Brian,
There are probably innumerable reasons for Portugal's present condition - and competitiveness isn't one of them unless you mean removing any chance of competition to the wealthy EU countries from Portugal. One cause may be the same as Greece's need to borrow vast quantities of money - off the balance sheet - in order to meet the required entry level debt band. Another is the cost to the national purse of the rapid market changes required before and after it joined. This would include the price paid for services subject to European regulation such as health, education, welfare - add to that the cost of all those now unemployed as a result of an "efficient" free-market. Exacerbated by the loss of government revenue from privatisation or internationalisation of ownership. Don't forget we brought them in so we could raid them. Rapid reform is the cause of this predicament and provides no solution. So parroting the usual World Bank, IMF, WTO, Washington Consensus mantra won't make it go away - ask 24 million Indonesian unemployed. But the main reason is simply that Portugal borrowed much more money than it's own paltry banks could lend it and ended up owing a large part of it to other countries' banks (and the banks that insured them - and ditto, ad nauseam) that now need it back but at an increased interest rate - rather than write it off - which in my view is exactly what Portugal, Ireland and Greece should do. It is the fallacy of self-regulating markets in a globalised world at play. If I were Spain I'd announce default before speculators killed my bonds, took all my wealth, and go for a Siesta. Better to suffer austerity for your own benefit than for that of some multinational bank. We'd go back to being a bunch of nation states and the only real losers would be those in the globalised banking industry. And of course the governments foolish enough to have bailed them out.
The panicked chatter now is for a solely Northern European Union as a result - excluding PIGS and Italy. A two tier union at best. I think we're seeing the end of the Globalisation era. And a very short one at that. Since the fall of the Soviet Union we have seen raw capitalism more or less destroy itself through the actions of it's strongest adherents. Crisis economics begetting yet worse crisis economics - all based on greed. Signs of this are to be seen in the Arab world - forced by repression to accept the austere economic dictates of globalisation they have rebelled. These are not the fanatics but the dispossessed looking for their fair share of the action - and why not. What we think is the natural order of things may not last forever. We've had a go at perpetuating it through exaggerated economic crises - which worked up to the 1999 WTO in Seattle. Then by armed force justified by equally exaggerated threats - hasn't worked in Afghanistan or Iraq unless hatred and corruption are the hallmarks were looking for. And now we've run out of excuses. Especially as we ourselves are falling victim to our own policies and practices.
Anyway, we haven't quite reached that point just yet. Ask yourself who benefits from an increase in the ECB interest rate given the economic suffering of numerous EU countries. In my view it is clear - why tip billions into these countries and not come out owning a large part of them - or at least the future profitable bits. So what we're seeing is a stab at the usual economic blackmail. Give us what we want or we won't give you any money. Although if enough countries threaten to default that may cause a rethink. My favourite mind experiment of the moment is that China decides to stop buying US debt and refinances the PIGS.
There is a difference between freedom and choice that defines our future. Freedom allows us to come to our own conclusions and make our own decisions - choice permits us to pick from someone else's. I prefer the former. Equality is universal, opportunity is selective. That's a tough one given our intrinsic selfishness but at the end of the day there is no existential justification for the extent of the inequality surrounding us - no matter which economic system we embrace.
Best,
There are probably innumerable reasons for Portugal's present condition - and competitiveness isn't one of them unless you mean removing any chance of competition to the wealthy EU countries from Portugal. One cause may be the same as Greece's need to borrow vast quantities of money - off the balance sheet - in order to meet the required entry level debt band. Another is the cost to the national purse of the rapid market changes required before and after it joined. This would include the price paid for services subject to European regulation such as health, education, welfare - add to that the cost of all those now unemployed as a result of an "efficient" free-market. Exacerbated by the loss of government revenue from privatisation or internationalisation of ownership. Don't forget we brought them in so we could raid them. Rapid reform is the cause of this predicament and provides no solution. So parroting the usual World Bank, IMF, WTO, Washington Consensus mantra won't make it go away - ask 24 million Indonesian unemployed. But the main reason is simply that Portugal borrowed much more money than it's own paltry banks could lend it and ended up owing a large part of it to other countries' banks (and the banks that insured them - and ditto, ad nauseam) that now need it back but at an increased interest rate - rather than write it off - which in my view is exactly what Portugal, Ireland and Greece should do. It is the fallacy of self-regulating markets in a globalised world at play. If I were Spain I'd announce default before speculators killed my bonds, took all my wealth, and go for a Siesta. Better to suffer austerity for your own benefit than for that of some multinational bank. We'd go back to being a bunch of nation states and the only real losers would be those in the globalised banking industry. And of course the governments foolish enough to have bailed them out.
The panicked chatter now is for a solely Northern European Union as a result - excluding PIGS and Italy. A two tier union at best. I think we're seeing the end of the Globalisation era. And a very short one at that. Since the fall of the Soviet Union we have seen raw capitalism more or less destroy itself through the actions of it's strongest adherents. Crisis economics begetting yet worse crisis economics - all based on greed. Signs of this are to be seen in the Arab world - forced by repression to accept the austere economic dictates of globalisation they have rebelled. These are not the fanatics but the dispossessed looking for their fair share of the action - and why not. What we think is the natural order of things may not last forever. We've had a go at perpetuating it through exaggerated economic crises - which worked up to the 1999 WTO in Seattle. Then by armed force justified by equally exaggerated threats - hasn't worked in Afghanistan or Iraq unless hatred and corruption are the hallmarks were looking for. And now we've run out of excuses. Especially as we ourselves are falling victim to our own policies and practices.
Anyway, we haven't quite reached that point just yet. Ask yourself who benefits from an increase in the ECB interest rate given the economic suffering of numerous EU countries. In my view it is clear - why tip billions into these countries and not come out owning a large part of them - or at least the future profitable bits. So what we're seeing is a stab at the usual economic blackmail. Give us what we want or we won't give you any money. Although if enough countries threaten to default that may cause a rethink. My favourite mind experiment of the moment is that China decides to stop buying US debt and refinances the PIGS.
There is a difference between freedom and choice that defines our future. Freedom allows us to come to our own conclusions and make our own decisions - choice permits us to pick from someone else's. I prefer the former. Equality is universal, opportunity is selective. That's a tough one given our intrinsic selfishness but at the end of the day there is no existential justification for the extent of the inequality surrounding us - no matter which economic system we embrace.
Best,
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