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Oecd Calls For More Austerity In Portugal

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8028737/OECD-calls-for-more-austerity-in-Portugal.html

Portugal must brace for fresh austerity to bring the budget deficit under control and stem capital flight, despite signs that political consensus is unravelling.

The OECD club of rich states urged the country to extend its public wage freeze until 2013 and prepare to raise taxes "swiftly" on sales and property.

"If acute market stress were to resurface, further fiscal tightening measures may need to be contemplated. Widening sovereign spreads, if persistent, may put the economic recovery at risk. The immediate challenge is to foster investor confidence by rapidly consolidating the public finances," it said.

Portugal's socialist premier Jose Socrates had hoped to tighten gradually, relying on growth to trim the deficit from 9.3pc in 2009 to 7.3pc this year, but markets have given this a thumbs down. Yields on 10-year Portuguese bonds have reached a post-EMU high of 6.41pc, some 413 points above German Bunds.

Mr Socrates has struggled with a minority government since the Left splintered in 2009, with defections to Marxist groups in the Bloco de Esquerda. He has relied on opposition conservatives, who have so far refused to back his latest austerity plans – ostensibly in a dispute over tax policy. A key minister said last week that Portugal would become "ungovernable" without a deal.

Azad Zangana from Schroders said investors will flee if there is any sign that the budget will not be passed in mid-October, or if measures are too weak. "The markets are clearly losing confidence in Portugal's government," he said, calling on parties to follow the example of Britain's Coalition in overcoming political differences.

Austerity fatigue is appearing in a string of states on the eurozone periphery and Eastern Europe. Ireland's coalition majority has slipped to two seats after an independent MP withdrew support, refusing to back welfare cuts. Spain faces a general strike tomorrow.

Three of Portugal's ex-finance ministers fear Lisbon may have to tap the €440bn (£375bn) bail-out fund or turn to the International Monetary Fund, saying Mr Socrates has left it too late to discipline spending.

Everywhere you look the pressure is growing, it will be interesting to see how our dear leaders smooth over the cracks this time.

Tick tock.

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Credit ratings and CDS rates are now irrelevent for European sovereign debt. They only count when you have private buyers making difficult investment choices.

As the only buyer is the ECB, and they will buy no matter what, one suspects Moodys and the rest are just wasting their time assessing this stuff.

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8028737/OECD-calls-for-more-austerity-in-Portugal.html

Everywhere you look the pressure is growing, it will be interesting to see how our dear leaders smooth over the cracks this time.

Tick tock.

"Portugal (...) had hoped to (...) trim the deficit from 9.3pc in 2009 to 7.3pc this year,"

Isn't our budget deficit around 11% this year? :unsure:

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Credit ratings and CDS rates are now irrelevent for European sovereign debt. They only count when you have private buyers making difficult investment choices.

As the only buyer is the ECB, and they will buy no matter what, one suspects Moodys and the rest are just wasting their time assessing this stuff.

Exactly right, the ECB will buy every bond from these countries if neccessary. They just are not willing to have a default. The only negotiation I can imagine is the ECB threatening not to buy unless the government comes up with some sort of minor austerity. But even that seems weak to me, because ultimately the ECB just politically will not allow a failed bond auction or a default.

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AEP now saying it's all going to be OK

"Irish and Portuguese borrowing costs have retreated from post-EMU highs after the country's leaders pledged to do whatever it takes to restore investor confidence."

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8031382/Ireland-and-Portugal-debt-crises-start-to-ease-after-leaders-pledge-to-take-action.html

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Exactly right, the ECB will buy every bond from these countries if neccessary. They just are not willing to have a default. The only negotiation I can imagine is the ECB threatening not to buy unless the government comes up with some sort of minor austerity. But even that seems weak to me, because ultimately the ECB just politically will not allow a failed bond auction or a default.

That's what they seem to have been doing so far. Worrying - how long can that go on for. There will be a default sooner or later, or something along those lines. The systems in place now, including austerity measures, are simply not going to be able to do the job. Euro's days are numbered, at least as we know it now. And UK banks are going to take a big hit on this as well, not pretty at all.

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I'll accept austerity when the bankers and the rest of the global elite accept austerity.

The whole point is that you do the austerity so they don't have to- that's what being in the elite means- you get to screw everyone else.

The real tragedy here is that their wealth is connected by some disgusting umbilical to yours- if little people like you don't go shopping their mountain of IOU's turn into worthless paper. :lol:

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I'll accept austerity when the bankers and the rest of the global elite accept austerity.

If you won't accept it then I guess they'll have to change their plans. B)

Edited by bogbrush

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The whole point is that you do the austerity so they don't have to- that's what being in the elite means- you get to screw everyone else.

The real tragedy here is that their wealth is connected by some disgusting umbilical to yours- if little people like you don't go shopping their mountain of IOU's turn into worthless paper. :lol:

Iceland told the international banking cartel to go ****** themsleves.

Iceland is recovering. Those who allow their central banks to bail out the cartel won't.

Edited by OnlyMe

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Is Laura aware?

Shock news of yesterday was a quite acceptable Cimarosa which the couple from España insisted they had bought in LIDL :o , normally the clearing house for the world's toxic red!

Is there anything else I should be aware of? :unsure:

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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