When I hear people talking about growth in Portugal...

... I realise how deeply rooted is one of the biggest paradigms of the Portuguese economy - that growth is only possible through public investment. This is a deep lie - and a dangerous one. Due to lack of adequate internal and external pressure, usually, the State is actually incredibly inefficient in its investment - and Portugal is actually a ver good example of it.

The main role of the State in an economy should be to provide the adequate framework in terms of laws that allow for a sustainable development of a country's economy, while protecting the best interests of its people. It should additionally incentivise and protect foreign trade, invest in major infra-structures that provide additional necessary support (and here, I include schools, public hospitals, public health insurances, highways and airports with the support of the private sector,...) and should define and implement (through taxes and limited subsidies) an economic and welfare strategy (I am only refering to the economic role of state, let's not include here Justice, Health, Education, Security and Safety, Culture,...). Additional investments are proven to be inefficiently sustained by an excess of taxes.

As so, it is absolutely crutial to actually break the excessive role of the State in the Portuguese economy (where it is actually taking up private space and eating an unproportional amount of resources) and let the private sector generate more efficient growth to its share and stakeholders. And yes, I am a proud liberal - and a very concerned citizen.

Labour cost per hour is half of the Eurozone

Yes, this is true. But, the fact is that this is a wrong measure. The relevant statistic is not this one, but the one where the labour cost is compared per unit of output - a good indicator of productivity. And there, believe me, the picture is pretty grim to Portugal and is part of the structural problems of the Portuguese economy.

http://expresso.sapo.pt/trabalho-custo-por-hora-de-trabalho-em-portugal-e-menos-de-metade-da-media-da-zona-euro=f721263 


http://economia.publico.pt/Noticia/custos-do-trabalho-em-portugal-abaixo-de-metade-da-media-da-zona-euro-no-ano-passado-1543376

That's what we are talking when we say...

... that Portugal needs to cut down on public spending - a massive cut on overheads. The measures that are on the table on what concerns public human resources aim at:

- close the gap vs human resources at private companies;

- increase efficiency and productivity of current talent;

- decrease the costs of firing on the public sector.

Some calculations point out that Portugal needs a public overhead reduction between 30.000 and 50.000 persons, to balance productivity, cost efficiency and help on deficit mitigation. Still, I think a key point is missing - the need to have a clear set program for talent evaluation, based on performance and behaviours. Contrary to many, I believe the vast majority of public sector is productive (or potentially productive in some cases), but a clear evaluation process is needed to ensure less productive talent is spotted and worked on (either by enhancing its productivity or by firing it) and ensure competitiveness and results from everyone.

But those measures are all needed. There are many unproductive spends in the Portuguese Government budget - and this is one of them. We need to have them all addressed, as Portugal can't afford to carry these extra-loads any more, with the consequences it has on lack of service, public spending and tax overloading.


http://economia.publico.pt/Noticia/propostas-do-governo-poem-em-causa-liberdade-no-local-de-trabalho-alerta-fesap-1543349

Not entering the euro...

... would never be a solution. The real cause for the crisis (the lack of competitiveness of the economy) would still be there, but would be hidden behind currency devaluations. I really don't agree with Cadilhe on this dimension. The euro was (and is) a major opportunity for Portugal, but we need to address the lack of productivity and strategy of our economy - then, we dream of growth.

http://economia.publico.pt/Noticia/miguel-cadilhe-nao-deveriamos-ter-entrado-para-o-euro-1543185

Just don't increase taxes any further...

... to face the decrease in tax revenue. The multiplier is simply not holding up to expectations...


http://economia.publico.pt/Noticia/receitas-fiscais-caem-mais-do-que-o-previsto-e-agravam-contas-publicas-1542924

Terminating contracts?

Should European Banks and investors terminate contracts with major US rating agencies, like Denmark is doing? Would that have a positive or a negative impact in the European sovereign debt situation?

http://economia.publico.pt/Noticia/banca-da-dinamarca-rasga-contratos-com-a-agencia-moodys-1542866

Austerity and strategy

Let's be very clear. Economically, Portugal needs two things:

- austerity, to stop public and private debt progression, especially on unproductive spending;

- a clear micro-economic strategy, that identifies and highlights the areas of growth and thus the key areas of investment.

This is key! We need to stop investing in the low or no return investments, and have a sustainable growth agenda, exploring our stronger key competitive advantages. We need to do this at the same time - that is the secret to move out of our current situation! We can't only do half of it...

http://economia.publico.pt/noticia/fmi-avisa-demasiada-austeridade-pode-ameacar-a-retoma-1542454

I keep saying there is a bubble in the tech market

Apple losing 9% of its market value overnight should not come as a surprise. The fact is that so many companies (like Apple and Facebook) are valued primarily on estimated future earnings heavily based on assumptions, that their stocks are proner to especulation. This is nowadays a major threat as, for many of those companies (not Apple, nor Google), there monetization models and profitability are still unclear - will they really make as much money as anticipated? In the words of Warren Buffet, you shouldn't make an investment if you don't understand how the company will money and thus how you will make money with it...

http://money.cnn.com//2012/04/17/markets/apple-stock/index.htm?section=money_markets&utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+rss%2Fmoney_markets+%28Markets%29

Competition is always good

That is my first comment when I see that Europe wants to set up a new ratings agency. And my second one is that has become crucial - to establish a new, European rating agency. That is credible and can actually break the almost monopoly of the big 3 American ones. Now, a few additional thoughts:

- Europe needs this agency to allow for a voice in the ratings world. But the agency needs to be credible. If Greece or Spain debt is actually not trustworthy, the European agency needs to be frontal and direct on that;

- This means that the capital structure of such a company needs to be closely evaluated. Now, I don't think that by taking in soverein capital this is more threatned than by having big banks one - as it happens with the big 3 American rating agencies;

- Last point - the 3 American agencies act like a block, because of close capital ties between their investors. Shouldn't this be looked in from a Competition Law and Equity markets stand point?

http://economia.publico.pt/Noticia/fundacao-bertelsmann-apresenta-projecto-para-agencia-de-rating-europeia-1542395

A good sign

Today, Portugal issued 18 months Sovereign debt - the first time it did so since the start of 2011. It seems it was a very successful placement with interests decreasing 166bps vs beginning of 2011. Yes, the interests are still high for a 18m maturity (4.332%), but we must be happy for this - we were able to sell debt at a lower interest. It means investors are starting to trust Portugal's ability to pay its debts. And that is extremely positive.

http://economia.publico.pt/Noticia/portugal-testou-mercado-de-divida-a-ano-e-meio-com-procura-forte-1540747

To the attention of European leaders

A 10.8% unemployment rate across Europe (with Spain soaring to 23.6%) is unacceptable. A high under-25 unemployment rate (again, Spain an example, with an incredible 50.5%) is unacceptable. High unemployment rates lead to recessions, revolutions and wars. Austerity without a growth plan associated just fuels it. European leaders, it is time to show real leadership, to clearly define where and how to invest, to generate high and positive Return On Investments and employment. Guys... honestly, I don't believe we have much time - we need to start doing this now.

http://business.time.com/2012/04/02/europe-unemployment-hits-record-10-8/