I have been busy and on holidays - the blog has been neglected.
There are a few news worth reporting on. Some are even good. The speculation against the Euro and the countries in trouble in Europe seems to be lessening. But perhaps it is because of the holidays and this is just the quiet before the storm.
Italy managed to sell bonds at a low interest rate compared to the 7+ percent of previous offerings. Portugal and Spain still has high interest rates.
The mortgage interest is going down, which signifies lower payments on housing, which will help the people a little bit. On the other hand hardly any houses are sold.
In Spain the news are not good. The public deficit will not be 6% this year but a staggering 8%. The cure, which is worse than the decease is more taxes as proposed by the government. Let us not forget that unemployment in Spain is nearly double of Portugal. In spite of a seemingly stronger economy, Spain is at risk.
The government in Portugal talks about structural reform. We do not see much of that. In fact nothing so far... Except for the fact that EDP (the electricity) company has been sold. A Chinese company has bought the shares owned by the state (21.35%). I wonder if the government now will have to find another way charging hidden taxes of which the electricity bill already contains 50%. Also I am quite sure the Portuguese people has not gotten full value for this former common good. That is how it goes in a public sale, not to mention a public fire sale. I am quite sure that electricity will not get cheaper now - on the contrary.
Selling the country to the Chinese is not exactly my favorite solution to the problems. On the other hand it is a viable one, there is not much choice, and better to be working for the Chinese than to starve...
Finally, it seems we will have a solution to the absurd rental law. A large number of rental contracts have rents that are so low they approach zero. This because rents have not been following the market price - in fact they were not allowed to. It has been the policy of all previous governments to let property owners pay for rent subsidization. This is obviously a government task and it has let to far to few homes for rent in Portugal. Even wealthy people have abused this condition. I have heard of people living in palaces paying 50 Euros a month. The problem is the large number of poor people needing the low rent to get by. They will now in five years probably have to live on the streets as the rents within five years supposedly will be actualized. The proposed law is not quite clear at this point - in particular with regard to rent subsidization, which will be necessary. I am in favor anyway, as a free market is better at regulating prices than any government, and a large number of people have no homes available for rent as the situation stands. Building new and maintaining existing homes for rent, would be a nice help for the economy as well. It could also clear up some of the ruins you see in each city in Portugal.
While talking rent - I nearly forgot. One of the reasons the government is promoting higher rents is of course because of taxation. Could it be the main one? I would not be surprised as taxing has so far been the only remedy for the crisis applied by the government.
The number of children born in Portugal is the lowest since 1960, when the numbers started being registered centrally (by INI - National Institute of Statistics). Apparently because of the crisis. I will buy that as one explanation. Another is the fact that the young are emigrating. A requisite of child birth is a relatively young mother... On the other hand perhaps the government is planning on grandmothers giving birth again using artificial means? Perhaps there is plan behind the madness?
On Sunday going to the café will start becoming more expensive. A number of intermediate VAT rates levied on diverse products will go up to 23%. I can guarantee longer walks as a number of establishments will close. Once you get to enjoy your coffee, it will only be until you see the bill. Not only restaurants and cafés will become more expensive. A number of products will see VAT raised from 6% and 13% to 23%. Joy - more money for the state to pay back loans - whatever is left is for waste. It goes into the black hole. It will be interesting whether raising the VAT will actually give more income? If the amount of business lost and the number of businesses actually closing down is large - then it will not - as I suspect. But I do guarantee this: The people will become more poor.
A young person going to cafés a lot asked me concerning the VAT: For how long will it be more expensive because of the Value Added Tax? My answer was easy: Forever. To my knowledge no VAT has ever been lowered. A problem shared with most taxes. The government assurances that the austerity measures are temporary are laughable.
In Portugal the police force called ASAE controls smoking and restaurantsusing Gestapo methods. They are responsible for implementing all kind of regulations limiting the freedom of activities performed on private property. I am talking about hotels, restaurants, shops and so on. Don't let your customers dance in your restaurant as that will land you in front of judge. And woe if you do not remember to put up the sign indicating that the sale of tobacco to minors is illegal. The minimum fine is 30.000 euros and it can go up to 250.000. Interestingly the fine for actually selling tobacco to minors is the same and in reality much lower.
Praised be bureaucracies.
Most of all the small gyms in Portugal have been closed down or will be soon. They do not have sufficient ventilation, lockers, showers, toilets, separate toilet facilities for staff, or the money for several technical directors with a university degree in fitness (there must always be one on the premises). The laws were made in a collaboration between the universities and the big (mostly multinational) gyms. Thus the poor will now stop using gymnasiums as the cheap ones are dying out.
Praised be bureaucracies.
There are a few news worth reporting on. Some are even good. The speculation against the Euro and the countries in trouble in Europe seems to be lessening. But perhaps it is because of the holidays and this is just the quiet before the storm.
Italy managed to sell bonds at a low interest rate compared to the 7+ percent of previous offerings. Portugal and Spain still has high interest rates.
The mortgage interest is going down, which signifies lower payments on housing, which will help the people a little bit. On the other hand hardly any houses are sold.
In Spain the news are not good. The public deficit will not be 6% this year but a staggering 8%. The cure, which is worse than the decease is more taxes as proposed by the government. Let us not forget that unemployment in Spain is nearly double of Portugal. In spite of a seemingly stronger economy, Spain is at risk.
The government in Portugal talks about structural reform. We do not see much of that. In fact nothing so far... Except for the fact that EDP (the electricity) company has been sold. A Chinese company has bought the shares owned by the state (21.35%). I wonder if the government now will have to find another way charging hidden taxes of which the electricity bill already contains 50%. Also I am quite sure the Portuguese people has not gotten full value for this former common good. That is how it goes in a public sale, not to mention a public fire sale. I am quite sure that electricity will not get cheaper now - on the contrary.
Selling the country to the Chinese is not exactly my favorite solution to the problems. On the other hand it is a viable one, there is not much choice, and better to be working for the Chinese than to starve...
Finally, it seems we will have a solution to the absurd rental law. A large number of rental contracts have rents that are so low they approach zero. This because rents have not been following the market price - in fact they were not allowed to. It has been the policy of all previous governments to let property owners pay for rent subsidization. This is obviously a government task and it has let to far to few homes for rent in Portugal. Even wealthy people have abused this condition. I have heard of people living in palaces paying 50 Euros a month. The problem is the large number of poor people needing the low rent to get by. They will now in five years probably have to live on the streets as the rents within five years supposedly will be actualized. The proposed law is not quite clear at this point - in particular with regard to rent subsidization, which will be necessary. I am in favor anyway, as a free market is better at regulating prices than any government, and a large number of people have no homes available for rent as the situation stands. Building new and maintaining existing homes for rent, would be a nice help for the economy as well. It could also clear up some of the ruins you see in each city in Portugal.
While talking rent - I nearly forgot. One of the reasons the government is promoting higher rents is of course because of taxation. Could it be the main one? I would not be surprised as taxing has so far been the only remedy for the crisis applied by the government.
The number of children born in Portugal is the lowest since 1960, when the numbers started being registered centrally (by INI - National Institute of Statistics). Apparently because of the crisis. I will buy that as one explanation. Another is the fact that the young are emigrating. A requisite of child birth is a relatively young mother... On the other hand perhaps the government is planning on grandmothers giving birth again using artificial means? Perhaps there is plan behind the madness?
On Sunday going to the café will start becoming more expensive. A number of intermediate VAT rates levied on diverse products will go up to 23%. I can guarantee longer walks as a number of establishments will close. Once you get to enjoy your coffee, it will only be until you see the bill. Not only restaurants and cafés will become more expensive. A number of products will see VAT raised from 6% and 13% to 23%. Joy - more money for the state to pay back loans - whatever is left is for waste. It goes into the black hole. It will be interesting whether raising the VAT will actually give more income? If the amount of business lost and the number of businesses actually closing down is large - then it will not - as I suspect. But I do guarantee this: The people will become more poor.
A young person going to cafés a lot asked me concerning the VAT: For how long will it be more expensive because of the Value Added Tax? My answer was easy: Forever. To my knowledge no VAT has ever been lowered. A problem shared with most taxes. The government assurances that the austerity measures are temporary are laughable.
In Portugal the police force called ASAE controls smoking and restaurants
Praised be bureaucracies.
Most of all the small gyms in Portugal have been closed down or will be soon. They do not have sufficient ventilation, lockers, showers, toilets, separate toilet facilities for staff, or the money for several technical directors with a university degree in fitness (there must always be one on the premises). The laws were made in a collaboration between the universities and the big (mostly multinational) gyms. Thus the poor will now stop using gymnasiums as the cheap ones are dying out.
Praised be bureaucracies.
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