Portugal Brings Back Eurozone Debt Crisis

A blog about business and economics.
July 3 2013 8:48 AM

Portugal's Bringing Eurozone Debt Crisis Back

A man looks at daily newspapers with front pages carrying headlines concerning the resignation of Portuguese Foreign Minister and the political crisis in Portugal, in Lisbon on July 3, 2013.


This has been a little buried by more dramatic events elsewhere, but Portugese government bond yields are spiking today in a sign of the exciting return of the eurozone debt crisis. The specific issue is that Portugal's main center-right party is presiding over a tough austerity program and a terrible economy. So naturally they're unpopular. That's been leading the ministers of their junior coalition partner, the CDS-PP, to start resigning. If the CDS-PP leaves the government there's no majority and there'll need to be new elections. And new elections bring new political uncertainty—including possibly prolonged coalition negotiations and efforts to renegotiate the terms under which Portugal is getting assistance from the Troika (i.e., the European Commission, the European Central Bank, and the International Monetary Fund). Consequently, the bond yields are spiking.

Nobody should exaggerate the significance of this particular hiccup. But it's a reminder that the eurozone debt crisis really and truly hasn't gone anywhere. Southern Europe is experiencing depression-level conditions, and growth is quite weak even in "core" Eurozone countries such as Germany and the Netherlands. And everything is being held together, financially, by measures with dubious levels of political legitimacy. The Troika is pushing the boundaries of its legal authority, while at the same time governments across the continent are being pushed to the boundaries of what's acceptable to the voters.


The powers that be have really proven a lot of skeptics wrong after the past two years in terms of basically holding this rickety structure up. But the underlying conditions are so weak that every little bump in the road raises a lot of thorny problems.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.


War Stories

The Right Target

Why Obama’s airstrikes against ISIS may be more effective than people expect.

The One National Holiday Republicans Hope You Forget

It’s Legal for Obama to Bomb Syria Because He Says It Is

I Stand With Emma Watson on Women’s Rights

Even though I know I’m going to get flak for it.

Should You Recline Your Seat? Two Economists Weigh In.


It Is Very, Very Stupid to Compare Hope Solo to Ray Rice

Or, why it is very, very stupid to compare Hope Solo to Ray Rice.

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

Why Is This Mother in Prison for Helping Her Daughter Get an Abortion?

It’s Fine to Use Facebook to Serve People With Legal Papers, Court Rules

  News & Politics
Sept. 23 2014 6:40 PM Coalition of the Presentable Don’t believe the official version. Meet America’s real allies in the fight against ISIS.
Sept. 23 2014 2:08 PM Home Depot’s Former Lead Security Engineer Had a Legacy of Sabotage
Sept. 23 2014 1:57 PM Would a Second Sarkozy Presidency End Marriage Equality in France?
  Double X
The XX Factor
Sept. 23 2014 2:32 PM Politico Asks: Why Is Gabby Giffords So “Ruthless” on Gun Control?
  Slate Plus
Political Gabfest
Sept. 23 2014 3:04 PM Chicago Gabfest How to get your tickets before anyone else.
Brow Beat
Sept. 23 2014 8:38 PM “No One in This World” Is One of Kutiman’s Best, Most Impressive Songs
Future Tense
Sept. 23 2014 5:36 PM This Climate Change Poem Moved World Leaders to Tears Today
  Health & Science
Sept. 23 2014 4:33 PM Who Deserves Those 4 Inches of Airplane Seat Space? An investigation into the economics of reclining.
Sports Nut
Sept. 23 2014 7:27 PM You’re Fired, Roger Goodell If the commissioner gets the ax, the NFL would still need a better justice system. What would that look like?