The last lot was written late as you can't transfer from 'word to here', so all had to be re-typed.
This is more up to date. A busy few days. About 6 hours solid work earned £300 by refusing to accept SAGA's absolutely outrageous demands to re-insure with them for the 4th time our elderly Range Rover. And I thought highwaymen had to actually leave their desks to collect the dosh. Wiseley re-invested £100 odd of the savings with the new lot in a breakdown insurance as we're off to see Kate 'n Cos' house near Limoges dans La France Profonde at the weekend. The horse's winter quarters are now repaired and rubble path laid to avoid slough of despond. Dommie's mini digger helped to push some of the newly arrived earth into position where the nebbiolo will be planted. Tony & Hemda asking for advice on their house in Pieve'. A solution was proffered in outline, site visit to follow. Wait for the mini explosion from Il Nano - not to be confused with the poison dwarf ( our nickname for Brunetta). Most unfair, as actually, with other members of B's government, apart from Twemonti, he's doing a grand job and isn't afraid to admit to mistakes.
Why the SUN like title - do you remember Argentina? I was delighted to see an old friend in yet more trouble. During the last attempt by the Left to form a coherent leadership ( one Walter Veltroni ) I publicly said and wrote that I'd vote for him in the brand new primaries if he could guarantee not to include Mastella in any group he might form since he represents the paridigm case of all that is reprehensible in Italian politics. I paid my Euro and gave my choice. It is of course worth pondering these two musings. 1) He and Mr B are perhaps symptoms not the disease - after all they were voted in. 2) To return to Argentina: maybe the country is/was so badly run because it had the greatest number of Italian immigrants of all S.American countries - remember Galtieri: a very Italian name. A Spanish dictionary actually has some words that are specific to Argentina because of the Italian influence on the language.
Glad to see that Ferrucio de Bartoli on 'Parla con Me' shares my views on the negative effect that an otiose legal system is having on FDI.
Just look at the Euro fly. Combine Trichet's absolute refusal to do anything about a soaring Euro ( he's got 100 basis points to play with given : 0.25% US, 0.5% UK and 0.10% Japan bank rates) with an Italy that may be 40% overvalued and the future here does indeed look grim. Just look at the tourist industry. This is a country with maybe some 80% of the world's art/architectural treasures ( not all of them by any means well looked after). But who is going to pay to come and look at them at these prices? The tourist industry is badly coordinated compared with, say, France. There you have properly graded hotels at all price levels, good central organisation of the industry at trade fairs - none of our inter regional rivalry - and town councils/tourist office that know how to run a web site. c.f Montpellier.
To be sure manufacturing has all kinds of porblems not least of which is that the generally low value added, low tech. stuff they produce can be copied and made cheaper elsewhere. But not even the Chinese can make a Paestum nor the Indians a Villa Maser. Manufacturing and technology comes and goes; if my memory is correct the Italians borrowed silk making, paper making and even noodles from the Chinese - they are now repaying the compliment by borrowing amongst other things the Italian post war success story of manufacturing affordable mass market white goods . the Haier vs. Merloni match is on right now.
giovedì 22 ottobre 2009
Tremonti's hidden agenda
The trouble with being an elderly foreigner interested in things economic and living at 750m in the Apennines, is that there aren't many interlocutors interested in this kind of matter. Despite the fact that my criticisms of italian economic policy ( if that expression is not actually oxymoronic at the moment) are made with the best interests of my adopted country at heart.
How right my academic correspondent at Bocconi was about Tremonti; in my old fashioned anglo saxon terms "he's pissed in the chips yet again". To think that Biagi was murdered for proposing even modest reforms does make one wonder. Notice Mr B taday again siding with unreconstructed trades unions - one went as far as to say that they had written his script themselves. The last time Mr B did so, was just before the last elections over the Alitaglia ( pun intended) affair. That cost the taxpayer some hefty redundancy pay billions inter alia that Air France was about to take on board. Now I'm not a reader of Dan Brown and, as such, not a conspiracy theorist, but I think I see the hidden agenda of these two gentlemen. What looks like a piece of sentimentality ' founding families, preserving social peace etc.) is in fact covering their terror of losing even more of the tax base.
To my mind there are 5 classes of worker in Italy:
Employees with permanent contracts
Civil servants ( public officials/employees )
Employees with short term contracts
Shopkeepers and small tradesmen
And of course the Mafia
The first two have, paid on their behalf by their employer, the full 'Tax on employment' ( often well over 100% of take home pay) even though some would like to call most of it social security not tax. What's in a name when it's your pay packet that's suffers?.
En passant, the second one also costs the taxpayer a fortune in pensions after sometimes the briefest of careers.
The third has less paid into the system on his/her behalf by the employer than the first two.
The fourth by all accounts earns less than his shop assistant/employee and therefore pays little into the system.
The fifth in as much as they bribe to get public contracts are of course imposing a tax of their own whilst providing some services for which there is obviously a demand ( drugs, prostitution etc.) and earning profits therefrom which are totally untaxed.
If the trend is against 'jobs for life' and Brunetta is successful in reducing waste (= personnel ) in the public service then apart from some long term gains to the state pension fund the tax take is trended downwards. Hence the rhetoric, rather than starting on a complete overhaul of the tax situation to bring some equity into the system. Under Padoa-Schioppa at least some attempt at sector benchmarking was made so that, if the Café de Paris in the Via Veneto was turning over less than Bar White Green in Pievebovigliana some questions might be asked. He was also proposing ( to trades union indifference if not downright hostility) some social support for short term contract workers. Trades union members are mostly old and in permanent jobs Q.E.D.
As I wrote to my correspondent,' What think you?'. I know you must be busy man so you don't have much time to mark the essays of an economic illiterate, but it would be great to hear from you.
How right my academic correspondent at Bocconi was about Tremonti; in my old fashioned anglo saxon terms "he's pissed in the chips yet again". To think that Biagi was murdered for proposing even modest reforms does make one wonder. Notice Mr B taday again siding with unreconstructed trades unions - one went as far as to say that they had written his script themselves. The last time Mr B did so, was just before the last elections over the Alitaglia ( pun intended) affair. That cost the taxpayer some hefty redundancy pay billions inter alia that Air France was about to take on board. Now I'm not a reader of Dan Brown and, as such, not a conspiracy theorist, but I think I see the hidden agenda of these two gentlemen. What looks like a piece of sentimentality ' founding families, preserving social peace etc.) is in fact covering their terror of losing even more of the tax base.
To my mind there are 5 classes of worker in Italy:
Employees with permanent contracts
Civil servants ( public officials/employees )
Employees with short term contracts
Shopkeepers and small tradesmen
And of course the Mafia
The first two have, paid on their behalf by their employer, the full 'Tax on employment' ( often well over 100% of take home pay) even though some would like to call most of it social security not tax. What's in a name when it's your pay packet that's suffers?.
En passant, the second one also costs the taxpayer a fortune in pensions after sometimes the briefest of careers.
The third has less paid into the system on his/her behalf by the employer than the first two.
The fourth by all accounts earns less than his shop assistant/employee and therefore pays little into the system.
The fifth in as much as they bribe to get public contracts are of course imposing a tax of their own whilst providing some services for which there is obviously a demand ( drugs, prostitution etc.) and earning profits therefrom which are totally untaxed.
If the trend is against 'jobs for life' and Brunetta is successful in reducing waste (= personnel ) in the public service then apart from some long term gains to the state pension fund the tax take is trended downwards. Hence the rhetoric, rather than starting on a complete overhaul of the tax situation to bring some equity into the system. Under Padoa-Schioppa at least some attempt at sector benchmarking was made so that, if the Café de Paris in the Via Veneto was turning over less than Bar White Green in Pievebovigliana some questions might be asked. He was also proposing ( to trades union indifference if not downright hostility) some social support for short term contract workers. Trades union members are mostly old and in permanent jobs Q.E.D.
As I wrote to my correspondent,' What think you?'. I know you must be busy man so you don't have much time to mark the essays of an economic illiterate, but it would be great to hear from you.
domenica 18 ottobre 2009
Reform the law in Italy and who should pay for St Francis' wood
A wet Sunday in Le Marche but managed to harvest last of the 2nd sowing of French beans. Great guffaws when the magistrates were reported as threatening to go on strike as Berlusconi hots up his attempts at reform. Strike? Who would notice? Ancona our regional capital was reported as having the slowest courts in Italy last year by the Espresso - 10 yrs to get a case heard, if my memory serves me correctly. Which brings me back to the end of my last blog.
If labour productivity in this country is to be brought up to competitive levels then apart from wage restraint ( difficult in a country where take home pay in a factory can be lower than 1,000 euros a month ) and of course a freer labour market, investment in new plant is a must. Give a man a new machine that produces 50 widgets per hour as opposed to his old faithful that did 25 and obviously productivity goes up by100%. The small family run businessesthat are the backbone of the economy have thier own backs against the wall and realise that, even if they could borrow the money, workers are easier to sack than the bank manager when things go quiet. What's missing here is FDI ( foreign direct investment). When the first language on a P&G product is Greek you know something is awry. Greece after all is as much and economic basket case as Italy. So why Greece for multinationals and not Italy which has the lowest FDI in Europe and that which it has is high-tailing it for home? Answer: the legal system. Multinationals will not come here because contracts cannot be enforced within the lifetime of the product- if at all. If no multinationals come with the inevitable transfer of mangament know-how and technology , where is the new investment to come from? Who is going to employ gainfully the graduates ? Now if the law were to be reformed maybe things might look brighter- after all it couldn't get any worse. Cases such as the Perugia murder, and indeed any of Berlusconi's legal problems make Italy a laughing stock because of the sheer inefficiency and length of time. To be sure there's bound to be an element of self interest in Mr B's efforts but there could be collateral gains - again on the principle that nothing could be worse than the current farce. Magistrati l'Ultracasta by Stefano Livadiotti makes bitter sweet reading.
Now to lighter joke. The poor old National Trust called FAI here in Italy wants us all to contribute a few bob to keep St. Francis' wood going. They must be joking. This shady walk is part of a tiny monastry where St. Francis holed up for a bit of a think - very beautiful. But this supposed object of our charity is right next to Assisi. Go there after 8.30 am after Jan. 30th and you can't move for tourists. This town is making a fortune - if they can't shell out a few cents then what about the church itself. You can bet your bottom dollar that it was the state ( the taxpayer) that fixed up the cathedral after the last 1997 earthquake. It's time they put their hands in their own pocket. Only Marchegiani in Italy are supposed to have short arms and deep pockets, we don't need any rivals
A wet Sunday in Le Marche but managed to harvest last of the 2nd sowing of French beans. Great guffaws when the magistrates were reported as threatening to go on strike as Berlusconi hots up his attempts at reform. Strike? Who would notice? Ancona our regional capital was reported as having the slowest courts in Italy last year by the Espresso - 10 yrs to get a case heard, if my memory serves me correctly. Which brings me back to the end of my last blog.
If labour productivity in this country is to be brought up to competitive levels then apart from wage restraint ( difficult in a country where take home pay in a factory can be lower than 1,000 euros a month ) and of course a freer labour market, investment in new plant is a must. Give a man a new machine that produces 50 widgets per hour as opposed to his old faithful that did 25 and obviously productivity goes up by100%. The small family run businessesthat are the backbone of the economy have thier own backs against the wall and realise that, even if they could borrow the money, workers are easier to sack than the bank manager when things go quiet. What's missing here is FDI ( foreign direct investment). When the first language on a P&G product is Greek you know something is awry. Greece after all is as much and economic basket case as Italy. So why Greece for multinationals and not Italy which has the lowest FDI in Europe and that which it has is high-tailing it for home? Answer: the legal system. Multinationals will not come here because contracts cannot be enforced within the lifetime of the product- if at all. If no multinationals come with the inevitable transfer of mangament know-how and technology , where is the new investment to come from? Who is going to employ gainfully the graduates ? Now if the law were to be reformed maybe things might look brighter- after all it couldn't get any worse. Cases such as the Perugia murder, and indeed any of Berlusconi's legal problems make Italy a laughing stock because of the sheer inefficiency and length of time. To be sure there's bound to be an element of self interest in Mr B's efforts but there could be collateral gains - again on the principle that nothing could be worse than the current farce. Magistrati l'Ultracasta by Stefano Livadiotti makes bitter sweet reading.
Now to lighter joke. The poor old National Trust called FAI here in Italy wants us all to contribute a few bob to keep St. Francis' wood going. They must be joking. This shady walk is part of a tiny monastry where St. Francis holed up for a bit of a think - very beautiful. But this supposed object of our charity is right next to Assisi. Go there after 8.30 am after Jan. 30th and you can't move for tourists. This town is making a fortune - if they can't shell out a few cents then what about the church itself. You can bet your bottom dollar that it was the state ( the taxpayer) that fixed up the cathedral after the last 1997 earthquake. It's time they put their hands in their own pocket. Only Marchegiani in Italy are supposed to have short arms and deep pockets, we don't need any rivals
venerdì 16 ottobre 2009
Should Italy leave the euro/default on gvt. debt?
At the end of 2008 Italy had a national debt of 1.66 trillion euros. Debt stood at 105.8% of GDP so GDP must have been 1.569 trillion - en passant this absolute amount is very difficult to find ; not even the bank of Italy will give an answer.
The middle estimate for the fall in GDP for 2009 is some 5.2%.
1.569 x 0.948 = 1.487 trillion as an estimate for the outcome for 2009. Gvt. debt was officially announced 4 days ago to be at 118% of GDP. My best guess is that the outcome for end 2009 will be some 125% of GDP as Italy has yet to learn to pay unemployment pay at anything approaching western European levels. By some accounts only 0,5% of GDP is spent on this item. The question one might ask at this point is: what happens to the fantastic ( to anglo-saxon minds) levels of taxation on labour ( INPS. INAIL. BOOT money for builders) which are paid by employers - which naturally depresseses the level of pay for the workers? When you're out of a job you can wait months before some ghastly triumvirate of local politicians, trades union representatives and local Confindustria deigns to hand out a pittance. Non permanent 'precarie? get nothing despite having paid in.
This excursus appart; let's assume I'm right about 125% ratio of debt to GDP by end 2009. If this is true, and patient investors ( or bond vigilantes if you prefer) are prepared to go on accepting yields of 3.9% on 10 year gvt. paper ( BOT's or whatever) then 125 x 0.039 = 4.875% of GDP is going to be spent on servicing the interest portion of the debt. Maastricht, what on earth was that? 3% + 60% max.......... The choice is stark; 10 years of wage restraint/flexibility and of course investment is required in order to bring productivity up to competititve levels or get out of the Euro/default. Once Italy is out then Greece, Portugal and probably Spain will go to. The Euro will rocket and poor old Germany will have to find some very rich Chinese indeed to buy their excellent cars and capital goods. On the other hand maybe the Germans/Dutch etc. can be persuaded to fund Italy and the others - at a price of course.
The middle estimate for the fall in GDP for 2009 is some 5.2%.
1.569 x 0.948 = 1.487 trillion as an estimate for the outcome for 2009. Gvt. debt was officially announced 4 days ago to be at 118% of GDP. My best guess is that the outcome for end 2009 will be some 125% of GDP as Italy has yet to learn to pay unemployment pay at anything approaching western European levels. By some accounts only 0,5% of GDP is spent on this item. The question one might ask at this point is: what happens to the fantastic ( to anglo-saxon minds) levels of taxation on labour ( INPS. INAIL. BOOT money for builders) which are paid by employers - which naturally depresseses the level of pay for the workers? When you're out of a job you can wait months before some ghastly triumvirate of local politicians, trades union representatives and local Confindustria deigns to hand out a pittance. Non permanent 'precarie? get nothing despite having paid in.
This excursus appart; let's assume I'm right about 125% ratio of debt to GDP by end 2009. If this is true, and patient investors ( or bond vigilantes if you prefer) are prepared to go on accepting yields of 3.9% on 10 year gvt. paper ( BOT's or whatever) then 125 x 0.039 = 4.875% of GDP is going to be spent on servicing the interest portion of the debt. Maastricht, what on earth was that? 3% + 60% max.......... The choice is stark; 10 years of wage restraint/flexibility and of course investment is required in order to bring productivity up to competititve levels or get out of the Euro/default. Once Italy is out then Greece, Portugal and probably Spain will go to. The Euro will rocket and poor old Germany will have to find some very rich Chinese indeed to buy their excellent cars and capital goods. On the other hand maybe the Germans/Dutch etc. can be persuaded to fund Italy and the others - at a price of course.
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