Austerity’s next victim: Portugal

When I say “worse than expected.” I of course mean “worse than the right-wing expected. Those of us on the left knew exactly the disaster that these governments were walking into with their near-pathological embrace of “austerity.”

Austerity is sinking the UK and Europe, and the results in Portugal are especially ugly. This may be why people like Paul Ryan are trying to avoid calling their austerity “austerity.” Paul Ryan is used to telling tall tales, but we shouldn’t be terribly surprised with this latest one.  Even he can see that the bloom is off the austerity rose.

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Debt via Shutterstock.

Make no mistake, European austerity is what the Republican extremists want to inflict on the US. They can spin it however they like, but the GOP proposals are the same economy-destroying austerity that we’ve seen all across Europe.

All signs point towards a triple-dip recession in the UK.

Spain has already done a double dip.

And Portugal is now plunging into the depths of recession, reporting numbers that are much worse than expected.

As our own Gaius Publius wrote recently, no austerity anywhere in the world has restored a national economy.

Even the right-wing American Enterprise Institute is recognizing the problems of austerity, but the right-wing political class is slow to learn (I guess they haven’t added Austerity 101 yet to all of those Christian fundamentalist schools the GOP always fawns over).

What kind of a fool wants this for the US?  The GOP kind of a fool, of course. How many times must we see the same failures repeated before the Republicans finally get it?

Portugal expects its economy to shrink 2% in 2013—a much uglier outlook than the 1% contraction that it had previously estimated for the year. One of the earliest countries to be bailed out after the financial crisis, Portugal is now mired in the deepest economic slump since 1975. Today’s news signals that 2013 is a likely addition to two years of steady recession the country has suffered already.

Why the grim revision? Álvaro Santos Pereira, the economic minister, blamed the crummy economies of its neighbors. “Because Europe is in crisis and many European countries are suffering a recession, and over 70% of Portuguese exports go to Europe, it’s natural that there was a significant impact,” he said last week, according to financial daily Diário Económico.

Regardless of the cause, today’s update tarnishes Portugal’s image as a poster child for austerity’s success in helping it make its economy competitive. The country accepted deep budget cuts as a condition of a bail-out by the European Union and the International Monetary Fund in 2011. Just last month, the IMF said Portugal has made “considerable progress” (paywall) toward a return to international debt markets and that “the authorities’ policy reform and efforts have been impressive.”

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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7 Responses to “Austerity’s next victim: Portugal”

  1. I hope we can see the light at the end of the tunnel soon. It has been many years now since the financial crisis started yet it still seems to be our biggest problem… maybe we should try something new than all we tried in the passed. Really for my feeling nothing changed really… the same threats that caused the crisis in the first place are still there… I guess we just have to wait until our politicians solve the problems… until things get totally out of hand and perhaps we must do something about it ourselves.

  2. Our Country started going downhill when Ronald Reagan arrived at the White House in 1981. He touted three major agenda items. Two of these were just like George Bush’s 20 years later: greatly increase defense spending and slash taxes on the wealthy ~(remember its called “Voodoo Economics)~. He did both. His greatest effort was devoted to cutting the top tax rate from 70% to 50% to 38% to 28%, giving obesely wealthy Americans gigantic new piles of money to play with. The national debt nearly tripled on Reagan’s watch, from $993 billion to $2.6 trillion.

    Reagan tried to correct his mistakes by raising taxes 11 times during his administration. When that didn’t work he signed into law “The Tax Equity and Fiscal Responsibility Act of 1982”, THE BIGGEST TAX INCREASE IN THE HISTORY OF THE UNITED STATES!

    But the top tax rate never approached even 50% much less the 70% it was when Reagan took office.

    Now the Republicans hate Government, they think it is the problem (re: to much regulation) now why would you put people who hate Government and regulations in charge of the Government and Regulations (THE “HOUSE”)?

    What did you think was going to happen?

  3. Dameocrat says:

    The trouble with this line of thinking is that it is not just the gop that believes this stuff. It is also neoliberal democrats like Obama, Clinton, and Harry Reid.

  4. Indigo says:

    Bu wait! There’s more, March 1 is just a week away and sequestration is a virtual certainty. Austerity has ruined Europe, why not the United States? Let’s go for it!
    We’ve got another decade to waste and besides, the Second Great
    Depression could yet prove to be as powerful a character-builder as the
    First Great Depression.

  5. GarySFBCN says:

    Austerity in Europe is more insidious than in the US – countries will disappear:

    “We have already seen the results of austerity in the small country of Latvia, a supposed success story. A country with an already low birthrate even by European standards (ranked 195th out of 222 countries in 2012 by the CIA World Factbook), the country lost 200,000 people between 2000 and 2010. Now, the population stands where it was in 1957 and estimates from the Ministry of Economics indicate that Latvia could have as few as 1.6 million people by 2030. Latvians joke that in 2030 the last Latvian can “shut off the lights at Riga airport”—but the first to leave the country have been those with higher degrees, a classic “brain drain” situation. Agencies in Latvia arrange for educated, middle-aged Latvians to emigrate to the UK or Ireland, where they will work on farms or in factories for low wages. The Latvian government claims that the demographic crisis is at the top of its agenda, but serious measures have yet to be implemented. Despite the continuing claims of success and growth from supporters of austerity, it is hard to imagine anything but a country in decline under these circumstances.”

  6. ComradeRutherford says:

    According to ‘Supply Side Economics’, 2 – 2 = 5. The Republicans have fervently believed that since 1980. It is nearly impossible to get them to realize that their economic model only leads to destruction.

    But, then , I’ve maintained since 1980 that the GOP’s point is to bankrupt America and the world and go back to the feudal system when the Conservatives were in control of everything and everyone else were slaves.

  7. nicho says:

    Not “worse than expected” but exactly what they were hoping for. The corporatists’ plan was to hollow out the middle class — in Europe and in the US. They are succeeding beyond their wildest dreams. Their goals always were:

    Drive down wages
    Destroy the unions
    Privatize the infrastructure
    Destroy social programs
    Reduce taxes on he wealthy

    This was the reasoning behind the creation of the euro. Without a sovereign currency, countries like Greece, Ireland, Spain, Portugal cannot respond to financial crisis except by beating up on the working class.

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