Back to the Future

The current economic crisis has highlighted, for the unbiased observer, the obvious threats posed to a small, peripheral country, which dreamt, one day, of becoming a major player among the European sharks.

At the present time, and with the available info, I’d like to state with proper emphasis, that it is recognisable a major trend on the Portuguese evolution, mainly on economic grounds.

Some other day, I was stating that this particular environment requires some knowledge in several human interaction fields, such as history, psychology, even sociology. Why? Because no single expert will be able to explain the full extent of measures and events that will take place.

So, forwarding the facts:

1. The current balance deficit, in addiction to the major institutions and families’ debt, clearly show that the republic is becoming default prone (over 200% growth predicted for the year).

2. The short term debt is growing faster than the capacity to repay loans interest (7.3B in the last 6 moths).

3. The current Portuguese rating is obviously misjudged, hidden by the more expansive policies from both the US and UK, only to be adjusted on the day before the first auction failure (remember Lehmann Bros).

4. The monetary option (entering the euro) confirmed that the state burden on the real economy and overall lack of competitiveness removed any chance of survival without severe measures, including massive layoffs and pay cuts (in Iceland, this meant a plunge in living standards of 20 to 50%).

5. The unemployment rate is soaring into an historical rioting level, nearing 2 digits. To the obvious excess of government spending, this adds the radical loss of tax revenues (21% in the last 2 quarters).

This probably makes the independent minds reach a wide consensus in the conclusions. We won’t make it without some sort of UE bailout.

In my view, that trend means that all financial institutions as well as the republic it self will collapse. Like I said earlier, you’ll have to study in order to predict or at least understand the multiple (and uncontrollable) reactions to these striking events.

It would be wise not to get fooled by the fireworks politicians use, both in difficult times, and when nearing general elections.

Since I found the mindset to write so many words, I’d like to advise you to read a lot, to be wary and to find a way to secure both assets and goods. Prepare for the worst, but hope for the best.

It’s not that knowledge or compassion should stop at the state boundaries. It’s just that we are in an awful shape. So now you can’t say you haven’t been warned.