Loading ...“No QE For You!”: ECB May Cut “Lifeline” To Portugal After Socialists Overthrow Government
On Tuesday, Brussels and Berlin got what amounted to the worst news possible out of Portugal. In what sounds like the plot of a McCarthy-era propaganda spy novel, the Socialists and Communists have overthrown the government.
More specifically, Antonio Costa and the Socialists cemented their coalition with the Communists and The Left Bloc on the way to ousting Portuguese PM Pedro Passos Coelho’s government. This came just days after President Anibal Cavaco Silva reappointed the premier on the heels of largely inconclusive elections. That reappointment represented a slap in the face for the leftists and all but guaranteed they’d move to take control.
That’s just about the last outcome Jean Claude-Juncker, Angela Merkel, and Christine Lagarde wanted to see on the heels of the summer’s fraught and protracted negotiations with Greece.
As we’ve discussed extensively, the whole point of putting Alexis Tsipras through round after round of “mental waterboarding” was to dissuade any and all Syriza sympathizers from attempting to negotiate for debt relief and/or a rolling back of austerity. If things should go south in Lisbon, it would mean that the advocates of fiscal rectitude in the EMU will be forced to watch as one of their prized bailout “success” stories turns the corner and decides “austerity” isn’t worth the trouble.
That sets the stage for more debt drama just as the EU splinters over the migrant crisis.