Lawmakers in Portugal have rejected the austerity measures proposed to parliament late in the afternoon today. Portugal has been increasing taxes and cutting payrolls to avoid asking for help from the international community, as they know the restrictions and control they would have to give up in order to receive that currency injection. The rejection of this plan puts a coordinated international bailout for Portugal in it’s direct site.
According to Finance Minister Fernando Teixeira dos Santos, the rejection of this plan will bring about more difficulties for Portugals financial situation that they may not be able to handle on their own.
Prime Minister Jose Socrates recently stated that he could not continue to run the country if this plan was defeated and not allowed to pass. We will soon find out if he is bluffing. If he does resign, it could cause a governmental paralysis until mid summer. Elections would not be held until May or June, and then a new body would have to be put in place before anything can get done.
This adds to the grim financial situation that is facing the world today, and is one of the main drivers behind gold hitting an all time high, and silver going places it has not seen in over thirty years.
Overall this is bad news for Portugal and the EU, but great news for precious metals values to go even higher!
Washington Post has a great article concerning this very topic;