[bainsfather]

In this sub-thread, we were debating whether austerity in Portugal was a success.

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'.

[ptaipale]

Iceland is not a very useful counterexample for "a country must not break promises" - or more precisely, "is it not wise for a country to break trust in its policies" - because I can't see what promises Iceland would have broken.

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&...