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Portugal Prime Minister Resigns Amid EU Turmoil

March 24, 2011

Finance Minister Fernando Teixeira dos Santos on March 11 presented additional deficit-cutting measures equal to 4.5 percent of gross domestic product over three years, including a reduction in pensions of more than 1,500 euros a month and further cuts in tax benefits. The measures were rejected yesterday in parliament by opposition parties.

The dominoes of debt are rearing their ugly heads again in Europe as now Portugal is in crisis. It is estimated more austerity will be require to bail out Portugal — the price tag: nearly $100 billion. This scenario is causing violent protests in the most civilized of all places, Brussels, Belgium — home of the EU and international capital of Europe for finance.

What we are seeing is mirroring what is happening in the United States as our state governments are looking at all public benefits, public education, unions and social programs as targets to cut and gut. Read this and see if there is not an uncomfortable trend developing.

Reuters reports today:

Around 30 demonstrators protesting against the EU’s handling of the financial crisis tried to break through barriers and threw rocks at Belgian police, who responded with the water cannon, witnesses and the spokeswoman said.

Police estimated around 12,000 demonstrators had gathered near the European Union institutions where EU leaders will meet later Thursday. Organizers, including labor unions, put the number at closer to 20,000.

The protesters are opposed to an EU competitiveness pact, an agreement reached this month by euro zone leaders to adopt measures like higher retirement ages, a review of wage indexation and more flexible labor markets.

“At the level of pensions, social security and work flexibility, what has been put on the table at the European level is unacceptable,” Myriam Delmee, vice-president of the BBTK union in Belgium, told Reuters from the protest.

This is getting closer to what John Harris called in January: 2011’s Summer of Rage. [see related post]

Portugal’s Prime Minister Resigns
March 24 (Bloomberg) — Portugal’s debt was downgraded two steps by Fitch Ratings after the country’s Prime Minister resigned last night following the rejection of his deficit- cutting measures.

Portugal had its long-term foreign and local currency issuer default ratings cut to A- from A+ and short-term issuer default ratings cut to F2 from F1, according to a statement today. The ratings were placed on “watch negative,” meaning they may be cut further.

“The downgrade reflects increased risks to policy implementation and fiscal financing in light of the Portuguese parliament’s failure to pass fiscal consolidation measures and the resignation of the Prime Minister,” Douglas Renwick, director at Fitch’s sovereign group, said in the statement.

The rejection of the austerity measures has “significantly increased the chances of Portugal requiring multilateral support in the near term,” according to Fitch.

Read entire Bloomberg article, click here

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