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Of course it worked: nowadays Portugal can borrow money in the free market with interest rates that are historically low, much cheaper than with the IMF. This m

Of course it worked: nowadays Portugal can borrow money in the free market with interest rates that are historically low, much cheaper than with the IMF. This means: the world trusts again in Portugal. What you speak about is a completely different thing, Portugal has very old and deep structural problems but they were not caused by this particular crisis, they just got more exposed. Solving them is another story, I don't even think that our democracy (as we know it) is able to do it.

icebraining 12y ago
Can we borrow because the world trusts us, or because the world trusts that we'll get bailed out again if we default?
- galfarragem 12y ago
  The world trusts that they will receive the money that they lend to us. The lender doesn't care from where that money comes. In the end we arrive to the same conclusion, EU/IMF/whatever trust Portugal enough to bail us out again. But I understand where you want to get: "we are behaving like good boys" and making everything that "Germany" says. Would you prefer an atitude like the Greek one, "acting like a spoiled kid"? As Greece, we are a small and periferical country without any power to negotiate by ourselves - we need to associate with others - and sincerely I prefer Portugal to associate with Germany than Greece. Our best way to get through this is by being "the good boys" and man up.
  - icebraining 12y ago
    That's not where I want to get; I don't care about such petty considerations, nor do I agree with any of those characterizations. If it's better for us to strictly comply with the guidelines set by the lenders, I'm fine with that. I'm simply skeptical that any of those parties (private lenders or EC/IMF/ECB) lend us money because they trust us to pay it back, and so I have to wonder why else would they lend us money.
bainsfather 12y ago
Borrowing rates are historically low most other places as well. Regarding 'trust' in Portugal: Draghi's 'whatever it takes' statement and actions are mainly what fixed this. You need to be careful about definitively attributing an outcome to a particular action - hey, maybe you fixed borrowing costs by eating weetabix for breakfast one day in 2010, and now Portugal has low borrowing rates. We are also of course only considering one very limited measure of 'success' - you did not mention unemployment or GDP, for some reason ...
- galfarragem 12y ago
  > Regarding 'trust' in Portugal: Draghi's 'whatever it takes' statement and actions are mainly what fixed this. > maybe you fixed borrowing costs by eating weetabix for breakfast one day in 2010, and now Portugal has low borrowing rates. Portugal has low borrowing rates because it didn't break promises and contracts. This allowed Portugal to be trusted again, not Draghi's statements. If so they would have worked with Greece also.. 'Trust, not money, is the currency of business and life.' - David Horsager
  - bainsfather 12y ago
    The ECB buying government debt, and pledging to buy as much as was needed, wasn't the main cause then? Global interest rates being historically low isn't a cause now? No, you say, it is because of something that was the same before, during, and after the main crisis point - that promises and contracts were not broken. (Not that promises or contracts need necessarily have been broken had other courses of action been taken). Meanwhile e.g. Germany, who broke the rules on borrowing early in the life of the Euro, has of course suffered economic collapse, and cannot borrow money at any interest rate. And Iceland, they are back in the stone age now.
    - galfarragem 12y ago
      We can never compare Portugal with Iceland. As an objective example: Portugal needs energy from the exterior to survive. Would anybody trust us enough to sell energy (at a reasonable price), not knowing if we would pay it [1]? By the other hand, Iceland doesnt't need the exterior as much as we, they can afford to not be trusted [2]. [1] Or we could associate to Russia, like Syriza tried.. [2] 'By harnessing the abundant hydroelectric and geothermal power sources, Iceland's renewable energy industry provides close to 85% of all the nation's primary energy - proportionally more than any other country - with 99.9% of Iceland's electricity being generated from renewables.' http://en.wikipedia.org/wiki/Economy_of_Iceland http://en.wikipedia.org/wiki/Economy_of_Iceland

icebraining 12y ago

Can we borrow because the world trusts us, or because the world trusts that we'll get bailed out again if we default?

galfarragem 12y ago
The world trusts that they will receive the money that they lend to us. The lender doesn't care from where that money comes. In the end we arrive to the same conclusion, EU/IMF/whatever trust Portugal enough to bail us out again. But I understand where you want to get: "we are behaving like good boys" and making everything that "Germany" says. Would you prefer an atitude like the Greek one, "acting like a spoiled kid"? As Greece, we are a small and periferical country without any power to negotiate by ourselves - we need to associate with others - and sincerely I prefer Portugal to associate with Germany than Greece. Our best way to get through this is by being "the good boys" and man up.
- icebraining 12y ago
  That's not where I want to get; I don't care about such petty considerations, nor do I agree with any of those characterizations. If it's better for us to strictly comply with the guidelines set by the lenders, I'm fine with that. I'm simply skeptical that any of those parties (private lenders or EC/IMF/ECB) lend us money because they trust us to pay it back, and so I have to wonder why else would they lend us money.

bainsfather 12y ago

Borrowing rates are historically low most other places as well. Regarding 'trust' in Portugal: Draghi's 'whatever it takes' statement and actions are mainly what fixed this. You need to be careful about definitively attributing an outcome to a particular action - hey, maybe you fixed borrowing costs by eating weetabix for breakfast one day in 2010, and now Portugal has low borrowing rates. We are also of course only considering one very limited measure of 'success' - you did not mention unemployment or GDP, for some reason ...

galfarragem 12y ago
> Regarding 'trust' in Portugal: Draghi's 'whatever it takes' statement and actions are mainly what fixed this. > maybe you fixed borrowing costs by eating weetabix for breakfast one day in 2010, and now Portugal has low borrowing rates. Portugal has low borrowing rates because it didn't break promises and contracts. This allowed Portugal to be trusted again, not Draghi's statements. If so they would have worked with Greece also.. 'Trust, not money, is the currency of business and life.' - David Horsager
- bainsfather 12y ago
  The ECB buying government debt, and pledging to buy as much as was needed, wasn't the main cause then? Global interest rates being historically low isn't a cause now? No, you say, it is because of something that was the same before, during, and after the main crisis point - that promises and contracts were not broken. (Not that promises or contracts need necessarily have been broken had other courses of action been taken). Meanwhile e.g. Germany, who broke the rules on borrowing early in the life of the Euro, has of course suffered economic collapse, and cannot borrow money at any interest rate. And Iceland, they are back in the stone age now.
  - galfarragem 12y ago
    We can never compare Portugal with Iceland. As an objective example: Portugal needs energy from the exterior to survive. Would anybody trust us enough to sell energy (at a reasonable price), not knowing if we would pay it [1]? By the other hand, Iceland doesnt't need the exterior as much as we, they can afford to not be trusted [2]. [1] Or we could associate to Russia, like Syriza tried.. [2] 'By harnessing the abundant hydroelectric and geothermal power sources, Iceland's renewable energy industry provides close to 85% of all the nation's primary energy - proportionally more than any other country - with 99.9% of Iceland's electricity being generated from renewables.' http://en.wikipedia.org/wiki/Economy_of_Iceland http://en.wikipedia.org/wiki/Economy_of_Iceland