Tuesday, 20 January 2015

China - I agree with Krugman

Paul Krugman says that China keeps him up at night, pointing a number of reasons for that:

1) The need to transition from an investment to a consumption economy, and how difficult that will be

2) A shrinking work force - to which I would add its low qualification

3) And poor quality of data

To these, though, I would add just 2 more:

4) Low return on investment in many of Chinese investments, that are poorly linked to an effective economy. Let's just think about the huge amounts that are being spent on real estate projects that are then left empty or on the incredible percentage (30%?) of wind power generators that are not connected to the electric grid.

5) The rigid and extremely uncertain ability of the current Governmental regime to actually manage the transition from a capital extensive economy to an intensive, imaginative one.

Yep. China also keeps me up at night.

Monday, 19 January 2015


A world in which a elite possesses more than 50% of the wealth and dictates norms and laws to 100% of it is a nightmare that we should all the be fighting hard. Even that elite should be massively worried about it - this situation is not sustainable and will lead to a social rupture, in which everyone will lose too much. The clock is ticking.

Sunday, 4 January 2015

3D printing & copyright

The predictions that 3D printing will disrupt the economy are not new. Typically, they focus on the shift of manufacture from lower production costs' countries to anyone who owns a 3D printer and knows how to operate it. Everybody could do their own objects, based on files it would upload to its 3D printer.

Now, this poses a different question - how was that file acquired. And it is here that the play will be over the next 2 years. The strength of copyright will play a key role in the 3D printing industry, as file ownership and availability to use will be central. If the industry can own files (and prevent their usage from anyone who didn't buy them), then a market will arise on objects blue-prints - and probably Apple, Google, Amazon and Alibaba, who operate major digital stores will dominate the industry especially after an initial period where hardware development will still be the focus. Now, if such a copyright strength is not enforced in the files themselves, the industry will be mainly a hardware oriented one.

This will have major implications and is not a straight forward play. Just think about points such as files' standards development (remember the VHS vs Beta fight?), hacking (just think about the European countries where political parties advocating the free usage of entertainment files, like movies and music, and their role on this ground) and personal creativity. This will be an incredibly interesting market to look at over the next 2 years. Stay tuned!

Monday, 3 November 2014

What should be scarying all of us

This article is an amazing summary highlighting 10 of the scariest things happening in the Global economy right now. It only forgets about one other, in my humble opinion - Global warming and what that will mean in terms of living conditions in many parts of the world (and the cost associated with it).

Having said this, please, read the article if you like good horror stories that should keep you awake at night.

Wednesday, 1 October 2014

To the attention of Portugal

This HBR article about Scotland  (and, by the way, England) just highlights the need for a small  country to clearly define its role in the global market as a key point for its success in a highly connected world - and why this can be a better strategy than most of the bigger countries are doing.

Sunday, 28 September 2014

Competition is the lifeblood of an economy

I like this article. Not only because it very clearly intersects macro and micro economy (and we all know how so many economists tend to consider themselves in only one field, forgetting how both of them are actually key for most of the analysis), but because it underlines the importance of competition for the development of a western economy. The under note is really simple - if an economy over invests in non-transactionable goods, it is doomed. It is the stimulus of competition on transactionable goods that ensures the progress and productivity that stimulate sustainable growth. Period.

Wednesday, 14 August 2013

This is a good figure but don't take it too positively

A 1.1% growth of GDP in Q2 vs Q1 of 2013 is a good result for the Portuguese economy and one that should fill our hearts with hope (literally). But we should not take this as a sign that everything is well:

1) GDP evolution is accurately measured only when comparing vs previous year. That means we should be comparing Q2 2013 vs Q2 2012. That is so as each Q has its own dynamics - the best example is Q3, that is impacted by summertime seasonality, which makes "product"go up (people consume more). When we look at Q2 2013 vs Q2 2012, we still got a -2% GDP evolution. And that is not positive.

2) Many of the structural reforms that Portugal needs are still to be done. Which means this positive figure is only capturing the impact of some of the measures already taken (namely in terms of... lower Labor costs, aka, lower salaries) and context (and Germany and France, two of our biggest markets, have just announced higher GDPs than expected). To make growth sustainable we need to do what I have been saying in the past 3 years (at least) - growth strategy, reduced Government weight, leaner judicial system, higher productivity.

So, lets take this figure as a recharge to our hearts, minds and hopes. And lets make sure that we do what is needed to achieve sustainable growth, and (through private investment) reduce the pornographic unemployment levels that Portugal still has.