Portuguese public debt and the financial market

Last Monday (9/27) the yield of the Portuguese Treasury Bonds at 10 years, reached the new record of 6,54%.

Once more the Portuguese Government comes justifying this reality as prove of a speculated attack from the financial market against the Portuguese public finances. The Portuguese Prime-Minister never takes responsibility for nothing bad that happens in Portugal only take credits for the good thinks, so the height yield can not be his guilty and because of that it must be the responsibility of some one else, on this case is the financial agents that are trying to make him look bad.

But let’s look closer to this question. The market aren’t asking to the Portuguese Government to go to them and ask them for billions of Euros every week, that happens because the Portuguese Government are living of credit for more than a decade, and before that was living from the EU structural funds, what means that the Portuguese Government lives on external money since de 1975 Revolution, first from the IMF (in early 80’s), then from the EU (from 1986) and recently from the annual increased of the public debt. In 2008 the actual Government claimed a deficit reduction, but in reality was just some contain measures for that years and wasn’t the structural restructure of the State that will allow to reduce sustainably the public deficit, as the country needs. The proof of that is the actual deficit growing without the public anticrisis activities, but the Prime-Minister try to justify it because of them, what is not true.

So is the actual situation a speculate attack against the national public debt?

The reality is that the financial market agents are loaning money that some other persons saved and applied in banks or funds. It is our money. Knowing this let put the question: would you loan your savings to a person that spends more that he wins and do not shows any intentions of start making changes on his life style or begin cutting on his spendings? Or in case of loaning that money wouldn’t you want a higher yield for the risk you are taking? Because that is what is happening every week when the Portuguese Government goes to the market and ask for billions of Euros and keep announcing the TGV or the new international airport and beyond that keep avoiding the shrink of the State structural costs. The government wants to keep living in the luxury at the cost of others money. The Government are killing the middle class that supports any country economy and because the taxes are not enough to maintain their luxuries style of life they continue increasing the public debt and some one else will pay the price, because they already have their pockets full.

This year the admission of boys (corruption) have increased and the deficit of almost all ministries have inflated, what proves that the reduction of the national deficit will be made only by the reduction of the families income and the increased of taxes and not through the necessary measures to obtain a real and sustain reduction of the deficit. The Government will kill the economic activity before initiate any action against the real problem, the corruption on the State, because the government is sustain on that corruption, without the “Job for the Boys” the Prime-Minister will lose the party support.

Would you loan any money to this Government? I would not.