A Scream from the Bottom of a Well

by Andrew Stuttaford

Angela Merkel’s hope that the euro zone’s next crisis /demand-for-German-cash could be be postponed until after the September elections is looking ever more likely to end in disappointment. Unease over Slovenia is growing, and Portugal is being ground up by a classic debt trap.

The Daily Telegraph’s Ambrose Evans-Pritchard steps in with his calculator of doom:

[Portugal's] economic slump is proving much deeper than forecast. The deficit has been rising not falling, in spite of austerity cuts. Specifically, it will need to need to borrow €14.1 billion in 2014, and €15bn in 2015. This is 30pc more than required when the crisis blew up in 2011. The average interest rate will be higher than it was then…. Portugal is in a deeper hole after its €78bn bail-out than it was before. Public debt will reach 124pc of GDP this year. The “financing burden” will keep rising until 2017.

When it comes to Cyprus,  I had not expected that its bailout would hold the line for long, but, as for what’s happened now, well, I’ll let the Cyprus Mail take up the story:

…Just when you thought it could not get any worse, the bailout jumps from €17.5 billion to €23 billion while we were not looking. Where Cyprus was initially to contribute €5.8 billion, then €7.5 billion, to the bailout, this has been hiked to €13 billion with no explanations offered to the people – the victims of this grand theft. A bigger outflow than originally estimated from the banks was cited as possibly one of the reasons. In addition, reports have surfaced that the bulk of the island’s gold reserves would be sold for a paltry €400 million…

At a time like this, people don’t want to hear political rhetoric about some imaginary golden future where we are living happily ever after on a cloud of natural gas. People want to hear the truth about what is happening to their country now so they can make up their own minds and take decisions about their futures, or in this case, the lack thereof…

Tick tock.

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