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The European commission is not happy. It turned out that the latest cuts it enforced on Portugal were not legal – according to the Portuguese Constitutional Court. Really Portugal, you must try harder than that.

Back in May 2011 Portugal asked for help. The European Commission, ECB and IMF, collectively known as the TROIKA, agreed a 78 billion euros bail-out, but only if in turn Portugal implemented some pretty severe cuts.

Of five billion euros worth of cuts agreed by Portugal’s government, the Constitutional Court has rejected around a fifth. The court didn’t much like the idea of cutting the pay and pensions of public sector workers, and rejected plans to tax unemployment subsidies.

Portugal’s Prime Minister Pedro Passos Coelho has said it’s a national emergency.

Portugal’s harsh Dickensian masters, The European Commission, said: “Any departure from the programme’s objectives, or their re-negotiation, would in fact neutralise the efforts already made and achieved by the Portuguese citizens.”

So what is Mr Coelho to do? He said that the money must he be found from elsewhere, probably meaning public sector cuts, less money spent on education, health and social security.
But how can Portugal cutting spending on education be good for the country in the long run?
It just goes to show that the belief held by the markets that the Eurozone crisis was near its end was based on some pretty some pretty optimistic readings of the data.

Actually forget about the data; there is more to it than that. There are people at the other end of Eurozone austerity, and right now the seeds for all kinds of social unrest are being sown.

Austerity can work when applied in isolation. But when it is applies across more than one continent, it looks like economic suicide.

©2013 Investment and Business News.

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