Earlier this year, the European Union’s economic arm fought tooth and nail with Greece over their massive amounts of sovereign debt that hung in the balance between default, and restructure. In the end, the Troika won out over the Syriza government, and money began to flow back in only after austerity measures were increased against the Greek people.
And a little less than six months later, the EU is once again attempting to use their power on a sovereign country to force not only monetary policies on the people of Portugal, but perhaps now a political one as well as on Nov. 10, the European Central Bank threatened to turn off the Euro spigot to the Southern European country for their temerity in voting out an EU friendly government and replacing it with a Marxist one.
On Tuesday, Brussels and Berlin got what amounted to the worst news possible out of Portugal. In what sounds like the plot of a McCarthy-era propaganda spy novel, the Socialists and Communists have overthrown the government.
More specifically, Antonio Costa and the Socialists cemented their coalition with the Communists and The Left Bloc on the way toousting Portuguese PM Pedro Passos Coelho’s government. This came just days after President Anibal Cavaco Silva reappointed the premier on the heels of largely inconclusive elections. That reappointment represented a slap in the face for the leftists and all but guaranteed they’d move to take control.
That’s just about the last outcome Jean Claude-Juncker, Angela Merkel, and Christine Lagarde wanted to see on the heels of the summer’s fraught and protracted negotiations with Greece.
So essentially, this is just the start of the very same kind of tactics the troika used to bully Greece; that is, they’ll use the fear of financial armageddon to get the political outcomes that you want. Here’s Reuters explaining why Portugal may need some “tough love” now that the Socialists and in charge:
A compromise could be messy, tough love might actually help.
Cutting Portugal off could be dramatic. In 2013, Italy was gripped with similar instability and its 10-year bond spreads rose over a 100 basis points higher than Portugal’s today. Cyprus was late to gain access to the programme in 2015 and it spread over German bunds was over 5 percent. Beyond Portugal, the move would highlight the limits of the ECB’s ability to move markets. – Zerohedge
The past few years have seen a massive shift by the people away from the Eurozone concept, and against economic policies of austerity that came out of the Credit Crisis bailouts from 2008. Britain’s recent elections had at its foundation a promise from the conservative party to allow a referendum vote for remaining within the Eurozone, and a new referendum in Spain to have the Catalonia region secede from the primary government are all repercussions of economic and political policies implemented out of Brussels.
Contrary to rhetoric in the mainstream media, most regions of the world are now back in recession, with the important elements of unemployment, gdp, and price inflation never really being addressed despite trillions of dollars of QE, and at or near zero percent interest rates. And like nearly all points in history when wealth disparity between the masses reaches a critical juncture, the end result is almost always revolution, either at the ballot box, or at the guillotine, and it appears that many nations in Europe are now at that place.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.