Revolving doors are not exclusive to Spain: the EU and the Barroso case

The revolving doors, this metaphor so common in Spain, since they pass nearly all politicians and officials when “turn” of the public domain to the private. The cases are numerous: Rodrigo Rato, José María Aznar, Felipe González, Pedro Solbes, Angel Acebes, Eduardo Zaplana, Trinidad Jiménez, Esperanza Aguirre – though he then returned to politics-…

The list is long, because almost all those who have gone through the political life ‘feel the call’ the big business when they put an end to its stage of public service. In addition, given the circumstance that always tend to cross any signing of the Ibex 35 or multinational prestige, never to an SME that is starting.

All cases generate controversy in public opinion, even though some always do it more than others. However, if we felt that this was another practice ‘ typical spanish’ we were wrong. Them doors swivel them used in almost all the countries, since the temptation of a charge designed to measure in a great entity is very difficult of beat.

In fact, a few days ago, the former President of the European Commission, José Manuel Durão Barroso, has been at the center of controversy since Brussels has decided to open an investigation to its signing by Goldman Sachs if it raises “ethical conflict”, something that the Portuguese has defended claiming that this is a discrimination with respect to other members of the Commission who have then gone to private enterprise.

Although you have to take into account that the differences are substantial, Barroso has been leader of the European institution for no less than 12 years, as well as formerly Prime Minister of Portugal. Therefore, we do not talk of one European official.

A case that precedent

In spite of that the entrance of Barroso in the giant American financial occurred 20 months after leaving his post in the EU – which means that you don’t have to previously notify the institution of his new job, since it has been over 18 months since it stopped being senior – his signing has raised blisters in the European Court.

The Defender of the people of the EU, Emily O’Reilly, has been who has raised the Hare, since it has called on Brussels to confirm him how reviewed “in accordance” the recruitment of the Portuguese. In addition, he argues that the 18-month period does not preclude that a careful evaluation of this type of procurement, be carried out as there are many interests at stake, especially the reputation of an organization that Brexit has called into question.

And is that it is precisely the output of the British islands of the Union on what will be responsible for advising the American Bank Barroso, hence, the Ombudsman requested information Jean Claude Juncker, President of the European Commission, the guidelines given to the Manager to negotiate the departure of UK, Michel Bernier to interact with Barroso.

That is why the Commission has decided to ‘cut through the sound’ and in a decision without precedent you have closed access to the Portuguese institution, that something was being a former senior official. In addition, Brussels him has put the label of ‘experienced ‘lobbyist, which flee as the plague large executives of the world of finance and business (albeit it or actually).

Are doors dropping off of turn?

All this stir that is has caused in Brussels has coincidido in a moment special in Spain on the theme of the doors revolving. In our case, the controversy has been starring José Manuel Soria, the former Minister of industry punctuated by famous Roles of Panama, that his involvement in this diversion of funds to not pay taxes in Spain will pursue long enough.


Once away from the political foci since his resignation last April, at the beginning of September was again out into the fore on his appointment by the Government to represent Spain at the World Bank. The criticisms soon rise, since citizenship was considered immoral that an involved in the scandal in Panama, he had to leave his ministerial portfolio, was the Envoy of Spain in the institution. Especially since it was learned that you he will collect a whopping 226,000 euros a year… tax-free.

Before the disgruntled popular and social, Soria is saw forced to reject the since by orders of his party, that still not has got form Executive and that is saw between the sword and the wall. In addition, after is knew that the designation of Soria for the since not was or casual or meritorious, but is made to finger, contrary to what said the Government.

Thus, for the first time in Spain the popular pressure achieved that revolving door will close and not return to produce a case that borders the morality and political ethics and citizen. He case of Soria puts of relief the boredom of the society before this via direct that have them high charges for place is in it great company when its time political ends and how that cry popular can give to the fret with that leap of a side to the other.

Is Barroso the next ‘obliged’ to resign at Goldman Sachs? Be not surprised anyone, revolving doors are starting to stand up.

The 9 best links on economy and society to understand what is happening

Continuing our overview of the best links in economy and society to understand what is going on, we bring you our compilation of the week. We started:

  • We eliminate the money (cash). Very interesting the proposal of nothing is free.

  • The importance of evaluations in education as a tool of transparency and improvement. Great analysis in two parts in Politikon (here and here).

  • What exactly is an Austrian backpack? If not you still have it clear, perfectly explained it Inorange.

  • It is not only sugar, hundreds of industries try to deceive us: we have a problem and it is time to seek solutions. Tremendous post from Engadgetcoworkers.

  • Triple ceiling on the S & P500? Guru Huky tells us in GurusBlog.

  • On the blog of BBVA explained how you can calculate the real price of housing to be able to negotiate better in the sale.

  • What has been of the pioneers of the downloads? Downloads King’s Councillor, investor or entrepreneur: life after ‘piracy’. In the confidential.

  • Are AdBlock Plus selling advertising? It seems a news of the World Today, but no, it’s absolutely true. They explained on The Verge (in English).

  • Finally, in Nobbot: 19 professions that will be popular in 10 years and now any child imagines.

Uncertain in the ECB horizon: its policies are reaching the limit

Recent years have been difficult for central banks around the world, and in the euro area has not been an exception. The decisions of political monetary of the Bank Central European (ECB) have been object of a greater scrutiny by those analysts.

And it is that never in the history of the ECB forced monetary to unsuspected limits had been as they are the current with an “unconventional” monetary policy. In fact, the European Monetary Authority is making monthly purchases of assets by a total of 80,000 million, keeps repo at 0% interest rates and the rate of-0.4 per cent deposit.

All this has been implemented to carry out the main mandate of the ECB price stability, with an inflation target of 2% in the medium term. However, not it is getting since there is a gap between the objective, the inflation current (0% average of the year until the date) and the projections of inflation of the ECB (1.3% in 2017, 1.6% in 2018).


The decision of the ECB

In this uncertain Outlook, the first decision that the ECB should take is if will lower the target inflation of 2% either will pursue a more aggressive monetary policy that carried up to date, to fulfil its mandate.

Remember that now the ECB is buying between sovereign bonds and corporate bonds a total of 80,000 million euros a month until, at a minimum, end of March 2017.

The current quantitative easing programme will amount to 17% of the GDP of the euro area at the time in which to complete in March next year and currently the ECB’s balance sheet is 3.35 billion euros.

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For now, the ECB has not adopted additional measures, in fact, the Governing Council at the last meeting of September not discussed an extension of the programme of purchases or other measures. The conclusion was that, for the moment, there is no substantial changes that would justify the decision to act.

The problem of shortage of German bonds

However, with the current program of purchases, already there are some concerns the effectiveness that can be performed under the self-imposed requirements of the ECB. It should be recalled that there are two general lines that form these requirements to develop the European QE

First of all, purchases should materialize according to the weight of the economies within the eurozone. I.e., a proportionality criterion for it to be acquired more German than French, Italian or Spanish bonds.

Secondly, the IRR of the purchases made in any case can be performed with rates lower than the rate of deposits, i.e. IRR is not less than – 0.40%.

And it is under this point at which evidence is a problem. The downward pressure on interest rates in the euro zone and the purchase program has led to more than 50% of the outstanding debt eligible for the ECB to negative returns, which reduces the stock of suitable for buying bonds, which mainly are mainly German bonds.

Mario Draghi, President of the ECB, has recognized that the universe of eligible bonds to QE purchases has been clearly restricted and that they have to make sure that the program can be made with the “new constellation of interest rates”.

As a result of this problem, recently, the bond market has reacted to the possible problems of liquidity. For example, the bund (German ten-year bond), showed an positive IRR for the first time since the end of July this year.


What alternatives does the ECB?

Currently, the Eurosystem (the ECB and the national central banks) buy around 18,000 billion euros of German bonds per month. If you reduce this amount, about other countries, proportionately reduce what amounts to a narrowing of bonds, especially the longer term that the Bundesbank has revealed that it is reluctant to buy.

In principle, the position of the ECB is that the QE program has the flexibility to adjust. The authorities, in the past, have made technical changes that include the increase in the proportion of each bond issue that can be purchased, and the addition of asset classes such as sovereign and corporate debt.

The limits for individual bond purchases could rise again, or the central bank could lower its self-imposed on that rule the eligible debt is one that has a return below the deposit rate.

The ECB could also deviate from the capital rule that takes into account the weight give them countries and realize shopping in more highly indebted countries as it is the case of Italy (debt of 133% of GDP), although the President of the Bundesbank, Jens Weidmann, has already warned against the risk of blurring the line between monetary and fiscal policy.

The second rescue to Portugal is in mouth of all, not had finished with the crisis?

For the Portuguese Prime Minister defends the economic future of the country but is already a compulsory word “rescue“. Is word appears with more frequency in Portugal of what I would like the Government.

The first warning has been the German Commerzbank Bank , specialist when it comes to pessimistic analysis on Portugal, the first was produced the year 2013, but the next was the ‘Financial Times’.

The questions that arise for us: what risks have been detected Commerbank and the Financial Times? What says Brussels about the possible rescue? What are the forecasts for Portugal for the next year?
Is the main problem the deficit Portuguese?

What says the Financial Times? It differs from the forecasts of the European Commission?

Financial Times Comision Europea

In the opinion of the ‘Financial Times‘ article said that the problem was the weak growth of the country, the fall of the investment, the low competitiveness, the budget deficit and the Portuguese banking sector are largely of debt of Portugal.

The Commission European is of send to them countries of Europe of the South a message to meet the commitments and of time Portugal is the country more weak. It budget that is presented this year, as well as the figures of growth until the time, will be determinants for please, or not. The European Commission does not see a risk of rescue for the moment.

But the Commission European ve difficulties in the system banking. There are risks in them accounts public are worst of what is expected and that the budgets for the year that comes not are chords to it agreed.

The prima of risk and the types of interest are the worst of Europe

Prima De Riesgo Tipo De Interes Portugal

The prima of risk is increased, to difference of the rest of countries of the Union European, already is located in 315 points. Interest rates of 10-year government debt stands at 3.2 percent.

Now the future of Portugal depends on of that the Agency of ratings DBRS grade to its debt as garbage during the next months. If to the end passes this, Lisbon could be is without access to the liquidity that offer those markets.

Brussels considers that even is soon to decide a second rescue, but not are in accordance with the latest decisions of the Government Portuguese, and with them data of deficit until this time. Therefore, Lisbon must comply with the commitments of this year and present austere budgets for the following when Brussels will not force them to pay the fine.

The big problem in the banking sector: Caixa Geral and Novobanco

Caixa Geral De Depositos

The Portuguese Government has pressures not to meet part of the reforms and return part of the aid granted to Portugal and a rise in pensions, but Brussels thinks you can afford any of this.

It should be remembered the little margin of liquidity that Caixa Geral and Novobanco, entities that are not yet a buyer. Certainly there are to find a buyer for Novobanco and, above all, should solve the problem of Caixa Geral, with the limitations imposed by competition.

Competition has allowed an injection of 2,600 million euros in market conditions, and 1,000 million euros in the form of hybrid capital, as well as a restructuring plan.

The deficit now not is the problem of Portugal

No Es Problema La Deuda Portugal

The growth and investment are two factors that do not fit in the Portuguese Government forecasts. The objective of this year was grow a 1.8 percent and until the time only has grown a 0.2 percent, surely is going to grow below the 1.5 percent of the 2015.

Ago already two years the Troika visit Portugal after a plan of rescue of 78,000 million of euros. But the year past the Government conservative was replaced by a Government Socialist. The Government has dear transmit to Brussels an image of tranquility in the midst of uncertainties.

But the opposition of the Government, formed by the PSD and CDS, are announcing that the deficit will not fall of 3 per cent, breach of commitments with Brussels. But according to the Government this year the deficit will be below 2.5 percent.

If that happens it would be the first time that Portugal comply with commitments to the European Commission which called for a deficit of 2.8 percent. But the opposition warning that the problem does not is the deficit if not the debt.

The problem with Portugal is the debt

The Portuguese Government’s objective is that debt will fall by end of year by 124,8 percent of GDP, but until this moment is situated in 131,6 per cent of GDP, situadonse in the main positions of the European Union.

It should be also noted that Portugal has a proportion of salary of its inhabitants as the public debt per capita is 130,14 per cent, as shown in the graph:

Proporcion Deuda Segun Salario Portugal

The debt in hands of the sector Banking Portuguese has increased five points, of the 20 per cent up to the 25 per cent. But the opposition stands out that has lowered to minimum the investment with a descent of the 3 per cent. The Government has interest that the stop has lowered to the 11.1 percent as shows the graphic “number of unemployed by countries” of Eurostat:

Numero Parados Portugal

In the Blog Salmon | The IMF assumes its errors in those rescues European. would it cause? Interference political

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Juncker proposes free wifi in European cities: a bad idea

In the debate of the State of the EU, the President of the Commission European, Jean-Claude Juncker has said that has intention of promote that all the cities have Wifi free in the Center for 2020. This is an of the main promises of investment in technology on the part of the EU.

And the truth is that it is a bad idea. Ten years ago still could have a sense, attempting to connect to more better people, but today is a completely unnecessary and reminds me of a flawed plan E of Spain.

Connectivity is not expensive

Today, in any country of the EU, the price of having a SIM with data connectivity is minimal. Even in Spain, which is a country with traditionally high tariffs, it is possible to have data on your mobile 1 GB for just 5 euros per month with a prepaid rate (and cheaper If we are going to contract).

In other countries, it is even cheaper. And with the end of roaming (although it has limitations) you won’t have problems so that tourists can enjoy Internet while sailing out of their country.

The investment has two costs

Investment in municipal Wifi networks, although it could make sense ten years ago, when mobile data rates were expensive, today has no sense. Is an investment that can generate employment to short term, Yes, but not gives more than itself.

This reminds me of the Plan E. As measure to alleviate temporarily the effects of the crisis was good, but so limited in the time that not served of much before a crisis deep. And to the end is invested all in infrastructure that not helped to improve the productivity of Spain (almost all is was to change the sidewalks and build sports centres that then not is could keep).

And the cost is double, since what is reverse in create these networks Wifi is money that not is invests in others things (Yes, I’m speaking of the cost of the opportunity). And if all the money that is intended to devote to Wifi networks is invested in r & d at universities to improve Europe’s competitiveness against the rest of the world? In the short term it would also create employment but also would have an impact in the long run.

Seems that Spain not is so different from Europe and that there nor have a plan clear of how get to Europe of the crisis. And although invest in Wifi sounds better to invest on sidewalks, at the end we are talking about the same: invest in non-strategic infrastructure.

More information | Page official of the debate of the State of the EU

How much debt do the autonomous communities?

The autonomous communities had a higher debt since the crisis. In the 2007 had a debt of 61.096 million with a 5.7 percent of the GDP, four times less that what is has registered since it carries of the 2016.

He Government in functions already has announced that the communities autonomous is will have that adjust to a deficit of the 0.3 percent and not the agreed with Hacienda of the 0.7 percent, which goes to assume a adjustment of 4,000 million of euros.

We can ask ourselves: what autonomous communities have more debt? What is the split budget with more debt in the communities autonomous? What proportion of debt of each community autonomous has the largest split of them budgets?

Much of the debt of the autonomous communities is health

The autonomous communities due to its suppliers 9.431 billion euros according to the latest data of finance, may, more than 70 per cent correspond to expenses of health as indicated in the chart “Total debt and debt health regions in all the autonomous communities of Spain”:

Total Deuda Y En Sanidad

Must think that the Government is has spent in the last lustro more than 208,000 million of euros to rescue to some communities autonomous that suffer the lack of access to them markets for to finance its deficit.

He 45 percent of these funds have been for pay them bills of them suppliers since not is had of liquidity in the Treasury and is delayed each time more them payments of the invoices of them suppliers.

Older affected pharmaceutical laboratories, health technology, and pharmacies

The most affected during these years have been pharmaceutical, medical technology companies and pharmacies, that until more was more than 70 percent of the debt. The debt has increased with the suppliers the 7.7 per cent in the last mayo until them 9.431, 36 million of euros.

In the graphic “Total of debt by communities autonomous” is can check that the community autonomous with more debt is Catalonia with 1.946,10 million of euros, followed by the community Valencia with 1.814,90 million of euros, 1.420,70 million in the community of Madrid and 1.100,30 million of euros in it community Andalusian.

Total Deuda Por Ccaa

Of this debt total in the community of Catalonia corresponds 1.243,59 million of euros in health, 1.384,98 million of euros in health in the community Valencian, 859,94 million of euros in health in the community of Madrid and 755,81 million of euros in health in the community Andalusian as is can see in the graphic “Total debt in health by communities autonomous” :

Total Deuda Sanidad Por Ccaa

With the absence of a Government that can approve the decision taken by the ‘Council of financial and Fiscal policy’ which agreed to finance with the autonomous communities move from a deficit of 0.3 percent to 0.7 percent.

In the community of Castilla y León has more than 90% of its debt in health

The vast majority of the autonomous communities have already used much of the 4,000 million euros assigned additional granted by Treasury. There are two options: approve new settings or improve liquidity through a delay in the payment of invoices to suppliers of the autonomous communities.

The first option appears to be that it could not be since the autonomous communities has been subjected to great pressure in recent years. The second seems more likely to since in some autonomous communities like Catalonia already have been used with delays over the 6 months.

The departure of health is the main expenditure of budgets of the autonomous communities as you can see in the graph “proportion debt in total debt of the autonomous communities regarding health”:

Proporcion Deuda En Sanidad Respecto Total Deuda

The great challenge that the autonomous communities have is to develop budgets for next year. In previous years, the Government gave them before the summer the reference of the ceiling of expenditure, i.e., the maximum that could spend and from this figure could be the budgets to be submitted before October 15.

This year is different because that the Government still has not finalized it and must take responsibility before the European Commission on the theme of the fine when it decides on the deficit ceiling.

In the Blog Salmon | The expenditure health rises in Spain, why?

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