Summer of 2007. Portugal was cruising and rested on an economic growth rate of almost 2.5%, compounded by a deficit below Brussel’s threshold and a debt of 68% the value of GDP.
Across the pound the general mood was different. Lehman Brothers showed the first signs of instability. Still, no one took much notice, until the bank presented losses of 3.9 billion, wreaking havoc in the American markets. We already know how this played out. The end to the American real state bubble left the European system in the lurch, causing funding for economic activity to dry up and massive bail outs funded by the taxpayers. The peripheral economics, more fragile, were the first ones to fall, when the madness of speculators reached public debt. Under the pressure of rating agencies, funding for the state became unbearably expensive, precisely at a moment when it was most needed. And it all took place under the still and indifferent look of the ECB.
8 years went by. With unemployment, poverty and recession, the peripheral countries paid for the fact of being the wrong economy, in the wrong place, wrong time. Promises were made: markets would be controlled. But, since then, the ECB has injected millions and millions of euros in a debt-laden financial system, teeming with financial assets that are either toxic or devalued by the prolonged crisis in Europe. A crisis that, shall we say, cannot be masked by the development of emerging economies any longer.
Now it just so happens that the biggest German bank, Deutsche Bank, is apparently announcing losses of 6 billion euros, whilst it is widely known that the bank has financial derivatives worth 65 trillion, about 20 times the value of German GDP. And that it was heavily fined over market manipulation.
In face of this, all this and the refugee crisis, the threat from the far-right and the eventual ‘Brexit’, the German Finance Minister, Wolfgang Schäuble, did not find a better explanation for the ‘nervousness’ in the market than the Portuguese government budget, the one that dared, however timidly, make some self-determination count.
This shall not shock only those who stopped seeing the bigger picture and accepted the ‘behave, it’s all your fault, you lived beyond your means’ narrative. A deplorable, and, above all, very sad Europe.
Translated by João Areal for Esquerda.net/English.
