Who is going to pay the interest?

Everyone seems happy with the Stability and Growth Pact (SGP) agreed by the Finance Ministers of the European Union (EU). It is, in fact, a reason to smile. It is as if, at the end of the year, we would put together in an Assembly all the people who were fined this year and had as the only point in the agenda: “to forgive or not to forgive the traffic fines”. It is not difficult to guess the decision… “It would be handy” for almost every Government to change the SGP. And so it was changed. And everybody was a happy chap. Everybody? No, some irresolute and strange economists still say that the stability of European public finances is not only a question that is very sensitive to political interests (not all of them are so “noble” as our technologic shock; believe it or not, there are those who expect to win elections more easily with this renewed ability to easily spend/invest…) but also, above all, it is a fundamental basis for economic growth. The message that came across about the SGP (“we created it but, after all, it is too rigid for the expenses/investments we want/have the need to do, so we have to make it more flexible”) increases the pressure on the interest rates in the euro zone (towards its increase, of course), making the commitment of sanitizing the public accounts of the Member-States less incisive and giving a bigger room for the public induction of the rise in prices. This inflationist pressure will be fought by the European Central Bank (ECB) with the rise of the interest rates. And when, in one of the next meetings, the ECB raises reference interests rates, the many Portuguese who bought, with great effort, their own houses, has to send the “bill” to the men and ladies of the Left Block and the Communist Party (for example) that so much attacked the ignoble monster called SGP. Fact remains that the fashion was, almost from the start, to attack the SGP, to blame it for the weak economic performance and the increase in unemployment, among other bad things. No one (or very few) said what it was actually for. Now, unfortunately, it is going to be understood. And the Portuguese with house loans will be some of the first.