In a new report on Portugal, Moody’s researchers commented:
Portugal conducts a successful bond swap but new tax hikes revive anti-austerity protests
The protests in Portugal have not been as visible as those in Spain, Italy, Greece, and to some extent France
There is a broad body of opinion that protests and voter rejection of current political leaders could be the highest barrier to implementation of austerity programs, and therefore, access to bailout funds. The heads of France and Italy have already been pushed out of office. There is a slight chance that even the head of Germany, Angela Merkel, could be thrown out next year over rejection of her plans to us her nation’s position as the de facto bank of Europe to bailout out parts of the region.
Clearly, the street protests are not over, and many are well organized. Powerful union in some of the countries which are facing budget cuts can mobilized hundreds of thousands of protestors which often shutters a substantial portion of the economic activity in these nations as the protests go on
And, the most complex calulus of this is whether the IMF, EU, and ECB will risk disintegration of some of the financially weaker nations, and risk a deep region-wide recession, or offer funds despite a lack of budget cuts
Douglas A. McIntyre
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