by John Galt
January 19, 2012 23:00 ET
As the markets continue their drunken ways, Portugal is sending out a distress signal. Ambrose Evans-Pritchard’s story this morning from the U.K. Telegraph heralds this warning clarion in graphic detail:
Portugal to need “debt haircut” as economy tips into Grecian downward spiral
(Click on the title to read the full article
The excerpt which should set off alarm bells in bankster’s offices from Brussels to Berlin:
The problem is the slow-burn threat of debt-deflation. Interest costs for Portuguese companies are painfully high – if they can roll over loans at all – and the debt burden is rising on a shrinking economic base. Real M1 money deposits contracted at an annual rate near 20pc in the second half of 2011.
Since the country cannot devalue within EMU, it hopes to achieve an “internal devaluation” to restore 30pc in lost competitiveness against Germany. This is a gruelling process, entailing cuts that eat away at tax revenue.
Portugal is a troubling case for EU officials, who insist that Greece is a “one-off” case rather than the first of a string of countries trapped in a deeper North-South structural rift. The official line is that Portugal will pull through because it has grasped the nettle of retrenchment and reform.
Contained? I think not and reading the rest of the article provides a glimpse into the charade being perpetrated on the world’s investors while the bankster’s shuffle their funds away from the PIIGS and into safety.
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