Showing posts with label Spain. Show all posts
Showing posts with label Spain. Show all posts

Friday, February 08, 2013

Houston, we have a problem... Portugal!

Though EU & IMF have agreed on an audacious $956 billion bailout plan for the Euro zone to control the sovereign debt crisis that started with Greece, it won’t be of much help. B&E talks to experts across continents, including the European Central Bank to analyse who all are next in the felicitation parade by Manish K Pandey
 
Almost a month ago when ash clouds from Iceland’s volcano Eyjafjallaj-kull were showing their prowess by bringing almost all European airports to halt, not many knew about the danger that was about to engulf Greece and had the capability of bringing some of the biggest euro zone economies to a standstill. Then it came and even Greek gods could not save their beleaguered nation from its fury. Result: The $333.53 billion economy (2009 estimate) has today almost but collapsed. While Standard & Poor’s has already rated Greek bonds as junk (first time a euro member has lost its investment grade since 1999), its fiscal deficit is hovering around 14% of GDP.

As Greece now moves closer to a sovereign default, several economists believe that the turmoil would not end here, and would continue to take some more in its wake. Taking into account the deteriorating financial strength of the banking systems in nations like Ireland, UK, Spain, Italy, et al, any or all of them could be the usual suspects. But leading the identification parade is Portugal, a country could well be the talk of the town very soon with respect to a domino collapse. Robert Thomas, Senior Vice President, Moody’s Investor Service, based out of UK, shares with B&E, “Despite many fundamental differences to Greece, Portugal is now at the forefront of investor concern if the risk of contagion continues.”

The signals sent by Portugal are almost similar to the ones propelled by Greece just before the financial volcano erupted there. Like its distressed Euro-partner, Portugal too has a fragile public finance. Its budget deficit is already around 9.4%, which is an astonishing 6% higher than the standards set by EU. Further, Portugal’s foreign liabilities are close to 108% of its GDP ($225.35 billion), much higher when compared with Greece whose foreign liabilities stand at 87% of GDP ($264.82 billion). Truly, Spain too has foreign liabilities that are equivalent to 91% of it GDP ($1.20 trillion), but unlike Spain, Portugal has been suffering from a bigger problem of very slow growth rates over the last decade. CMA DataVision, a UK-based research firm that tracks the riskiness of sovereign debt, rates Portugal’s performance during Q1 2010 to be the worst in the developed world. As per it, the spread between the starting price of swaps in January 2010 and the end price in March 2010 has widened to 52.3%. So, while last year Portugal’s GDP declined by 0.1%, this year it is forecast to slow down even further, by 3.3%. And the only solution that Portugal has if it wants to stick to the lifeline is to borrow from foreign investors. But, that’s exactly where the problem lies. If interest rates stay high, this dormant volcano can erupt any time to engulf the Portuguese economy. Not to forget, investors are already demanding an interest rate of 6% on Portuguese bonds.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Tuesday, August 07, 2012

STICKY POINT: ABORTION (TO ALLOW IT... OR NOT TO)

The debate on abortion has moved away from the empowerment of women to cutting religious propaganda

Kenya, India, Bangladesh, Spain, Mexico, all are nations where abortion is illegal (after a few weeks of conception; like in India) but the governments are not able to control or deliberately overlook the illegal abortions (Mexico has over 900,000 illegal abortions every year). And this point is where religious groups, especially the Catholic communities, are lobbying very hard to stop abortions globally. In general, a majority of Catholic Christians are considered to be pro-life. While Barack is now giving millions of dollars to groups that aggressively promote the pro-choice concept, he has been highly condemned by the Vatican along with pro-life leaders on this move. In the Dominican Republic, after the Dominican Catholic Church lobbied, the present laws ban abortion in all circumstances, even in cases of rape; in fact, even when the mother’s life is in danger. Abortion is banned in Catholic heavy Ireland, except in cases where the mother’s life is in danger. In Spain, though abortion is illegal, with the passage of gay rights the ban was expected to be removed. However, the Catholic Church has launched campaigns to prevent the reform from being passed. It’s clear that the issue of abortion can never escape the bloodying conflict between the political and religious spheres. The politician who attempts to go against the existing religious paradigm could well end up losing a huge base of voters – Obama knew that and still won.

But then, is abortion right or wrong? That, we truly believe, is for a nation and its people to decide. If the democratically elected legislature of a country – which promotes equal women’s rights – believes abortions should be allowed or banned, in whatever form or reason, then be that as it may! Unfortunately, not only is the majority of most legislative assemblies almost always made up of men, these nations also suffer what we now know as the Roe Effect, which says that pro-choice parents have generally ended up having more abortions and hence fewer children over decades than the pro-life population; thus support for legal abortions has declined over time, and will decline further in the future. That, sadly, might be the way of things to be in the future...


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