Monday, October 31, 2011

Brain drain

I have lost my ability for speech, I am flabbergasted, I am so astounded that I have somebody else write this.  Dictation is by tears.

The government has made an announcement.  It comes from the "Secretário de Estado da Juventude e do Desporto", Alexandre Miguel Mestre. "A secretariado de estado" is one of many subministers (trick to have governments seem smaller than they are as the number of überministers can be small).  "Juventude and Desporto" is youth and sport.  Mr. Mestre belongs to the Deputy and Parliamentary Affairs Minister, Mr. Miguel Relvas.

What a Deputy and Parliamentary Affairs Minister does, nobody knew.  Now we know he is the boss of Mr. Mestre.

Mr. Mestre has announced that young people should leave their comfort zone to find a job.  I entirely agree, until Mr. Mestre then declares all of Portugal the comfort zone of youths.  Yes, you already got the geist of his communiqúe.

Mr. Mestre is asking young people to emigrate to find a job.  Pack the luggage. Leave the country. Get lost.  There is no future here.  Our investment in you is a write off.

He then continues "the country can not look at emigration only with negativistic (politician speak for pessimisteyes  concerning brain drain"

Mr. Mestre - you should have told East Germany so many years ago...   In spite of them making the DDR a prison to try stop people running away, to this day the brain drain is still felt in the eastern part of Germany.

However, I can see your point and the advantages.   It will permit lower expenses, lower the number of infants, improve the unemployment statistics, decrease the amount and violence of demonstrations and it will permit people like you to stay in power.

When every person in Portugal with any initiative or IQ has left, then the rest can leave - as there is no reason to remain and the country will have no future.

The last one leaving can turn off the lights.

PS.  The subministry seems to be closed already.  The rats are smart and are always the first to leave the sinking ship.   When you try to access the website - it says:

maintenance - we will try to be brief

Sunday, October 30, 2011

Spend, spend, spend

Just like Portugal, the economy of the United Kingdom has nearly been smashed by out of control politicians;

Worth while watching!  The second part is here (5 parts all in all)

Hat tip: O Insurgente, Britains trillion pound horror story

Public Servant

Hat tip and credit: Schamblers

In Portugal we call a public servant, an employee of the public service, "funcionário público":  public employee.

They used to be known as public servants, servidores públicos.  In 1935 there were 25000, in 1969 there were 165000 and today we have around 730000 (or less than 600000 depending on how you count - probably nobody knows the real number if you add consultants, members of "PPP"s, employees in public companies etc.).

This number is actually not large compared to countries in Northern Europe.  Less than 15% of the working population.  However the sector is inefficient and expensive and must be reduced.

I would like them to be called public servants in Portugal again.  "Servidores Públicos" or even "Serventes Públicos".  I think the name and attitude matters.

A public servant should be a person of high integrity that has sworn to uphold the republic and the constitution.  More often than not a public servant will have access to confidential information and have large powers over other citizens.  A public servant must be held to higher moral standards than other citizens.  Corruption is much more serious than stealing from say a bank.  On the other hand, public servants must be given special powers and protections to fulfill their functions.

A public servant should always treat a citizen with the out most respect and helpfulness while fulfilling his requirements.

I believe it would be to the advantage of all citizens and the country alike, that public servants no longer paid income tax.  First of all it makes no sense the state puts money in one pocket just to remove it from the other.  Secondly, it would enhance and demonstrate the statute of public servant.  Finally, it would also demonstrate the difference between taxpayers (*) paying for the public service and people working for the public service.

I suggest a revision of the statutes of a public servant in Portugal.   Here is rather nice one from Lebanon of all places to use for inspiration.

A couple of incidents from real life in Portugal:
Once at the ATM in the local shopping center the line was very long indeed.  With patience, everybody awaiting their turn - demonstrating the impeccable Portuguese politeness when in a line - people were surprised to see a male individual (not a gentleman for sure) enter the front of the line and start using the ATM.  The people in the line were aghast.  One gentleman complained in particular.  The cheating individual turned around, claimed he was a judge and informed he as a judge was not supposed to wait in lines.  Any more trouble and he would call the police and have people arrested for interfering with a judge.

Ministers in Portugal always travel with police protection, limousine in the middle and police front and back. The police will hold all other traffic back, so the minister can pass.  It is quite a nuisance in heavy traffic and the noise of the police sirens is astounding.

The public servant, both the minister and the judge, should have no privileges beyond insuring their safety.  If anything they should be the ones to hold back for the taxpayers while the taxpayer earns money to pay their salaries.   No wonder Portuguese ministers speak so favorably of public transports and the quality of the road network.  They are never stuck in traffic.  Maybe a little taste of the real world would give them some understanding?

(*) Even when not paying income tax, public servants would still pay a number of taxes. It is simply and unfortunately much too complicated to avoid that, due to very large number of additional taxes in existence.

It has gotten to the point where taxpayers are unable to calculate how much they actually pay in tax.
Don't believe me? Take a taxi ride. Then let me know how much of the fare was tax... You should of course include part of the taxi drivers income tax (we presume he owns the taxi), vehicle tax, vehicle inspection fee, the VAT, the taxi license, the tax on the insurance, the road tax, the toll tax, the tax on fuel and ad nauseum. Because if it were not for all these taxes and fees - your fare would in all probability be that much lower.

Saturday, October 29, 2011

I beg you

Shooting yourself in the foot may be deadly.  Don't do it.
PM Passos Coelho, Hat Tip (Fernando Campos)

A priori this government sounds like it want to make the necessary changes.  In Brazil the PM yesterday stated:

"Our path we have to follow is a path of economic change, we must bet more on the companies, more on the opening on the economy to the exterior, more on entrepreneurship and the creativity of the Portuguese, free us from the weight of this debt - it will take time, but has to be done, to reduce the spending of the state and the public expenses"


We need to solve the structural problems.  Indeed!   But when you look at what the government is doing it is astoundingly limited.  Let us study what is being done for the companies.  Here are the plans:

  1. Workers in the private sector will work 2.5 hours more per week with no compensation
  2. 4-5 yearly holidays will be abolished, and bridges will be eliminated.
Is that it?  No lower costs? No incentives?  No smaller public sector?  No lower labor costs?  No more efficiency?  No less bureaucracy?  No better education?  No better health? No lower social costs?  No economic help?  No way to get loans/finance?  No more liberal labour laws?  No more work force mobility?  

I could be generous and list a few initiatives that may be the beginning of structural change and perhaps a lower level of expenditure for the public sector:
  1. Less PPPs, public private entity co-operations
  2. Privatization of large public companies
  3. Abolishing a large number of public entities
    But which, and is abolishment just joining them together into larger fewer ones?
    There are no plans to fire any public employees (as the immediate cost would be larger than the savings)
  4. Cutting health costs
  5. Cutting education costs
  6. Making former free highways not so
No, the government has instead insisted on creating income on the short term to live up to the public sector maximum deficit as defined by the Troika.   Because the alternative is bankruptcy as Portugal would default.  But would this really be so bad?  Greece has technically defaulted now and will be forgiven 50% of its debt.  I checked a recent satellite image and Greece is still there.   

I am very afraid the cure proposed by the PSD government is as bad or worse than the decease - if possible

Consider some of the measures Portugal will have to live with:
  • Higher income tax for well to do companies
  • Higher income tax for well to do people
  • Less deductions income tax for all individuals and especially for well to do individuals = more tax
  • Higher property taxes
  • Higher levels of value added tax.  The max level has been raised from 16% to 23% percent the last few years.  This government does not raise the max level, but it will raise some lower level taxed products from 6% and 13% to 23%.
    Here are some where it will hurt:  Restaurants, cafes, entertainment, electricity and gas
  • All, except the poorest, retirees (except for people associated with the devil) will loose two monthly payments per year (the 13th and 14th) for at least the next two years
  • All, except the worst paid, public employees will loose two monthly payments per year (the 13th and 14th) for at least the next two years
  • Everybody, except the poorest, will loose 3,5% of their income this year in extra tax. (50% taxation of the 14th salary)
  • No pensions will be actualized the next two years (at least)
  • No public salaries will be actualized the next two years (at least)
  • Cutting health costs
  • Cutting education costs
  • Demanding higher levels of bank reserves
  • Raising costs of public transports
The year is not over yet and we will see more measures still.  2012 and 2013 will see more yet.

I could also list what the government is not doing.  But my keyboard would not be able to handle the massive input.

Anyway, the consequences read somewhat like an economics 101 recipe for disaster:
  • When people have less money to spend - they spend less.  Currently half of everybody in Portugal earn less 500 euros per month.
  • When products become more expensive (e.g. more VAT) people buy less
  • When people spend less, the companies sell less
  • When companies sell less, they earn less or go broke
  • When companies sell less and go broke unemployment will worsen. .
  • My schadenfreude is vibrant on the news of public employees loosing income.  A large group of them, the bureaucrats, deserve it.  But less income to a large group of the population means, all things even, also a retraction of the economy.  They will spend less
  • A retraction of the economy leads, all things even, to less well to do companies and individuals
  • You may have noticed that I added cutting health costs on both the list of the structural change measures and the list above.  Please do show me a single economy where lowering health levels have lead to more richness?  Sick people do not work very well and they are expensive in the long run.  They are even more expensive when they can not be fired
  • You may have noticed that I added cutting education costs on both the list of the structural change measures and the list above.  Please do show me a single economy where lowering educations levels have lead to more richness?  Stupid people are not much good in countries which are dependent on high tech industries and they are expensive in the long run.  They are even more expensive when they cannot be fired.  Stupid people tend to be worse citizens than educated people.
  • Retroactive (ex post facto) laws are not popular or even illegal for a reason.  You tend to distrust when words are broken and how can you have a society of law and justice when your current lawful, maybe even recommended, actions may be illegal tomorrow?   Cutting pensions are surely a necessity, but it is also a retroactive measure.  The current retirees have for the most part paid large shares (generally speaking 34+%) of the money reserved for them as salaries, subsidies, and social costs for their retirements mostly in the form of social security.  They were guaranteed a certain pension.  So much for that promise.
  • The banks are currently hardly financing any companies.  They will after raising reserves have even less to lend.
  • Added costs for companies, such as higher property taxes and added transportation costs, does not exactly help the bottom line.
The consumer confidence index is nearing the lowest ever.  The unemployment at the highest level in recent times.

IMHO the government measures are nearly all making it more difficult for the private sector.  It will diminish.  There will be less companies, less income, and less entrepreneurship.   The economy will retract.

In Greece by now 20% of all shops have closed.  I am sure soon at least 20% of all other companies will have closed as well.  And it will hurt much more next year and probably the coming years...   In Portugal the same will happen.   When it does, we are not talking about 13% unemployment but rather 20 something percent.  The Spanish unemployment is currently at 21,5%, youth unemployment over 40%.  I am afraid our neighbor with a seemingly more healthy economy is showing us where we are going.

The real tragedy here is that the government when proposing its measures had certain assumptions like:  13% unemployment and a retraction of the economy of 2,8% for 2012.  (I am not certain of the exact numbers and too lazy to look them up - but they are in that neighborhood).   Everybody outside the government just knows it will be worse!

I beg you.  Somebody give the government a calculator!

For the possible consequences could be devastating.  Worst scenarios consists of decades of crisis, 30% or more unemployed, education and health sectors in ruin and private enterprise destroyed.

In the above the focus is mostly on economic issues.  But this is not really where the focus ought only to be.  Economy, or money, is just a means, albeit important, to accomplish something.  A thriving economy is not a guarantee for a thriving population.  What is to guarantee life quality, satisfaction and happiness?  A recent study pins Portuguese as some of the most unhappy of the OECD.

A huge unemployment is surely not a way to improve happiness.

I beg you.  Somebody ask the government to get their priorities in order.

Friday, October 28, 2011

The Devil Giveth And The Devil Taketh Care Of His Own

The world of finance and the banks are a major cause behind this financial crisis.  Why does it not surprise me that they will not suffer together with everybody else.

Well you see, the retired bankers in Portugal will be the only retirees for now (*) who will not loose their 13th and 14th month of retirement payment.  Further more, they will have their pensions updated yearly as usually.   Look at the bright side - maybe they can buy your house when you have to leave, because you can no longer afford it.  (Hat tip: Diario de Noticias)

(*) Some pigs are just more equal than others.  Rumors are that the ex-PIDE inspectors (Gestapo like secret police from the time of Salazar) will also not loose a cent in retirement benefits.  They are being considered for one extra 15th salary.  To lighten their burdens.  When you torture somebody - that leaves a mark...

Update:  One reader was surprised to know that the ex-PIDE people get pensions at all considering their previous occupation.   My dear friend, they were all bureaucrats as well, and rather efficient ones - I have been told.  Bureaucrats will use any means to get what they want.  And whether they lie, cheat, steal, work, do nothing, succeed and/or fail - they will always be respected and rewarded.  Results are irrelevant.  It is a law of nature.  But woe the people who actually do a purposeful job for a living like doctors, teachers or other common citizens - do not cross the line and for your own sake do not mess with the bureaucrats.

(*) The ex-PIDE do receive pensions, but that they are to receive more is a joke of mine
.. .. .. .. ..  not based on reality .. .. .. .. .. it would never happen .. .. .. .. .. I am sure...

Will I have to eat my words as PEC 7 has arrived?

The new government, PSD, has so far been a bit of a disappointment.  Frankly, the first measures were slow to be announced and they were all about extra taxes.

The troika, IMF, The EU and ECB, had made an agreement with Portugal: "The Economic Adjustment Programme for Portugal" in May 2011 with the previous government.  It is a rather large document that in very abbreviated terms promises the aid Portugal previously asked for in return for concessions in the form of strong measures:
  1. structural reforms to boost potential growth, create jobs, and improve competitiveness
  2. a fiscal consolidation strategy, supported by structural fiscal measures and better fiscal control over public-private-partnerships and state-owned enterprises, aimed at putting the gross public debt-to-GDP ratio on a firm downward path in the medium term and reducing the deficit below 3 % of GDP by 2013
  3. a financial sector strategy based on recapitalisation and deleveraging, with efforts to safeguard the financial sector against disorderly deleveraging through market based mechanisms supported by backstop facilities.
The key words in 1) structural reforms, is the very essence of what is necessary in Portugal.  If you read the document, you will find the criteria that Portugal must get to 2) by finding one third of the money by increases in receipts (e.g.taxes) and two thirds by cutting expenses.

But please do notice the:  " boost potential growth, create jobs, and improve competitiveness". 

In fact, the agreement is surprisingly detailed and gives little room for manoevre for any government.  The new PSD government reasonably spent some time after taking over to look at the situation.  Unsurprisingly, the deficit was larger than thought and new very large amounts of hidden debt kept popping up.  To the point where Portugal in a review already had to be warned...

Then the government presented the first measures. New taxes.  They were rapidly criticized for nearly only working within the usual area of increasing income. Absurdly some of the criticism came from the previous government party, now the opposition: PS. However, I found the criticism had a point.  Here are the first measures, I call PEC 5 (*):
  • 50% tax surcharge on Christmas bonuses
  • rise of VAT in gas and electricity
  • increase in public transport fares
  • increase in income tax  for individuals with higher earnings.
  • increase in corporation tax for businesses with higher earnings.
  • cuts in spending on health sector
  • cuts in spending on education sector
All this without removing/changing any of the previous government's austerity measures:  PEC 1, PEC 2 and PEC 3.

PEC 6 was presented recently and finally for the first time public expense are planned to be cut for real, but again also some new taxes:
  • Increase of some lower VAT rates to 23%.  The most polemic being food services such as restaurants and cultural events such as concerts going from 13% to 23%
  • Increases in personal tax by decreasing deductions and removing deductions entirely from people who earn well
  • Loss of both 13th and 14th salaries for public employees and retirees earning above 1000 euros
  • More measures against tax evasion
  • Tax evasion fines will rise by 50%
  • Some national holidays will be cancelled (4-5)
  • Employees in the private sector will have to work half an hour extra every day with no extra remuneration
As far as I understand, the measures are to last two years.  Update:  Only the loss of the 13th and 14th salary is explicitly stated temporary by the prime minister.  He does say it might be three years.  He also says that 12 salaries per year might be the right to aim for.  I say:   He is a politician.  How often does a government lower a tax or fee?  Why should there be more money in the state vault anytime the next 10 years?  This financial crisis may last a while...

Unfortunately, no permanent solutions, no structural change.  A bit like peeing in your pants to keep warm.  Only the two last measures will have some small impact on improving conditions for private enterprise.  All the rest will in principle have as its main effect that the economy will retract even more.  PEC 5 and PEC 6 are therefore largely considered to be solely for the purpose of meeting the deficit demands.

Organic laws approved by ministers, Thursday
But today, at last, some good news, PEC 7?, if the measures are implemented.  I will see it before I believe it, but then I may have to eat some of my words.  Amazing real structural change it seems:

146 public entities will be abolished (from 359 to 213) and 290 high level managers will become superfluous (from 715 to 425).  Also the number of intermediate managers will be diminished.

This is epic and finally seems to be a real effort of cutting fat and restructuring the public sector to become more lean and efficient, to combat the bureaucracy.  If this goes through and the cuts are rational - I applaud.

Let us see.

(*) PEC means Programa de Estabilidade e Crescimento - Program for stability and growth, e.i. austerity measures in a package. PEC 4 was never implemented (the previous government fell on PEC 4.  After four packages in one year and three promises of each being the last one...). PEC 5, 6, 7 are terms invented by me.  The current government does not give them these names.  PEC 6 is in fact the proposal for OE 2012 (state budget 2012)

All that you did yesterday was a rearrangement of the deck chairs on the Titanic

We are now all in Europe part of an experiment.  I doubt the consequences have been considered fully.

"Today we have a deal on the Euro that will benefit its 17 members – but I stress only temporarily. In the long run, this is neither sustainable nor defensible.

We should also allow the non-Eurozone members – such as my country the Czech Republic – to decide again whether they wish to enter. We signed up to a monetary union, not a transfer union or a bond union in our accession treaty. This is the major reason why the Czech Prime minister wishes to call the referendum on this matter. I fully support him.

We have come up with costly and temporary solutions. Sorry, Mr. President, there is no reason for optimism. Not at all. All that you did yesterday was a rearrangement of the deck chairs on the Titanic.“

Read more at the "O Insurgente" (Hat Tip)

Thursday, October 27, 2011

Economy, reality and perception of politicians all together

In the House of Hens
Hat tip: Ekstra Bladet (Danish tabloid) and Ingemann (cartoonist)

Translation from left to right:

If I need 50 grams of fodder to make an egg of 50 grams...

What do I then need to make an egg of 100 grams...

A larger asshole...

Who said asshole...Are you once more speaking about him the Minister of Food...

Brilliant provoking cartoonist.  Thank you.

How did Portugal get so much off the track

To find an explanation is not easy.   Many Portuguese and others have been giving warnings for years:  "It cannot continue like this".  In all modesty, my thoughts, and the thoughts of many other foreigners I have talked with, have long been one of wonderment.  "How can this function?".  The answer is now apparent:  It cannot.

Some explanations (and I only take negative aspects into consideration) that come to me are:

  • Politicians
    • Dishonesty, greed, nepotism and corruption
    • Stupidity
    • Lack of ideals
    • Pettiness
    • Keynes is considered a God
    • Two party system
    • Two much power
  • Local "government"
    • To many entities
      • Governos Civis
      • Municipalities
    • Two much local power for individuals
    • Too many incentives to make income that is contrary to the interests of the local citizens
    • Don't give a damn about life quality and the citizens
  • Powerful bureaucracy
    • Bureaucrats with extreme power and gleeful use of such power (sadists?)
    • Retirement in the fifties
    • Lifetime pensions equal to end salary
    • Lifetime health insurance beyond any possible for non public sector
    • Higher salaries than in private enterprise
    • No possibility to fire
    • No requirements for performance
    • No measurements of performance
    • Greed, nepotism and corruption
    • Too many top bureaucrats are politicians and are dismissed/admitted after elections depending on the ruling party
    • Absenteeism
    • No delegation
  • Strong left wing tendency in Portugal
    • Spending with no control
    • Blaming private enterprises painting them as the devil
    • Making life difficult for private enterprises
    • Creation of dead end welfare society run by the public sector
    • Taxation up to nearly 80% (of the money the companies have available to pay each employee)
    • Absurd protection of workers due to non liberal labor laws(difficult/impossible to fire or to demand people actually work)
    • Absurd protection of renters (no rent increases, nearly impossible to evict)
  • Appearance is the most important
    • No long term solutions
    • Dreadful priorities.  Children not important.  Schools not important.  Health system not important.
  • Always mending by using patch work short term solutions
    • No long term planning
    • No long term solution
    • More expensive in the long run
  • History
    • Only a democracy for a short time
      • No ability to compromise
      • Disregard for the minority
      • No understanding that certain areas need very long term solutions
      • Lack of social responsibility (every man for himself)
      • No understanding of democratic duties
    • Catholic Church
      • Don't question what you are told
      • No delegation of decisions.  Extreme hierarchic top heavy management structure
      • Extreme conservatism
      • Dictatorship would have been more difficult without the church
      • Values have permeated the Portuguese society for centuries
    • Dictatorship (includes the time of monarchy)
      • Independent thought forbidden
      • Political discussions forbidden
      • Public assembly forbidden
      • People do not protest much
      • People do not demand much
      • People believe/fear authorities
      • Portugal was frozen in time for a long time
      • Small groups owning the land (12 powerful families before the revolution)
    • Revolution
      • Confusion (for a few years after the revolution in 1974)
        • People taking university courses in one year
        • Abolishment of important social structures
        • Abolishment of nearly all education (after 12 year basic schooling) except superior. I.e. no more apprentices.
      • After the revolution the rich families came back.  They were no longer owner of all the land but in short period of time they plus a few new friends became owners of the capital.
      • Communist co-operatives (farming)
    • Many farms have become too small to be profitable due to splitting up for generations
      • Portugal does not even produce 50% of its needs for food
      • Farming is ineffective even though the land is fertile, there is lots of water (as opposed to contrary claims) and the climate is exceptional.
      • Farmers are uneducated
    • Social mobility
      • Class society
      • Little or no mobility
      • Effort and capability not rewarded
    • Education
      • Children as a group are given comparatively little importance
      • Still a large group of analfabets (they are dying off though)
      • Still a large group with only 4 years of school
      • According to PISA the Portuguese lower education (up to 12th grade) were among the worst in the OECD (only Greece worse!).  It is a little better now
      • A lack of alternatives to higher education
      • Quality of higher education too low (too many students and too many private dubious universities)
      • No regulation of output for certain professions.  E.g. too many architects...
      • To some accounts the worst teachers in the OECD with the least number of teaching hours and best paid.
    • Private sector
      • Old fashioned methods of management
      • Nepotism - lack of qualified managers/leaders
      • Managers with no social responsibilities or awareness
        • Greed
      • Always looking for the quick buck in the short term
      • Absurd property speculation
      • Absurd (and now gone) propensity to keep old fashioned industries (e.g. textile and mechanical)
    • Public sector
      • Too big
      • Too expensive
      • Too ineffective
      • Too much debt
      • Out of control
      • Out of control public companies
    • Public/private sector interconnections and common interests
      • To many private companies living off the public sector
      • To much movement of managers between private/public sectors (after each election!)
      • No regulation of capitalism
      • Destruction of the historic patrimony
      • Destruction of the landscape and life quality by out of control unplanned building
    • The people
      • Lack of common sense
        • Pollution
        • Lack of social responsibility
          • Littering
          • Vandalism
        • Destruction of environment
      • Materialism
        • There are more important things than the purely material - the knowledge of that used to be a Portuguese characteristic.  Now it is but forgotten
        • It is not all about having the nice clothes, the great car, the latest cell phone etc
      • Justice system
        • Broken down, two slow
        • Rich/well connected are impune
        • Too complicated 
        • Too many instances for appeals
      I could also mention many more, but I am running out of my daily word allowance.  Let me just mention one symptomatic occurrence.   There is no way to ignore globalization.  The room for manoeuvres for a state is much smaller than in the past.  The last 15 years has been a continuous financial crisis in Portugal.  In the same period there have been large global market fluctuations including two very large upturns.  They but moderated the problems felt in Portugal and were a true indicator of the serious problems, not really hidden, but in the open.  Portugal did not take advantage of the favorable times.  E.g. by lowering the debt and preparing for the next cycle.

      Now, one of the good aspects of capitalism is that the private sector will regulate itself under normal terms where the state creates the right conditions and insures capitalism does not become savage.  Bad companies will go broke - to avoid that,  unproductive workers tend to be eliminated and bad managers tend to be fired.  Companies that cannot compete, will not sell its products.  This is not so for the public sector and the major playground of politicians and bureaucrats.

      The well educated bureaucrats and politicians are to blame.  They ought be punished.  They knew, they know, they acted in the wrong. I suggest every single politician and every single bureaucrat manager having exercised functions the last 20 years be dismissed and replaced. Cut their pensions to one third.  It will cause some innocent victims - call them collateral damage - and they will be the minority.  For Portugal is at war for its survival.

      The public sector managers (bureaucrats) could be replaced by maybe 2000 German bureaucrats.  They are largely incorruptible, not entirely pleasant, but effective depending on their political mandate.   Give them the power to clean house.

      Greek debt cut to half

      An agreement has been reached at the EU.  Hat Tip: BBC

      At this moment I do not entirely understand it.  But it seems:
      • European banks holding Greek debt have agreed to take a loss of 50% on the debt
        • The stockholders take the loss...
        • It is not a Greek default
        • It will permit Greece a still huge debt load of 120% of its GDP in 2020. Under current conditions, it would have grown to an astonishing 180%.
      • IMF and the Euro zone will give (I think they mean loan) Greece an additional 100 billion euros
      • The EU bailout fond is boosted from 440 billion euros to a cool 1,000,000,000,000 euros (one trillion)
      • The banks will be obliged to accept new recapitalization demands of 106 billion euros
        • This will require more bank packages, I believe.  Guess who is paying...
      The financial markets are reacting positively.  I consider they think it makes little difference for the spendthrift Greeks, but are just happy to see the EU agree on something.  Greece will continue to spend and will continue to need more aid.   Not the least reasons being the world wide crisis and the partial destruction of the Greek economy.

      The one trillion is a big number.  But not that big a number if say Portugal, Spain and Italy start asking for (additional) help.

      What would happen if we private citizens started to complain about our debt?  Would we also get a 50% discount?

      Nevertheless, it is an attempt to save the Euro zone.   I wonder what the government in Portugal will now say.  They have used the "it would be terrible for Portugal to default" - does that mean hell fire on Earth?, as one argument for the austerity measures.  However, a 50% cut in debt looks rather enticing - does it not?

      It seems the banks do not agree and are not part of the agreement.  The EU would like it to be a voluntary agreement as to not make Greece seem to default.
      The EU banks can be forced, but what about banks outside the EU?  Or is all the debt inside the EU?  I doubt it.

      Update 2:
      The 50% loss is equivalent to 20 billion euros.  The banks are needing to find 126 all in all...

      Update 3:
      Academics do not understand much of the above either.  Quite frankly because it is unclear and not negotiated yet.  Another question:  How is the 440 billion euros bail out fond to become 1 trillion euros?  By magic?

      Update 4:
      The rating agencies are now jumping into the fray.  Fitch now states that the bond haircut is a default.  Of course it is, what else would you call it?  The emperor IS naked.  But sometimes it does take a child to see the obvious.

      Wednesday, October 26, 2011

      A lesson in economy

      A friend send me the following in Portuguese.  I find it hilarious:
      A traveler arrives at a hotel to sleep, but asks to see the room first.
      He leaves two banknotes of 100 euros at the reception as a deposit.
      While the traveler checks out the rooms, the hotel manager runs out of the hotel with the two 100 euro banknotes.  He goes to the grocery next door to pay an old debt...exactly the 200 euros.
      Surprised by the sudden payment of the debt, the grocer takes advantage by paying a supplier an old debt.  Also 200 euros.
      The supplier take the two bank notes and runs to the pharmacy to pay a debt of his there:  Exactly 200 euros.
      The pharmacist, with the notes in his hand, runs quickly to a bar next door to pay a prostitute. By coincidence the debt is 200 euros.
      The grateful prostitute, leaves with the money in direction of the hotel, her favorite place to take clients. However, lately she has not paid for the rooms.
      Her debt: 200 euros.
      She tells the manager she is paying her debt and leaves the bank notes on top of the reception desk.
      Precisely at this moment, the traveler comes back after having had a look at the rooms. He expected something else, he said, and takes the two notes back, says thank you and leaves the hotel.
      Nobody earned or spent a cent, but the whole town is now debt free, everyone's credit has been reestablished and all are looking confidently towards the future.  
      Economics is a difficult matter to understand!
      The government, praised be the politicians, understands it all:

      Police(s) in Portugal

      Guarda Nacional Republicana, Soldiers

      I seem to have a vague memory of more types of armed police in Portugal than currently. But even so we are exceptionally well served:

      Ministry of Justice:

      Ministry of Internal Administration:

      Ministry of Defense:

      Ministry of Economy and Innovation:

      Also included could be the secret service. But let us leave them out of it for now.

      All in all there is a little bit less than an approximate 58000 police in Portugal (it is quite difficult to find current numbers - are they a secret?)  - excluding pure military police, i.e. police that does not interact with civilians. To compare with other countries that gives Portugal a ratio of less than 200 citizens per police person.

      To this number of around 60000 comes a unknown number of civil servants working for/with the police.  Probably more than 10000.

      The EU average ratio is 350 according to this source. However, check this, albeit older source indicating these numbers:

      Sweden          328
      Canada          358
      United Kingdom  400
      United States   459
      Netherlands     553
      Japan           556
      Denmark         594
      France          632
      Finland         643
      Norway          661
      Update:  According to this EU Report, Portugal is the country in Europe (but for Cypres) with the most police (see page 89).  However, the number of police is stated to be "only" 51000.  I think my numbers are more correct.

      May I suggest the following:

      1. Let there be one police corps. One basic police education (in one location!) equivalent to a low level university education (3-4 years). Everybody wishing to join the police will start the same way.   Then there later will be specialization to traffic, criminal investigation, economic crimes, border control, military law etc.   This would give "esprit de corps" to all policemen - police with different areas of responsibility might even start to co-operate. It will also give a lot of career possibilities. It might even lead to less fat in the form of levels of managers and bureaucracy.
      2. Abolish the Autoridade de Segurança Alimentar e Económica policemen. I am sure the bureaucrats can manage to inspect a restaurant or bakery all by themselves. If need be, they can ask for assistance. 
      3. Abolish the Polícia Judiciária Militar, military police for criminal investigation. Surely this job can be taken over by the civilian police. They just have to study a few extra laws.
      4. Join the Polícia do ExércitoPolícia Aérea and Polícia Naval into one unified military police. Surely that is sufficient and more cost effective. But let them stay somewhat apart from the normal police. All should, nevertheless, complete the basic police education in addition to military education.
      5. Consider whether the prison guards should be armed. If so they should be police. Otherwise disarm them and make them prison guards only with statute lower than police.
      6. Abolish the Guarda Nacional Republicana. Military have no business policing civilians. It is a leftover from old dictatorial times!
      7. Abolish the Polícias municipais
      8. Move all the police to the justice department. Alternatively to the Ministry of Internal Affairs as the Ministry of Justice is maybe the least efficient ministry.
      According to statistics of serious crime, Portugal is one of the safest countries in the OECD. Lower the number of police to at least the European average. That is at minimum 20000 police less. There be money to be saved here even if raising salaries a bit. Also, I expect the efficiency will be higher with a smaller police force.

      BTW, many people in Portugal complain about the police and horrific stories are told. I have personally always found them polite, efficient and helpful.

      Curiously, the Portuguese in spite of comparatively low levels of crime, are one of the people in the Western World that feel most insecure. It is common a front door of a dwelling be more related to a bank vault than a house. It will more often than not be reinforced by steel and have at least three locks. To insure that a smaller police force does not make the population pee in their collective pants I suggest an unarmed voluntary reserve police force based on the fantastic system of the voluntary firemen in Portugal. It will be nearly free and it would be a great help to combat petty crime - petty crime by youngsters is nearly always on the road to serious crime.

      Update 17.11.2011
      Guarda Nacional Republicana does principally belong to the Ministry of Internal Administration (as a reader has corrected me - thanks) concerning civil matters (including policing).  But they are related to the Ministry of Defense in military matters, when considered soldiers.   See Wikipedia article.  I still do not feel comfortable with a police force based on a military organisation.  There is a strong connection with the officers of GNR and the armed forces as well.  This being said, the GNR seem very efficient and a unified police force could very well learn much from it.

      Tuesday, October 25, 2011

      World development

      Here is an amazing video by Hans Rosling. The development of the World showing all the countries of the world plotted on an animated graph showing life expectancy versus richness progressing from 1810 to our time.

      May Hans Rosling's wish for a converging World of more health and wealth come true.

      If you liked this do not miss more Hans Rosling presentations. There are several at TED.

      Here is one from 2006:

      Dexia and other banks

      It is not as easy being a bank these days as it used to be.   And it will undoubtedly get much worse before it gets better.

      Look at this nice collection of 5 links concerning the Belgium bank Dexia and stress tests at the blog Blasfémia (Hat Tip)

      The banks in Portugal have with a few and one grave exception behaved nicely compared to banks around the World.  Particularly banks in the US and Northern Europe.  I am somewhat against saving banks with bank packages and public money.  If they are not healthy - let them go broke - specially when they have done casino speculation.

      Banks used to be the pillars of society, with responsible conservative boards and bank directors with a notion of social responsibility.   This is no longer the case.   They have shown themselves to be champions of the old cardinal sins.  Greed is ugly indeed, and ugliness is now associated with everybody in banking and even more so in finance.  Deservedly or not.  There are many in the world of finance that deserved to be tarred, feathered and evicted from town.  Quite frankly, the world would be a better place without them.  It is shameful they will receive no punishment.

      Looking at banking generally speaking, it would be rather dreadful if they all closed as they are part of very fabric of our society.  Many small savers would loose much and many companies would close.  On the other side, the argument that the banks provide capital for private endeavors such as company financing is currently not true.  The banks should thread lightly and assume an apologetic attitude.  We don't like you anymore!

      We expect you to be responsible, to have less greed, to stop lending money to idiots, to stop speculating to the same degree, to stop gearing every deposited Euro into many fictitious.   We expect larger reserves.  We expect you to be an asset for society instead of a burden.  Because you don't really produce anything.  You just make money out of money.

      See this rather old article from Financial Times:  Faith and finance: Of greed and creed

      I am by no means a religious person; but I find it interesting that both the Bible and the Quran speak against lending money with interest (in the Bible's case arguably: excessive interest, usury and foremost in relation to the poor).
      But take a look at the credit card circus.  The best credit card clients of the banks have maxed their cards, are paying late and lots of penalties.  Interest can easily reach 50% a year.  Enough, I suspect, for a Mafia money shark to be convicted.
      Hint - if you have little money - get rid of all your bank cards, debit and credit.  Use cash.  It is quite easy to see when the wallet or money jar starts getting empty.  It will make your life better!

      The future of Greece might be decided tomorrow

      The situation of Greece is indeed precarious.  But so is the entire situation of Europe.  Have a look at this diagram.  It oversimplifies and perhaps exaggerates.  Yet...

      Supposedly the final decision on Greece is tomorrow including the yet another "final relief package".  We will see.

      Monday, October 24, 2011


      Currently tourism has a value of around 11% of the Portuguese GDP and employ 8% of the population.  It is growing and may be around 15% of the GDP in just 4 years.  Portugal has to some accounts the potential to become the 10th most visited country in the world, currently it is around number 17.  The neighbors Spain and France are number two and number one respectively.

      If you have never been to Portugal I can strongly recommend it.  Many people retire here for a reason as well.  There are fantastic places to visit.  To mention a few:
      • Lisbon, one of the more unique capitals in Europe and also the European capital with the highest average temperature.  Not too cold and usually not too warm.   It is IMHO much more interesting than Madrid with a richer history, better gastronomy, more interesting topology, more cultural experiences and cheaper.
      • The Alentejo is a favorite of mine.  Try visiting one or more cities, some Pousadas, the country side, and rent a boat for a weekend on the Alqueva - the largest artificial lake in Europe
      • The Atlantic coast is beautiful and varied and has plenty of peaceful places.   However, the water is cold but invigorating with beautiful beaches.
      • In the North you have Gerês, one of the most amazing national parks ind the world.  You have close to Spain, the "Trás-os-Montes" - behind the mountains.  It fun to reach by starting out from Oporto and by follwing the river Douro with its wine terraces.     

      Amiera Marina (Alqueva lake)

      The variety of gastronomy and landscapes is unique in such a small country as Portugal.  Though the Portuguese generally speaking and with some real exceptions do not know the concept:  "Good service", they are a very nice people and make up for it in friendliness.  They like (most) foreigners and will more often than not go out of their way to help you.  This is specially true outside the big cities and tourist areas.

      But actually, I would ask you to come in spite of the partial destruction of Portugal as a tourist destination.  Despite tourism being the single most important industry, and the one with the highest potential growth rates, it is difficult to imagine a more dedicated effort by the governing class to keep the tourist away.  Instead of writing an essay let me just give the reader some examples:
      • There have been no limit or control of constructions
        • All municipalities get a rather large fee for each new building.  Why should the corrupted nepotists ever limit any construction when part of the fee end up in their pockets eventually?
        • There are no criteria that a new building should fit into the existing landscape/buildings. The Portuguese emigrants may have elevated the construction of the world's most ugly villa to an art form.   I have personally broken several cameras trying to take pictures in the North where they are more the rule than the exception. 
        • A very large number of beautiful old buildings have been torn down.    You can build a lot of square 10 story apartment buildings on an old Quinta (farm).  Even more if you build the building close enough, so you do not have to buy a TV.  The neighbor's is right on the other side of the window.  Also you do not need green areas or playing grounds for the kids. 
          • A trick to be allowed to tear down an old building is to let it rot until it basically falls down by itself or just becomes a danger. If it is an apartment building with people living in it, destroying the roof will soon make some or all move away.  A building with no rentals are worth much more. Ruins in the cities do not bother the municipalities much or at all until they start falling.
        • It seems if you have money you can build anything or anywhere as one infamous Portuguese rich family has done in the Sintra-Cascais national park, where building was not allowed.  You just need a big fire, and then prohibit the firemen to enter through your private land. 
        • I particularly dislike a shopping center at the entry to old Cascais Village.  Hence, I am waiting for them to build a garbage processing plant on the beach in the village.
        • I, somewhat in jest, tell my Portuguese friends:  "The Portuguese hate the color green.   They prefer the color of concrete".
        • What happened?  Old Portuguese buildings are mostly very pleasing even beautiful to look at?  
        • Why do Portuguese Municipalities have city architects?  Are these people architects?  Has anybody in a Portuguese municipality heard about the concept aesthetics?
        • What kind of tourist prefers to have his ugly 20 story hotel constructed on the beach, next to 100 other hotels on the beach?  Have a look in the Algarve.  Hooligan from Liverpool comes to mind.  As an interesting fact:  Portugal’s annual income from the golf industry represents 1.25 per cent of national income and 14 per cent of all income from tourism.  Golf tourists do as a whole not like Liverpool Hooligans 
      • I live on the "Costa do Sol".  The sun coast.  It does indeed have sun and a wonderful climate as it is turned towards the south, next to the sea, a part of the bay of Lisbon (where the Tagus river enters the Atlantic) with the Sintra mountains in the back.   It used to be a wonderful and very pretty coast and continues 20 something kilometers long.  Many European royal families had a summer residence here.  Estoril was known all over Europe.   These days, hardly a square meter is not filled with, for the most ugly, concrete buildings.  The beautiful coastal road is a 4 lane highway (or the second worst thing).   Anybody with sense would have made the coastal road into a boardwalk with restaurants, shops, cafes etc. They would have limited the building and kept at few green areas (there is only one left on the entire coast located in Carcavelos.  It is reserved for the building of 4000 or so apartments).
      • There is no Minister of Tourism in Portugal.  Let me restate:  There is no Ministry of Tourism in Portugal.  There was one for less than two years 7 years ago.  Instead we have  a tourism secretary belonging under the Ministry of something.  I am so glad we instead have ministers for these important areas:   
        • Ministry for Parliamentary Affairs
        • Ministry of Social Solidarity and Social Security
        • Ministry of Agriculture, Sea, Environment and Territorial Administration
      • You may notice publicity in your country for tourism.  Like:  "Come visit sunny Spain".   How often do you see the same for Portugal?
      • I have heard how large international investors have fled Portugal.  It is rather easy to make them flee.  After they wait ten years for a permission, say for building a tourist resort on less than one of 1200 kilometers of shoreline of Alqueva lake, they go some where else like Brazil, where there is less bureaucracy.   Meanwhile the permission for exploratory oil platforms have been given outside the last unspoiled place in the Algarve:  The unique Ria Formosa State Park.
      • Almost nothing is done in Portugal thinking about:
        • Children
        • Life quality
        • Long term (Short term is more usual then medium term)
        • Sustainability  
        • Enticing investments
        • Helping companies
      • However, tourism is not quite forgotten.  A growing number of companies are creating real nice offerings.  Alas, they are still in the minority.  They also must have permanent head aches after continuously banging their heads on the red tape covered closed doors of the Portuguese bureaucracy. Furthermore they all have balls the size of elephants (including the female managers)
      • I wonder how many 10 million population countries of Western Europe do not have a single amusement park (traditional one - not aqua park, zoo or similar).  I know one:  Portugal.  The traditional quaint fashioned one, Feira Popular, was closed in Lisbon several years ago by the municipality.  The plot was worth a lot of money in the center of Lisbon.  It stands empty yet and a few hundred peopled are now added to unemployment at the supposed care of Ministry of Labour and Social Solidarity.  Likewise the Ministry of Finance must have lost a few million in tax income.   
        • Some tourists have children.  Some tourists with children look for fun activities for their children.  Some tourists with children looking for fun activities consider amusement parks as such!  Even some citizens of Portugal (the little ones) like amusement parks.
      • One of my least favorite companies is ANA.  It is a state company just like TAP.  TAP is the Portuguese Airline.  It is surprisingly good.  They have a Brazilian boss. He managed to have the political board fired,  The man must be superhuman. They dislike ANA as well.  ANA takes care of the airports.
        You meet ANA when you arrive to and leave from Portugal by airplane as many or most tourists do.  In Lisbon, first you will usually have to take a bus to the terminal from where the airplane is parked.  There are not nearly enough gates.
        When you arrive you will notice you do so apparently without your luggage.  But do not worry.  The luggage is there.   If you are lucky and get one of the old transport conveyors, then you may look behind the plastic curtain.  I once did so when arriving from the US very late at night.  We had waited one hour for the luggage which is not unusual.  We looked through the curtain and down to the single guy working.  He was smoking.   Between each cigarette he would put a piece of luggage from the cart onto the transport band.  I asked him kindly whether he could speed it up a bit.  He did of course.  ANA might tell you they no longer are responsible for luggage - now there are subcontractors like Groundforce or whatever.  The speed is the same though - the slowest in Western Europe?
        When you enter the duty free from check-in, the security is fast and rather thorough.  Always has been.  
        Don´t buy anything in the rather bland airport.  It is cheaper every else except in other airports - the wine selection is excellent, however.
        You do not need to pay one Euro deposit for the luggage cart anymore.  That was fun.  I usually arrived at the arrivals of the airport without coins as my destination does not accept them and the metal detector likewise.   But I did have cash.  But nowhere to get a coin.  The 80 year old grandmothers got stronger in the Lisbon airport.   I wrote a formal complaint and got an answer from the ministry.  They could see no reason for the complaint.  It did not bother the passengers and it was to improve service (sic).
        Anyway, after a couple of years the deposit requirement was removed.   There are still no small luggage carts inside the airport.  It makes the grandmothers stronger.
      • To finish off, before running out of ink:  A country like Denmark, with a more than a rather miserable climate, and half the size of Portugal makes more money in absolute amounts on tourism than Portugal.


      Eurostat tells us that inflation in Portugal went from 2,0% in September 2010, to recently 2,9% to 3,5% currently in Portugal.  The total inflation of 2009:  -0,9% , 2010: 1,4%

      This 3,5% inflation is higher than in most other EU countries and the growth rate seems high...  Of course we must wait for the final numbers of 2011 and 2012 to confirm whether the indications in fact lead to an inflation of this order.

      Looking at transport costs and electricity which all have or will grow at a rate at over 3,5% the future looks a bit expensive.

      Especially taking into account salaries either have not grown or have been diminished. And not forgetting the added tax burden.

      Also, I believe we can take it for granted that many/most public services will either/both raise the cost or add supplemental taxes (*)

      All in all many Portuguese will soon see a power of purchase 30% to 40% lower than a few years ago.  At this moment I estimate the numbers but will in a future article look in more detail at PEC 1 to PEC 6 (**), and other austerity measures we are suffering in Portugal

      (*) My favorite is that when you call some public entities you pay a fee per minute in addition to the actual cost of the call.  Consequently, I can foresee, they will wait even longer to answer the phones.  Of course it is not all bleak.  I am sure there will soon be prizes to win among the callers to create even more traffic:
      "Congratulations - you just won a ham - you are still number 98 in queue to talk to an operator to report a dead relative."

      (**) PEC 5 and PEC 6 do not actually exist under that name, but I like the sound of PEC = pack in English.   PEC means Programa de Estabilidade e Crescimento - Program for stability and growth, e.i. austerity measures in a package.  Pack 5 and 6 are by the current government.  PEC 4 was never implemented (the government fell on 4.  After 4 packages in 1 year and three promises of this being the last one...)

      Saturday, October 22, 2011

      The Shadow Economy

      Interesting link to study on the European Shadow Economy (pdf) (Patronized by Visa Europe), Hat Tip: Economia e Finanças (blog)

      The shadow economy is 19% and growing in Portugal.  This is around the average for Europe but in the high end for Western Europe.  I would have thought it was larger in Portugal.  Alas, I have no proof to that.  But do bear in mind that such studies are not easy to perform and hard evidence is hard to come by.

      However, let me point out that countries like Denmark, Norway, Germany and Sweden supposedly have  parallel economies of around 15%.  Considering then that southern Europe should only be in the interval from 19% to 25% is highly unlikely.

      Undoubtedly the shadow economy will tend to grow under austerity measures and likewise the government will do all in its power to limit it.  I remember reading about two actions recently announced/aired by the Portuguese government:
      1. Invoices will be electronic and registered through the revenue service
      2. Fines for manipulating invoices/accounting are multiplied by at least a factor 7
      A typical question in Portugal:  Do you want it with or without invoice?  Without, usually means you pay the bill without IVA (currently 23%).  Also it means the transaction is not registered in the books.  Curiously, you are nearly regarded as a retard when asking for an Invoice.  Furthermore, why is it common practice most places by default to emit receipts that on the bottom declares?:  Not valid for tax purposes  Also, why does it take so long time many places to get a real receipt or invoice?

      I have in the Algarve in a restaurant once waited 90 minutes for an invoice.  Our local McDonald's emits receipts (for tax purposes) by default.  They are however illegible due to a problem with the printer.  I once asked for an legible invoice.  That took 15-20 minutes to provide.   Meanwhile the food got cold.  Supposedly they fixed the printer.  A few days later when I came back the invoice was again illegible.  I, however, had learned my lesson and did not ask for another...  To make sure, the receipt paper McDonald's and many other places use is for thermal impression.  Like in the old fax machines.  The paper unless kept at 43% humidity at a constant temperature of 19,3 degrees celcius in a dark place becomes slightly brownish - and most importantly: blank - within less than a month.

      I have been told retail/services sales software in Portugal may for a small extra fee have double accounting enabled.  You turn the key left on the cash register and the transaction is entered into the books and an invoice can be generated.  Turn the key right and it goes into the shadows...   Wouldn't surprise me none that them right key turners are in the majority!?

      You cannot but succumb and admire human ingenuity involved in avoiding taxation.   Only a politician lacking more (of our) money has more imagination.

      The study, BTW, indicates that lawyers, doctors and other liberal professions are the worst culprits.  It does remind me of a claim many years ago in Portugal shown in newspapers:  80% of all lawyers then declared they earned minimum salary.   I doubt they dare to defraud to that degree currently as the tax authorities from time to time do wonder how the 7 Ferraris in the garage were paid on minimum salary. All in all, perhaps the play on the word "lawyer" to "lier" has more than one reason.

      May I make a small suggestion to the government?  Make a new law:  Within 30 days 30 hours and 30 minutes from today all commercial establishments and liberal professions must emit a receipt/invoice (tax purpose valid) for all sales/transactions.  If the amount is more than X euros the buyer's tax number must be included (or ID number for foreigners).

      Make a public campaign explaining why tax must be paid by all, otherwise the ones not paying will have you pay!  Within a short time, most will ask for the receipt and complain if not receiving it.

      Next law:  Within 1 year all such transactions must be transmitted electronically to the revenue services (for privacy reasons all private tax numbers must be anonimized)

      Result: IVA (value added tax *) would bring in much more.  IRC (company tax) and IRS (personal tax) will also bring in more.  Some establishments and some liberal professionals will of course go broke/give up.  But all in all the tax rates could be lowered and still the same revenue obtained.  (Alternatively, and unfortunately more likely, we will also make the politicians happy by giving them more money to spend - in best case only some of the extra revenue will be returned to the honest citizens)

      Apropos:  The current government is aware of the problems and the previous government(s) have already made some rules concerning receipts/invoices.  One of the recent proposed austerity measures is to let all citizens deduct 5% of the IVA paid.  Of course that requires receipts.  But what on earth should make people ask for more receipts after they have gathered 1/20 (say a month's worth) of what they spend in a year?  Still it must be recognized as a beginning.

      (*) Why on earth is value added tax called that?  It does not add value to a product.  It removes value.  Say a product is worth 10.  With 10 plus 23% VAT the price becomes 12,30.  But the product still is only worth an inherent 10.   The product now has as an extra cost of 2,30 for the consumer.  The consumer loses 2,30.  It is a value lost tax at the moment of acquisition:  VLT!  I of course know why it is called VAT.  It is newspeak invented by politicians.  The honest name would be sales tax or added cost tax.