Portugal is doing well

Ms. Merkel is supposedly impressed by Portugal and the fact we this year will reach our goal of deficit.

There is no reason to be impressed.   Our debt is increasing by around 5.8% this year alone.  It will also increase next year.  Perhaps we should ask Mr. Socrates to come back from his hideout studies in Paris and advice on payment of the debt.  According to him there is actually a possibility to pay it in its entirety - even though it would be foolish.

Fools aside, we would probably not reach the goal this year without the absorption and spending of the banker's pension fund.

Meanwhile, the country continues to fall apart.  The number of families, small businesses and companies going broke is preposterous.  A large number of dynamic persons, including a lot of well educated young people are emigrating.  Next year it will be worse.  Who will in 2013 be left to produce and create growth?

Update:  At the least the prime minister does not try to hide all the sordid facts.  "Without the extraordinary income from the banker's pension fund the public deficit would have been close to 8% this year".
Exactly.  With all kinds of tricks and quite a few austerity measures we have managed to lower the deficit 1% since last year.  Next year we have to reach 4.5%.  That is nearly 4% less with the economy retracting a lot more... 

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.

Policies cooked up by charlatans

Financial terrorists

Hat tip: Apodrecetuga

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

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.

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. 

Spend, spend, spend

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


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

Hat tip: O Insurgente, Britains trillion pound horror story