Eurocrisis in South European angle

[Love Mountain]

You can't have a 0.5 growth when unemployment is high.

And I agree, but you're not gonna get spontaneous job growth from the private sector by having low tax regimes. It just doesn't happen. Nor do high taxes cause massive tax flight, but they do increase government revenue. The answer is simple, if you're pissed about unemployment, lobby Government to hire people. Because Vodafone and Renault Nissan aren't going to do it. Don't like large public sectors? Then wait for the economy to re-adjust itself which is painful and you're seeing exactly what Krugmanites said would happen. Low growth rates, persistent unemployment, and angry rhetoric.

And look, an EU exit, is not the end of the world, despite how I phrase my dislike for such an option. It can certainly be done, but you know what? I wanna see plans and serious policy proposals about what will happen and what the leadership is going to do next. I know you're all watching the Brexit mess, boy that sure is a coordinated affair.

[Basil II the B.S]

And I agree, but you're not gonna get spontaneous job growth from the private sector by having low tax regimes.

Hm, why? Low taxes are normally very good for business, that's all they want actually. That's why they move to Dubai. No income tax to pay.

It just doesn't happen. Nor do high taxes cause massive tax flight, but they do increase government revenue. The answer is simple, if you're pissed about unemployment, lobby Government to hire people. Because Vodafone and Renault Nissan aren't going to do it. Don't like large public sectors? Then wait for the economy to re-adjust itself which is painful and you're seeing exactly what Krugmanites said would happen. Low growth rates, persistent unemployment, and angry rhetoric.

Vodafone and Renault Nissan will and actually do lobby the government and with more resources than the average citizen could ever hope to have, hence more efficiently; which is why we are in the we are in right now.

I can give you an example of this. Before we forced Renzi, globalist shill, out of the government in December, this retard laxened data privacy laws. Result? In the last year, Vodafone and the other telecom companies started selling the phone numbers to marketing companies, so that they now spam you with calls 24/7 with ''epic offers that you'll never receive again until 30 minutes later''; and of course if you pick up the call they milk your phone credit dry. We have come to the point that if you don't know the number who's calling in Italy, don't pick it up and of course everyone is pissed off.

And the economy won't even readjust itself as long as governments bow down to counterproductive austerity measures. It'll keep remaining low growth, more and more people giving up on the job market and again even if it doesn't show in the unemployment or it shows as a drop in it, it also shows in the elections as in '' all''.

And look, an EU exit, is not the end of the world, despite how I phrase my dislike for such an option. It can certainly be done, but you know what? I wanna see plans and serious policy proposals about what will happen and what the leadership is going to do next. I know you're all watching the Brexit mess, boy that sure is a coordinated affair.

The funny thing about Brexit is that everyone focuses too much on the lack of plan of the UK, but ignores the fact that Brussels doesn't have a coherent strategy either. You have the ideologists like Juncker and Verhoftadt pushing for a bad deal to the UK, but their multinational and financial backers don't want that.

[fkizz]

@Sukiyama

I think you probably misunderstood me. I wasn't complaining about slow growth (better than contraction) in itself, but saying that Europe at the moment is full of problems and other crisis that a slow growth cannot numb or halt. Perhaps not even a medium/fast growth could.

I live in a literal epicenter of a case of seeing contraction vs slow growth even in daily life, it's how it has gone in this country by now. Yes slow growth is still fairly better, but the stories one keeps hearing about what goes up in the north continent becomes worrying.

European Crisis no longer economical or financial (assuming it ever was just that).

[Love Mountain]

Hm, why? Low taxes are normally very good for business, that's all they want actually. That's why they move to Dubai. No income tax to pay.

Correlational data is less than unanimous on this issue.

Vodafone and Renault Nissan will and actually do lobby the government and with more resources than the average citizen could ever hope to have, hence more efficiently; which is why we are in the we are in right now.

I can give you an example of this. Before we forced Renzi, globalist shill, out of the government in December, this retard laxened data privacy laws. Result? In the last year, Vodafone and the other telecom companies started selling the phone numbers to marketing companies, so that they now spam you with calls 24/7 with ''epic offers that you'll never receive again until 30 minutes later''; and of course if you pick up the call they milk your phone credit dry. We have come to the point that if you don't know the number who's calling in Italy, don't pick it up and of course everyone is pissed off.

And the economy won't even readjust itself as long as governments bow down to counterproductive austerity measures. It'll keep remaining low growth, more and more people giving up on the job market and again even if it doesn't show in the unemployment or it shows as a drop in it, it also shows in the elections as in '' all''.

Which is what I'm saying, if unemployment makes you angry, force the Government to hire people. The private sector isn't going to spontaneously grow and hire them for you. Growth and expansion is always slow unless there is massive injection of capital from somewhere involved. Which is why lending is important...

The idea that exiting the EU, getting your own currency, and having low taxes is going to save the economy is flawed. There are so many economic factors involved with that it'll be hard to predict winners and losers if EU breaks up.

The funny thing about Brexit is that everyone focuses too much on the lack of plan of the UK, but ignores the fact that Brussels doesn't have a coherent strategy either. You have the ideologists like Juncker and Verhoftadt pushing for a bad deal to the UK, but their multinational and financial backers don't want that.

Well yes, but my main point was that you don't really want a mess like Brexit if you can avoid it.

@Sukiyama

I think you probably misunderstood me. I wasn't complaining about slow growth (better than contraction) in itself, but saying that Europe at the moment is full of problems and other crisis that a slow growth cannot numb or halt. Perhaps not even a medium/fast growth could.

I live in a literal epicenter of a case of seeing contraction vs slow growth even in daily life, it's how it has gone in this country by now. Yes slow growth is still fairly better, but the stories one keeps hearing about what goes up in the north continent becomes worrying.

European Crisis no longer economical or financial (assuming it ever was just that).

I see. Social problems in Europe are currently my most significant concern as well. They are the driving force in some of the fear tactics we are seeing from both sides. Like I've said before, if you give the economy stable jobs and income everybody will probably tolerate the current social upheavals. Unfortunately that's not the case and things are getting pretty dicey. Oh well, at least Europe is still a better Democracy than US.

[Basil II the B.S]

Correlational data is less than unanimous on this issue.

It's one of those topics where economists are unable to be unbiased about so I'm going to leave them out.
I focus rather on the fact that business owners flock where taxes are low.

Which is what I'm saying, if unemployment makes you angry, force the Government to hire people. The private sector isn't going to spontaneously grow and hire them for you. Growth and expansion is always slow unless there is massive injection of capital from somewhere involved. Which is why lending is important...

The idea that exiting the EU, getting your own currency, and having low taxes is going to save the economy is flawed. There are so many economic factors involved with that it'll be hard to predict winners and losers if EU breaks up.

There are a number of problems that I mentioned:
1) The regulatory context, Basel II rules basically favour lending to big corporations over small and medium, which require higher liquidity for the bank and higher interests to pay for the company, thus banks lend only to big corps, but big corps use that money to buy back their stocks to push it higher. This is why QE in Europe is such a failure. I recall reading a paper that points out that while small enterprises are the most risky, medium ones are the least risky of the group, so the regulatory environment is nonsense.
2)Keynesians rightfully point out that we have we have a low demand problem. Low demand doesn't drive prices, which is why inflation in Europe was absent for the last couple of years. We have inflation right now entirely due to the fact that oil prices doubled in the last 6 months, thus energy prices are up. For the rest, it's still non-existant. And if prices don't grow, then business don't hire. Note that austerity policies are what drive demand down.
3)Consequence of the above, there's the issue that governments can't just create jobs randomly, they must be productive. Indeed they aren't doing that at all, they are doing the opposite, they chose austerity because they are globalist elite governments and the very same globalist elite wants those government bonds to be repaid back, hence austerity.

So we have a private sector unable to create growth, because of the banking sector and a public sector unable to do the same.... again because of the financial sector, buy side this time, the hedge funds and similar. Either path you take, the problem ends up being the financial world, which is why I advocate returning to national currencies. The financial world, being right now the number one problem preventing growth can't be left with the enormous power of monetary creation. We need a way that allows countries to inject money in the economy without going through the financial sector.


edit:

http://www.reuters.com/article/us-ge...-idUSKBN1850H7

German export to a new all time high.

Merkel is going to get re-elected.

Hilarious what an artificially devaluated currency can do.

[Ludicus]

The Eurocrisis, Schauble and Ronaldo,
POLITICO Playbook Eurogroup’s deficit

COUNCIL — PORTUGAL THE NEW POSTER CHILD FOR REFORM: Twelve months ago it was all so different. Portugal was on the verge of EU economic sanctions and the success of its new left-wing coalition government was far from assured. Today it is no longer in breach of EU budget rules and expects to hand back €10 billion to the IMF. Playbook hears German Finance Minister Wolfgang Schäuble on Tuesday called Mário Centeno “the Ronaldo of the ECOFIN” group of finance ministers.

According to Playbook’s Portuguese source, such progress is like winning Eurovision for policy wonks.

Last year, Reuters asked,
Portugal rolls back austerity, how far can it go? | Reuters

Here is the answer: the Keynesian policies are working- cutting fiscal deficit while raising pensions and wages, and the unemployment rate fell. It's the lowest budget deficit in more than 40 years, and Portugal exits EU's deficit watchlist.



Now take a look, EU Growth Rate,

[Basil II the B.S]

That's pretty good. I'll look at some details of what he did.

[Knight of Heaven]

They are expecting 3% GDP growth in the last quarter of this year.

Internal consumption indeed grew, and a lot of that has to do with the Tourism boom we are seeing right now in Portugal. Lisbon and Porto are transformed and in vougue and quite amazing to live there to be honest (I speak from experience).

But it isnt only the big cities that are seeing this tourism boom. Other places as well. A lot of foreigners European the most, but not only, are chosing to live and invest here. That is a special boom Imo.

Even in the interior in the Schist villages. Opening Inns and Traditional Beer making, by belgians, Dutch, French, Brazilian people etc.. Very interesting things are happening that is undeniable.

Also Tourism uplifts other industry as well, like metalurgy wich have seen a substancial growth of late, among others.



Honestly as it is even with the goverment policies, it doesnt seem sustainable to me, in the long run anyway. But there is hope and definitely there is things happening in other areas as well.

If we can manage to run a low deficit, we may be able to atract proper investment, for the economy, and that could make wonders for Portugal imo.

However They are achieving the deficit by cutting on Public services, as well investment.

Smart thing they did was to not folow Troika austerity playbook, on choking the dam economy.

If it wasnt for the Debt service we could have seen right now, growth in the realm of 4% to 7% Most likely.


Honestly I blame all of this good news on Eder goal

[Basil II the B.S]

The main problem with following Keynesian demand stimulus is that it generally ends up favouring imports and worsening the trade balance. For now, it hasn't happened, because while imports have grown, so have exports, balancing it out rather well. We'll see in 1 year or so.


Throwing it there, on CEPR there are zero articles on Centeno and/or Portugal's reforms.
http://voxeu.org/columns/archive

You see what I mean when I see mainstream economists are a dishonest circlejerk? Thousands of contributors from ''top universities'' and none of them bothered to address a real world evidence that austerity isn't working.

Why should we trust intellectuals then?

[Knight of Heaven]

The main problem with following Keynesian demand stimulus is that it generally ends up favouring imports and worsening the trade balance. For now, it hasn't happened, because while imports have grown, so have exports, balancing it out rather well. We'll see in 1 year or so.

.....

Well in our case Imports Grow because our exports grow. In a sense a lot of our industry requires parts and materials from outside the country.

On the other hand this growth we are seeing, is mostly centered on comsumption. And thanks to tourism, in most part. But also goverment policies.

As reforms go, there is still a lot to do, in the realm of the state, or Public area. They already did stuff the previous goverment promised to do, and never did....
Yet It isnt all Roses, as you already point out. There arent Miracles, after all.

The truth, is the results, are better right now then what Centeno or Costa had ever forseen. But then again, such is the nature of this things.

Im Still happier, then i was a few years ago. At very least we have Competent inteligent People on front of the country now.

I cant say the same about our right wingers or rather our previous goverment, to be honest.

It is not a right or left thing btw, it is about the quality of the people we can have. There is some like Passos Coelho, or Jose Seguro (in the left wing) that are Party made products, they are coached, and trained to have certain postures, and behave in a certain way, (they are made, by "king makers" or facilitators) but regarding any concrete political thought? Well... they have none.
And folow the convention at the time. hence the complete loss and disoriented oposition rethoric right now.

While Costa and Centeno are Pro EU, they made gracefull gymmastics in dealing with the wants of Brussels, and Her Schauble, with our own interests and policies.

It was very recently that we had to hear obvious threats of another bailout, and sanctions from Schauble and EU comission, if we deviated from Austerity policies previously prescribed...


It is telling.

[Basil II the B.S]

Yeah I'm not sure about imports and exports right now, I only look at the trend and it's clearly broken for the first time since 2008. If it sustains itself, it shouldn't be too bad, Portugal is still a net importer but it's not too far from flat. I don't think you can achieve that without leaving the Euro.

Unemployment has improved a lot, but it was already improving before the current government to be perfectly honest, it went from 14% to 12% and now to 10% under Costa and Centeno. There's always the downside that participation rate is still declining, so if unemployment drops because of retirees and/or people giving up on the job market, it's not good either. Hard to say at the moment.

Being a tourist resort isn't exactly the best way to build an economy either, sure it helps now because it's far better than being in a recession. So there are a number of open questions but having achieved a 2%+ growth with a balanced budget without austerity is undeniably good.

By comparison, Greece that is experimenting the German medicine is still going nowhere. Thank god Germans should be in charge.

[Knight of Heaven]

Yeah I'm not sure about imports and exports right now, I only look at the trend and it's clearly broken for the first time since 2008. If it sustains itself, it shouldn't be too bad, Portugal is still a net importer but it's not too far from flat. I don't think you can achieve that without leaving the Euro.

Well the bigest target countries where we export to, is obviously Spain, Germany and France. Same goes for Importing. Im unsure about leaving the euro, Would exactly change our economic tissue sort to speak. And this isnt the kinda thing you do by yourself, without consequences. Considering the International conjucture right now.

Like it or not tourism is a big ( the bigest chunk of our economy) And there is still room for improvement and growth.

Hopefully this can open doors to other industry as it is happning in some measure. Actualy there is a lot more demand for certain things we cant actualy supply right now. Regarding office space for international companies, and corporations, business etc, in our capital Lisbon. Six new mega buildings are to be built in the next 2 years to acomodate this demand, and still isnt enough.
This is just one small example.

And im fully aware this isnt sustainable. And i cant say we dont have austerity. We do, however instead of being a burden on the fiscal area right now, it is instead a burden on Public expense. We can see it plainly in the decrease of Public services efficiency for instance. Also the decrease fo Public investment. Wich will not stay like that forever.

Portugal is still Fragile, and vulnerable towards international conjucture. But we no doubt are better then we were a couple of years ago.


There is some indicators that were improving even during the tenure of previous goverment, as you already stated. Exports as well for example.

This kind of things hardly goverments have easy control of this days. That is why im blaming current results on the economy on the tourism boom, then what realy any goverment did. First and foremost.

Still i do see the clear improvement in competency from previous goverment to this one. Finaly they stabilize the finance system in Portugal, instead of pushing foward towards the future, finally they are letting the economy breathe, and self heal. they brought back the Simplex program ( easier to form business, and such, regarding bureaucracy)

An astronomic debt still remains a problem towards future growth. Sooner or later that it has to be delt with, for the good of all of us imo.

[Basil II the B.S]

I was about to write ''Portugal's debt isn't that high'' then I checked, 129% (Italy's 132%) of GDP. Fuuuuuuuuuuuuuck.

[Ludicus]

Sooner or later that it has to be delt with, for the good of all of us imo.

Better sooner than later

I was about to write ''Portugal's debt isn't that high'' then I checked, 129% (Italy's 132%) of GDP. Fuuuuuuuuuuuuuck.

We know
We have been saying this for years.The debt is unpayable.
And you know Portuguese, PS e BE pedem “cenários concretos” de reestruturação da dívida
Here the full report,Debt Sustainability (80 pages) april 2017

-----

In English,A discussion on the “Sustainable Program for Debt Restructuring (The proposal is authored by Ricardo Cabral, Francisco Louça, Eugenia Pires and Pedro Nuno Santos under the auspice of the Institute of Public Policy Thomas Jefferson - Correia da Serra. The full document is available at: http://www.ipp-jcs.org/wp-content/u...)

The purpose of this article is to discuss the salient points of the proposal recently presented by a group of Portuguese economists |1| to restructure public debt in Portugal.
.... All in all, its clear that the crisis requires that the progressive political forces of Europe start developing clearly defined policy proposals that deal in a realistic way with the interconnection of fundamental issues such as public debt and the financial system. The SP is a good starting point to build upon.

-------------
Anyway,
Exclusive: Portugal says economy growing faster than forecast

The government’s message is that economic growth is strong and sustained, and it is accelerating,” Centeno told Reuters. “The fact is that we are converging with the European Union, we are finally converging.” He said year-on-year growth in the second quarter was likely to be “above 3 percent, given the acceleration we are seeing”. In the first quarter, the economy grew 2.8 percent from a year earlier, its strongest rise in a decade. For all of 2017, Centeno said there was “no question” that growth would be higher than 2 percent. He would not give a new, precise estimate for this year, but said higher growth would “definitely be incorporated into our projections”.

Our right wing president predicts 3.2%
Expresso | Marcelo: crescimento de 3,2% e défice de 1,4%

[Basil II the B.S]

I've been doing a little bit of reading and things might not be as good as they sound. Essentially, the recovery for now is driven by 2 elements:
1) tourism as KOH had mentioned (revenue was up 10% last year)
2) real estate prices going up fast (28% this year alone)

The latter is out of cheap credit from the Netherlands and Germany.
Does that sound familiar?

[Ludicus]

I've been doing a little bit of reading and things might not be as good as they sound. Essentially, the recovery for now is driven by
tourism

There is a steady tourism growth, but not exclusively, exportations increased.
ISEG revê em alta previsão para o crescimento da economia em 2017 ( 2,4-2,8%)
Portugal: exportations en nette hausse en mars - Le Figaro

[Basil II the B.S]

Export increased but so did import and approximately by the same size, meaning the trade balance is unchanged.

[fkizz]

Basil you are correct. But we go so bombed and looted by Troike that what's happening now is like having a good, good mellow painkiller while being pampared in hospital bed by a some good looking nurses.

Sure there is no cure avaliable for your ilness, but this is still much much better than how we were before.

It's true our trade balance and import/export ratio is still screwed up, but we've achieved lowest deficit since democracy begun - and some months ago Schauble wanted EU sanctions on us for "too high deficit" (implying that after we would need another bailout).. now we're outside of Schauble artillery range. As long as our balance of payments improves in the meanwhile..

So we've achieved only a timid growth and lower deficit, but as you say, what we can achieve inside the euro is very limited. Given that we're forced to stay, better to have this than follow suicidal austerity path.

Oh, and this growth and relief in employment was achieved by applying public spending keynesian stimulus and flushing neoliberal austerity down the toilet.
That's the best part.

[Basil II the B.S]

Oh don't get me wrong, compared to the pro-austerity coalitions we had in Spain, Italy and Greece, Portugal is doing great.

Even if it isn't a recovery driven by fiscal stimulus, which I don't think so at this point, it's still not a stagnation or recession caused by austerity.

It goes back to what my position is, I don't even mind balancing budgets but it should be at the cost of crippling growth, because it creates as self fullfilling defeatist cycle.

[fkizz]

Even if it isn't a recovery driven by fiscal stimulus, which I don't think so at this point, it's still not a stagnation or recession caused by austerity.

In Lisbon lots of public works started with this government, almost everything public that could built or re-built was enacted for such, to the point of causing the most amazing traffic jams due to roads interrupted.
Some constructions that were stopped on previous austerity government were resumed on this one aswell. I'd say it's fair to assumed public spending was enacted if only to unclog some longterm unemployment.

Also when previously you had unemployment stories from every social group you knw, now they are becoming rarer and rarer.

According to ISEG (a 106 years old economics university), we're bound to experience growth around 2,6-2,8% ; higher estimate than our government and brussels.

Also on tourism it isn't just the tourists in themselves, both male and female, but foreigners from north europe who buy their houses here and spend their retirement money here.

So yes this all roses but we haven't reached the Euro limiter ceiling yet. Medium term this can turn out more or less okay, long term it's likely estagnation due to currency and trade balance problems. If we had our own currency we could be growing much faster.
But let's see if the economy adapts and changes.

As long as we stay outside EU neoliberal austerity range I'm not complaining much.