3 actions and 2 generic ideas that could help in dealing with the sovereign debt


1. The creation of a committee composed both by independent (external) analysts and representatives of all the relevant interest groups of the society (smaller interest groups could certainly manage to get to the table by making agreements with larger groups or coming together under common goals and objectives) to analyse extensively both the dimension and the composition of the sovereign debt;

2. To distinguish between national and personal debt; personal debt should therefore be attributed to the regime and to the people who benefited from it, governors and other bureaucrats proved to have incurred in debt favoring personal interests – or any others different than national interests – should (1) be responsible for pay back the money (2) be brought to justice in order to respond for odious governance and violation of their duties as people’s representatives and legally pay for it (I mean going to jail if necessary);

3. As Portugal is a country of honest people (and we don’t want to be left out of the world’s [nor European!] economic and financial system), the debt proved to be national should be renegotiated under realistic terms and assumptions and be paid as soon as possible (read “as soon as sustainable“);

4. In order to get such kind realistic terms the debt should be renegotiated not just at a national level but probably with all the PIGS together; some sort of fiscal union, though in my opinion desirable at an European level, is unlikely to advance in southern Europe so the details of such gathering should be intensively debated at all levels of the society;

5. Always pursue adjustment with growth; target both the demand (market creation and diversification) and the supply (productivity) sides, combine market oriented elements and strategies with government intervention and softcore economic planning (we need strategy once for all!); contemplate each country’s historical path, each country’s culture, specificity and target what is common commonly and what is different differently: each country has its very own problems to deal with and national autonomy is imperative. Bottom-up approaches and democratic processes are likely to deliver more adjusted policies to our reality; private property, autonomy and human capabilities must be contemplated as engines for sustained growth together with a strong and proactive, though democratic and limited by increased political competition, governance. A more meritocratic system should help as well as increased (not decreased!) investment in the formation of human capital (i.e. health and education) and technology. We are not that far apart from some more dynamic small developing countries.

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