Wednesday, November 30, 2011

Policies cooked up by charlatans

Financial terrorists
Hat tip: Apodrecetuga

Adding debt to a debt problem is going to increase stability?  That is insane.

Bad boy banker threatens

The bad boy banker Fernando Ulrich, president of BPI, one of the larger Portuguese Banks, makes an interesting statement:

Public entities local or central will never ever get credit (from the banks) again - unless they can show the same credit rating and cash flow as similar entities in Germany or Schwitzerland.

The reason I call him bad boy banker, is the he has been the most vocal of the bankers against the demand banks must raise their reserves to the levels demanded by the Troika.  From him came the by now infamous question.  It goes something like this (from my memory)  "How can 5th or 7th level rank bureaucrats (of the Troika) be deciding issues of this kind of importance?"

His argumentation is that the money applied for further capital in the banks is less money available for financing companies and society in general.  Also he argues, that banks forced to augment the capital by next year may have to borrow from the state's fund created for this reason.  The state gets the money from the Troika - a by now infamous fund of 12 billion euros.  He knows the state will demand influence (stocks?!) from the banks they lend money.  And as he claims - this is a kind of nationalization.

His most weighty argument in my opinion is this:  "Let the bankers take care of banking."

He has a point.  The politicians obviously do not understand banking or much of anything.  They should stay out of the private sector.

On the other hand this whole crisis has the financial sector as one of the culprits.  But it must also be stated that the Portuguese banks have been some of the most responsible of all Europe.

Until now, BPI, Mr. Ulrich's bank, has been awarded by Fitch by receiving a junk rating together with the Portuguese state.

Perhaps the public sector not being able to borrow money in the future is positive.  Then at least they can waste less and perhaps become responsible.  Spending less than your income would be a nice rule for the next 100 years...

The public sector can foresee some horrific short term problems.  If I were I bank I would not lend a cent to any public entity.  Not even the Bank of Portugal.  Not even if they handed in the gold reserves as a collateral.  Because no matter what - you can only be sure of one thing:  The public sector is untrustworthy.

Tuesday, November 29, 2011

Empty barrels make more noise

A number of socialists, foremost among them ex-president Mr. Mario Soares , ex-minister of finance Mr. Freitas do Amaral and the entire opposition are rambling against the "dictatorship of Merkozy".  Merkozy being Mrs. Merkel of Germany and Mr. Sarkozy of France.  The dictatorship being them negotiating alone and making demands mostly on the PIIGS and other European countries.

The economy of France is in fact not very healthy, but it still has a triple AAA rating and the German economy is so far the healthier.

They are are the only two big sustainable economies left in the European Monetary Union.  I do to a degree understand the preoccupation of many concerning the apparent lack of democracy in the current process.  But:
  1. Who is paying for the PIIGS?
  2. Who will save Europe?  The PIIGS?
  3. Who has blatantly - even criminally mismanaged their economies?
  4. In Northern Europe mismanagement and corruption has consequences.  Is it that hard to understand that Northern Europe, calvinistic or not, want to see the responsible punished?  The reason is to make sure it does not happen again. With the persons and causes identified it is less likely.
  5. When you have mismanaged economically it is quite normal to loose freedoms and maneuverability.  The creditors will always impose rules to insure their capital.
  6. Northern Europe is by definition more proactive than reactive and plan long term in stead of short term.  The PIIGS have done the opposite.
It is of course not pleasant to have been called out in the open and shown that years of work has been wasted. It has been wasted because the quality of work has sub-par and even miserable.  Looking back in time the socialists share the main burden as their governance is more recent.  But the social democrats also have a large share the guilt.

The rot has to come out of the political system and the rot has to come out of the public system. 

Portugal should be happy to have the rich uncles in Europe trying to save it (and themselves and the European Union).   If the socialists here in Portugal had any results they could point at, and say "We know what we did.  See how fine it is."  Then they could join the discussion of the adults.  As it is - they deserve to be left out.

Even though I personally am no great fan of German bureaucracy and German mentality as a whole - I can see some of the qualities.  Portugal needs more discipline, more accountability, more planning, more focus etc.  In fact, Portugal should consider replacing the top 2000 public function managers with Germans.  Give them power to fire and change.  In five years there would be results. We would have less liberty in Portugal, but at least we might not be broke.

And as the socialists now have discovered.  When one is broke, one does not have much liberty anyways.  

Going broke, the odds are in, take two

The financial markets gives us again the probabilities on countries defaulting.  The top 10 current candidates are (the numbers from three weeks ago in parenthesis):
  1. Greece
    92.93 (1: 86.58%)
  2. Portugal
    60.50% (2: 58.79%)
  3. Argentina
    54.47% (6: 46.48%)
  4. Pakistan
    54.38% (4: 48.55%)
  5. Venezuela
    53.12% (3: 50.46%)
  6. Ukraine
    46.95% (7: 41.00%)
  7. Ireland
    46.79% (5: 46.79%)
  8. Italy
    37.63% (8: 38.82%)
  9. Hungary
    35.99% (9: 31.06%)
  10. Spain
    33.64% (10: 29.16%)
The PIIGS are all in the top 10.  Otherwise it would be disappointing.   To people who love to be at the top of lists.  The presence on this one is no reason for pride.  The company neither.

Monday, November 28, 2011

I feel sorry for the minister of finance

Vítor Gaspar
He just seems such a nice guy.  He speaks clearly and is clearly no real politician...yet.  He is also is nearly the only member of government (or even parliament) that actually seems to be able to calm down the country.  In spite of his job of delivering the extreme austerity measures.  If his measures had the same quality as their delivery, things would start to look brighter.

But boy does he look aged and stressed.

Anybody would, with his responsibility.  And his problems - they become worse every day...

The OECD just came out with new previsions from their group of Gypsy soothsayers.  I don't know why but I trust their gypsies more the the gypsies of the EU not to mention the complete lack of quality of the Portuguese soothsayers.

Retraction of the economy will be worse in 2012 than predicted by the government about 4 weeks ago and worse than predicted by the EU about 3 weeks ago: Not 2,8%, not 3% but 3,2%.

My hat eating, as fun as it would be, looks more unlikely than ever.  Of course you do not need a soothsayer to be able to predict that it will worse than 3,2%.  Much worse, I am afraid.

That is what a lot of new taxes and no structural changes will do to a country like Portugal.  In fact we still have to see a single structural change implemented to try to make it possible or even likely for businesses to grow.  They are the producers.  The simple truth is that we all live off the products of what looks like a smaller group of smaller producers in 2012 and onwards.  Not the least because the consumers will have less purchasing power in Portugal for sure, and probably in the entire EU.  Even with the same purchase power, people are saving more and are more careful with spending.

By the way, the OECD also predicts nearly 14% unemployment for 2013.   Higher numbers than the government and the EU predict.   We will be lucky if it does not rise to the Greek levels of this year.  Estimated at 18%.  

The big parties are not on speaking terms

The petty political games continue among the big parties.

We can this morning read in the news, that there have been no negotiations this weekend between the government, PSD/CDS and the opposition, PS.

Everybody but the politicians have by now discovered the grave situation of the country.  Nearly everybody, except the politicians, understand the need of a united nation.

Portugal may not be at war and also not at fight for its survival, but we are at a crisis just below that.  There are a large number of citizens in this country living below the ridiculously low poverty limit.  This number is becoming larger.

An enormously large number of families and businesses have gone bankrupt or will in the coming year.  The unemployment is near 13% and if not for a miracle will go up.

There is a huge lack of social cohesion.  No national unity.  There have not even been a single apology, to my knowledge, from any responsible politicians, from any members of governments the last 30 years.

Even our usually very (and too) quiet president has started talking about cohesion and national unity.

And yet the political petty games are still on.

At this moment PS and PSD should a long time ago have started negotiations and found common grounds.  Even if not being able to find common ground, the disagreements should have been kept behind closed doors.  If (when) the need arises for at broad collaboration, there may not be much left to collaborate on.

And yet we see here Mr. Seguro, the leader of PS state: "There have not been, there are not, and there will be no negotiations with PS and the government concerning the state budget of 2012".

Even if the crisis should fizzle out, and Portugal arise from ashes in 2013 by a miracle, then areas like health and education need reforms with a broad majority behind them.  You cannot run these areas such as these on four year plans changing everything after every election.  The cost in terms of money and in terms of human sacrifices are simply to high as the past and the present situation clearly proves.

We have in Portugal a democratically elected parliament.  But we have no democrats in parliament.

Compromises, long term planning, the importance of listening to minorities, working for the good of the people, leadership, the art of the statesman - all these we look for in vain in the Portuguese parliament.  Instead we find a group of people playing petty games - for their own personal advancement?

This no game.

Shame on you.

Saturday, November 26, 2011

I have solved the mystery

Fictitious, for now...
Here I went and  practically proclaimed most Portuguese politicians dishonest thieving corrupt incompetent conniving  bastards.   I am of course referring to the gentlemen and a few ladies who got us into this mess of social misery and near bankruptcy.

I was wrong.

I sincerely apologize and I eat my words.

The explanation is much more simple.  It is one of simple minds.  You see, most politicians are numerically challenged.  I.e. they do not understand numbers very well or at all, many in fact suffer from dyscalculia.  Also they are geographically challenged.  Beyond their own navels they really do not see the world around them. Furthermore, they are culturally challenged as well.  They tend not to see other cultures.  This goes well with my claim that narcissists all are culturally and geographically challenged.

My mommas  (I have had the luck of more than one) always taught me to help and treat with respect the mentally and otherwise challenged members of our species (before PC, the era of politically correct, they were mental cases and handicapped).  And so I have tried.  And thus my apology, albeit belated.

You see I found the reason for the mess.  Because of the many who have heard my ravings or the few who have read my ravings in my blog (spread it please), some say.  "People can't be that evil.  They can't be that conniving. No, it is very simple.  It is all caused by stupidity!".  In my ignorance I ignored their arguments as I thought I knew better.  And also I do not like non PC statements.  If they had said mentally challenged I might have listened - instead they dared call the concept by its name.

We now get to source of the mystery.  How did the Portuguese politicians manage to overspend so much?  Because nobody in their right mind would do so consciously.  It is quite simple and all involves the word billion.

When I write billion, I (as well as the EU) mean the number 1 000 000 000, a 1000 million, 10 to the 9th, 10^9.  But in Europe a billion generally means 1 000 000 000 000, a million million, 10 to the 12th, 10^12.  It is an American custom to use 10^9 as a billion.  In France, Germany, Scandinavia and other countries we use the word "milliard" for 10^9 as we are civilized - just ask the French.  The funny thing is that some countries like the UK and Portugal do not have a word for 10^9.   Instead they say a thousand million. As in "The Earth is approximately 4.5 thousand million years old."  It is somewhat primitive but a good way to have much needed daily math lessons.  On the other hand I am glad they do not say "4.5 thousand thousand thousand years old".

What has that to do with the mystery?  Well, read on - I am nearly there.

The GDP of Portugal is 170 billion euros.  I.e. 170 000 000 000 euros.  The Portuguese public debt varies according to different sources and your political standpoint.  But pretty much all agree it is currently around the GDP.  I.e. 170 billion.

Here are couple of further facts:  Everybody reads the GDP numbers from international sources, as they simply to do not believe national sources, when it comes to GDP.  They all state a GDP in billions.
When looking at public debt everybody only look at their own doctored numbers, as they come from trusted national sources easily manipulated.

Do you see it?  The Portuguese politicians were told:  The GDP is 170 billion euros and the public debt is 170 thousand millions.  In other numbers: GDP 170 000 000 000 000 versus debt 170 000 000 000.  A debt a thousand times less, no less, than the GDP.  This is where the feeble minded mentally challenged politicians made the mistake.  They actually thought Portugal had the lowest debt, percentage wise, in Europe.  They mistook the GDP billion for a Portuguese billion (bilião).

It was an honest mistake.

So now we are in this mess with nobody to blame really.  But at least the mystery is solved and the conspiracy theories have been disproven.  There are no malicious people behind the financial crisis.  No conscious corruptness.  It is all an unfortunate accident.  The only possible blame is on the people.  The people should be more careful with whom they elect.

Friday, November 25, 2011

Household accounting

Soon for sale (cheaply!)
The nice gift loan we got from the Troika of a potential 78 billion euros has avoided the Portuguese state going bankrupt.  For now.

When the yearly interest rate on loans - to finance the never ending rising public expenditure - became unsupportable on the free markets, it was around 7%.  In some instances the lenders now want around 14%.

Thus the 4-5% yearly interest rate Portugal must pay on the 78 billion is comparably a good deal.  The time to pay back the loan varies according to the source.   The Europeans (2/3 of the loan) are asking for 4% and an average pay back time of 12 years.  IMF is asking for 5% (variable) and an average 7.25 years.

To make it more simple let us say 10.5 years average to pay the loans back.  We can then calculate the yearly interest at ~3 billion a year.  Close to 2% of the national GDP.

And here are the big news in the MSM today:  "Portugal will have to pay 34 billion in interest on the 78 billion loan", and one maybe not so naive reader exclaimed:  "That is close to to 50% interest!", well it isn't.  And then again - it is, if you look at the whole period.  Economists have also claimed, "We may not use the entire loan".  The chance of that happening is probably smaller than the guilty corrupt politicians admitting and paying back what they have stolen.

And do not forget we have to amortize the loan.  That is, we should pay an additional 7 billion a year.

All in all, we are talking above 6% of the current GDP every year during ten years going to pay just this debt.  As the state is responsible for half of the GDP more or less - it consequently corresponds to a massive ~12% of the state budget.

On top of that, there there is additional interest and amortization on other larger (all together) loans owed by the Portuguese state (by us).  After all, the public debt looks soon to be above 110% (depending on sources) of the GDP.

Furthermore, we have to add the yearly deficit of the Portuguese state.  Last year 8,6%, this year ~4,5% and next year ~3% if everything goes as planned.   You see, the public debt is not even becoming smaller - it is still growing.  In the near future for sure and perhaps even (much?) longer.

Additionally, the economy is contracting. The GDP might be 170 billion this year, but according to official expectations will be 168,5 billions next year with a growth of -3%.  The "Larsen rating bureau" and other cynic realists, on the other hand expect something closer to -5%.  Or Larsen will have to eat his old hat.

Income is going down and expenses are going up.   Our big neighbor, Spain, and the next country over, Italy, are currently both in trouble.  And we are all on the financial bookmaker's world wide top 10 to default (go broke) and the rating agencies have nearly all given Portugal junk status.

If you ask me, I can't see how a Portuguese default can be avoided.  Considering the simple but revealing accounting above, the international financial crisis, Portugal's financial super crisis, the paralysis of the EU, the international mistrust, the lack of growth, the bankruptcies of families, the bankruptcies of businesses, the despair of the people and the politicians lack of any common sense and the resulting lack of pro-active action - the outlook is bleak indeed.

I have a cold and my eyes are in tears.  I am glad to have that excuse. 

Thursday, November 24, 2011

Portugal is junk

Portuguese countryside, according to Fitch
Not only has Portugal now junk status, but with a negative outlook.  This according to the rating agency Fitch, that downgraded Portugal today from BB+ to BBB-

Moody's is of course worse, giving Portugal this even lower status: "Non investment grade - speculative".  In other words they suggest not to invest in Portuguese papers, and if you do, you are certified mad and might as well go to a casino.

Only Greece and Serbia are worse off than Portugal according to Fitch.  The negative outlook means Portugal is in the competition to be number one of the worst.  I always thought if you have to go then at least with a bang.

I suggest parties all over the country instead of no good boring strikes.

I was getting worried about "the boys"

Why?  It is good income and little work!
Fortunately I have now seen (hat tip SIC Notícias), that PPPs (Public Private Partnerships) one of the big and growing reasons for the public deficit, and the job choice number one for ex politicians and their cronies aka "the boys" are not, by far, entirely out of the question.

They just have to be carefully studied beforehand, the minister of finance states.

SNAFU is the order of the day.  Same procedures as last year.  "The boys" just need to be a bit more patient - that's all.

If sanity ruled - Portugal would not consider a PPP the next 100 years, but fortunately it does not.  I am sure the members of parliament - with their double jobs as representatives of the state and simultaneously working for some big companies, that just happen to be involved in PPPs - will continue as during the last government.  I wonder if six of them will just happen to be on the negotiating committee again?  Amazing co-incidence that...

That is a relief.  We are relieved.  Happy for the corrupt industrious political class.

PS. A few red revolutionary radical political activists might make a lot of noise concerning new PPPs.  My advice is find a different acronym instead of PPP - it is an often used sound political tactic.  Call them Civil Organized Rural Restoration Unified Project Tasks.  CORRUPTs.  This way you will have a fresh start and nobody will complain.  After all, the CORRUPTs have nothing to do with PPPs.   Their names are completely different.

Wednesday, November 23, 2011

The rats are already leaving the sinking ship?

Read Portugal instead of Wall Street
I have already twice mentioned the government policy of getting rid of young people by asking them to emigrate.  Here and here.

Obviously this will have effects.  Already it seems the population is diminishing.  I have not heard MSM mentioning this.  I do not think it is the young people emigrating provoking this already.  I think the smart and the rich as well as some emigrants from Eastern Europe and Brazil are starting to flee.  Look at the chart below showing the size of the Portuguese population:

With a birth rate of 1.3, severely worsening financial situation, and the young emigrating, there will soon be lot of space here.   It will be kind of cool to be the only person on the beach of Carcavelos in summer 2025.  Also a bit lonely - but I will not have to worry about pulling in my stomach when the pretty women pass by.

The trade deficit...

it is impossible for a country to balance its government and business deficits while running a trade deficit. This is an accounting identity and is true for all countries at all times. Greece and others are in a monster predicament. No amount of austerity will work until their labor costs drop (for both private and government workers) and their trade deficits are brought into alignment.
We have of course no news from the government concerning the trade deficit.  It seems to worry only people with common sense.  On the other hand, with a sufficient number of citizens broke and with no money to buy foreign goods - the problem might solve itself.  Except - what about Portugal having to import more than half of its basic necessities - such as food.

Portugal reported a trade deficit equivalent to 1323 Million EUR in September of 2011. Portugal major exports are: clothing and footwear, machinery, chemicals, cork and paper products, hides, tungsten and wine. Portugal imports mostly machinery and transport equipment, chemicals, petroleum, textiles and agricultural products. European Union is by far its largest trading partner accounting for about 72% of total trade.
Consider that Portugal has had a continuous trade deficit for 20 years now.   I do not know about you, but if I for twenty years had bought more than what I produced (earned) then I would be in real trouble by now and truly dependent on my creditors.

How many work for us?

Interestingly the municipalities who have hired since 2008, i.e. during the crisis, will be forced to cut down by 3% on the number of public employees.  And that already in 2012.

I feel sorry for the people loosing their jobs, but ecstatic concerning the possibility of smaller local authorities and just the thought of municipalities being forced to save are good news.

However, how can the state demand that municipalities cut down 3%?  It does not even know it self how many public employees there are?!  It is a wonder, that they all receive a salary and a pension.  In fact that is probably why some receive more than just one...

Get your act together and tell us exactly how many public employees Portugal has - it is an public embarrassment and a proof of your incompetence you don't know.

Today the Público (hat tip) can tell us that the government will publish the numbers of public employees adhering to general strike tomorrow.  I doubt the numbers will be trustworthy from either the government, because of incompetence, and from the unions because of exaggeration.  You will know the government is lying if it gives us percentages.  Those would clearly be inventions as the total number of public employees is unknown.

The Portuguese prime minister is reading my blog

The Portuguese prime minister, Mr. Passos Coelho,  is reading my blog.  About time I humbly say.  He should read some more blogs.

At least he now has announced (hat tip Diário de Notícias)
  • The armed forces command structure should be simplified and made more effective (e.g. less "high" commands, one instead of four?)
  • The need to avoid duplicate functions (e.g. military health system, pensions)
All in all, he also wants a meaner and leaner military.

He asks that the armed forces also accept sacrifices like the rest of population.

If I ever see actual results, then I will applaud the prime minister.  On the other hand seeing the problem is the first step.

Sunday, November 20, 2011


Mr. Seguro, the opposition leader and the leader of the "Socialist" Party continues with his:  "We do not agree on the austerity measures.  The VAT should not be raised, the public employees should not receive less, there is a lot of room in the budget for all kinds of extra expenses."

Then he states: The "Socialist Party" will soon come with other much better suggestions for coming through the crisis.  He has stated so at least 100 times.

Well, you had years to do that.  And no result except being a major cause for the mess.  You have had weeks to react to the new austerity measures and zilch except creating discord and doubt.

Why not do the decent thing.  A public modern hara-kiri, stand up in front of the media, apologize profoundly while bowing multiple times.  You must also cry.   Then get lost for ever.

The only alternative is being constructive.  Because some of the criticisms of the austerity measures are correct. There is no structural change, there are no measures to create growth by helping the producers, and there are no measures to improve life quality. 

Defeatism at its worst

Hat tip: Journal de Negócios
The Communist Party, bless their little revolutionary hearts, are making an official question to the Minister on how it is possible young people going to the "Centros de Emprego" ("employment centers", public offices helping people finding work), now are being asked to emigrate?

I already knew the government statements concerning getting rid of am embarrassing problem - in fact it has publicly been stated that the young should leave their comfort zone, implying it is their own fault, and emigrate to get a job.  Now the public announcement has become official policy and has been implemented. (*)

Amazingly, the government is not worried about brain drain, the millions of investment lost or even that Portugal has NO FUTURE without young people.   Are there any demographers working for the government in Portugal?  They could tell any politicians with a brain (not many) that Portugal needs more young people - not less.  In not too many years the demographic bomb will have created a society with more old than people working.  And it is worse in Portugal than practically anywhere else, because of a birth rate of 1.3. Who will pay for all these old people?

Have you noticed all the countries in Europe (and even world wide) doing the opposite?  Trying to keep their young at home, even considering threatening them with a bill for their education if they emigrate! And what about all the measures taken to attract and invite well educated young from abroad to come stay?  I bet other countries are very happy to receive the educated, hard working and dynamic young people now leaving Portugal.  Because a lot of the best will be the ones with guts to leave.  By the way, they will probably leave for good - as statistics show that young people emigrating do usually not come back.

Asking young people to emigrate is the worst defeatist policy I can imagine.  Well, I suppose selling Portugal to the highest bidder is slightly worse - but might in fact be better for the young.

I had some hopes for the new PSD government, but it is just more of the same.  Let us solve the problems any way possible.  Here is a good one.  Get the young to leave.  Less unemployment, less demonstrations/uprisings, less costs, less babies, less schools.  Our policies will work and we will be elected again.

Shame on you!

(*) The only bright spot in all this is that the "Centros de Emprego", now can be closed.  Just replace it with a warning:  "There are no jobs in Portugal.  Emigrate."   Next, we can close the Ministry of Labor.

And these are the people trying to save Europe?

Water does not prevent dehydration

EU officials have concluded, following a three-year investigation, there was no evidence to prove the previously undisputed fact. Producers of bottled water are now forbidden by law from making the claim and will face a two-year jail sentence if they defy the edict, which comes into force in the UK next month. Last night, critics claimed the EU was at odds with both science and common sense. Conservative MEP Roger Helmer said:

“The euro is burning, the EU is falling apart and yet here they are: highly-paid, highly-pensioned officials worrying about the obvious qualities of water and trying to deny us the right to say what is patently true."

“If ever there were an episode which demonstrates the folly of the great European project then this is it.”

German professors Dr Andreas Hahn and Dr Moritz Hagenmeyer, who advise food manufacturers on how to advertise their products, asked the European Commission if the claim could be made on labels.

A MEP Paul Nuttall said: “I had to read this four or five times before I believed it. It is a perfect example of what Brussels does best. Spend three years, with 20 separate pieces of correspondence before summoning 21 professors to Parma where they decide with great solemnity that drinking water cannot be sold as a way to combat dehydration."

This comes right into the category of the bent banana (no myth) and the x year study to define what is a cow.

Comforting to know these are the people trying to save Europe.  They are one third of the Troika.  Comforting is it not?  I worry for Portugal.

I am strongly in favor of the European Union as an idea, but sometimes I have my doubts.  Perhaps we would be better off without these clowns...

Friday, November 18, 2011

Justice for the pensioners or the delinquents?

A Norwegian prison, click here for more pictures
How about this idea?  Put our old in the jails and the criminals in the homes of the old.  It is of course up to the elderly whether they want to or not.  But consider this:

In jail the retired would have:
  • Permanent companionship
  • Hot meals every day and on time
  • Free juridical assistance.
  • Every day access to bathing, time off and walks
  • No need to make food, go shopping, washing the dishes, cleaning the house or washing clothes
  • All the necessary medicine and regular access to health services for free
  • No need to pay rent
  • Permanent 24/7 video surveillance, and included immediate emergency assistance in case of accident or other need
  • Bedding changed twice a week and clothes washed and ironed with regularity
  • Every twenty minutes a visit by a guard. Any correspondence or messages to be handed over personally
  • A dedicated place for receiving family and other visitors
  • Access to library, exercise room, physical therapy and a chapel
  • Visits by a priest and volunteers if so desired
  • Encouragement to take up a profession or a study, including adequate installations, teachers and equipment for free
  • Free clothes and products for personal hygiene
  • The right to live in a private and very secure building, with protected yard for exercise and socializing
  • Access to reading, computer, television, radio and telephones
  • Access to secretarial pool, psychologists, social workers, politicians, journalists, Amnesty international etc. - all available for listening concerning complaints  
  • All employees, such as guards and secretaries, obliged to observe a strict code of conduct or risk harsh punishment.
  • Guaranteed adherence to all human rights according to treaties signed and observed by Portugal.
On the other hand in the private (ex-) homes of the retired, the criminals would be forced to stay and have:
  • 200 euros to live on a month in a small home or room, having no maintenance or improvements done the last 50 years
  • Nobody to clean
  • Food only if made, often cold and with irregularity
  • Clothes bought only with own money needing cleaning and repairs
  • Living alone with no surveillance
  • Forget to eat and take necessary medicine, and nobody around to help
  • From time to time to be cheated, conned, robbed or even assaulted physically
  • Possibility of dying without anybody noticing for months or even years
  • To die after waiting months or years for a doctor's appointment or a surgical procedure.
  • To be ignored by politicians and institutions
  • Nobody to complain to
  • Baths only every two weeks with a risk of falling and getting hurt in the old bathtub
  • Passing a miserable time in winter due to not being able to afford heating
  • The daily entertainment would be soap operas on the TV
Considering the above, I think all tax payers would agree it would be much better to take care of the elderly by putting them in jail, and punish the criminals by putting them out.  Perhaps the criminals would think twice after having lived a few years as a retiree.

The brilliant comparisons and the idea above are not mine.  A big hat tip and thanks for the permission to reproduce in English to the blog:  Apodrecetuga

75% of the 2,5 million retired in Portugal live on the equivalent of minimum salary or less.  The minimum pensions are either 189, 227, or 246 euros per month.  More than one million pensioners receive a sub-subsistence minimum pension.  They are the real poor in Portugal.  It is basically impossible to live on minimum salary not to mention a minimum pension in one of the large cities considering rent, electricity, water, gas, food, medicine and so on. The situation is beyond shameful.  Considering the money lost due to corruption and carelessness, the absurd number of public constructions such as highways and roundabouts - the situation is criminal.

Thursday, November 17, 2011

Diverse news

The Troika has visited and examined.  Portugal has passed and will be allowed to borrow more money, 8 billion euros, at fairly high interest, but lower interest than on the free market.  The most interesting was their message: "It looks good" (concerning the austerity measures and the goals) and "the conditions of the agreements with the Troika may be negotiated".  I am not sure they should have said the last bit...
On the other hand some of the other messages need to heard again due to general disbelief from some parts of the population. I liked this one:  "The number of public servants is too high and they earn to much".  The latter was not said directly - but if you are able to read between the lines...
They also gave a message of "lowering the salaries of the private employees".  I am not sure I agree.  The salaries are already very low in Portugal.  The argument is that salaries in Portugal can not compete with much lower salaries elsewhere.  Outside Europe of course.   "The only alternative", the message continues, "is more efficiency and more productivity".  I like the latter option.  No country in Europe can hope to compete with the low salaries in Asia for now.  Our future is services, high tech, design etc.  We need highly educated effective productive workers working for companies exporting services and goods.

The police is being allowed to expand with 1100 new police.  Portugal is going for the world record in number of police officers in relation to population size.  A typical political response.  The fact is, Portugal needs to save money and become more efficient.  Instead we spend more on a measure of no real effect except for the psychological one.  On the other hand, maybe the politicians are running scared of uprisings?  Unlikely as they are, they would not be undeserved due to the failure of politicians to seek national unity.

More fines:  The government will spend 4 million euros on more road radars.  Already the number of fines and the size of them is astonishing in Portugal.  It must be a real good income.   Very few of the many existing radars have been placed in so called black spots to reduce accidents.  They are mostly used on big avenues where a speed a little above 50 kms per hour is no risk.  As I said, it generates good income.  In spite of a fourth of the fines never being paid as the authorities can not issue them sufficiently fast before the infraction expires.
General speaking, the fines in Portugal have reached enormous heights.  Considering the income level of most people they are grotesque.  My son, the other day, lost his ticket on the coastal train.  150 euros fine.  He is 17 and a student.  What if you earn minimum salary of ~480?  It would be more fair with fines according to income.
Companies are also severely punished.  The previous year my IT company (I) paid the monthly employee income tax 8 days late a few times.  I was simply overwhelmed with work and also hate administrative tasks - a small fine and a late fee was deserved.  The resulting robbery fines were a minimum 50% of the amount paid late.  I wonder what that does to companies in financial trouble?
Good income though for the tax man.  Against all odds I hope the money went to a children's home and not into the pockets of a dirty politician.

Common sense seems to prevail with the public TV and Radio.  It will stay public but will cut the number of employees (currently 4000). In the future probably based on a commercial free budget.  Perhaps this will permit more quality instead of quantity.  More facts instead of opinion.  Maybe some of the people from BBC can come here and show how to make documentaries instead of contests, quality TV series instead of soap operas.
This brings me to an interesting tendency all over the world.  The experts are called in to be interviewed and asked about their opinions - instead of what they know.  Also, the majority of "experts" are now journalists?  So we have journalists interviewing journalists?   I can see the advantages.  No real news or knowledge are necessary any more.  They are all auto generated in the studio.

The Portuguese state is notoriously late on all payments and hardly ever will pay interests on late payments.  It concerns tax returns, payments of invoices etc.  Economists have calculated the cost to 14000 lost jobs in the private sector per year and a cost of 2% of GDP for the last five years.  When a company issues an invoice to the state - the VAT becomes due the next month.  But the payment may only arrive in two years.  The companies and the liberal professions thus pay instead of receive.  Economists, and other good folk, can tell you that leads to liquidity problems...

All the PIIGS have qualified for the European Football Championships 2012.  I hope it is not another indicator of strange priorities.  Here in Portugal, football is always the number one news and the presidents of football clubs and associations are among the most powerful.  It is common, come election times, that political prime minister candidates confer with football club presidents - a little better than doing so with the mafia, I suppose.  On the other hand the Portuguese 6-2 football victory the other day giving access to the championship were good news.  As the only such, I hope it can be a much needed help for the Portuguese psyche.

Spain nearly reached 7% interests on a 10 year bonds sale.  That is above what made other PIIGS seek bailouts.  Combined with the surreal unemployment in Spain - a near to no difference 50% for youths - it is very worrying indeed.

Our minister of economy was a bit fast and stated in parliament that we will start recuperating in 2012.  I.e. the economy would start to grow.  The day after he retracted: 2012 will be the beginning of better times.  He knows of course the economy will retract in 2012 - much worse than this year.  I am glad he did not state the more likely result, the beginning of the end, as we have enough bad news as it is.

And now to the lacking news this week from the government:  Where are the promised structural reforms?  What will be done to promote growth?  We see a little talk but absolutely no actions.  So far nearly all austerity measures will just hinder growth.  Combined with the systemic financial international crisis - I fail to see how we can create and sell more products.  The government is a promoter of the the evil circle dance...  We are not amused.

Wednesday, November 16, 2011

Is everybody mad in this country?

It must be a cultural thing. I do not understand.  TAP is a public company owned by the state.  I.e. all Portuguese.  It is supposed to be privatized now, so Portugal can pay off on some of its debts.  But now the pilots of TAP have decided to strike eight days, four days before Christmas and 4 days after New Years.  Not because they are upset by salaries going down and taxes going up.  But because they want to be given, offered as a gift, up to 20% of TAP when it is sold.  They were promised so a few years ago, if TAP ever were to be privatized.

It must be a cultural thing. I do not understand.  A select group of employees of a company has been promised part of the company - no small part either.  But why are shares of a public company owned by all Portuguese just to be offered to 800 or so pilots.  What about the stewardesses?   I bet the pilots will never get coffee again.

It must be a cultural thing. I do not understand.  Does it not take a very special law to give away public property to a few number of selected private citizens?  Is this even constitutional?

It must be a cultural thing. I do not understand.  Do the pilots consider the country finished, and now like the old USSR must be divided in equal parts to be given to the few well to do?

It must be a cultural thing. I do not understand.  The company is being readied to be sold.  And now 8 days of strike at the most critical part of the year business wise.  The strike will cost a minimum of 50 million Euros and probably lower the price of the company by the double.

It must be a cultural thing. I do not understand.  Who in Portugal can make promises like that?  Did the pilots believe it?  Why?  I know many pilots come from a military background and pilots and military pilots in particular, are not exactly humble.  But this seem over the top - even for people born without a grain of humbleness.

It must be a cultural thing. I do not understand.  Does Portugal have a hidden owner? Is there a hidden King and is this still an absolute monarchy?  Is he (she?) the one who gives away state patrimony?  Where does he (she?) live?  I would like to meet him (her?).  I like the area around Tavira - the title of baron and 400 square kilometers of land would make me pretty satisfied.  I would shut up for a while...

It must be a cultural thing. I do not understand.  The country is in the worst crisis in a generation.  The president and the prime minister are asking for social responsibility. And an elite group - one of the best paid  groups of people in the country are considering running off with the silverware?  I am grateful they only want to take 20% - they could take it all.  Thank goodness that pilots are responsible people.

It must be a cultural thing. I do not understand.  This can't be a real event?  Did I doze off for a few months?  Is it the first of April already?

It must be a cultural thing. I do not understand.  Is everybody mad in this country?

Update 19.11.2011:  There is a video in Portuguese in circulation trying to explain the pilot's point of view.  It is claimed that they in 1999 received a promised partnership in the company, when (if?) privatized, if they would accept a lower (none at the time?) salary raise.  The promise was given by the then socialist government (credible - politicians love to give away other peoples property).  The corresponding amount has now been calculated: 400 millions.  The 800 pilots would each get a cool 500000 euros.

I would like to have some austerity too...    Instead I have to hand in more of my property every year to pay extra income tax, more property tax, more VAT.  In return I receive less services of a worse quality from the state.  This state business is a real cool business.  I would like one too.   No wonder most dictators prefer to go down fighting instead of just giving it up.

Tuesday, November 15, 2011

A roundabout on each corner

Nice tulips, nice columns, nice flags, nice grass, nice...
Every other road intersection in Portugal has been turned into a roundabout.  This is actually good.  Portugal used to be the country in Europe with most traffic accidents and while there are a lot of accidents in roundabouts they are seldom serious.  They also, usually, make the traffic flow better.

Fascinatingly, every municipality in the country has entered into a contest.  How to make the prettiest (taste is subjective) most impressive roundabout.  It involves expensive landscaping, sculptures, lights, automatic watering of plants, weird colors etc.  Mayors, when they meet, brag about having the biggest one.

There are large number of pictures on this Portuguese blog.

The schools may be falling apart, ruins be found in the middle of city centers, and the poor be living on the streets.  But we will not save on the roundabouts as they show off our prosperity and ability to prioritize.  I suppose it makes sense.  Logically the people running the companies getting the construction and maintenance contracts are friends or family of local authorities.

Consider the advantages. There are many areas where the roundabouts are the only green areas - as the surroundings are covered with concrete.  However, small children fortunately do not go there to play often and rarely repeatedly.  Also, I always used to complain that I could not see where my tax money was spent.

It is alive
Note how a number of sculptures block the visibility in roundabouts.  Interestingly this is supposedly illegal according to Portuguese law and it sure does make the roundabouts a bit less safe.  But also more interesting in an adrenaline provoking manner.  Cars can literally come out of nowhere.  Cool.

Close to where I live in Carcavelos on the coastal road going from Lisbon to Cascais, a couple of roundabouts have been remade at least four times.  The four lane coastal road is a very busy road.  Until a few years ago it was claimed the most dangerous road in Europe.  People have slowed down now, but some still drive very fast using it as if it were a highway - the drugged drunk disco dancer delinquents driving home early mornings are speed record holders.  Hence the proven fact that a car can be wrapped around a mast at 5 meters height and a 3 ton jeep can fly through billboard at 4 meters height.

This is how one of the roundabouts looks now (see here - Google Maps) - the other is similar (see here)

The traffic sign(s) to the right are destroyed once a week - minimum
One of the problems, when the roundabouts were built and replaced intersections, were that people overlooked them.  After all they did not use to be there.  So they would drive right through them.  Often several in one day. That scratched the first two designs as the cars would impact with whatever structures that were on them.  Even the old telephone poles they had put up as barriers were not up to the job.

The third one was rather amusing as it had a hole in the middle (there is an underground pedestrian passing underneath this one roundabout to get safely to the beach).  One day in the morning I saw a car had attempted to cross the roundabout.  The hole had swallowed it.  Good training for golfers perhaps?  I have noticed when putting with too much strength - the ball with too much speed never goes in, even when passing right over the hole.

Finally, we got the design shown above.  Some still claim with tenacity the metal ramps are sculptures - but no.  They are quite functional.  When a car drives across the roundabout they become airborne for quite a distance.  I saw a car proving so another morning.  It taught me two things.  Even while ramping the speed needs to be moderated somewhat - and cars can leave craters in a field.   

The ramps and the hole in the middle would be a nice combination - but the spoilsports have covered the hole with heavy duty grates.  Ah well, the coastal road in Carcavelos can still be put to good use by Darwin Award hopefuls.

How many public pension schemes are there?

Today we can read in the Portuguese news that the military pension fund is being saved by a 6.5 million euro  payment from the government, that will keep it afloat until the end of the year.  That is good, I suppose, otherwise the retired military personal would stop receiving money.

6.5 million is a refreshingly small number.  Usually the debts are listed in billions.

But it does bother me quite a bit.  How many public pension funds are there?  I thought everybody was in the big one belonging to social security.  A few weeks ago the news were about the bankers pension fund being merged with the social security.  Now we hear about the military pension fund?!

Is there a special fund for politicians as well?  I would not be surprised.  If so, there should be one for baker's apprentices as well.

May I suggest one and one only public pension fund?  To save money?  To be fair?  To get rid of some bureaucracy.  Portugal is a small country and there are modern technologies.  It no longer makes economic sense to have the same basic bureaucratic organization repeated several times over.

Also from a point of fairness and cohesion, stop giving groups special privileges.

The military is one of the good examples of a candidate for more for efficiency.  There are three "estados-maior", military commands.  One each for the army, air force and the navy.  On top of that there is a "supreme estado-maior", military command for all three.  There is a also a separate health service for military personal and family members with own hospitals.   There is a separate military police for each branch of the armed forces and the military has a separate pension fund.

I was for a short time military myself and I have immense sympathy for armed forces and consider them a necessity of free society, not to speak of treaty obligations.  But I would like to see an efficient military.  Let us look at another number.  There are 132 generals in "the active" in Portugal.  United States, the only super power, has around 870.  I will let the reader calculate how many generals the US would have following the Portuguese standard (estimated active personal armed forces US: 1.4+ million, Portugal: 45000).  I have one question though: Who sweeps the floors of the officer clubs in Portugal?  Majors/Commanders?   This is however, not a Portuguese only problem.  Many countries now have a ratio of 5 or less enlisted per officer.

It does not sound very efficient - does it?

What about, for starters, one military command, one military police, pensions through social security and health treatment through the public hospitals.  A smaller military health structure, a field hospital, could be kept for UN or NATO deployments.  All this would permit more soldiering, less administration, and it would show that the armed forces are an integral part of society and also understand times of austerity.  Looking for goodwill?

Sunday, November 13, 2011

No national unity

Why do Portuguese, generally speaking, disdain their own country?
Why is a Brazilian football coach smarter than the collective Portuguese political elite?
Why do Portuguese politicians continue their lack wit political games in a time of crisis?
Why do the politicians not give importance to national unity?

The president
This presidency has been rather catastrophical in terms of when the president speaks, when he keeps silent and what he says when the silence is over.  I had hoped that Mr. Cavaco Silva would have become a statesman as he seemed to have the potential.  Alas, we have had no such luck.  In times of crisis the president is quiet. In times where the people needs a leader, he is absent (right now literally - in America).  In times where he should create unity - he creates discord.  Does he even speak to the prime minister?  I am not an avid viewer of TV - aux contraire - but as far as I know there has not been a single speech to the nation from the president (or the prime minister for that sake).  And this during the worst Portuguese crisis in a generation.  At times, I wonder whether Mr. Cavaco Silva is well.  Has he become incapacitated?

The politicians
From the other political leaders we have come to expect anything.  Even murder now seems to make part of a politicians make-up.  A former PSD parliamentary leader has been accused of murder in Brazil.  He is also a lawyer - the correlation and progression is clear with the general impression of politician's careers:   lawyer (liar), politician, riches, political leader, more riches and now murder.  Corruptness and nepotism is somewhere in the timeline as well, I am sure.

Amazingly, most Portuguese I have spoken to are not even very surprised that a prominent politician might have committed murder.  The level of expectation is extremely low, politicians are considered human monsters?!  

For now the gentleman in question is of course innocent until proven otherwise in a court of law.  I sincerely hope it will be innocence - in spite of much evidence pointing to his guilt.  Murder would indicate that the corruptness of the political class has reached mafia levels.

National discord
There is no national unity in Portugal.  I cannot recall any recent messages from the president or the prime minister to the nation.  The politicians ask for huge sacrifices from the people.  But they do not disdain themselves to speak to the nation.  I would by now have expected speeches in direct, breaking all other emissions, on national TV and Radio.  I would expect whole pages in the press.  All should explain why we got here, apologize for the failures of the leadership, explain the international problems, explain what and why it is necessary with the draconian measures, beg for understanding and unity, explain how the citizens can help, and finally give the promises, that this will lead to a more prosperous and just nation.

All we get are a few words between one meeting or another.  The president included a few words in a speech to American-Portuguese, the Prime minister a few words also in parliament.  Otherwise zilch.
Try to have a look at the websites of the Portuguese President or the Portuguese Prime Minister.  I see no messages.  It is insufficient, inadmissible, inexplicable and irresponsible.

On top of that we have obvious and public disagreement between the prime minister and the president, not to mention the main opposition party.  At the the same time, the petty, childlike, dim wit political games continue.  Are you all out of your (insert appropriate multiple swear words) minds?

May I remind you that Portugal is continuously scrutinized by the international community?  Even moreso by the big financial interests?  The same interests that has as their current favorite objective to invest against nations.  Do you know Portugal is called a pig - literally - by other countries?

Furthermore, may I remind you that Portugal will not make it without the support of the population - you know the bothersome humans living in cities, towns, villages and the countryside all over the country.  The people you need to fool to be elected.

The basic messages you have given so far are:  The people will pay much more tax, receive less, work longer, or work not at all (unemployed) and the young will have to emigrate.

All to make up for the mistakes (and criminal negligence if not crimes outright) of the leaders, former and present, of the country.

On top of that the Portuguese people have been treated like this for centuries.  The dictatorship is still recent.  It is not entirely strange, that Portuguese suffer from an inferiority complex and more often than not speak badly of their own country.

The national discord is breaking the country.

National unity
With national unity and national pride, Portugal has the potential of a great nation.   It is a nation of diversity and great beauty.  Of a kind and hard working people with a rich culture.  It has a history of many proud and great moments.

Consider what a single Brazilian football trainer could do with a simple message.  He thought it incomprehensible that the national football team he was responsible for received so little support - so he on TV asked for more, to make an effort: "We are all Portugal".  Suddenly people felt pride in being Portuguese, to the degree that every other dwelling and every other car would be showing the Portuguese flag.  And this for football, which all considered, is not that important in the big picture.

Let there be unity and national pride, the political and citizen elite must show the way by example.  Most of all, the political leadership must get its act together and live up to the concept.  Lead!

Saturday, November 12, 2011

The public "servants" are demonstrating

Hat tip: SIC Noticias
Today the public employees (remember they are not servants in Portugal) are demonstrating.  I applaud citizens in Portugal using their civic rights - that happens far too little.  One of the reasons we are in this mess.

I also applaud the public employees for demonstrating on a Saturday.  Because, taking the current situation into account, striking like the privileged transport (public as well) employees have being doing on working days, is a bit like shooting yourself in the foot.  If you don't understand that - then shooting yourself in the head is quite safe.

I feel a bit nasty this morning, so let me suggest the following.  We should register the public function employees at the demonstration today.  I have a feeling all the absentees and terminal ill will show up.  The absentees can be recognized on their new jackets.   They are the ones who arrive in the morning to hang their jackets on the back of the chairs and then leave only to come back at the end of the day to pick up the jackets again.  The terminal ill can be recognized by looking exceedingly healthy and by being unknown at their places of work as they are on indefinite sick leave since forever.

To be fair, a large number of public employees do a terrific job.  I can mention police, nurses, doctors, teachers and so forth.   I know the absentees are not popular among these hard workers.  They make everybody work twice as hard as they ought to.

But another number of public employees, with an overweight of bureaucrats and managers, seem to either have no function or have the main function of keeping the hard workers from doing their jobs.   Were I you, I would go to my desk this Saturday and start working (for the first time in your life on a weekend).  Because hopefully somebody will look over your shoulder soon and ask: What's the purpose of your function?  How efficient are you?

We, the producers -  us who generate the products paying everything - have met you, we are tired of carrying your weight, we are tired of the ways you have invented to hinder us in producing, and we are not amused.

Friday, November 11, 2011

Austerity birth control

Hat tip: Humorbabaca

Translation: "New method for male birth control"

Portugal is supposedly the country with the lowest birth rate in Europe.  With 15 years of crisis and these kinds of austerity measures - how could it be otherwise?

The answer from the politicians:  "We feel your pain" - yeah, right.   Am I the only one who would like the guilty to go by this machine daily?

On top of that, in case of unlikely procreation, the young have been asked to leave.


PS (Socialist Party) is abstaining from the vote on the state budget 2012, which seems to have been mostly approved today.  The members of PS are known as militants, but the hammer and sickle is not its logo.  Instead it uses the fist and when that seems a bit old fashioned the inconspicuous and peaceful red rose is used.  Except for the militancy bit, pretty much the same as all social democratic parties in Europe.

The new leader of the Socialists is called Mr. Seguro (seguro means safe).  It is a good name for a socialist leader, I suppose.  I am on the other hand a bit fed up with the Gentleman.  He spends his time trying to remove all blame from his own party, assign it to the current government and taking no responsibility what so ever for the current situation.  He has only managed to tarnish even more the reputation of Portugal and brought into doubt the ability of Portugal to persevere.

If I were to meet Mr. Seguro, a safe bet is that I would like to point out a few facts:
  1. If any single party is to blame for the current crisis then it is the socialists as they been in government the last 6 years.
  2. The agreement with the Troika was signed by the last socialist government.
  3. I understand you are very much against cutting down public expenditure, even though you know it is necessary.  You worry about the human costs, as many do - including me.
  4. You have no alternatives (to my knowledge) to cutting down public expenditure except more taxes for everybody.  Thus the agreement with the Troika would be put into jeopardy as it clearly states 1/3 extra income and 2/3 cuts on the expenditure.  
  5. You seem to represent the type of socialism some call concrete socialism.  Old fashioned proletariate against the evil capitalists.  This even though you and everybody else know - there is only one way out of this crisis and this is by producing more than we spend.  The producers are nearly all private enterprise.  Even current communist countries promote private enterprise.
  6. Even you must by now realize the public debt is a problem? 
All in all you make a very weak performance.  We are not amused.

If you have real alternatives - present them (and there are no buffers in the state budget for 2012)  I believe some of the government proposed measures are weak in many areas and too expansive in others.  Some carry extreme risk and I would like to see alternatives that also take life quality and social coherence into account.  Also I would like to see measures that promote growth and private enterprise.   However - the current realities and the (your) agreement with the Troika leave little room for manoeuvres.

May I suggest this is a time for unity and humility?  Your current strategy have created exactly zero results for your electorate.  As the main opposition party - you have responsibilities above and beyond petty party politics. Your previous party leader (his name a joke in many circles) became an embarrassment for the country.  The number of scandals your ex-leader and the Socialist Party have been involved in the last years is staggering.

Mr. Seguro, I do not know your background beyond that you have been a government minister, I do not know whether you personally are partly responsible for the actions of the previous two socialist governments.  My guess would be yes, as I think you are not new to politics, and that you must be a man of influence in PS, to have become the new leader.  But I will give you the benefit of the doubt and assume by miracle you are a gentleman and a person of integrity. 

However, I find your discourse tiresome and arrogant in the extreme considering the track record of the last two governments.   PSD (Social Democrat Party), as a member of the two big party system, is in my opinion nearly as guilty as PS in having brought the country to the brink.  However, your guilt is more recent and thus more obvious.  If the people were ever to obtain justice and see heads roll (metaphorically speaking of course) they would look first into the actions - many call criminal negligence and even crimes - of the people in and behind the previous government.   

Shall we look at a few statistics from the last two governments (PS and colored red)?  A big hat tip to the Portuguese blog:  Desmitos for the graphs from:  The real legacy of this government from May 2011.  (this refers to then PS government)

Rate of growth of GDP

Public debt in percentage of GDP (hidden debt not included for 2010)

Public debt in percentage of GDP (hidden debt not included for 2010)

Unemployment rate

Net external debt as percentage of GDP

Portuguese GDP as a percentage of average GDP of top tier European countries
And now to the infamous PPPs (Public-Private Partnerships), perhaps one of the best indicators of overspending, corruption and "jobs for the boys"?!  Here are the number of PPPs established per government.  Thanks to that my eventual great grandchildren will still have a debt in 70 years...

  • Cavaco Silva (PSD): 2 
  • António Guterres (PS): 30 
  • Durão Barroso (PSD) : 6 
  • José Sócrates (PS): 50
The graphs and numbers speak for themselves I find.
An sincere humble apology to the entire Portuguese people is in order - how dare you not!

Thursday, November 10, 2011

Do not believe the official story

Today we note that the recession (the retraction of the economy) in Portugal in 2012 by the European Commission is being estimated to 3%  A short time ago the prevision from the Commission was closer to 2%. We currently see numbers already starting to invalidate the 2.8% estimated by the government.  It will of course put the whole 2012 state budget at risk which started being negotiated in parliament just today.

Only politicians and economists working for official entities such as the Portuguese government, OECD, ECB, the European Commission, the IMF etc. seem to believe these numbers.  The real numbers will be much worse - or I will have to eat my old hat.  The risk of the latter is minimal as anybody with an iota of common sense and an calculator can see where we are heading.

I believe a few responsible leaders in Portugal know the sad truth.  They perhaps keep quiet not to create panic.  Portugal is broke and will need to soon negotiate help - at a minimum a technical default.  In this climate of international crisis there is no easy way out - on the contrary - everything will be more difficult.  There may not be any money available for rescue packages if (when?) countries like Italy and Spain start floundering.   

The  austerity measures, much needed savings in the public sector, initially will add to the retraction of the economy.   Mainly because there are basically zero initiatives to create growth.  On the contrary the already high tax burden on people and companies producing is rising dramatically.  This combined with a huge drop off in internal demand will break half of the shops and companies in Portugal.  This process is already started.

The government seem to at least theoretically to understand the only way out of the crisis is by producing more.  Only producers are paying the bills.  The whole public sector and everybody receiving money or services from the public sector live off producers.   It is simply not possible to live spending more than we produce.

However, the actions taken by the government are so far only short term stop gap measures nearly completely ignoring the needs of the productive and entirely ignoring the need for more and new producers (private enterprise) of which exporters are the most valuable.  Some announced measures are promising, but have so far stayed on paper where the ink is still wet.  See here and here. 

You just need to look at Greece, to see where we are going.  You hear repeated constantly, that Portugal is not Greece or the other PIIGS, but then where is the explanation to why it seems we have the same problems and all work on similar measures?  Portugal is not Greece.  Portugal is Greece 6-12 months ago.

Stupidity has created huge amounts of public debt above 100% of the GDP with a burden of interest that will soon surpass 5% of the GDP and is impossible to pay. Combined with a badly functioning  unproductive public apparatus with bureaucrats living in an alternative reality, intertwined with nepotism, politics and a strong mix of public/private interests there are no easy solutions.

The only solutions available will be draconian such as the prime minister's plan announced today to cut down by 43% the public sector by 2014 - in three years only - it seems implausible.  I would think it impossible without cutting public salaries and all pensions to half.  On top of that half of the public servants may have to be fired.  It may also be the only way to have a chance to lower the debt.  I am not sure this will be politically possible as the effects on Portuguese society will be devastating.  Only if combined with a strong civic involvement and movements do I foresee a possibility.

Today the Greek unemployment figures for August were announced.  Since the crisis started, unemployment has gone up from 355000 to 908000.  That corresponds to a current 18.4% and a whopping 43.5% youth unemployment.  I want you to look at these figures just once more.  They. Will. Be. The. Reality. Here. Soon.  And they may very well become worse.

You know the current Portuguese figures and the official previsions?  The current unemployment is 12.5% and the alternative reality economists are giving previsions of 13% to 13.9% for 2012.  This is of course bull - a minimum 25% of all companies and shops will have closed in Portugal by the end of 2012.   A minimum of 200000 families will go broke.  The main stream media (and the government) has been very quiet about current youth unemployment in Portugal as the number is shocking:  27.1% - the 4th worst in Europe.  Our neighbor Spain is the leader with an unsupportable 48%.  Furthermore, be aware that youth unemployment is the number for unemployed young people between 15 and 24 and it does not count young people studying.  Therefore the real youth rate is probably around 50% more.  In other words.  If you are young and looking for a job - nearly no matter your qualifications - you are screwed.   Hence the dreadful defeatist destructive official message from the Portuguese government:  Emigrate - there is no future here.

Portugal will soon reach Spanish and Greek numbers.   Can you imagine what that will do to the economy and the cohesion of society?  The crisis is no longer theoretical - even though we are barely feeling the big one coming up.

I usually exaggerate and add a few attempts of being funny to my articles such as jokes, funny cartoons or relevant pictures.  But this is the reality, utterly serious and not a joking matter.  I imagine you are revolted - specially if you are living here in Portugal.  It will take much suffering and hard work to overcome the very difficult times - years - ahead.

I wish we could at least have the satisfaction of seeing the responsible persons: politicians, corrupt officials, greedy dishonest private sector managers and "the boys" being punished for bringing the country into this position during the last at least 20 years - but that will not happen - on the contrary they will get to keep most of their ill gotten gains and will be the ones least affected by austerity.  Maybe some kind of truth commissions such as those used in South Africa after apartheid may bring some closure to the serious crimes committed.

On the other hand, I do believe that the hard lessons learned will help to prevent it happening again in the future and permit creating a more healthy democracy for the people by the people.  The people deserve it.