Suffering from persistently weak economies, governments and central banks are experimenting with ever more aggressive – some say dangerous – monetary treatments. Countries are being enrolled, like it or not, in the economic equivalent of clinical trials.
Before embarking on a new course of treatment, the doctors ought to inspect the patients in the wards next door. I found myself last month visiting two countries following diametrically opposite courses of treatment: Portugal, perhaps the least demonstrative sufferer on the eurozone periphery; and Argentina, which has long injected economic drugs not registered elsewhere. Both are instructive – and discouraging.
Portugal belongs to a strong currency bloc – its money functions as a real store of value, and convertibility is not in question. But the place is stony broke, and these advantages, so dear in the abstract to business people, have little appeal to residents with no money at all. The new roads built with EU funds are deserted, since they carry a toll; traffic has been displaced on to the roads they were designed to relieve. People prefer double-parking their ageing cars in the narrow streets to paying a euro or two at the shiny new car park. The receptionist in the empty hotel arrives, after a long wait, to serve you a drink in the bar; he later turns up as a waiter in the restaurant. Though they have the gentlest manners in Europe, the Portuguese have begun to express their frustration in a frank and vivid style of graffiti. Everything is on sale and no one is buying.