Shopping: My elder daughter gave me a wonderful Swiss army knife for my recent birthday. One of its 56 implements is a plastic toothpick. Having mislaid it, I checked on line and found 2 shops in Pontevedra on the company's site. Here's what happened at the first one yesterday. Its window, by the way, was full of different models of the the knife:-
Hola. Do you have a replacement toothpick for this knife?
No.
Can you order me one?
No.
Why not?
It would be difficult.
How so?
I'm not an official distributor.
So, on to the second place today . . . Without too much confidence I'll be able to avoid shopping on line. Meanwhile, the obvious questions are: Where does Shop 1 get its supplies from? And: Are they genuine or fake? I don't suppose it matters for the toothpick, though.
Taxation: Per El País: Spain collects significantly less tax than most of its EU neighbours: measured in terms of the contribution to GDP, at 34.6%, Spain’s is almost six percentage points short of the average, which is 40%. The biggest difference is income tax (IRPF), where Spain’s contribution is two percentage points below that of its neighbours. One consequence of this is that, for decades if not centuries, the Spanish state has compensated by hitting you with taxes every time you do anything remotely official. Especially if you want to transfer property, when there's no only a capital gains tax but also a transfer tax of at least 7%. Anyway, the article provides reasons for this situation. Essentially: The experts attribute the shortfall to the generous exemptions, deductions and rebates, as well as to widespread fraud. Guess which class bears the greatest tax burden.
THE EU
Italy: I've previously cited Don Quijones views on the banking system there. Attached is an article which goes on from this to predict that Italy will eventually have to exit the EU. A couple of samplers: Since the beginning of 2008, the US and the UK are currently registering output up by about 12% and 8% respectively. Over the same period, Italy’s GDP is down by 8%. . . . Since the beginning of 1999, the UK economy has grown by almost 40%, against about 25% in Germany and France. But Italy’s performance is in a different league. Over the last 17 years it has managed to grow by less than 6pc. In other words, since the formation of the euro, Italy’s economy has essentially stagnated. Along with this stagnation has come an employment disaster. Unemployment now stands at about 12% of the workforce. [Spain's, by the way, is around 20%]
GALICIAN STUFF
Airports: Hard as I find this to believe, there is actually a Committee for the Coordination of Airports. On the other hand, I'm not surprised that the foto of it showed at least 18 members around a U-shaped table. However capable they might be in facing their challenge, they aren't helped by the refusal of the mayors of Santiago, La Coruña and Vigo to come clean on how much they subsidise the various airlines.
Cash from Madrid: The president of our regional government, Sr Feijoo, has said he won't stand for Madrid reducing subventions to us because more money will be needed to bribe the Catalans and Basques not to to press independence demands. Good luck with that, Alberto.
LOCAL STUFF
Marriages: In Pontevedra province:
2009: Civil, 1821: Religious, 1698. The first year in which the former predominated. Total: 3,519
2015: Civil, 2165: Religious, 793. Total: 2,958. Down by 16%
THE GALLERY
FINALLY
A priest here in Galicia has introduced a special Confession table in his church, calling it La Isla de Misericordia. Or 'The Island of Mercy'. I can think of nothing less likely to make me confess than doing it in public, face-to-face with a priest. But I guess it makes sense to him.
ARTICLE
Italy needs reform and
a euro exit is inevitable: Roger Bootle
On Sunday Italy goes to
the polls to vote, not on membership of the EU, or even of the euro,
but rather on an apparently arcane political matter, namely the
powers of the upper house of the Italian parliament, the Senate. But
there are close connections between this vote and the matters of the
euro and EU membership.
For a start, the
referendum was triggered by the failure of Italy’s Prime Minister,
Matteo Renzi, to change the constitution. He believes the extensive
powers of the Senate effectively block attempts to reform the Italian
economy.
Moreover, Mr Renzi has
suggested that if he loses he will resign, thereby plunging the
country into a period of political chaos and emboldening the
eurosceptic Five Star movement. As with other referendums and
elections, the vote will be regarded by the populace not so much as
an opportunity to express a view about the precise details of
institutional reform, as a chance to give their verdict on Mr Renzi’s
government in particular and the state of Italy in general.
And it really is in
quite a state. The Italian banking system is appallingly weak. Almost
20% of loans are “non-performing”, meaning that borrowers are
not paying the interest due. Many will probably not be able to repay
their debts. At some point or other, there is going to be a
reckoning, and it is not going to be pretty.
There is also a public
sector financial crisis. Over recent years, the Italian government
has battened down the hatches in an attempt to reduce the burden of
public sector debt. But it has failed. As a share of GDP, Italian
government debt stands at about 130%, and rising.
In fact, the Italian
government is no longer over-spending. Indeed, if you exclude
interest payments, it is running a surplus of 1.4% of GDP. The
problem is that it cannot exclude interest payments. And they are
huge, amounting to about 4% of GDP every year.
As in just about every
other notable case, the way to get on top of the Italian debt problem
is through economic growth. It would help if there were a return to
positive rates of inflation, rather than the stuttering deflation
that currently envelops the country. In many ways, though, these
financial problems are less serious than the underlying economic
weakness. Some readers may remember that in the 1950s, 1960s and
1970s Italy was a powerhouse of economic growth. At one point its GDP
passed the UK’s, an event trumpeted by the Italians as “Il
Sorpasso”.
But recently it has
been a very different story. It is common to compare the performance
of the world’s major economies since the onset of the financial
crisis in the first quarter of 2008. All industrial countries
suffered a loss of output in the first few years, but most then
managed to recover. Since the beginning of 2008, the US and the UK
are currently registering output up by about 12pc and 8pc
respectively. Over the same period, Italy’s GDP is down by 8pc.
If this comparison
seems pretty stark, then you should reflect on Italy’s performance
since the euro was established in 1999. You may recall that this bold
monetary construct was supposedly going to unleash a wave of
prosperity across Europe, including Italy. Britain, which stood aside
from the single currency, risked being left behind, mired in
comparative poverty. Staying out of the euro was the Brexit of its
time. The warnings of looming under-performance, accompanied by
forebodings of the imminent departure of key Japanese and American
firms, were its version of Project Fear.
To put it mildly, the
outturn has been somewhat different. Since the beginning of 1999, the
UK economy has grown by almost 40pc, against about 25pc in Germany
and France. But Italy’s performance is in a different league. Over
the last 17 years it has managed to grow by less than 6pc. In other
words, since the formation of the euro, Italy’s economy has
essentially stagnated. Along with this stagnation has come an
employment disaster. Unemployment now stands at about 12% of the
workforce.
Nor is the long-term
outlook very promising. The Italian birth rate is running at about
1.4 per woman. The United Nations projects that by 2035, Italy’s
population will have fallen by about 2%. Quite apart from what that
would do directly to reduce the size of the Italian economy, this is
not exactly an environment in which Italian businesses will be
galvanised into investment.
It is pretty clear what
would bring a revival of the Italian economy and ease many of its
financial problems, if not solve its population crisis. Italy needs a
much lower exchange rate. While it is in the euro, of course, it does
not have a currency of its own to depreciate, and the exchange value
of the euro is determined more by the performance of its Teutonic
neighbours.
Not that a weaker
currency would solve all problems. Italy needs fundamental reform,
and not only to the powers and practices of parliament. But if it
could enjoy a boost to competitiveness of 20 to 30% through a lower
exchange rate, this would lead to a surge in net exports and higher
economic growth, with corresponding gains to employment. In such an
environment, it might be easier to get through some of the many
reforms that Italy needs.
You may think that a
referendum on the powers of the Italian Senate does not promise to be
anything like as exciting as the Brexit vote or the US Presidential
election. But it is well worth keeping an eye out for the result of
Sunday’s vote. Among other things, it may set Italy on the path to
leaving the euro. Whatever the outcome on Sunday, though, I have come
to believe that this is not a matter of if but when.
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