Worst excuse ever?

The former prime minister of Portugal has taken a short break from his propaganda tour and hideout studies in France.  He is there to study political science.  To call politics a science is of course ridiculous - as it belongs to the so called social sciences - aka the voodoo sciences.  So let us call it by its name.  Mr. Socrates is in France to study politics.  About time I would say.  Have they gotten to the part of "dangers of corruption?".  Or the part where you learn to lie properly?

Because Mr Socrates' excuse on public TV concerning his statement is among the worst I have ever heard.  He claims that the phrase: "The idea of paying the debt is childish" must be seen in context.

He claims he was referring to "paying the entire Portuguese debt in one go" as a childish notion.  By "one go" he meant next year or maybe in 3-4 years.

I would call it a godlike notion - as in needing a miracle - to be able to pay the Portuguese debt in one go.  Portugal cannot even stop increasing the debt, not mentioning paying it off...

Therefore the excuse is utter nonsense.

Instead it is for once a true glimpse into the soul of the "entitled" opportunists.  There is a strange ideology among us in the world.  It is an ideology of entitlement.  We are entitled to receive help, we are entitled to have everything paid, we are entitled to free health care - we are entitled to everything.  There is nothing mentioned of gratitude, hard work. paying back or taking responsibility.  No, instead there is a demand of rights.  A right to entitlement.

Mr. Socrates not only is a believer in rights.  He of course feels Portugal is entitled to eternal finance and no obligations.  He happily spends other people's hard earned money.  Without a glimpse he in 6 years doubled Portugal's debt, as the money earners capability of creating riches to be taken by the state was not up to the necessities of Mr. Socrates.  He completely ignored his duties as the head of government, not to mention as the head of the country.  He fostered an environment of extreme corruption and absolutely no accountability.

Rights are in my opinion something earned and rights always include obligations.

Now we must pay, and dearly, for the "entitled".

May the phrase , "The idea of paying the debt is childish", follow Mr. Socrates as a defining moment the rest of his life.  Another proof of ineptitude.  Perhaps then he will never be given a job of responsibility again.

Child's play

Mr. Socrates, the previous prime minister has found an audience in Paris.  I wonder how.  Did he pay them?

If anybody can be made personally responsible for the unpayable debts of the country - it should be Mr. Socrates.  Check out here.  With any justice, Mr. Socrates will one day have to answer in court concerning the mismanagement of the country.  Don't hold your breath while waiting.

Mr. Socrates has been known for a number of scandals.  One of the smaller ones being his degree as an Engineer.  He is still not considered one by the order of Portuguese engineers.

The country is insolvent going through the biggest crisis ever as a democracy and Mr. Socrates gives us a few wise words:


"The idea of paying the debt is childish."

I think I understand this one.  My children, my grandchildren and even my great grandchildren will be paying the debt.


"Debts of countries are per definition eternal"

Now I understand better.  If debts are eternal - then you of course need not worry much.  I will talk to my bank tomorrow.  I will ask for a loan - not eternal - after all I am not a country - but just 65 years.  I will guarantee to pay it in full in 65 years including all accrued interests.  Cross my heart...


"I have studied this during... (small pause) ...time"

Mr. Socrates has studied so many subjects.  I had never heard about this PhD in economy (and public finance?).  Impressive.  On the other hand, Mr. Socrates has learned something.  No definite time of study.  Just ...time
On the other hand when an engineering degree can be finished on a Sunday, then ...time gives limitless possibilities.


"The economy is managed, I have studied that"

In his extensive studies of economy and public finance, Mr. Socrates has discovered a truth.  "The economy is managed."  This is of course a small lapse of Mr. Socrates.  The economy is not managed.  The economy must be managed.  As in actively taking care of it.  I know this is what he meant.  I just know it.  Really!


"Of course you cannot get too much debt, because that can be difficult"'

Indeed, there is nothing as valuable as experience.  Creditors can become so tedious when you don´t pay them.  It is downright unpleasant.  It is a lack of education.  If you borrow money from the loan sharks they will crush your knee caps.  BTW did we get any loans from Russia?


"That is how I see things, but never mind this is a very technical discussion..."

Very technical, high level, at least one 4 syllable word, and down right philosophical.  I must say I have a hard time following you.  But then again I just have minor studies in economy.  Never did get that PhD.  I am just an ordinary (unrecognized!) software engineer. Other PhDs have a hard time following Mr. Socrates as well.  But then again there are PhDs and then PhDs and post docs of an extraordinary - indeed out of the ordinary - degree like Mr. Socrates.

The Government is corrupt

In Spain patients are now informed about the cost of the treatment
"The open heart surgery was a success.
However, when your husband saw the cost of the operation..."

A concern of the outmost graveness has arisen.

It was only a question of time.  The minister of health is corrupt or feeble minded.  Or both.

In a time where everybody is asked to make sacrifices, at a time of the worst crisis in Portugal in a generation, at a time where the government have let us know that in the future management positions will be filled by open and public selection, where the candidates must have the qualifications and must compete against each other - this happens:

Six members of PSD/CDS have been nominated hospital administrators in the first round of assignments

The old game of "jobs for the boys" is back.  After each election it is normal have an exchange of managers.  E.g. of hospitals.  The loosing party members leave and the winning party members enter.  Qualifications are not considered.

In the agreement,"The Ecomic Adjustment Programme", with the Troika it is explicitly written: "Improve selection criteria and adopt measures to ensure a more transparent selection of the chairs and members of hospital boards".This measure must be implemented by Q4 of 2011 ready for the third review.

The measure in detail can be read on page 78:

3.74. Improve selection criteria and adopt measures to ensure a more transparent selection
of the chairs and members of hospital boards. Members will be required by law to be
persons of recognised standing in health, management and health administration.

It is hereby clear that Portugal must fail the third review.

In that light the excuse from the governments is incomprehensible and feeble:

From the health ministry: "this only concerns public institutions and alike"

There is only one and immediate solution to this, if the government want to keep any credibility whatsoever.   The minister must resign and the nominated hospital administrators from PSD as well.  Today is better than tomorrow.  The day after tomorrow is too late.

If not we have the proof of corruption all through - not only in the ministry of health.  And then we all know what it means next time the government asks for sacrifices. The sacrifice is for "the boys".  I then suggest you do not.

Shame on you!  Hypocrites!

Update:
I forgot to write that 6 PSD/CDS are placed but also 6 PS are leaving.  The level of incompetence before and after is probably the same: Extremely high.

A beautiful land

Full screen HD is available from youtube

Portugal is a beautiful country with a wonderful people (some politicians excepted).  It is time the people claim it back.

BTW it is obvious tourism is a big industry in Portugal.  Watching the prize winning video it is easy to understand why the potential is even bigger.

Portugal most unequal in Europe

The OECD has release a new report:  Divided We Stand: Why Inequality Keeps Rising

In the three decades prior to the recent economic downturn, wage gaps widened and household income inequality increased in a large majority of OECD countries. This occurred even when countries were going through a period of sustained economic and employment growth. This report analyses the major underlying forces behind these developments

Inequality in society is not necessarily equal to a bad economy.  The US has been an unequal society for a long time.  However, generally speaking, inequality is a sign of problems in society.  It is said about Henry Ford, when he was asked why he paid his workers so much more than other employers, that he answered:  "This way they can afford to buy my cars."

Economically speaking this is largely true.  A population with money to spend tends to be healthy for business.  

For me the much more important issue is one of social coherency.  Inequality, a large difference between rich and poor, usually also signifies a large number of poor.  This creates societies like Brazil, where the rich have to protect themselves by having bodyguards, bullet proof cars and hiding in special buildings.  A lot of Brazilians - and not only the poor - have left Brazil because of this.

Also societies tend to function better with a large middle class.  A high level of education tends to lead to a large middle class.  Most of the most wealthy and best functioning countries tend to have less inequality.  They are generally speaking more civilized and the perceived level of life quality is higher for all, poor and rich.

Thus this study is extremely worrisome looking at the numbers for Portugal.

Portugal is the country with most inequality in Europe.

Now, if you are a socialist, your way of fixing this is trying to redistribute wealth.  You take it from the wealthy and give it to the poor.  I think this could be catastrophic.  For the rich generate much of the wealth of society.  Of course there has to be some redistribution - but only the minimal necessary - in the the form of taxes to guarantee the functioning of the state. 

The main problem is not the rich being rich, it is the poor being poor.  I believe it is much better to focus on making the poor richer.  You do that, by giving incentives and possibilities to the poor to become middle class and giving the middle class incentives to become rich by becoming entrepreneurs.

In Portugal's case some of the rich are a problem as their wealth has been generated illicitly by participating in corruptness.  The money has been stolen and the wealth generated has not been of much benefit for society.  These rich we can live without.  Tax them to death if possible and instead give the licit rich job makers incentives to make more.  Pay them if necessary!

You have perhaps in my writings noticed I do not care much for socialists.  That is a fact.  But on the other hand I do not care for inequality to a degree seen in Portugal.  A true socialist I see as a somewhat naive "do-gooder".  An idealist believing in the communist utopia.  We humans may one day get there and will be able to live according to the teachings of religion.  But for now, we must work with what we have.

The reason to why I mention my socialist phobia is because it gives me a chance to criticize the so called "Socialist Party" of Portugal.  Despite 20 years of socialist presidents and nearly as much of socialist governments - there sure is not much equality in this country.   The same goes for the partner in crime, "The Social Democratic Party".  The two parties of the nearly pure two party system are anything but social and have created one of the most unequal and most unhappy countries - and not very rich at that!

Shame on you!

Update:  Article from Portugal Daily View

Reign in the local authorities

Municipality of Cascais
"Proud" owner of 11 public companies

Yesterday I suggested diminishing the number of municipalities to 40 and closing down every single "freguesia" in:

Close to 5000 local authorities in Portugal?

I continue to think so.  But I forgot to mention that it would be the ideal moment to close down every single municipal company.  There are a very large number of them in Portugal and they cost everybody a great deal.

Just in my municipality, Cascais, we have eleven (*).  These kind of "companies" are more often than not used to get jobs for "the boys" at salaries much above the public sector.  They often loose money and need to be resupplied by the municipalities.  It is completely impossible to find out whether they are cost effective or not.  They are in effect a monopoly in their area (the municipality).  I have a postulate.  The degree of corruptness in a municipality is directly proportional to money spent on (e.g. number of) municipal companies.

In my humble opinion all the employees should be counted as public employees and their passives should be added to the public debt.  It will not be easy as nobody even knows the exact number of municipal companies in Portugal.

So shut them all down.  If a municipality is not able to handle, say garbage collection, then make a public tender for the service for two year periods.  Nobody in the municipality should be allowed to choose the winning company.

A so called white book with an analysis of the sector has been made public (hat tip "O Público).  There are at least 14000 employees and 334 of these companies.  They have a debt of at least 2.4 billion (1.5% of the GDP).  The only problem is that the real numbers are much larger.  We just don't know how large.

I am not really surprised.  After all even the state does not know its exact number of employees...

(*)  One of the companies in Cascais is called EMAC, "Empresa Municipal de Ambiente de Cascais", Municipial Company of the Environment of Cascais.  Do notice the PC name of the company.  A great way of misdirection if necessary. We call it the Municipial Company of António Capucho ("Empresa Municipal de António Capucho").  Mr. António Capucho is the former president (**) of the municipality of Cascais.  I have no idea whether the company was created by him or the former crook, president of Cascais, Judas.
What I do believe is that we loose money because of that company.
What I do know is what I have seen in the past.  I often run on the beach in Carcavelos in the morning.  Usually, I and the fantastic cleaners (***) are the first on the beach.  Quite a while ago they were redoing part of the beach walk and at a large expense building an ocean breaker to keep the sand from disappearing from the beach.
Several mornings I saw large trucks from EMAC driving away truck loads of sand from the beach.  It is illegal to take away sand from the beach and I wonder who came to benefit from all that sand...

(**) Presidents of municipalities have far too much power, just as their inflated title suggest.  A reform of the municipalities should curb this power as much as possible.  A good start of psychological value would be a new less imposing title.

(***) They are also from EMAC, I believe, and actually do a great job.  It must cost a fortune.  A lot of the public using the beach are swines and pollute.  Some civic lessons would be nice and could save money...

Madness: cutting down on tourism

Projection:  Sector recommends external promotion
It is good the government knows better
Who dared write this magazine?
Oops - the government...

Pure madness.  The government is cutting down (hat tip: portugal daily view) on support for the single largest viable industry in Portugal with a possibly bright future:  Tourism has the possibility to grow to 15% of GDP the next years.

The sub-minister of tourism (belonging to the über-ministry of economy) using the reverse logic and defeatism known from the ministry of parliamentary affairs (the one asking young people to emigrate) announces:

State Secretary for Tourism Cecília Meirelessaid that the government’s tourism promotion agency would face a 30% budget cut worth about €230 million in 2012.

However she gave assurances that a smaller budget would not affect tourism investment and promotion.

They must live in an alternative reality.  I am waiting for them to ask the tourists to leave us alone.  The raised VAT levied on most tourism is of course an indirect invitation to do so.

In fact she may be right concerning her assurance as the promotion is close to zero anyways.  The investment will probably soon approach zero because of the bureaucratic program of sabotage: also known as anti tourism, anti investment and anti business in general.

Close to 5000 local authorities in Portugal?

There are 308 municipalities ("conselhos, câmaras") and 4359 local administrative units ("freguesias").  The latter are a form of an administrative parish.

In the old days (20 years ago) a trip to the North from Lisbon could easily take a day.  A trip of 40 km into the countryside could sometimes take two hours because of heavy traffic and miserable roads.

However the roads and public transports are very good now and the country seems much smaller.  Considering the Internet there is in fact no longer a reason for so many entities in Portugal.

Thus the only real structural measure implemented by the current government to diminish the size of the public sector:  The civil governments ("governos civis") have practically been closed down.  They were a kind of representative of the central government locally.

The government has talked about shutting down "freguesias".  First there was talk about 1000 now the number is much lower as the "freguesias" are protesting.

In 20 years in Portugal we have visited our "freguesia" once or twice.  They do however have a number of local activities, which we have attended.  They have a building, employees and thus spend money.

We have visited our "câmara" a few times.  First to get married and the afterwards to get a building license.  But otherwise never.  They have lots of buildings and employees, and spend a lot of money.  They also have created an enormous wasteful structure of companies owned by the municipalities.  Lots of "jobs for the boys".

I would suggest a more radical change than the government proposes:

40 municipalities and 0 "freguesias".  The "freguesias" could continue, but then only with voluntary workers and a building for meetings.  There are lots and lots of countries without" freguesias".

There are cities in the world with "câmaras" the size of Portugal.  With modern technology and other modern infrastructures it makes no sense with so many local authorities as we have today.

I would furthermore suggest that the "câmaras" no longer would receive income from constructions.  That is no fees for building licences and no income from property tax.  This should all go to the state.  The state could then redistribute to all municipalities.

Additionally, the "câmaras" should no longer be allowed to decide on what land is for construction or the degree of permitted construction density without getting the direct approval of the population and one or more state agencies.

Considering all the bureaucracy, waste and corruption associated to local authorities this is the only sensible plan of action to take.

The other day on TV a sad truth was revealed.  There are only two kinds of business in Portugal that has more than a 1000% profit.  Drugs and the manipulation of land value.  The latter must be stopped as it is easy to do and it is more harmful than the former.

Pension fund robbery or a poisonous gift?

Portugal has to me an unknown number of pension funds.  Social security was only created after the revolution and all large companies had their own pension schemes.

When social security was created, for reasons beyond logic the separate pension schemes were kept.

Perhaps for the best as the social security has spent some of the money reserved for pensions (and "bought" Portuguese state debt of dubious value) and count on current and future income to be able to pay future pensions.  Until eventually absorbed by the social security the pension funds had money in them.   Friday, one of the last?, the bankers pension fund was handed over to the state.

For once I actually feel a little bit sorry for the bankers.  They will eventually as everybody else live from one day to another, as their pension money will be devoured by the state.  Also they will in the future see drastic cuts in their pensions - just like everybody else.  For now, though, they are fine as:

• For the state to be allowed to take the money the bankers have been guaranteed pensions are not touched by austerity measures
• The banks will continue to decide how much the bankers going into retirement will receive.  This point is incomprehensible as it suggests the banks will continue to stay outside the normal rules of society and social security.

The banker's pension fund had an amount of around 6 billion euros.  I.e. more than 3% of the annual GDP.

It is difficult to get a clear answer but the following are the apparent facts

• Without this one-off injection - Portugal would not be able to meet the max 5.9% state budget deficit demand.
• Some of the money will be spend right away
• Some of the money will be spend to assure then bankers pension the coming year
• Once again the politician state and swear:  This will be the last time we do this trick (perhaps because there are few pension funds left - but the military still has a large one...)
• Some of the money will be saved for future expenses

The last fact is stated by the Portuguese prime minister.  It is doubtful in my opinion.  Because the statement infers a third will be saved.  I do not believe it as the money is needed now.

What is interesting and extremely worrying:

• The payment from the banks (the pension fund) includes government bonds.  I.e. debt owed by the Portuguese state.  They will probably just be absorbed - the effect will be to absolve the debt.
• If the max. deficit of the state could not have been met without this injection - the public debt would then have ended up with an additional 9% (5.9% plus 3%+) of the the GDP this year?
• The requirement for next year is 4.5%.  There will be no more pension funds to rob.  The effort is not only one from 5.9% to 4.5% but actually from 9% to 4.5%?  A draconian cut.  No wonder the prime minister speaks of possible further austerity measures in 2012.
• The 6 billions euros correspond to nearly 10% of the annual income of the state.
• Robbing the money from the banker's pension fund will leave little money to pay future pensions.  Consequently, the next 80 years or so - money will be missing from the budget and will have to found elsewhere through taxation or by not paying (as much) pension. We have now a new debt for the state.
• I wonder why the banks handed over the pension fund without a peep from the banks.  They are usually extremely loud when not satisfied. Obviously because they will save money by doing it.  Ergo the public will now have an added burden here as well.  This is analogue to a loan with interest - probably a high one.

What a mess.  It looks bleak for 2012 and beyond.

Two sources (Portuguese): Passos: "Não há folgas, nem almofadas" and Ricas Pensões

Nightmares instead of solutions

Seguro: Passos dá "pesadelos" em vez de "soluções"

translated:

Seguro: Passos provokes nightmares instead of providing solutions.

Hat tip to "O Expresso"

Seguro, is Mr. Seguro, the chairman of the Socialist Party.  Passos is Mr. Passos Coelho, the Portuguese prime minister.

For the first time Mr. Seguro says something that makes sense to me.  It probably happened by accident, but let us give the gentleman the benefit of uncertainty.

What Mr. Seguro refers to by "solutions" is the complete lack of structural reforms presented by the government.  All measures presented so far, are stop gap measures, that will worsen the economy instead of improving it.  However, Mr. Seguro is probably not really in favor of the necessary structural reforms.  Him and his party prefer taxing instead of limiting the expenses.  So his arguments are curious at the very least.

Concerning "nightmares", Mr Seguro refers to the recent interview with the prime minister.  For the first time in recent time, I can record, Mr. Passos Coelho gave something that with a little flexibility could be considered a message to the Portuguese people.  About time - I say!

Back to nightmares.  The prime minister during the interview would not rule out further austerity measures in 2012 if it becomes necessary.  He would not rule out one of the measures being the loss of the subsidies (15% of the salary consisting of the 2 extra salaries every year) in the private industry.  Presumably by increased taxing.

What the politicians will do - I have no idea.  Their brains are wired differently from that of human brains.  But I can practically guarantee you, that further austerity measures will become necessary in 2012.

- - -

As an aside I present you the photograph from when Mr. Seguro made the statement:

Hat tip to "O Expresso"

Is it just me?  I consider the colors absolutely psychedelic.  They could give me nightmares.  Looks like something out of what I imagine a LSD trip looks like.   It goes with our continuous nightmare of the Portuguese collapse.  So I suppose I cannot blame the designers...   

Fourth most corrupt

The Corruption Perceptions Index, 2011, by Transparency International is out.

Portugal is number 32 in the world, with the least corrupt at the top.  It is number 18 in Europe (out of 32), but only less corrupt than three other countries in Western Europe:  Malta, Italy and Greece.

The comparison of Western Europe does not sound that far off; however the place as number 32 in the world (out of 182) could be doubtful.

To understand the index one must understand it is based on a number of studies in the form of 17 assessments and surveys (the methodology can be downloaded under "download data" on the website).  The rating of each (not all countries are in all studies) is used for a final index.

But take a look at some of the questions of the surveys below.  My answers are in red (corruption positive) or green (corruption negative).  How can that give a rating of 32?  I wonder what people were asked.  The corrupt politicians and officials?

• Are there clear procedures and accountability governing the allocation and use of public funds?
  No
• Are public funds misappropriated by ministers/public officials for private or party political purposes?
  Yes
• Are there special funds for which there is no accountability?
  Yes
• Are there general abuses of public resources?
  Yes .
• Is there a professional civil service or are large numbers of officials directly appointed by the government?
  There is a large professional civil service, but a large number of officials are appointed directly or by nepotism
• Is there an independent body auditing the management of public finances?
  Yes (in theory - to my knowledge, except for one or two cases, nobody of any importance has ever been punished).  The number of large cases, that have never been solved is astounding.
• Is there an independent judiciary with the power to try ministers/public officials for abuses?
  Yes
• Is there a tradition of a payment of bribes to secure contracts and gain favours?
  Always.  Not always in the form of money, though.
• Has the government implemented effective anti-corruption initiatives?
  Never
• Is the government free from excessive bureaucratic regulations, registration requirements, and other controls that increase opportunities for corruption?
  Are you kidding? NO!
• Are there adequate laws requiring financial disclosure and disallowing conflict of interest?
  No
• Does the government advertise jobs and contracts?
  No to jobs, and yes to most contracts because of EU ruling.  But contracts are hardly ever awarded on mere merit.
• Does the state enforce an effective legislative or administrative process—particularly one that is free of prejudice against one’s political opponents—to prevent, investigate, and prosecute the corruption of government officials and civil servants?
  No way
• Do whistle-blowers, anti-corruption activists, investigators, and journalists enjoy legal protections that make them feel secure about reporting cases of bribery and corruption?
  Somewhat.  It is not risk free to be a whistle blower, though violence is probably not an issue  OTOH to be a journalist is probably quite risk free.

World moving to save the European mess

The world's largest central banks yesterday acted to avert a liquidity crisis in Europe.  It was a concerted effort.
There has been no explanation.  But before the action the European banks were hardly given any dollar credits and perhaps it was to save one or more large European banks.  Or even countries.  The international community does not want a repeat of the Lehman Brothers' collapse.  Partly in due to lack of liquidity.

To illustrate the nervousness of the financial markets before the action -  I can mention that the German one year bonds were offered at an interest rate of -0.05 percent.  The first time ever with an interest rate below zero.  In other words investors were willing to pay the German state to keep their money safe for one year.

The collapse of one, more or all of the following:  Greece, other PIIGS, The Euro in Southern Europe, the entire Euro, the entire European Union and perhaps consequent international financial collapse does not look unlikely in the eyes of investors.

Some collapse looks inevitable from where I am sitting as well.

At the moment, I can perhaps for the first time in my life say I am fortunate not to have a dozen million dollars to place somewhere.  Putting them in a bank account or buying bonds of PIIGS countries would be out of the question.  The risk of devaluation or even collapse is too high.  You could then consider buying gold.  But there has been sold more certificates of gold than the actual quantity of physical gold available.  So unless you take possession of the physical gold - you could be in trouble.  A run on gold is not entirely unlikely.

Perhaps betting on Germany not going bankrupt the coming year and paying for it - is not that crazy...