In the end we arrive to the same conclusion, EU/IMF/whatever trust Portugal enough to bail us out again.
But I understand where you want to get: "we are behaving like good boys" and making everything that "Germany" says. Would you prefer an atitude like the Greek one, "acting like a spoiled kid"? As Greece, we are a small and periferical country without any power to negotiate by ourselves - we need to associate with others - and sincerely I prefer Portugal to associate with Germany than Greece. Our best way to get through this is by being "the good boys" and man up.
I'm simply skeptical that any of those parties (private lenders or EC/IMF/ECB) lend us money because they trust us to pay it back, and so I have to wonder why else would they lend us money.
Regarding 'trust' in Portugal: Draghi's 'whatever it takes' statement and actions are mainly what fixed this.
You need to be careful about definitively attributing an outcome to a particular action - hey, maybe you fixed borrowing costs by eating weetabix for breakfast one day in 2010, and now Portugal has low borrowing rates.
We are also of course only considering one very limited measure of 'success' - you did not mention unemployment or GDP, for some reason ...
> maybe you fixed borrowing costs by eating weetabix for breakfast one day in 2010, and now Portugal has low borrowing rates.
Portugal has low borrowing rates because it didn't break promises and contracts. This allowed Portugal to be trusted again, not Draghi's statements. If so they would have worked with Greece also..
'Trust, not money, is the currency of business and life.' - David Horsager
Global interest rates being historically low isn't a cause now?
No, you say, it is because of something that was the same before, during, and after the main crisis point - that promises and contracts were not broken. (Not that promises or contracts need necessarily have been broken had other courses of action been taken).
Meanwhile e.g. Germany, who broke the rules on borrowing early in the life of the Euro, has of course suffered economic collapse, and cannot borrow money at any interest rate. And Iceland, they are back in the stone age now.
If Portugal behaved like Greece, it couldn't borrow at those rates from the market. Greece can't, without others underwriting the debts.
Compare Greece: http://www.tradingeconomics.com/greece/government-bond-yield
to Portugal:http://www.tradingeconomics.com/portugal/government-bond-yie...
Notice how the figures have same form, but quite different scales.
The best comparison would be to Portugal had it and the EU/ECB adopted different policies. Admittedly this is hard since we do not see that.
You are choosing to compare Portugal to Greece. Greece alas is a complete basket-case. Starting in a much better situation than Greece, and claiming success for policies that leave you less worse off than Greece, is a very low bar.
At the same time, you argue that we can never compare Portugal to Iceland - not even as a counterexample to 'a country must not break promises or contracts, otherwise the economy goes down the drain'.
Why the Iceland case is different - and Iceland has not lost serious trust in eyes of lenders - is that Iceland did not run a serious public deficit and it did not fill such a deficit by borrowing.
Still, the economic crisis brought a shock to Icelandic economy in form of huge devaluation. If Portugal would have gone from EUR to its own currency, how much would it have devalued?
ISK halved its value practically overnight: http://www.tradingeconomics.com/embed/?s=usdisk&d1=20050101&...
Portugal needs energy from the exterior to survive. Would anybody trust us enough to sell energy (at a reasonable price), not knowing if we would pay it [1]? By the other hand, Iceland doesnt't need the exterior as much as we, they can afford to not be trusted [2].
[1] Or we could associate to Russia, like Syriza tried..
[2] 'By harnessing the abundant hydroelectric and geothermal power sources, Iceland's renewable energy industry provides close to 85% of all the nation's primary energy - proportionally more than any other country - with 99.9% of Iceland's electricity being generated from renewables.'
Iceland never had much deficit. It has a healthy public economy. Iceland had a boom of financial industry which then went bust, but it wasn't a significant part of the country's real economy.
When the banks went bust, foreign customers who lost money in the crash insisted that Iceland, the country, should compensate. The government felt they didn't, because it was not the Icelandic government that was in bankruptcy. And that was fine.
The public deficit in Greece (and, to lesser extent, Portugal, Ireland, France, Italy and now Finland) is a very different problem.
What you speak about is a completely different thing, Portugal has very old and deep structural problems but they were not caused by this particular crisis, they just got more exposed. Solving them is another story, I don't even think that our democracy (as we know it) is able to do it.