Is Portugal Worth Taking A Look?

Mar. 14, 2012 7:43 AM ET
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Long Only, Value, Special Situations, Medium-Term Horizon

Contributor Since 2012

I enjoy doing research and analyzing companies, hoping to find good investment opportunities. I'm Portuguese, a big fan of Warren Buffet and looking to share and discuss my ideas with other investors.

Because I´m Portuguese, I decided to write a little bit about my country and what is going on around here.

Well, of course we are under surveillance (let's be honest, it's not surveillance... Our European partners and the IMF are in charge) so the general view outside Portugal is that we are a bunch of bad guys who lived above our means and now must pay the price for spending money that we didn't have, on things we could not afford.
While I don't´t necessarily agree I must accept that this is the case and until that view changes, the country is going nowhere.
The public spending in the last few years was really bad. I can give you two examples (to be short): they made roads parallel to each other and in some, there is no traffic. Also, public companies were managed as an arm of the government, with no financial and economic discipline.
I'm telling you this so that you don't think that I'm defending the mistakes that were made.
But maybe there are some things worth thinking about.
The private sector also got too much debt. Money was cheap and, like everywhere in the world, there was a lot of credit offered. You woke up and you could see daily on TV, magazines, billboards,..., a lot of advertising for an easy credit for a new car, computer, appliances...
Sure, everybody is responsible for their own decisions but I would like to ask who benefit from this?
I have to take notice that, for example, in the auto industry, there is no Portuguese automaker and the majority of cars sold here are either German or French. I also have to take notice that without the credit that was made so easily available, most people could never afford one of those cars.
So, is this question fair: "Were they lending us money so that we could buy goods from them?"
Or this one: "The debt of the undisciplined countries is responsible for how many jobs created in Germany (for example) and for what part of their GDP?"

But let's move on to what happened more recently.
It's difficult to trust somebody who, more or less two years ago, told the world that there was no debt crisis in Europe, just a small problem in Greece. I remember Europe telling that they would help Greece and that in 2012 everything would be fine.
What happened after I think is worse than arriving home early and catching your other half cheating on you... How can you trust them again?
And what about the lack of understanding that without growth the indebted countries will go nowhere?
If I have too much debt, how can I pay it back by getting poorer? And more, how does the creditor feels better about what I owe when I'm getting poorer?

I don't really now what is going to happen in Portugal. I hope and feel that because we are delivering what was asked by the IMF and Europe, we may start to focus less on austerity and more on how to make the economy grow. But I don't really trust those guys... Almost everything they said that would happen didn't happen.

But that could be a good thing for Portugal. If Portugal fails, the whole world will tell them how they were really bad in managing the crisis, how they should have listen to Krugman, how this excess austerity killed the patient,..., and in the end they also would have failed.
And because there are elections coming in France and Germany, let's hope they're thinking about using the successful story of Portugal to show their electors how they resolved the European debt crisis.

If you believe so, it might be worth taking a look at Portuguese Government Bonds and companies.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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