The sharks are circling again. The cost of debt rising inexorably in the Club Med countries. After a couple months of respite, the spectre of sovereign debt is again casting a shadow over Europe. I was in Portugal recently, on the eve of the biggest general strike since that country became a democracy after the ‘Red Rose Revolution’ in 1974. The show of strength by the trades unions was impressive though largely futile. Following Greece and Ireland, Portugal will almost certainly become the latest victim of the sovereign debt crisis that is rocking the EU to its very foundations.
Outside Lisbon, there was an eerie calm. The Algarve is now one long housing estate punctuated by golf courses. In Albufeira I marvelled at the endless estates of candy coloured holiday homes, all empty. It’s like being in one of those post-apocalyptic video games where all the people have all been killed by a mystery disease. You half expected to see a crowd of zombies. What I did see was a guy in a hat trotting along in a cart drawn by a donkey. You see rather a lot of blokes on donkeys here, if you hang around long enough. For, beneath the veneer of prosperity brought by tourism, Portugal is a low-growth, low-tech, essentially agricultural economy. Nothing wrong with that. Except that dozy Portugal is harnessed, via the euro, to the the most technologically efficient and productive manufacturing force on the planet: Germany. And that’s the problem: it’s a donkey yoked to a race horse .
