Going Underground in Hard Times

[As countries across the world sink deeper into capitalist crisis, and relief, though promised, only leads to more “austerity” measures–cuts in basic services, growing unemployment, higher taxes–growing numbers have moved to the “informal”, “underground”, “grey market” economy, outside of official and governmental review, regulation, and control.  In many countries this amounts to one-third to one-half of the economy.  This article about the underground economy in Portugal traces such growth in response to official crisis and bankruptcy. — Frontlines ed.]

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By Mario Queiroz

LISBON, Jan 28, 2012 (IPS) – The underground economy in Portugal is booming thanks to the steep increases in taxation and prices demanded by a “troika” of international creditors to address the country’s economic crisis.

In May 2011, the International Monetary Fund (IMF), the European Union (EU) and the European Central Bank (ECB) loaned Portugal the equivalent of 103 billion dollars as a financial rescue package.

In return, the troika imposed draconian conditions on middle- and lower-income sectors of the population, and headed by the IMF took on a supervisory role over this southern European country’s economy.

Sheer survival instinct among those most affected by the austerity measures is driving them further into the parallel economy, which according to recent official figures amounted to 24.8 percent of GDP in 2010.

And it is continuing to grow, owing to the severe economic crisis from which there seems to be no way out, a study from the Faculty of Economics of the University of Porto concludes. Continue reading