 167%,
12, Switzerland, $1,610,897,000,000, 2014, $154,063, 229%,
13, Australia, $1,395,638,000,000, 2014, $52,596, 95%,
14, Canada, $1,337,445,000,000, 2014, $29,625, 92%,
15, Belgium, $1,286,918,000,000, 2014, $113,603, 266%,
Devastating List to this Article's Chart on International Debt.
Little former British Colony, Hong Kong, is number 16 on list with $1.23 Trillion USD External Debt, 334% of GDP.
http://www.zerohedge.com/news/2015-07-19/portugal%E2%80%99s-debts-are-al...
This article delivers abundant food for thought.