Austerity in Portugal revisited

April 13, 2013

Portugal continues to push hard for this year’s “Call me Argentina” award.  You may recall that their constitutional court invalidated the government’s attempts to save money by cutting the bonuses of government workers — yes, they get two a year. That was ruled unconstitutional because it discriminated against government workers. Last week, the Times reports, they “struck down [more] austerity measures … [and] called into question [whether] the government can meet its budgetary goals.” Evidently having no money is not a legal basis for cutting spending in Portugal.

The question is what happens next if the government runs out of funds. They can’t print euros, but can they pay workers in something else? This surely isn’t the end of the story.

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