"The closer I see what is going on, the more uncomfortable I feel"

Mário Centeno, Minister of Finance, sticking out his tongue,
making fun of pulling the wool over everyones´eyes??

The 2016 State Draft Budget has been called many names: 

"Unrealistic, reckless, artificial". 

The Draft plan has also been called several names, 

but the real danger is, that it will be called "unapproved". 

The public debt will also gain a new name - which is "garbage" - 

and Portugal risks a new bailout.

The Draft State Budget for 2016 was the name the government 

gave the document which it sent to Brussels on 22 January. 

Since then - before even actually - the document already had many other names. 

"Unrealistic" named by rating agency Fitch, 

"unwise," said the Council of Public Finances, 

"a fiction worthy of an Oscar", pointed Assunção Cristas. 

More seriously, the European Commission inquired about 

"the reasons why the government plans to change the structural balance

 well below the adjustment recommended by the Council." 

Brussels is uncompromising on this negotiation, 

but the European Commission has not given the draft 

the "unapproved" name, yet. 

If this should happen, another name - "rubbish/trash" - 

will be immediately given by DBRS, 

the only rating agency handling public debt and the Portuguese banks 

at the European Central Bank (ECB). 

And, therefore, separates the country from a new international bailout.

All of these negative names given to the budget draft plan, 

made headlines of the national and international press in the last ten days. 

On Saturday, the parliamentary PSD whip, Luis Montenegro, 

criticized the government for presenting a "proposal [budget] 

that does not deserve the credit of any national nor international organization" 

and by acting "carelessly 

instability and uncertainty has been brought to the country". 

To this criticism, the government has responded calmly 

with messages and António Costa said that 

"there is no reason to be particularly worried" 

about a process that "is not political, but technical."

A Government source said on Saturday, to the Express newspaper, 

that the budget plan that may be agreed on in Brussels, 

will not be "something that allows people to say that the Government 

received a slap on the wrist in Brussels 

or has failed to turn the page on austerity". 

Nor will the government breach its commitments 

with the radical left, the socialists guaranteed.

With the troika of creditors in Lisbon, these days, 

for a mission of post-bail-out program monitoring, 

the budget outline for 2016 sent to Brussels, has received many other names. 

The Technical Unit of Budget Support (UTAO) 

said some measures actually "artificially improve the fiscal effort." 

At issue is the accounting of the "extraordinary measures" 

of reversals of some of the imposed austerity measures. 

This wrong way of accounting, according to UTAO, 

allows a reduction in the structural deficit - a decrease of 0.2% 

which is seen as insufficient by Brussels - 

and far from what which exists in reality, 

also according to UTAO, 

which is an increase in the structural deficit.

Between technical analysis, the budget plan was, of course, 

called "unwise" by Teodora Cardoso´s team 

in the Council of Public Finance (CFP). 

In an opinion draft, requested by António Costa, 

which was attached to the draft, 

the CFP economists questioned the macroeconomic assumptions 

on which the budget plan is based. 

And quite explicitly expressed the concern of a stimulus model 

to encourage public consumption by the socialists 

and included in the budget outline. 

An objection which, Teodora Cardoso had already manifested,

 in May last year, when she said 

"the domestic demand stimulus policies 

have shown its ineffectiveness in the past." 

Almost half a year later, after the general elections in October, 

the Governor of the Bank of Portugal, Carlos Costa, 

had warned in equal terms, that

 "all economic policy errors committed in the present, 

will be paid in two, three or five years´ time, 

but with much more pain. "

The "pain" is beginning to be noted in the financial markets, 

which are a forum which constantly attempts to guess 

the future trends in the economies, in corporate earnings 

and the risk of credit claims. 

Large and small investors, who with their purchases and sales, 

move the markets, are always paying close attention 

to hear the latests results of research 

of the so-called investment strategists, 

that is, analysts from banks and brokerages.

One of these strategists, of a major European investment bank, 

used a conference in Lisbon, as an excuse to try to understand, on the spot, 

"what all the fuss is about." 

And after the meetings that took place in the Portuguese capital, 

said he understood the origin of the "fuss" better, that is, 

the alarming reports that have been written about Portugal

 - the most striking of which was written by the economists 

of the giant Commerzbank, 

who called Portugal 

the "new (old) "problem child" of the euro zone."

"The closer I see what is going on, the more uncomfortable I feel,"  

the analyst, with  whom the Observer spoke in Lisbon, 

in the middle of last week, confessed. 

"To be  honest, I'm not convinced that all this will lead to that, 

one day, Portugal will restructure its debt and impose losses 

on the investors who lent money to the country. 

That is, in a perspective of buying Portuguese bonds 

and keep them until the end, I still feel reasonably safe. 

But much of the trading in the markets is made by investors on shorter terms

 - especially in the case of Portugal - 

and there is a high potential for great volatility in the near future ", 

says the expert, noting that this will make a new debt far

more expensive than the Portuguese Treasury will try to find

 in the international markets. 

As indeed, it is already happening, 

although the ECB, has once again indicated that it should strengthen 

the monetary stimulus in the euro area.

David Schnautz of the Commerzbank, 

pointed a finger, by saying: 

"the reversal of contracts and agreements 

made by the previous government 

and which this new socialist government are reversing and disregarding, 

ignoring the policies that were being followed 

and that was to the liking of international investors and rating agencies 

is causing alarm."

Bad timing can aggravate a "vicious circle" in the markets. 

Following the report published by Commerzbank economists, 

and to better understand the increased risks for Portugal, 

an expert on markets of the same bank, 

who followed Portugal closely from the City of London for several years: 

a German named David Schnautz, 

said that which concerns him most, when it comes to interest payments, 

can be summarized as follows: 

with China in a economic crisis and the US Federal Reserve Bank 

raising interest rates, Portugal chose a bad time, 

in the international markets, to cast doubt on the balance of public finances 

and structural reform of the portuguese economy,

 while announcing that will want to issue more debt than anticipated 

and that Portugal will slow down on the repayments to the IMF.

"The international markets are nervous. 

Investors are at the moment more aware of the risks than the opportunities, 

which creates a very unfavorable context for Portugal," says David Schnautz, 

research director for European interest rates at Commerzbank. 

Although it is believed that the ECB's purchase program will, in a way, 

"neutralize" the new debt amounts that the government wants to issue this year,"

Portugal has indicated to the the markets a considerable financing need

 - € 14 billion in gross terms, according to the IGCP. 

This is a key issue, because selling all this debt without the ECB to absorb it, 

indirectly, would be a very difficult task. 

"Very difficult because Portugal continues to have only one rating 

above the junk (rubbish) category, which is, basically, 

an indication of the agencies that it is a risky investment, 

only recommended to the more speculative 

and not the most conservative markets, 

such as pension funds and insurers. 

It will be impossible, says David Schnautz, 

until that last rating above junk category, 

awarded by the Canadian agency DBRS, falls

 - as the same rating agency threatened on Friday.

In a statement issued on Friday, by this rating agency, 

seems to indicate that DBRS,  looking at the budget outline, 

is getting worried. 

To DBRS, the envisaged fiscal adjustment is "modest" 

and the growth rate of 2.1% for 2016 is "optimistic." 

What makes the budget execution "ambitious". 

Most worrisome for the agency, and for investors in general, 

it is that there may be a more obvious conflict 

between Brussels and the Portuguese government.

There are still 3 months left to the date 

provided for the upgrade of the rating of Portugal by DBRS - April 29 - 

but the European rules, do not prevent any agency at any time, 

to change its ratings or at least the prospect of "stable to negative". 

If this happens, or better, if investors feel that it is imminent, 

"the debt securities of Portugal 

will be under strong selling pressure in the markets," David Schnautz fears. 

"If interest rates start to rise, 

in turn this will increase the pressure on the DBRS to cut the rating, 

which can trigger a vicious circle" in the Portuguese debt, 

as Commerzbank said two weeks ago, 

which will most probably culminate with a new rescue bailout 

to ensure that  the financing of the State 

and Portuguese banks does not stop.

Dire time ahead, indeed, 

while António Costa and his strange communist bed-fellows

are reverting, squandering millions by millions, 

creating thousnads of jobs for the boys, 

decreasing the 40-hour work week to a mere 35 hours, 

increasing the state servants salaries, 

cancelling previous contracts of privitization, 

and forging happily ahead, 

ignoring all the warning signals and alarm bells

ringing all over the world about Portugal 

falling into a deep, deep pit of misery. 

Just as long as the unelected António Costa and his government 

can keep the radicals happy, selling the country out 

to the marxist and the leninist trade unions,

is of NO CONCERN:

The tax-payers will foot the bill!!

Until WHEN WILL THE SILENCE OF THE PEOPLE CONTINUE??