... to a country GDP. That means that, if you strongly cut Spending and raise Taxes too much, the Income contraction might actually put in a worst situation than before. That just another good reason for the need to cut inefficient Spending, but have strong and clear strategic bets to invest and fuel growth.
Monday 27 February 2012
Tuesday 21 February 2012
That is why we need to improve our productivity
Spanish Central Bank Governor has said today that adjusting prices and wages to reflect productivity is the only way to recover competitiveness. He is right, and he is thinking about salary cuts, for those who didn't understand. In Portugal, and from what we have seen prior to 2011, that cut would probably need to be between 20 and 25% (or even 30%, gulp...). Without that, our economy will face real issues in going back to growth, adjusting in things like unemployment...
Now, I don't like salary cuts - I also depend on one, and I think there are millions of workers in Portugal that earn a lot less than I do, many of them going through very hard times. But I think it is important to look again at this problem - we need productivity to be competitive and get back to growth. We need to increase our productivity so that our competitiveness isn't coming from salary cuts. And we need to go after that productivity in any imaginable way. So, please, let's all start talking on how to kick-start it!
Thursday 16 February 2012
The US new upper class risk
In this post, I am refering to Charles Murray article on Times, that you can (and I advise you to) read in http://ideas.time.com/2012/02/07/the-new-upper-class-and-the-real-reason-we-dislike-them/ .
I have always looked in amazement to the US incredible capacity for social movement. It really is a fabulous asset for a society to be able to so effectively link success to merit. But, from what I understand from Charles' document, an enclosed elite is forming and it can jeopardize ability. It would be a shame and a direct threat to the US way of living if it starts being run by a group of people with limited feel and grip on its population, that can' really understand their needs and dreams and can't hear their voice in the heart.
Wednesday 15 February 2012
Savings reduction = bad news
The news that the Portuguese families are saving less due to the austerity measures that have been taken is bad news. This probably signals that, as Soros and Stiglitz are saying, the austerity measures have gone too far... The austerity measures should be aimed at reducing excessive spending and unproductive investment, but shouldn't impact savings - that are an important part of bank financing and thus of privat investment. A reduction of savings means a reduction of investment, growth and even public refinancing inside country boundaries. As so, this is actually very bad for the Portuguese economy - probably worst than any demonstration could sign.
Monday 13 February 2012
Ortography
I must say I am very sad with all the doubts that suddenly sprinkled around the latest Portuguese Ortographic Agreement (AOP). This agreement was designed to keep Portuguese as one language, widely spoken throughout the world, for the next 2 centuries. It was designed to strengthen cultural and economical ties between Portugal, Brazil, Angola, Mozambique, East-Timor, Cape Verde, São Tomé and Principe,... If we don't do nothing about it, it is known that languages will slip to differentiation, according to the place where they are spoken. If we want Portuguese to still be one language, that our grand-children can be understood after flying half a world away, we need to act - and that was the objective of AOP.
But then, there is also the economical link. Portuguese is nowadays one of the world's most important languages - mainly thanks to Brazil (the world's 8th economy) strength. The fact that we speak one common language, enables economical, business and personal mobility ties, making the Portuguese countries community stronger globally. AOP stands for that. And, always travelling around the world, and understanding the benefits of one Portuguese language, I stand for AOP as well.
Saturday 11 February 2012
Portuguese scientific articles
This is a very good sign. The number of Portuguese scientific articles being published has tripled in only a decade. In an increasingly competitive economy, where innovation, differentiation and flexibility are key (especially for a small country), this is an incredible of sign of economical potential. And when we look at the rising number of start-ups coming out of college in Portugal, I would say that the potential is quickly being transformed in something more real and tangible. Let's not choke this potential with a complex, burocrat and tax-overburding State.
Monday 6 February 2012
I have been saying this...
I hate to put it so bluntly - but I told so! Europe needs to grow! We need to stabilize our spending, but we also need to grow - and right now!
Friday 3 February 2012
Bharara
The news that Ney York prosecutors have been moving on inside trading is very good news. It is a strong step towards leaner, clearer, more agile and more competitive markets. And, in the end, it is good news to consumer. We should all support it and follow its example.
Thursday 2 February 2012
This time, I agree with Riley
I think there has been a tentative to blow the Portuguese situation out of its context in the last few days. Being in the UK this week, I could see the comments from some press and media, trying to find similarities between Portugal and Greece's situation - and implying that Portugal is on the verge of bankruptcy. That is simply not true.
Portugal is not in a good shape, but has been setting a number of strong and hard reforms, aimed at bringing competitiveness back to the economy. A few of them are changes in the labor market, judicial reforms that are starting, reduction on the drag of a high and uneffective public sector (like transportation,...) and reducing State participation in companies outside of its purpose. Of course, we (including myself) would always like to happen faster - but, for others, the ones who are most affected, it is too quick. We have to find a balance there, but, we are doing and implementing them in a 2 to 3 years period. Those changes will effectively change the Portuguese economy, towards a more agile, modern and entrepreneurial one.
The Portuguese banking system is under control. Of course it is still far from being perfect and we still might have a few issues - namely on BCP. But we shouldn't expect any major disaster coming from that area, one that goes beyond the level of help that is already in place for all european banks - actually, when we look at stress tests results, most Portuguese banks are in a better shape than Italians and French ones.
Despite the huge number of reforms and changes, the Portuguese people understands we need them. And, though it doesn't like the impact of those changes, it accepts them, as it knows it will pay in the near future. Portuguese are especially... resilient and tough, and are ready to pass tough times but still make it through. You can see that even in terms of political alignment, as the main parties, share common trends on the current situation (with, naturally, some discussion and different opinions on specific subjects). This is a huge difference vs Greece or even Italy's.
It is true that Portugal might need to request help in 2013 - and I think we shouldn't try to hide it. But, the fact, is the situation will be under control. Meaning we might need it to make sure we are able to pay our debts, but the economy will be in a better shape and, hopefully, starting to recover, the huge unbalanced situation we have in the public sector and in some towns will be addressed - we will be in good shape to controlling the deficit and to start making the economy grow again. I agree with Riley - even if Portugal might need further help from EU and FMI, default is not a likely situation. And you can quote me on that!
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