More austerity for France - Portugal tumbling towards purgatory

President Sarkozy addressed the French nation on TV last evening and warned that growth would fall below one per cent and that new austerity measures would be announced within days. In Italy there seems much doubt as to whether even PM Berlusconi himself is fully persuaded as to the viability of the terms he set out in the letter for the EU, never mind whether his own party and coallition partners could be brought along.

The true horror story, disregarded in the Brussels EU midnight meetings was Portugal. Ambrose Evans-Pritchard in his column this morning in the Daily Telegraph, spells out the entire horror story with a compelling graphic, linked here.

A shrinking money supply is dangerous for countries with a high debt stock. Portugal’s public and private debt will reach 360pc of GDP by next year, far higher than in Greece.

Premier Pedro Passos Coelho has been praised by EU leaders for sticking to austerity pledges under Portugal’s EU-IMF rescue, but the policy is pushing the country deeper into slump and playing havoc with debt dynamics.

The EU deal was not designed to deal with such a threat. The working assumption is that Greece alone is the essential problem, and that other troubles are under control or caused by jittery markets.

Portugal has a special position in the advancement of the tyranny that is now the EU, in that the package imposed by the EU on that nation was negotiated with its civil servants while elections were underway, and thereafter imposed upon the supposed politicians.

Reichsmarschall Rehn will presumably soon be giving urgent thought as to how ridiculous and unreasonable demands can eventually be imposed.