tag:blogger.com,1999:blog-3950127.post1223755308033212904..comments2009-12-10T22:56:20.130+01:00Comments on Euro Watch: Portugal SustainsUnknownnoreply@blogger.comBlogger10125tag:blogger.com,1999:blog-3950127.post-41402684448124565242009-01-29T22:39:00.000+01:002009-01-29T22:39:00.000+01:00This is all very well, but it falls into the same ...This is all very well, but it falls into the same conceptual traps that economic theory does all over. It seems to me that it's high time there was more thinking outside the box going on in the world of economics.<BR/><BR/>The maxim that "growth is good" is deeply flawed for the simple reason that continual growth is wholly unnatural and completely unsustainable. Look at what the "growth is good" model has done to this planet post WWII! Especially in contrast to the predominantly agrarian and sustainable economies that preceded it for centuries beforehand.<BR/><BR/>The economies that have followed this maxim to its ultimate conclusion (like the US and UK) -- creating an artificially inflated climate of addictive consumption based on whims rather than basic needs and financed by ever-increasing and unrepayable levels of personal and national debt -- are about to see the bubble comprehensively burst. The party at the rest of the world's expense is over and the resultant carnage won't be pretty. The UK, with virtually no manufacturing industry left to speak of, and lacking the more vibrant can-do culture of the US, is particularly vulnerable.<BR/><BR/>The Portuguese economy, for all its failings, its paralysing bureaucracy and its moribund state, is fundamentally more sustainable. It seems to reflect the traditional values of the people which are still weighted more towards conservation and self-sufficiency than consumption for consumption's sake. Government policy emphasising renewable energy generation will pay dividends and if the country can resist jumping on the Spanish bandwagon and backing environmentally degrading speculative developments with no long-term vision, then as far as I can see Portugal is going to be one of the best places to be in Europe over the coming decade.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3950127.post-9946072751996976442009-01-27T09:02:00.000+01:002009-01-27T09:02:00.000+01:00Hello Pedro,"Could Portuguese housing prices get a...Hello Pedro,<BR/><BR/>"Could Portuguese housing prices get a strong correction (lets call it a "bust") in a short period of time (1 year) after a sort of a "boom" having taken place in a very long period (2 decades)?"<BR/><BR/>Really, this is an interesting thought. I don't really know. Basically, how much of a wage and price correction should we realistically be expecting over the next couple of years? How much pressure will Potugal Sovereign Debt come under? Will Portugal finally have to correct the CA deficit?<BR/><BR/>I suspect they answer to these questions is:<BR/><BR/>1) a substantial one<BR/>2)a lot<BR/>c) yes<BR/><BR/>which means there is a lot of downside here. A lot. So would this affect house prices? Almost certainly yes. My feeling is all the excesses of 10 years can now be taken out by force, but over 3 to 5 years, not in one year. So the downward slope would be steeper than the upward one, but not straight off a cliff. That is my feeling, but it is simply that, a feeling. <BR/><BR/>I think it is reasonable to assume that in Southern and Eastern Europe "the correction" will be with us till at least 2012, and maybe longer, given the accumulated imbalances.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-3950127.post-25385604456403891662009-01-26T15:51:00.000+01:002009-01-26T15:51:00.000+01:00"Portugal could also hardly be said to be riding t..."Portugal could also hardly be said to be riding the wave of a boom-bust trajectory (like its Iberian counterpart and neighbour), since if you never got the boom in the first place, well you obviously aren't going to get the bust part either."<BR/><BR/>There was not a short-term boom in housing prices, but while other countries have faced previous busts in the last 20-25 years, Portugal never had one, housing prices have been increasing for the same period. <BR/><BR/>The annual average growth rate of residential housing prices is in the range 7-8%, above those others for the same period. <BR/><BR/>2009 is the first year agencies are identifying a housing price decrease, -4.7% in 07Q3-08Q3. <BR/><BR/>Could Portuguese housing prices get a strong correction (lets call it a "bust") in a short period of time (1 year) after a sort of a "boom" having taken place in a very long period (2 decades)? <BR/><BR/>Prod your analitical skills into the matter. I would love to get some fresh insight...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3950127.post-51046347097841177932009-01-13T19:06:00.000+01:002009-01-13T19:06:00.000+01:00There is also a high degree of corruption in Portu...There is also a high degree of corruption in Portugal at all levels – this does not lead to sound policy. <BR/><BR/>No official -- police, local authority, tax etc is in reality accountable to anyone – this does not lead to the sound implementation of any policy sound or otherwise. <BR/><BR/>The administration of the country at local and state level is a shambles with massive delays (unless a brown envelope is used) – this discourages true investment.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3950127.post-28613591636295227152009-01-12T22:47:00.000+01:002009-01-12T22:47:00.000+01:00Hi CCz,""Avoiding the Portuguese Trap" by Christop...Hi CCz,<BR/><BR/>""Avoiding the Portuguese Trap" by Christoph B. Rosenberg IMF Senior Regional Representative for Central Europe and Baltic States, published by The Baltic Times on February 20th 2008."<BR/><BR/>Yep. I know. Indeed it may surprise you to learn that I wrote this piece as a first part of the reply I am preparing to Cristoph Rosenberg's response on RGE monitor to my Latvian devaluation piece.<BR/><BR/>Basically I am arguing that Latvia needs a sharp devaluation, since systematic deflation - as we have seen in the Portuguese case is all too often very impractical. I think Latvia etc need a substantial devaluation before enetering the euro - as Portugal did, and then a very tight fiscal surplus policy applying to prevent a "Spain" effect. If this kind of policy had been applied to Portugal then the result might have been different, but all that is now, unfortunately, history.<BR/><BR/>Basically it is very difficult to shift wages downwards when there are strong national collective bargaining agreements. To deflate without devaluation you effectively need to suspend these and this is normally politically totally impossible, so, like Portugal you get stuck.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-3950127.post-90177975253982943462009-01-12T21:48:00.000+01:002009-01-12T21:48:00.000+01:00Thanks for your reflection about Portugal..I belie...Thanks for your reflection about Portugal.<BR/>.<BR/>I believe your conclusions are not very far from what some call "the portuguese trap".<BR/>.<BR/>http://www.rgemonitor.com/euro-monitor/630/spain_a_stimulus_package_in_the_wrong_country<BR/>.<BR/>And here:<BR/>.<BR/>"Avoiding the Portuguese Trap" by Christoph B. Rosenberg IMF Senior Regional Representative for Central Europe and Baltic States, published by The Baltic Times on February 20th 2008.<BR/>.<BR/>I believe that whoever joins the euro, econnomically must become German, act, think and invest like a German company. It's impossible to thrive (perhaps survive)with a strong currency without acting as a German. <BR/>.<BR/>I wonder if Slovaks learned any lesson with the Portuguese.CCzhttps://www.blogger.com/profile/14653748657820727728noreply@blogger.comtag:blogger.com,1999:blog-3950127.post-45028117690553407912009-01-12T20:30:00.000+01:002009-01-12T20:30:00.000+01:00Hi,"The problem in my contry is the State influenc...Hi,<BR/><BR/>"The problem in my contry is the State influence over everything including media and the legal corruption, since every boost of prosperity cames from Public Works in last decades."<BR/><BR/>I don't disagree with you at all, but I think there are also deeper structual economic and demographic processes at work which is what I am trying to tease out. <BR/><BR/>We simply don't understand the impact on economic performance of even temporary declines in population, and all research into this is still, I would say, in its very early stages.<BR/><BR/>Still, the fact that Hungary - where state influence is also very important, and the "reformed" communist party still pretty influential (if under other names) is striking.<BR/><BR/>The real message of the Oliveira thing is, however, that we all need to work longer, we shouldn't be afraid of it, and that we can even enjoy it.<BR/><BR/>If you want to travel and enjoy yourself, do it while you are young. That's a much better way round to organise things it seems to me.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-3950127.post-14071025728621713462009-01-12T20:25:00.000+01:002009-01-12T20:25:00.000+01:00"Please correct...Manuel de Oliveira celebrates th..."Please correct...Manuel de Oliveira celebrates the 100 yeras of age!!"<BR/><BR/>Yes, thanks, I know, that was a stupid typo on my part, which I have now corrected. This was the whole point of the intro really, still working at 100 etc. How stupid of me.<BR/><BR/>he is one of my favourite directors. There is also a link with the title, since Marcello Mastroianni played Pereira in the film which he "sustains", while Mastroianni's last film was in fact Oliveira's excellent Viagem ao Princípio do Mundo. So there is kind of another hommage worked secretly in there.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-3950127.post-87386414332447506932009-01-12T18:30:00.000+01:002009-01-12T18:30:00.000+01:00Please correct...Manuel de Oliveira celebrates the...Please correct...Manuel de Oliveira celebrates the 100 yeras of age!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3950127.post-79298426390778549422009-01-12T18:05:00.000+01:002009-01-12T18:05:00.000+01:00The problem in my contry is the State influence ov...The problem in my contry is the State influence over everything including media and the legal corruption, since every boost of prosperity cames from Public Works in last decades.<BR/><BR/>Also cames from our "soul" of changing no thing . Seems exagerated but the mild Salazar Dictatorship that lasted 40 years was founded in a program of No change at all. And the todays Central Bloc of Twins: Socialist Party(PS) and Social Democratic Party(PSD) more or less defend the same and changing anything is almost impossible except for PS (which is the main party and since it has a leftist tinge can do more without upsetting Unions and Media) tough at risk of breaking up. Note that 2009 will be a very important year with 2 important elections: One for Government and other for Local ones. Right now projections say that extreme left could win 20% of vote this year, btw we are the only country that have a 10%+ Communist Party... So i am expecting lots of troubles in future. <BR/><BR/>About legal corruption:<BR/>there is a saying: It is not important if you are a Minister, what is important is if you have been a Minister... Most of them are Administrators in firms that are State owned or live from State contracts...<BR/><BR/>luckluckyAnonymousnoreply@blogger.com