6 ms·

As with many things, I think the truth lies exactly in the middle! Let me explain.. In 2011, Portugal applied to an IMF bailout. What do you do when you beg so

As with many things, I think the truth lies exactly in the middle! Let me explain.. In 2011, Portugal applied to an IMF bailout. What do you do when you beg someone for their money? You comply! You don't come out for the streets saying you won't pay! You say creditors exactly what they want to hear. You (seem to) reduce costs, you cancel holidays, you go even beyond what creditors ask you to do. You get smart, you understand you're in a weak position and take the best advantage of it. You don't do like the Greeks who let their egos be greater than their brains, and be on the spotlight for being over-spenders by saying they won't pay their creditors. That's what the government did in 2011-2015 and it worked! We got out of the spotlight and stop being perceived as over-spenders.. In 2015 a new government was elected. With the influx of tourists, and being seen as people who saved some money (and learned their lesson), the new government was in a really better position to try "the revival". They started reinvesting and giving the appearance that we are growing (and some things are, but also government spending). And it seems to be working so far... So, what really seems to work? Both things. When you're in a weak position you comply, and then when you get to a stronger position, you negotiate. So both type of governments were needed at exactly their time.. A good timing - I think that was the key to the current success!

galfarragem 8y ago
Our sucess boils to a tourism increase (driven from political instability in other countries and a very laxed tax system for foreigners), cheap oil (that gave room to increase taxes on petrol) and historically low interest rates.
- slig 8y ago
  > a very laxed tax system for foreigners Do you think this is one of the reasons (or the major one) that so many Portuguese people live abroad? [1] [1]: https://i.redd.it/2683a6np1g621.jpg https://i.redd.it/2683a6np1g621.jpg
  - deleted 8y ago
    [deleted]
  - rjtavares 8y ago
    No. The reasons some many people live abroad, IMO: 1. A culture built on world exploration. Our golden age myth is sailors leaving the country to find new lands. Our great epic book is "Os Lusíadas", a celebration of the discovery of a sea route to India by the Portuguese explorer Vasco da Gama inspired by Virgil and Homer's epics. 2. Many people left the country between WW2 and 1974 (due to a ruling dictatorship, a colonial war, and economic difficulties). These were mostly uneducated people that went to France, Germany, Switzerland to become low wage workers. 3. A newer wave of emigration (of much more educated people) due to low salaries in Portugal. I know a lot of people (mostly engineers) that more than tripled their wage simply by moving to more developed countries: Germany, UK, Sweden... Similar to moving to SF/NY when you're in rural US.
    - slig 8y ago
      Thank you for the insight.
- bogomipz 8y ago
  >"Our sucess boils to a tourism increase (driven from political instability in other countries and a very laxed tax system for foreigners)" Can you elaborate on what or how the tax system is very lax for foreigners?
  - deleted 8y ago
    [deleted]
  - uxhack 8y ago
    There are a number of tax breaks for foreigners, meaning effectively if you have not live in Portugal for 5 years you do not pay hardly any tax. This is dependent on you getting good advice.
    - galfarragem 8y ago
      "Dividends are Tax free from the UK for 10 years, 20% on local income. EU passport if you spend 500k on property" https://news.ycombinator.com/item?id=18165995 https://news.ycombinator.com/item?id=18165995 As an anecdote, Madonna is nowadays living in Portugal. Media says the reasons are the Lisbon sunlight and her son wants to learn soccer.
- garyclarke27 8y ago
  I moved here from UK mainly because of Brexit, attractive tax regime helped, also more English spoken than in Spain, more Brit friendly than Spain (not so many drunken UK hooligans), combination of stunning beaches and a safe large City like Lisbon is quite rare, Athens (basket case economy), Barcelona( v high crime rate). Also Great wine food and fantastic infrastructure, only spoiled by insane car & energy prices and totally inept drivers. Foreign sourced income is easy to get tax free for 10 years via dividends, local income tax is 20% but social costs still high to employ software engineers. Golden Visa also attracted me in case UK crashes out no deal, passport only requires €500k invested in property. Lisbon Cascais is booming because so many foreigners moving here and spending shit loads of cash on property, renovations furniture, services, schools etc, this has boosted the economy far more than Tourism increase, this also pays a lot of property related taxes and energy taxes and VAT 23%, so for the first time in donkeys years Portugal managed to balance the books last year. Many very rich successful entrepreneurs and professionals - huge numbers from Brazil, many Scandinavians, not as many Brits as expected (but now increasing), I was also surprised by how many US and Polish expats I have met living here.
andrepd 8y ago
>What do you do when you beg someone for their money? You comply! You don't come out for the streets saying you won't pay! It's not like the creditors were helping from the goodness of their hearts. They made stacks of money off it, off those imposed austerity measures, off (if you excuse the description) of bleeding the working class dry. Let's not forget who profited the most off the situation generated by the European debt crisis: big German banks... It's in the citizen's rights at least to protest for an alternative solution.
- bad_user 8y ago
  Blaming the big German banks is counterproductive when the real culprit is always the government that does the borrowing and the spending, along with the people that elected them. It’s how socialism works. Spend other people’s money on handouts then blame capitalism for the public debt.
  - claudiawerner 8y ago
    >It’s how socialism works. Spend other people’s money on handouts then blame capitalism for the public debt. That's how an economically careless welfare state works in a capitalist economy. What you are describing is social democracy, which is not the same as socialism and never has been in the history of the movements or any terminology recognised by social scientists. Socialism is direct worker control over the state and social means of production (to the point where Karl Marx considered the term synonymous to "Communism"), while social democracy is a liberal capitalist economy in which the government (which owns very little social means of production itself) funds welfare programs through taxes.
  - keldaris 8y ago
    It worked out rather the other way around, though, did it not? Namely, the consequences of the risks taken by the big banks in pursuing aggressive lending policies were effectively socialized, while profits remained private. Even in the case of the large sovereign bailouts (most prominently Greece) most of the money went directly towards debt servicing and associated expenses, further socializing risks taken by private banks. I'm not expressing any value judgment on these decisions in this post, but it seems to me the basic terminology is hard to dispute.
geezerjay 8y ago
> the new government was in a really better position to try "the revival". They started reinvesting and giving the appearance that we are growing (and some things are, but also government spending). And it seems to be working so far... This statement is very far from the truth. The current acting government actually cut investment spending to record levels as part of their renewed austerity effort, both with higher taxes and slending cuts, that resulted in record low deficit spending. While the previous goveremt of Portugal focused on higher income taxes focused on the middle/upper class and public sector workers, the current acting government forced increases in gas prices mixed with off-the-bool spending cuts in the form of captivation of expenditures. The key factor in Portugal's economic turnaround is the fact that the austerity program was actually surprisingly effective at fixing Portugal's problem, as is demonstrated by the fact that the portuguese recession that started way back in 2008 ended in 2014, right before the end of the austerity program.
- roymurdock 8y ago
  How does austerity (reducing government expenditures in order to control/safeguard public-sector debt) cause the end of a recession (shift from negative to positive GDP growth rate)? Saying austerity led to the end of a recession is like saying that cutting costs at your restaurant led to an increase in customers, or allowed you to charge higher prices for your food. Greece and Italy are fighting austerity because they take the traditional economic stance - government needs to spend tax dollars on increasing investment, education, employment, etc. instead of cutting investment costs and ensuring tax money is channeled to interest payments. Perhaps foreign investors saw that Portugal was taking its austerity seriously and began to increase investment, reassured their money would be relatively safe. But how could austerity lead to the boom in tourism and exports cited in the NY Times article?
  - eecc 8y ago
    Perhaps austerity destroyed internal spending power (as Mario Monti put it when interviewed about his government on US media) and this made the country more competitive and cheaper to external consumers?
  - 8y ago

galfarragem 8y ago

Our sucess boils to a tourism increase (driven from political instability in other countries and a very laxed tax system for foreigners), cheap oil (that gave room to increase taxes on petrol) and historically low interest rates.

slig 8y ago
> a very laxed tax system for foreigners Do you think this is one of the reasons (or the major one) that so many Portuguese people live abroad? [1] [1]: https://i.redd.it/2683a6np1g621.jpg https://i.redd.it/2683a6np1g621.jpg
- deleted 8y ago
  [deleted]
- rjtavares 8y ago
  No. The reasons some many people live abroad, IMO: 1. A culture built on world exploration. Our golden age myth is sailors leaving the country to find new lands. Our great epic book is "Os Lusíadas", a celebration of the discovery of a sea route to India by the Portuguese explorer Vasco da Gama inspired by Virgil and Homer's epics. 2. Many people left the country between WW2 and 1974 (due to a ruling dictatorship, a colonial war, and economic difficulties). These were mostly uneducated people that went to France, Germany, Switzerland to become low wage workers. 3. A newer wave of emigration (of much more educated people) due to low salaries in Portugal. I know a lot of people (mostly engineers) that more than tripled their wage simply by moving to more developed countries: Germany, UK, Sweden... Similar to moving to SF/NY when you're in rural US.
  - slig 8y ago
    Thank you for the insight.
bogomipz 8y ago
>"Our sucess boils to a tourism increase (driven from political instability in other countries and a very laxed tax system for foreigners)" Can you elaborate on what or how the tax system is very lax for foreigners?
- deleted 8y ago
  [deleted]
- uxhack 8y ago
  There are a number of tax breaks for foreigners, meaning effectively if you have not live in Portugal for 5 years you do not pay hardly any tax. This is dependent on you getting good advice.
  - galfarragem 8y ago
    "Dividends are Tax free from the UK for 10 years, 20% on local income. EU passport if you spend 500k on property" https://news.ycombinator.com/item?id=18165995 https://news.ycombinator.com/item?id=18165995 As an anecdote, Madonna is nowadays living in Portugal. Media says the reasons are the Lisbon sunlight and her son wants to learn soccer.
garyclarke27 8y ago
I moved here from UK mainly because of Brexit, attractive tax regime helped, also more English spoken than in Spain, more Brit friendly than Spain (not so many drunken UK hooligans), combination of stunning beaches and a safe large City like Lisbon is quite rare, Athens (basket case economy), Barcelona( v high crime rate). Also Great wine food and fantastic infrastructure, only spoiled by insane car & energy prices and totally inept drivers. Foreign sourced income is easy to get tax free for 10 years via dividends, local income tax is 20% but social costs still high to employ software engineers. Golden Visa also attracted me in case UK crashes out no deal, passport only requires €500k invested in property. Lisbon Cascais is booming because so many foreigners moving here and spending shit loads of cash on property, renovations furniture, services, schools etc, this has boosted the economy far more than Tourism increase, this also pays a lot of property related taxes and energy taxes and VAT 23%, so for the first time in donkeys years Portugal managed to balance the books last year. Many very rich successful entrepreneurs and professionals - huge numbers from Brazil, many Scandinavians, not as many Brits as expected (but now increasing), I was also surprised by how many US and Polish expats I have met living here.

andrepd 8y ago

>What do you do when you beg someone for their money? You comply! You don't come out for the streets saying you won't pay! It's not like the creditors were helping from the goodness of their hearts. They made stacks of money off it, off those imposed austerity measures, off (if you excuse the description) of bleeding the working class dry. Let's not forget who profited the most off the situation generated by the European debt crisis: big German banks... It's in the citizen's rights at least to protest for an alternative solution.

bad_user 8y ago
Blaming the big German banks is counterproductive when the real culprit is always the government that does the borrowing and the spending, along with the people that elected them. It’s how socialism works. Spend other people’s money on handouts then blame capitalism for the public debt.
- claudiawerner 8y ago
  >It’s how socialism works. Spend other people’s money on handouts then blame capitalism for the public debt. That's how an economically careless welfare state works in a capitalist economy. What you are describing is social democracy, which is not the same as socialism and never has been in the history of the movements or any terminology recognised by social scientists. Socialism is direct worker control over the state and social means of production (to the point where Karl Marx considered the term synonymous to "Communism"), while social democracy is a liberal capitalist economy in which the government (which owns very little social means of production itself) funds welfare programs through taxes.
- keldaris 8y ago
  It worked out rather the other way around, though, did it not? Namely, the consequences of the risks taken by the big banks in pursuing aggressive lending policies were effectively socialized, while profits remained private. Even in the case of the large sovereign bailouts (most prominently Greece) most of the money went directly towards debt servicing and associated expenses, further socializing risks taken by private banks. I'm not expressing any value judgment on these decisions in this post, but it seems to me the basic terminology is hard to dispute.

geezerjay 8y ago

> the new government was in a really better position to try "the revival". They started reinvesting and giving the appearance that we are growing (and some things are, but also government spending). And it seems to be working so far... This statement is very far from the truth. The current acting government actually cut investment spending to record levels as part of their renewed austerity effort, both with higher taxes and slending cuts, that resulted in record low deficit spending. While the previous goveremt of Portugal focused on higher income taxes focused on the middle/upper class and public sector workers, the current acting government forced increases in gas prices mixed with off-the-bool spending cuts in the form of captivation of expenditures. The key factor in Portugal's economic turnaround is the fact that the austerity program was actually surprisingly effective at fixing Portugal's problem, as is demonstrated by the fact that the portuguese recession that started way back in 2008 ended in 2014, right before the end of the austerity program.

roymurdock 8y ago
How does austerity (reducing government expenditures in order to control/safeguard public-sector debt) cause the end of a recession (shift from negative to positive GDP growth rate)? Saying austerity led to the end of a recession is like saying that cutting costs at your restaurant led to an increase in customers, or allowed you to charge higher prices for your food. Greece and Italy are fighting austerity because they take the traditional economic stance - government needs to spend tax dollars on increasing investment, education, employment, etc. instead of cutting investment costs and ensuring tax money is channeled to interest payments. Perhaps foreign investors saw that Portugal was taking its austerity seriously and began to increase investment, reassured their money would be relatively safe. But how could austerity lead to the boom in tourism and exports cited in the NY Times article?
- eecc 8y ago
  Perhaps austerity destroyed internal spending power (as Mario Monti put it when interviewed about his government on US media) and this made the country more competitive and cheaper to external consumers?
- 8y ago