Revolt in the South

‘Thinking of it, it’s perhaps surprising something like this hasn’t happened before

Although in fact, it hasn’t happened anyway.. At least not yet. But tensions are mounting, that’s for sure. We’re quite lucky we have Monti in Italy, going about his business in a rather unperturbed way and having good support from the population. But Greece and Portugal face little hope, and the longer that lasts, the more people will start to look for alternatives..

Portugal Politician: Debt is our ‘Atomic Bomb’

Friday, 16 Dec 2011 03:12 PM

By Forrest Jones

Rich European countries like France and Germany should impose austerity measures on Portugal with a little more care, as Lisbon can unleash the equivalent damage of dropping a nuclear bomb on the economy by defaulting, says Pedro Nuno Santos, vice-president of Portugal’s Socialist Party in parliament.

“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,” Santos says, according to The Telegraph.

“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.”

Portugal is already locked in recession and sunnier skies don’t lie on the horizon thanks to tough austerity measures.

The economy should contract by 3 percent in 2011.

The government has lengthened the workweek to 42 hours and has cut wages as part of austerity plans in exchange for a €78 billion loan package from the E.U. and the International Monetary Fund.

Many criticize harsh austerity, because while such measures cut spending, they also put more people out of work, which results in less consumer and other demand, less tax revenue and longer economic listlessness.

In Santos’ view, southern European nations should unite and make policy demands as a block.

“It is incomprehensible that the peripheral countries don’t do what the French president and the German Chancellor do. They should unite,” he says.

Italian Prime Minister Mario Monti has said Europe should remain united in tackling the debt crisis but hinted that Germany and France should be less rigid in enforcing austerity on their southern neighbors.

Europe’s response to the debt crisis “should be wrapped in a long-term sustainable approach, not just to feed short-term hunger for rigor in some countries,” Monti said, according to Reuters.