TEc - More pain, less gain - Portugal's troubles add up

Something has changed in Portugal in a matter of weeks.

The government backtracked on its controversial proposal to shift part of the social security tax burden from employers to employees. Then it presented the 2013 budget that jolted just about everyone including the governing coalition as well as prominent members from the ruling parties.

Talk of the day - the 2013 draft budget - rumbles on endlessly until the budget is approved. Many seek to predict the extent of further doom and gloom brought about by punishing income tax raises and cuts to social benefits. 

Others suggest amends or would rather see it ditched altogether.

Few offer workable alternatives that might ease the economic plight.

The Finance Minister has the upper hand as would be expected in such circumstances. Respected for his technical credentials yet accused of social insensivity and for staying aloof.

The country's mood is sad, angered and restive.

Mostly there is apprehension in the air as to what the future holds in store. 

For the underlying case is Portugal is overloaded by a debt pile which is barely manageable under current (and future?) conditions.

The government's top and only priority is to assure that bailout funds keep flowing in (at regular intervals) until the country is eventually able to borrow from markets at affordable rates.

An early return to economic growth seems as distant as ever.

The export sector continues to outperform itself displaying remarkable resilience in the midst of a worsening world economy.

Some say, however, that export growth is explained by sales of household gold and refined oil only. I suspect there is more to it.

Portugal remains in a very tight corner would be understatement.

The country's wish to break free from the shackles imprisoning it is for the moment severely hampered by both internal and external constraints. Until such time as the EU moves forward on key issues of Eurozone's monetary policy.

Or there is an unlikely change of heart by the trio of lenders.

It is hoped that once the adjustment program is complete there will still be an economy and a people sound and upbeat enough to start anew.

TEc - Meet the Fukushima 50? No, you can't - The true heroes following the Nature-triggered nuclear accident

Revulsion is what I feel on reading this article.
Well over a year since the momentous event at Fukushima in the wake of a major natural calamity hardly any public recognition - endorsed first by Tepco management then by Japan's government - has gone to those 50 brave men.
It goes far to show the workings of Japan's establishment and wider group interests at the very top.
Yet Japan as a country, as a nation, as a technologically sophisticated entity made to kneel down by Mother Nature owes so very much to so very few.

It cannot be overstated that the 50 are the only heroes in the aftermath of the accident. Without their direct intervention - and exposure to unknown risks - much more serious consequences would have ensued.

I deem it highly relevant that the full story of what happened at Fukushima be told.
Praise and outward recognition should be lavishly heaped on the 50 lone men.
Also, official rebuke and public disapproval should fall on those who did not live up to their responsibilities.

All facts have by now been established.
Japan would feel much more at ease with itself if only objective recognition were placed where it falls due: the 50 men who had their hands on the job and their lives on the line and none other could fill in for them.

Least of all Tepco's top manager...or the PM of the day!

TEc - Concrete jungles - Urban India

Indian cities remain mired in overwhelmingly towering challenges that defy any quantifiable scale. Ranging from unchecked population growth to a lack of or inadequate infrastructure to cope with ever growing multiple needs nearly everything is amiss. From the basic to the upmarket elaborate.
Despite the odds modernity has been seeping through layers of endemic corruption and institutional bad practices.
Successful individual projects bear testimony to this.
For the most part urbanisation in India is a random hit and run process where planning is as poor as its exact opposite is painfully true.
There are of course exceptions to this general rule.
It can fairly be said that concepts such as systematic urban planning and city management have not taken root.

If Surat should represent hope that things can be done differently then all city planners and urban managers from the rest of the country should be taking a hard look at it.

TEc - The tipping point - Portugal takes to the streets

It does look like a tipping point of some sort has been reached. Question is what tipping point is it?

I have long held the view that austerity was never the right word to define government policies already implemented or in the pipeline. The correct one would be adjustment made forceful on a country whose reliance on external finance became unbearable.
How could it not be whether in a single currency area or otherwise?

The sad thing is it all came to a head suddenly, starkly exposing how unsustainable the trajectory had become.
Of course there could and should be better tools from the EU/ECB to deal with the situation in as severe an economic downturn.
But the underlying issues - imbalances that built up over 15-20 years - had to be addressed sooner rather than later.

There has been a peaceful uprising in Portugal following the PM's latest announcement for the 2013 budget.
It is unlikely that the one measure now made the major bone of contention will get approved in its current form.
A compromise of some type will nevertheless have to be reached on ways to make Portugal's economy more competitive and better balanced between exports and internal consumption.

Quite a difficult balancing act but one that needs to take account of such simple concepts as take-home pay being sacred to any working person anywhere.
Especially when the government must first be seen to be digging into as yet no-go areas of deals struck with private companies in the past.
Tens of notoriously bad public-private partnership deals whose main financial burden falls to the State.
That means the taxpayer having to foot excessive bills over 30-40 years.

A spot-on observation on one of the most intractable problems in Portugal's electoral system. The obvious consequence being the downgrading of Democracy as you rightly point out.
Citizens in many countries hardly feel represented by the politicians they vote for even where direct elections are held. Let alone where they are clearly systemically misrepresented.
Democracies are indeed discredited to varying degrees because the main driver of all activity is found elsewhere not in Parliaments or governments anymore.
This would of course take us into a much wider argument on issues affecting political systems these days.

But yes I would agree the Portuguese electoral system is one such critical issue. I'm not sure it is the crux of the problem.

TEc - Not too little, possibly too late - The ECB takes action

Finally the ECB is beginning to sound like a Central Bank for all countries sharing the single currency. When called upon to deliver directly on its latest announcements then only will European citizens across the eurozone acknowledge they have not been thrown entirely into the frying pan of financial markets.
For all the specificities of which there are many the whole gambit boils down to this.

It is only fair to say Mario Draghi has made some solid statements on the ECB's readiness to uphold the Euro. He has spoken up consistently since taking over the ECB's top job from JCTrichet. Yesterday he made good on those statements by cobbling together a set of measures that redefine the ECB's role in the current Eurozone context.
However, it cannot go unnoticed that it took Spain's size and potentially Italy's - or nightmarishly both together - to force the ECB spring into action.
While small countries were targeted by bond markets eventually succumbing to the bailouts, the ECB in retrospect effectively failed to stand up for them in earnest.

The ECB has at long last seized its role as a Central Bank would for the Euro-17.

At national and EU level focus must equally shift to growth policies. Not a theoretical approach but a very clear and pragmatic one.
Importantly, to where sound economic growth is to be generated in the future across many countries.
Ultimately the only way for any country/economy to settle dues and refinance itself in the now all but shuttered financial markets.

TEc - Untangling the custo Brazil - Overtaxed?

I am appalled by the contents of the article that if accurate enough reveal an absurdly taxed country.In a sector that should provide a powerful incentive to growth.

Brazil is so blessed by Nature's bounty that power costs are eligible for natural competitive advantage. Yet it does seem like government has made it into a cash cow seeking to extract as much tax revenue from it as its failures to raise elsewhere where it might.
Even if transmissions lines are lengthy and theft occurs - it does to varying degrees in most developing countries - there is no plausible justification for electricity to be as pricey to the end user.
How much more competitive could Brazil's economy be - government still taking in sizeable tax revenue - if only the entire system/cost structure+taxes were adjusted to reflect all variables in a balanced way?
Will there be political drive to deliver fairly and squarely in this
vital sector over the coming years?

Whatever decisions are made going forward, Brazil cries out and deserves significantly cheaper electricity prices for the end user, both private and industry.
Such an objective must be regarded as strategic to the country's overall performance and well-being.
Well within its reach and to be achieved at the earliest.
Will it?

I see your point, there being a number of examples to back up that tendency.
But a tendency it is for it need not be destiny.
Canada and Australia, to mention two major economies with relatively small populations, do defy the notion.
Brazil too is indeed a manufacturing powerhouse in South America with relevant sales of manufactured goods across all sectors from needles and pins to advanced aircraft.

TEc - Disunited states of Europe - EU woes

The title to Charlemagne's latest piece is fitting enough.
Tellingly it wraps up the actual root cause of most macro problems now facing the EU.

I was never in any doubt that EU integration would be a slow, painful often heated-and-prone-to-setback process spread out over decades.
How could nations that lived at loggerheads with each other, in fierce competition and animosity over centuries ever hope to stand as one after a handful of years?

That said I cannot help being awed at the level of disunity that has surfaced thanks largely to a flawed economic model. A model based on seeking permanent help from money lenders to plug mounting deficits as if there was no tomorrow.
Rolling debt is acceptable until the debt pile is so huge as to become unmanageable. Yet this is exactly what happened to Southern European countries (Spain excepted), Ireland and outlier UK.

Uncertainty remains the only meaningful word.
The Eurozone's complexity is far from being approached aiming for resolution through balanced compromise.

While I instinctively agree with the points you've raised I am yet to see that silver lining come into full view.
There never was such good timing for a serious review of sorts and ways within societies. Much, however, hinges on prevailing dynamics in each of them. The way government and various leaderships across the full spectrum play out their stakes also featuring decisively.
I would hope to see balanced change driven by a greater goal come about.
As critical as it is for main bodies from civil society to rise up to the times, governments too must lead the way. Not by playing Daddy but by preventing or managing conflict wisely always for the greater good of the greatest number.

Failure to do so will mean a relapse to the very causes of the current mess. Such a mess would then perpetuate itself.
Each man for himself would signal a civilizational leap backwards most of us would not wish for.