a) that whether we like it or not, the Portuguese debt situation cannot be seen independently from what happens to Greece
b) that despite efforts by the Portuguese Government, and some statements from EU officials, to differentiate Portugal case from the Greek case, this is harder to achieve that it is believed - as a principle, to be able to signal difference, Portugal needs to take actions that Greece would not do, and for the moment there are some such differences: political consensus about the rescue plan, labor market reforms and wage cuts in civil servants pay, are the more significant ones. But somehow they fail to make their way into the overall prospects of the country.
To be followed closely, of course, in the coming days what is the real deal with Greece.
«The infuriating thing about this tragedy is that it was completely unnecessary. Half a century ago, any economist — or for that matter any undergraduate who had read Paul Samuelson’s textbook “Economics” — could have told you that austerity in the face of depression was a very bad idea. But policy makers, pundits and, I’m sorry to say, many economists decided, largely for political reasons, to forget what they used to know. And millions of workers are paying the price for their willful amnesia.»
ReplyDeleteIn http://www.nytimes.com/2012/01/30/opinion/krugman-the-austerity-debacle.html?_r=2