Skip to comments.Portuguese Socialists Threaten Economic Atomic Bomb
Posted on 12/17/2011 6:26:20 AM PST by Kaslin
Splintering and dissent continues in a major way as Christian Noyer, head of the Bank of France, attacks the fiscal rating of the UK following a negative outlook review of France by the rating agencies. In Portugal, socialists talk openly of default as a weapon.
Portuguese Socialists Threaten "Economic Atomic Bomb"
Ambrose Evans-Pritchard at The Telegraph writes Talk of 'nuclear default' sums up Left's anger at EU dictates
Tempers are fraying in austerity-racked Portugal. A top socialist politician was taped at a party dinner calling for diplomatic warfare against the EU's northern powers and issuing threats of debt default.
"We have an atomic bomb that we can use in the face of the Germans and the French: this atomic bomb is simply that we won't pay," said Pedro Nuno Santos, vice-president of the Socialist Party in the parliament.
"Debt is our only weapon and we must use it to impose better conditions, because recession itself is what is stopping us complying with the (EU-IMF Troika) accord. We should make the legs of the German bankers tremble," he said.
The comments came as Portugal slides deeper into recession, with the economy expected to contract by 3pc next year. Protesters marched through Lisbon on Thursday denouncing plans by the new conservative government to raise the working week to 42 hours. Wages are being cut 16pc for higher paid, and 8pc for lower paid public workers.
The parliament passed a fresh austerity budget earlier this month under the terms of its €78bn loan package from the EU and the International Monetary Fund.
Mr Nuno Santos said Europe's southern states should join forces to resist the austerity dictates and contractionary policies being imposed by the core powers. "It is incomprehensible that the peripheral countries don't do what the French president and the German Chancellor do. They should unite," he said.
Fitch Sets France Rating Outlook to Negative
Bloomberg reports France’s AAA Outlook Cut; Fitch Reviews Others
Fitch Ratings lowered France’s rating outlook and put the grades of nations including Spain and Italy on review for a downgrade, citing Europe’s failure to find a “comprehensive solution” to the debt crisis.
“Of particular concern is the absence of a credible financial backstop,” Fitch said in an e-mailed statement. “In Fitch’s opinion this requires more active and explicit commitment from the ECB.”
Without a full solution, Fitch said the crisis will persist, “punctuated by episodes of severe financial market volatility that is a particular source of risk to the sovereign governments of those countries with levels of public debt.”
Head of French Central Bank Attacks UK and Rating Agencies
In response to various outlook downgrades of France, Christian Noyer, head of the French central bank attacked the rating agencies and amusingly the UK.
When is the last time a major central bank head attacked the debt rating of another country? I cannot recall such a time but it has happened now.
Please consider UK 'should be downgraded' before France, says ECB's Christian Noyer
Britain should have its AAA credit rating before France, according to Christian Noyer, head of the French central bank, as the war of words between the two countries heats up following David Cameron's EU treaty veto.
"The downgrade does not appear to me to be justified when considering economic fundamentals," Mr Noyer said in an interview with local newspaper Le Telegramme de Brest.
"Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping," he went on.
"Frankly, the agencies have become incomprehensible and irrational. They threaten even when states have taken strong and positive decisions," the central banker said. "One could think that the use of agencies to guide investors is no longer valid."
French Foreign Minister Alain Juppe said yesterday that decisions by rating agencies were "sometimes subjective and political", and that any loss of France's top-notch AAA rating would be regrettable but not disastrous.
With that attack on the UK it is plain to see the poisonous atmosphere following the do-nothing over-hyped treaty proposal of Merkozy has gotten much worse.
NWO experiment going terribly wrong
The party is over. No more feel good from Germany and France. The socialist countries are having withdrawal symptoms.
Default really is the best option for most of these countries. They won’t be able to borrow again if they default, but they should not be borrowing anyway.
The socialists have run out of other people’s money
The socialists have run out of other people’s money
Don't make a move or the Portuguese gets it.
Haven’t S. American counties defaulted on bonds and loans in past years ?
Default is not merely the best option it is the only option. The borrowers are insolvent. Default simply acknowledges this reality and stops the make-believe game. But more importantly, it restores some sense of reality to the lenders too who for too long forgot that there is a risk element to any loan. The era of socialized risk / privatized reward must end. Default and bankruptcy are the only means to “clear the system” of toxic debt and restore normalcy to financial markets.
When did “Mish” Shedlock become “Mike?”
Going up-market, and leaving his old persona behind in the blog-slums?
Hasn't this been going on in Africa for 6 decades?
Somebody always comes along to "loan" them more money.
Attacking one’s benefactors only works when one’s benefactors are obligated in some manner to continue. This sort of rhetoric will only result in their being cut loose and left to fend for themselves. Upon just whom will clueless socialists in Portugal unleash their economic nuclear bomb then? Austerity is coming and will not be an option. I expect they’ll foul their own nests and burn things, then scream, rip their hair out and rend their clothing, while blaming anyone but themselves. They’d enslave others to wipe their collective butts if they could, all the while claiming the moral high ground but denigrating morals at every turn. Destructive, nihilist babies, the lot of them.
LOL bump. Spot on.
Mish is a nick, combining Mike and Shedlock. Maybe the thought was that he was writing to an unfamiliar audience.
The Big Government Socialists of Portugal do not want to be ruled by the Big Government Socialists of Germany.
Who will win? Why the Big Government Socialists, of course.
Ha — you are speaking of the ‘socialists in Portugal’ but with a couple of adjective/ noun changes, your words would apply so well to the Occupy Wall Street crowd. They also scream and cry when other people’s money runs out, blaming others, claiming the high moral ground.
The Portuguese, how many divisions do they have?
They’ll default. Some remnants of the Banks will be saved. The government will print fictitious cash because the people will use it. The Banks will lend that fictitious cash to the government. And on and on.
I think he’s just marketing himself upscale, now that he’s getting more national notice in “mainstream” pubs.
It’s a fill in the blank sort of crowd, largely the same the world over. Some are far more prone to actual acts of violence than others. Ours thus far are all mouth. It hasn’t always been thus, though.
Devemo-lo tudo para nossos amigos Cloward e Piven.
I’m taken to being more amused than shocked by the hair-on-fire antics of shorts like Denninger and this guy, they’ve been talking their books and ended up being regarded as sages for doing it. Strange times, strange bedfellows. It also helped that they were right. We’re in a big mess, anything could happen and most potential outcomes are negative. The people as a whole still do not understand the ramifications of what has gone down, which was the biggest fraud in the history of the world, imho. So, they go a-huntin’ for somebody, anybody, who sounds as if he might have some notion as to what the heck is going on. He’s just riding it to prominence. Can’t blame him, opportunity is severely limited at present.
If they want to borrow as much as Ghana, sure. No one is going to loan them any significant amount of cash if they don’t repay it.
Oh Lordy, do what he say! Do what he say!
Big 3 French bank balance sheets are 3 times the size of France’s GDP. Leveraged 30 to 1.
That would be like 3 big American banks have $45 trillion balance sheets.
Those French banks are French toast.
Portugal, Italy, Greece, everybody, deal. It ain’t goin’ away.
No mo’ money.
Immediately, Portugal will only be able to spend what they take in. They will have to immediately choose between paying welfare and pensions, and even if they terminate welfare the pensions will take a haircut.
The result of terminating welfare will be a tsunami of underclass people going into the rest of Europe and hastening the collapse of the remaining welfare states.
Socialists are truly economically illiterate. That move by Portugal would primarily nuke THEIR OWN economy!
It was gov’t largess that kept their economies afloat for so long, but now that is gone. Only a radically more free market can rebuild these economies.
I don't see that happening - these fools are still building (& tilting at) windmills, so I expect Europe to further decline economically.
And Obama has the US on exactly the same failed path.
This is the true face of socialism, infantilism.
A few centuries ago, if a country did not pay their debts, they could expect war ships to show up on their shores to make collections.
It worked great, incompetent governments were absorbed by more efficient governments.
Hasn't this been going on in Africa for 6 decades? Somebody always comes along to "loan" them more money.
This time I think no one will be around to loan them anything after the nuclear option, especially if it happens worldwide.
They don’t actually have any military, but they do have this old lady that they’ll send out to give you a stern look.
You are right. Banks encouraged irresponsible levels of debt from individuals, private groups and enterprise and governments.
When they hand out loans without considering the ability to pay back the loan, they have taken an irresponsible risk and should be the ones to pay for it in the end. If banksters were realistic, they would not loan money to socialist governments. They would not have buckled under Clinton’s demand that they give loans to poor people with no money in the name of race. The ending of these irresponsible and dishonest actions is always the same. The one that takes stupid risk, the banks, should pay the outcome and not pass it off to innocent others.
Hold it, men. He’s not bluffing.
If they default, does that mean that the lender could then collect the collateral?
And considering that these loans are to national governments... wouldn’t that make the nation in question the collateral?
I doubt there is any collateral. The creditors probably don’t even have the right to levy on the government’s assets. They certainly would not in the US. The only way the debt could be repaid is if Congress so orders.
When Portugal considers default as a weapon I recall the famous line in “Blazing Saddles”....
“Anyone move, I shoot the N____r!”
(”I think he means it.”)
Mexico defaulted, and France invaded. I don’t think they ever recovered their principle, but the French Foreign Legion got a few souvenirs.
Theft and deception are implicit to Marxist/socialist ideology...
There is a liberal in my office...half Portugese. He has stated numerous times that ‘government should take care of its people’.
In his mind, government is like the Scrooge McDuck...a paternal figure doling out support to the masses. He has no concept of where Scrooge McDuck gets his wealth (or that his vault is beyond empty right now).
He is particularly stubborn on healthcare...after all, it ‘works’ in Portugal. What Portugal has is a dual system, where the wealthy can get healthcare on their own, outside of the state run system. So, its better than the Canadian model, but still not sustainable.
I will send him this article. He will not be able to understand that allegedly free healthcare is helping to contract the Portugese economy.....now that I think about it, he has expressed concern that the western model of expanding economies is not ‘sustainable’... so the article will be very trivial to him.
AAahhhh ! Bless you !!!!
I’VE BEEN SAYING THAT FOR 20 YEARS AND PEOPLE THINK I’M NUTS !
The socialism ONLY worked because they bore no risk for their own national security.
America was backstopping them - if anything happened, America was there to jump in and protect them.
That - and this is huge and subtle, such that even the U.S. Presidents like Ike did not understand the long term - is why NATO was a ridiculous mistake from day 1.
Immediately after WWII, the rebuilding is one thing, that was fine because the Europeans ARE the same as Americans, i.e., those that came from Europe and who ran everything in America before wWII. Euros were not going to try to attack us and they ONLY needed some capital, not to be “taught modernity” to keep them from killing us by the thousands in terror plots. In a word, they were “sane”.
But... beyond rebuilding, I would have been absolutely dead serious clear with their leaders, and publicly - YOU FREEKING IDIOTS ARE ON YOUR OWN TO DEFEND YOURELF AGAINST THE RED MENACE.
Of course if the cr@p hits the fan we’re there, but our published policy should have been to let them know that THEY need to build a massive military and their aim should be parity without counting on our forces. The fact that there would have been NO defense treaty, in essence, NO guarantee, would have made them be defense-conscious. This would have informed their government budgets and national mentality for decades.
Instead, with NATO, we were carrying the log in the middle, and they just had one hand under one end. Their military guys have the fighting spirit, but most of their governments and the rest of society are “entitled” to U.S. military security. Now that Russia has rebranded, some mockingly talk about not having a need for superpower assistance. Regardless of what I see on the horizon, standing around with my pants down is not smart.
The critical cause of WWII (the reason it was not averted) was the fact that they did not take war preparation seriously and were not proactive in policy. If you’re truly scared, you prepare and are proactive, and if a nation really gets that it’s ultimately on it’s own, it’s got enough healthy fear to motivate itself.
Time to cut up the kids’ credit cards.
Default was always the obvious decision.
Default plus staying in the Euro zone.
What, are France and Germany going to expel the PIIGS if they refuse to service their current debts?
Borrowing more is not an issue, either.
The old debt is gone - no interest to pay, no principle to roll over.
The PIIGS can borrow ultra short term - 4 week terms, maybe 14% APR.
They’d have a bad year or two, but then they’d come out squeaky clean on the other side.