Italy's decision to boost their payment terms to improve cash-flow in the economy is a good step - a very good one. Many people claim Southern European economies need subsidies and stimulus packages, but a first step should actually be to clean debts that are paid 1 year later than agreed. The only problem - it deepens the Government's cash flow crisis...
Sunday, 7 April 2013
Saturday, 6 April 2013
I always said the way was to cut headcount
Portugal's Constitutional Court (that acts like a Supreme Court, ensuring Constitution is respected in all legal decisions in the country and legislative documents) has been clear - cutting public administration wages is not the way. Something that I fully agree, as it is a downgrading of capabilities at State level - it is not motivating, it just pushes out of the door the best talent there is in the State bureaucracy,... For me, the solution has always been to implement a meritocracy system in public administration (including performance evaluation, of course) and ensure that the worst performing talent is cut. I believe that a significant part of the solution of the solution for the budgetary crisis in Portugal is public spending cut through simplification (and thus headcount, as I am saying here) and tax softening, to ensure economic growth.
Tuesday, 2 April 2013
70% of Portuguese electric power was generated by renewable sources
And that's good news - especially for a country that has a serious issue on its foreign oil dependence. For me, renewable sources are a key strategic bet. I have previously criticized the ones who decided not to pursue it as vigorously as before - and I hold my ground. I only think the below article misses the link to foreign accounts impact.
Monday, 25 March 2013
Politicians don't understand economics
Let's be clear about it - most politicians don't understand economics. Which is a huge conundrum for me, given the fact so much of their job is actually related to it.
Some politicians might know a bit about governamental budgeting (not sovereign accounting, ok?), but they can't actually understand how an economy works at micro-economic level. When we start discussing about economic decision making at individual level, their insights are (at best) clogged or (more usually) simple guesses. You can clearly see it in the European Union initial proposal to bailout Cyprus banks (which, to "give a lesson" to a 0.2% eurozone economy, the EU decided to actually risk faith on its entire bank system), on the lack of proposals to propel the european economy back to growth and cut on spending (instead, european politicians prefer to raise taxes...) and the demagogy of not applying keynes theories to the fullest, on reducing public investment in times of growth to prevent market bubbles. But especially we can see it by their lack of focus on individual agents competitiveness, on the fact they don't really understand the value of innovation and differentiation to an economy, what is value accretion, the potential of higher education (maybe because a relative number of them has never really got one - but bought it).
When monetary policy became (almost) irrelevant, portuguese politicians (as an example), never understood that productivity should actually be the focus point of their economic speeches. But besides some hollow statements, this was never seen.
The european mess we are all going through arises mainly from the fact most politicians are mainly focused on tactical vote-gaining tactics or simple treaty negotiations - supported by an electoral bases that doesn't understand the growth of D&E countries actually hindered europe's competitiveness, pressing for productivity, innovation and differentiation.
To get out of the crisis, europe needs inspiring politicians, that understand the value of solidarity and growth, that can look at economic tissues and how to reinforce their competitiveness (or let them die and be replaced by others), that nurture micro-economics strategy - politicians like barack obama. If not, europe is on a crash course to become utterly irrelevant - and a lot poorer!
- Posted using BlogPress from my iPhone
Sunday, 24 March 2013
I agree and disagree
I agree with Selassie when he says that Portugal needs to implement the adjustment program. But I can't accept that he doesn't mention that the prime mistake of this program is its deployment, focusing more on taxes than on Public Spending cuts (hence the way it is overburdening the economy). And I disagree on one key point - we need to start investing for growth in our key economic clusters.
Like all macro-economists, Selassie forgets about the micro world - which is actually the key to get over this crisis.
Wednesday, 20 March 2013
Politicians still answer to the courts
So that is one of the dimensions where the fight against corruption and a perverted political system needs to be fought. By civic movements that actually sue politicians and the State. That has worked once and more in the US where it is a deeply rooted practice - just think about Chicago, where concerned citizens were able to save the downtown lake front by suing the city... twice!
But in the US, courts are actually more powerful than in Europe - democracy is actually stronger there. There is a tradition of Power of Law and Constitution Power that is at the root of the State - and where Congressional, Presidencial and Judicial powers are clearly split. I am not that sure if that is the case in Portugal...
But just the fact that we one candidate is being blocked is an initial good sign. Let's see, though, how this actually unfolds in the mess of appeals that politicians have put into Law in Portugal...
P.S- I have nothing against Fernando Seara (I don't have a bad opinion of him). But the Law should be interpreted in a specific way, and not twisted to serve momentarily political needs.
I listen to this gentleman
This is one of the few Portuguese politicians that I listen to all the time. Because of his balance, of his tranquil courage, of the political and social vision that he is able to interlink with economics. It is a (rare) pleasure to listen to him.
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