Portugal has failed to cut its external deficit for a different reason: it has had virtually no internal devaluation. Nominal G.D.P. remains at its 2008 peak. The nation has export capability (over 30 percent of G.D.P.), but it must do more to boost net trade. Portugal may actually be a country that would find adjustment a whole lot easier if it could have a little more wiggle room on its exchange rate.The failure of internal devaluation can only reflect on the moral weakness of the Portuguese, never on the policy itself.
By comparison, Ireland may be struggling with the sudden appearance of bank bailout debt, but early fiscal austerity coupled with internal devaluation were effective in stimulating net exports and eliminating its boom-time current account deficit. And export-led growth will at least help to stabilize the Irish economy and improve a budget position now saddled with debt servicing costs.Ah yes, the great Irish success of austerity. How's that going again?
Ireland Export Adviser Warns of Weak Growth:
The economic adviser to the Irish Exporters Association—representing small and large exporting firms—warned Wednesday that Ireland's economic outlook has worsened significantly as the economy will, at best, not grow at all this year.The best sentence is at the end, though: "Debt restructuring alone is insufficient and may even encourage a return to laxity." Oh, the dreaded laxity. Where would we be without elites to castigate the moral failings of the masses?