Labour: the lunatics won't relinquish control of the asylum
It’s official. The Labour Party doesn’t know whether it’s coming or going on economic policy. Today, the leading article on its news website, Maltastar, tells us that businesses are ‘squeezed’ by taxes and the high cost of utilities.
Ah, so that’s why they want to introduce the living wage: to give those squeezed businesses some financial breathing space.
Or maybem they’ve got another smart plan: reduce taxation but somehow find the money to shell out many millions more per annum in a living wage for the public sector payroll, which is still roughly 40% of the workforce.
Or another cunning plan: subsidise utilities for businesses (which goes against EU riules, but you know Labour doesn’t give a stuff about the rules) and hit those same businesses with a living wage instead.
That’s what happens when you have jacksh*t leader after jacksh*t leader.
And then some people say that Lawrence Gonzi doesn’t know what he’s doing so they’re going to vote in those Class A experts Joseph, Toni and Anglu instead.
Clearly, thinking skills are not part of the curriculum in Maltese schools.
46 Comments Comment
Reply to liberal Click here to cancel reply
Labour needs more financial people to advise it on these things.
[Daphne – Actually, I think the trouble is that Labour has too many financial people and they tend to be cut off from reality. Either that, or they’re too busy using Labour as a vehicular ride to power and status (ha – status as a Labour politician; now that’s an oxymoron) to tell the party bosses that their ideas are unworkable rubbish. If that weren’t the case, Labour’s Business Forum wouldn’t be run by a washed-up criminal lawyer and somebody who owns two small shops selling nursery items.]
They always come up with an idea which they can’t defend in an open debate because they don’t do their homework. I remember Alfred Sant being mauled on Xarabank on his idea to devalue the Lira. He couldn’t come up with any counter arguments. He never mentioned that the US had devalued the Dollar to increase their exports.
[Daphne – He didn’t do so because that argument is a non-starter. The US is a net exporter. Malta is a net importer. The US is practically self-sufficient and makes or grows almost everything it needs. Malta imports everything it needs. What happens when you devalue your currency but import everything you need? That’s right…..]
How about the prices of petrol? It is not true that Enemalta pay more when purchasing oil, even though there is a price increase. Why? Because when the price of oil goes up, the Dollar is devalued, so they make currency savings since they buy in Euro.
[Daphne – Exactly where do you get your information? I’m honestly curious.]
Did you ever hear someone from PL come up with this argument? No.
Daphne, I’m impressed. Yes it’s true, the US are net exporters while we are net importers. I am not saying that Sant was right, I am saying that his idea was not as ridiculous as the media portrayed it but he couldn’t defend his position because he did not do his homework.
[Daphne – His devaluation idea was completely ridiculous and irresponsible, liberal, and the reason he couldn’t defend it is not because he hadn’t done his homework, but because his opponents had done theirs. Also, I would like to think that a potential prime minister who plans a devaluation policy would have done his homework. You criticise him for not having prepared his arguments for a debate, but cannot see that this implies he hadn’t researched his policy.]
As for my information, I am an accountant and I follow the financial markets and I know that the price of oil and the USD are inversely proportional. You can check this by comparing a graph for the oil price and another for the USD.
On any given date, if one goes up the other goes down.
[Daphne – You are definitely not an accountant.]
Check the graph in this website http://www.forexpm.com/oil-usd-cad-jpy-correlation.html
[Daphne – Oh my god, honestly. You have confused devaluation with market fluctuations in the value of currency.]
If he hadn’t done his homework, why did he adopt that as his party’s policy, and promote it in a televised debate, no less?
If you are an accountant and follow financial markets, than I am “Spider Man”
“[Daphne – Oh my god, honestly. You have confused devaluation with market fluctuations in the value of currency.]”
Just concentrate on the graph, there is a negative correlation.
I get it, you are not an Accountant, you can’t understand this. I wouldn’t dare contradict a lawyer on legal matters unless it is the Income Tax Act or the Document on Duties Act but there you go….
[Daphne – You’re not an accountant either (and it’s not a proper noun) because you don’t know what devaluation means. Devaluation is devaluation. Fluctuation in the value of a currency because of market forces, including the push-pull of one dominant commodity, is not devaluation. You do not have to be an accountant to know this, but if you don’t know it, then you’re not an accountant.]
Sur liberal accountant, jekk Malta hija ‘net importer’ spjegali sew kif lira Maltija nieqsa 10-15% kien ser ikun ta vantagg? Ghal min, ghal konsumatur?
U jekk kellek elf lira Maltija il-bank, u gejt biex tikkonvertijhom f’ewro, kont tiehu gost b’ghaxar jew hmistax fil-mija anqas?
Rigward il-prezz taz-zejt, dan jiddipendi mill-principju baziku ekonomiku li bl-Inglz jissejjah ‘Supply vs demand’ u jekk tinnota sew, il-prezz taz-zejt joghla meta d-domanda hija l-ghola – fix-xitwa u meta l-industrija tkun qed tahdem vicin il-massimu li kapaci tahdem. U zgur li meta titbaxxa il-valur tal-currency, il-prezz joghla! M’hemmx bzonn tkun accountant biex tifhem principji bazici li donnok ghandek diffikulta kbira biex tifhem.
Ghandek bzonn tammetti li gvernijiet Laburisti dahhlu ‘l-Malta fi sqaqien li issa hrigna minnhom dawn l-ahhar snin ta gvernijiet Nazzjonalisti w dawk li qed igergru ghax dan l-ahhar sabu li ma jistux jieklu l-lobster, ghandhom jiftakru li fi zmien Mintoff u KMB xi landa tonn taz-zejt kienu jieklu – u meta l-gvernijiet Laburisti ta dak iz-zmien kienu jsibu bl-orhos prezz!
Ma rridx intawwal ghax kieku niehu faccata shiha biex nurik kemm qed titkellem mill-warrani.
[Daphne – Let’s stick to English, please, though I’ll admit that Maltese is wholly more satisfying for purposes like the comment above.]
Sorry about that, Daphne, here is an English version. You may wish to substitute the Maltese version. Thanks.
Mr. liberal accountant, if Malta is a ‘net importer’, can you explain to me how a Lira devalued by as much as 15% could be considered advantageous? To whom, the consumer?
And if you had a thousand lira in your bank account, when the time came to convert them to euro, would you have been pleased with getting 10 to 15% less?
Regarding the price of oil, this depends on the basic principle in economics, ‘Supply vs Demand’. The price of oil goes up when the demand is highest – in winter and when industry approaches peak capacity.
Of course, when the value of a currency goes down, the price ‘appears’ to be higher. One does not have to be an accountant in order to understand basic principles in economics which apparently you have a great difficulty with.
You need to admit that Labour governments drove Malta into economic straits which only under Nationalist governments, we have been able to emerge from and those who lately have been complaining that they can no longer afford lobster (I read it somewhere) should remember that under the Labour governments of Mintoff and KMB they never complained when the best the government could offer were the occasional cans of tuna when it could find the lowest price possible.
Alfred Sant’s idea of devaluation or depreciation of the Lira is water under the bridge… acqua passata.
Lately I heard how EneMalta buys its oil. It bought dollars beforehand to keep our prices stable as much as possible. Correct me if I’m wrong but I think this belies what Liberal is implying further up here.
I can’t believe Liberal is an Accountant.
As far as I know it, Accountants speak the language of capital, capital maintenance, income, expenses, profits, losses, value, private initiative, private assets and property, and liabilities.
In addition, I once heard an eminent Maltese Accountant say that an Accountant cannot by definition be a socialist.
Either Liberal is not an Accountant, or he is not a good one.
The US is NOT a net exporter. It registered its last trade surplas in 1975. It is, however, a net exporter of (new) dollars, if that’s what you meant. But not for long.
As for “The US is practically self-sufficient and makes or grows almost everything it needs,” well… it’s 2011 Daphne. Even ‘Made in China’ has come and gone and you’re still stuck somewhere in a time-space occupied by LalaLand.
[Daphne – Ergajt irxoxxtajt, Kevin? For my international readers: oh, Kevin, you’re back! Kevin being Mr Sharon Ellul Bonici, that is, the world’s leading conspiracy theorist on the Great Satan and its manifold evils.]
How predictable of you, tackling the man (and his spouse) rather than his argument.
[Daphne – I thought you were proud of your wife and the man you are. so what’s the big deal. I just find you amusing, that’s all, what with your gerbils and your conspiracy theories and your dedication to the anti-American cause.]
Well, I found you amusing too, especially when you haven’t a clue of what you’re talking about.
I am not a fan of conspiracy theories but this article from the Guardian makes interesting reading :
http://www.guardian.co.uk/news/datablog/2011/jan/18/us-federal-deficit-china-america-debt?intcmp=239
China does not need any stealth fighters but all it needs is to stop buying US Treasury bonds or, worse still, start offloading
those it already holds. China has also stated that it will be buying Greek and Portuguese sovereign bonds so as to building up its euro holdings. I do not think the Chinese President will be very receptive to US pressure about the yuan exchange rate.
It’s Alfred Sant redux
I don’t think we should rush to judgement. It might have been a misprint.
Or maybe their computer malfunctioned.
Daphne, you were right about the Maltese people lying about their height. This survey says that the average height of men is 1.7m and that of women 1.59m. As if!
http://www.timesofmalta.com/articles/view/20110118/local/its-official-pasta-is-maltas-favourite-dish
Did you all not realise, he must be Labour, so to keep consistent with Labour, he is speaking nonsense about economics.
So he might be an accountant after all, but more than that he must be Labour.
Why are you all so bewildered? I will not be at all surprised if he were to come over tomorrow and tell us “Hey guys, what I said is not what I meant”.
Remember when he read his famous 12 points to show us what he would do to help the economy recover, and one of them sent shivers down everybody’s spine? This was the bit when he said that if Labour is elected to government, the government will begin to compete with private business and import consumables in bulk to keep the prices down.
Then the next day he rushed to the Chamber of Commerce to say, “Hey guys, what I said is not what I meant”.
Sant actually proposed a depreciation, something that was impossible anyway because depreciation happens when exchange rates are freely floating.
Devaluation occurs when the exchange rate is fixed. This means that even there Sant was wrong about depreciation.
Moroeover the PN government of the early 90s in fact devalued the Maltese Lira, and the end result was just price increases. Malta is an open economy and you end up having to import (at higher prices) the raw materials used to make the very things we export, and so competitive export prices are NOT the result.
Those who do not know economics can read about the J curve and what it says. And besides being an open economy, there should also be spare capacity in the economy.
Just been leafing through The Sunday Tmies classified pages: 46 pages out of 60 are filled with job vacancy adverts. This must be a record, and the ads are not for Izra w Rabbi or Pijunieri.
What a shame that the likes of John Dalli, Jesmond Mugliett and Jeffrey Pullicino Orlando must spoil the party, because of their huge egos, and Jean Pierre Farrugia because of his….. ? I cant figure out what it is with him, actually.
[Daphne – Mid-life crisis. All the people you mention have got it, big-time. But they subliminate into that sort of behaviour instead of buying a red Ferrari, a Harley Davidson, or a chick from the eastern bloc.]
Job vacancies being advertised are, in the main, for specialists possibly with previous experience and with one or two university degrees. The days of vacancies for clerks are long gone; entry-level employees for banks now must have at minimum a relevant university degree.
Whilst I agree what most of your running commentary Daphne, you tend to omit a few cardinal points.
Business in Malta was hit with a steep increase in utility bills which were, for the majority, unforeseen. Secondly, in order to remain competitive, most businesses have tried to absorb these overheads, reducing their profitability and hence their disposable cash flow in the process.
Whilst it is true that the recession hit hard across the financial markets, there is no excuse for the government to continue funding an unsustainable welfare state at the expense of private enterprise.
The fact that Enemalta still claims a total debt of nearly 600 million euro is not the fault of the recession, but gross continuing mismanagement which has now translated into a fixed overhead for domestic as well as commercial consumers.
It is a domino effect which will ultimatley result in two factors, the first is unemployment as soon as the burden becomes too heavy for business and the second inflation if prices are forced to shoot up to meet the ever-increasing costs of production. Both detrimental to the macro economy of this nation.
[Daphne – I can’t imagine why you thought we’re at odds on this one, because we’re not. The only point on which I differ is your expectation that the government (or the supplier which replaces it should Enemalta be privatised) must give advance warning of price increases. In what part of the economy does that happen? The most you can expect or argue for is a contract with your supplier to buy X amount at X fixed price, with the price reviewed after a year. In my business, our biggest overhead is paper (for printing magazines). It is hugely expensive, it is imported, and the price goes up at random according to fluctuations on the international market. Meanwhile, we can’t raise our own prices, so we have to absorb the increased cost or trim costs elsewhere.]
Well national budgets do have a purpose you know.Before 2010, there was never any indication of such a price hike on utilities. The fact that the price of gas has increased over 100% for the catering industry, topped up with utility bills has made this ector very uncompetitive.
[Daphne – National budgets are not the point here. The starting-point for a national budget is: all things being equal. But frequently, they’re not. Now if the government made its own fuel without having to buy raw materials or anything else, then it would be able to control the price and commit to it in a national budget. But it doesn’t, so it can’t – no more than my printers can control the price of paper.]
Regrettably and as mentioned earlier, these increases were were completely unforseen, and have consequently left the business sector completely isolated. Don’t you think it is high time for the government to slash the welfare state as happend in the UK and allow some fresh air to the commercial class instead of buying votes through benefits?
[Daphne – How, by eroding health care or making people pay for their education? Imagine, then, how the people who complain about the price of fuel would behave. And I really can’t see how introducing university fees would give businesses cheaper fuel. There’s absolutely no correlation between the two.]
Let us go through my original post:
Paragraph 2:
“They always come up with an idea which they can’t defend in an open debate because they don’t do their homework. I remember Alfred Sant being mauled on Xarabank on his idea to devalue the Lira. He couldn’t come up with any counter arguments. He never mentioned that the US had devalued the Dollar to increase their exports.”
Here I am talking about devaluation
“How about the prices of petrol? It is not true that Enemalta pay more when purchasing oil, even though there is a price increase. Why? Because when the price of oil goes up, the Dollar is devalued, so they make currency savings since they buy in Euro.”
Here I am talking about movements in exchange rates (although possibly I misled everyone by using the word “devalued”. ).
@ Ciccio2011 & Angus Black
Please read what I said ” I am not saying that Sant was right, I am saying that his idea was not as ridiculous as the media portrayed it but he couldn’t defend his position because he did not do his homework.” So again, I am not supporting Sant’s idea.
Also, do a search for my past posts in this blog and identify one pro labour post. I assure you that you won’t find. I have always voted PN but I can see the two sides of a coin, possibly my generation, who do not remember the early eighties so vividly, are not as polarised towards their family party. And if you read between the lines of my original post, you will notice that the message is that Labour don’t have the right people in the right positions with particular reference to Charles Mangion as shadow minister for finance. Personally, as a financial person, I cringe at seeing Charles Mangion and previously Leo Brincat in these posts.
@ Ciccio2011 I am an expert in debits and credits and issuing financial statements. I can never be as good in the financial markets as a broker or an Accountant who has a CFA qualification, I just follow them. However, I find it much easier to grasp certain concepts than a person who hasn’t studied accountancy.
If you look at the link I posted, you will see that when oil is up USD is down and vice versa.
Now, if I buy one barrel at $90 today and the USD is 1.33 it would cost me EUR68. If the following month I buy one barrel at $100 and the USD is 1.45 it would still cost me EUR69. That is my point. The oil price has gone up by 11% but my cost has only gone up by 1.5%
Liberal, my comments were driven mainly by my understanding, like Daphne’s and others, that you were supporting Alfred Sant’s proposal to devalue the Maltese lira to gain in competitiveness, when, as far as I can remember now, there had been no unusual currency turbulence on international markets.
This is unlike the PN government’s devaluation in 1993/94, which was mainly in response to a sudden drop in the value of the Pound Sterling after market pressures.
Your comments also confirm the argument that an accountant, i.e. someone who believes in capital and entrepreneurship, cannot be a socialist.
At work we have an allowance of 140 euro per month for the company van. Up to now many of us kept up to this limit.
Some good news: http://www.maltarightnow.com/?module=news&at=Il%2DGvern+mhux+se+jintalab+jie%26%23295%3Bu+mi%26%23380%3Buri+o%26%23295%3Bra+biex+inaqqas+l%2Di%26%23380%3Bbilan%26%23267%3B+finanzjarju&t=a&aid=99825576&cid=24
No, by cutting down on abused unemployment cheques and benefits to countless mothers with unknown fathers.
[Daphne – Hasn’t there been rather a lot in the news about how that’s being done already? However, I wouldn’t stretch it so far as to say that single mothers should receive no benefits.]
Eroding the health system or tertiary education is not an option either but one must address the list of university courses which do not contribute anything to the national ecomony or even worse, allowing graduates to leave the island and seek their fortunes overseas after having been educated in Malta for free.
These are not austerity measures; this is capping down on waste. And you are right, there is absolutely no corelation between welfare and the price of fuel but there certainly would be a tangeable corelation between abused welfare and an overburdedned education system to a cut in corporate tax or even a drop in VAT in the tourist industry where most of the players still pay 18%.
So you’re suggesting that a condition of university education here is that graduates should not be allowed to work anywhere but here. You’re assuming that everyone who stays here is a net benefit to the economy and everyone who leaves is …what? A liability? A waste of money?
What would you say of the graduate who left Malta and whose work has contributed several hundred thousand to Malta’s economy?
How would you decide on which courses contribute to the national economy? By the number of job seekers a course produces?
What you are suggesting sounds very much like a return to the utilitarian policies of the 1970s. That’s not the smartest move.
“Eroding the health system or tertiary education is not an option either but one must address the list of university courses which do not contribute anything to the national ecomony or even worse, allowing graduates to leave the island and seek their fortunes overseas after having been educated in Malta for free.”
The university’s role in the knowledge-based economy cannot be underestimated. Learning skills empower the graduand with a set of tools that can help him/her adapt to new challenges.
University should be the cradle that produces analytical and entrepreneurial skills that are useful not only to the individual but right across the economy..
As for keeping graduands in Malta, there is no legal way that this can be achieved as it goes against the rights of the individual. The only way that it can be achieved is by having the necessary investment (private) that would open vacancies for these graduands.
This is happening already and in all of the scientific areas – the problem is actually one of supply and not demand. There are more jobs than there are people to fill them.
On the contrary, there is a legal way. It is called a contractual obligation which is a segment of private law. There is nothing illegal about it.
I am, in no way suggesting a numerus clausus as used to happen during Mintoff’s time. But free education should only be restricted to what the country needs and while all present acedemic courses should remain availaible, those which are not necessarily inidpensable to our econommy should be financed through an interest-free loan (interest subsidized by the government).
We are a modern European country and this is what our European counterparts exercise. The singluar reason why this government continues pumping millions into education courses which will give no return is to secure votes.
While doing this it is ultimately focusing its efforts on creating new revenue sources instead of chopping down on the continual haemmorages that we are made to witness, day in day out.
I am not being critical of government policies as many of them were just and fair and have proven their worth over the years. But others regerttably have burdened us with an unsustanable debt which only bone crushing taxes can resolve unless they get the bull by the horns and start trimming down on costs.
Lorna – I can assure you, you cannot have a contractual obligation in regard to the training as long as you are not employed and your employer is either offering you study leave or paying for your study.
Students who receive scholarships or stipends cannot be forced to enter into a contractual obligation.
“Eroding the health system or tertiary education is not an option either but one must address the list of university courses which do not contribute anything to the national ecomony or even worse, allowing graduates to leave the island and seek their fortunes overseas after having been educated in Malta for free.”
The sad thing is, being a skilled foreigner is usually met with resistance in Malta, being blamed for stealing away jobs. I have years of free education from a different country, now applying that skill in Malta, benefiting the Maltese economy. I wish that was met with more positive feelings.
Also you’re forgetting that the Maltese are a yo-yo people. The ones who leave (and I honestly don’t believe it’s many, considering the nurtured life at home) tend to come back with years of experience working in a foreign country to contribute. But I suppose you don’t want that.
Also, I still would love to see you name those courses. These things usually filter out themselves. If an industry is over-saturated, no further employment is possible, hence students realise that it’s a dead-end career and would choose an alternative course.
I think you will find that having a large part of the workforce university educated, even though some may not be in the most appropriate field, benefits the whole island.
I do say that with slight hesitation though, as I know there is a large number of students who educate themselves beyond their analytical ability.
The course you are looking for is Law :P
“but one must address the list of university courses which do not contribute anything to the national ecomony or even worse, allowing graduates to leave the island and seek their fortunes overseas after having been educated in Malta for free.”
Shades of Dom Mintoff with his degress not worth the paper they are printed on mantra and the 1977 medical profession massacre resulting in a mass exodus of our best consultants and doctors to pastures new abroad ! It is obvious that you were not born yet in those tumultous times but am I right in stating that you hanker after those times?
Why, but why, does almost everyone in this country expect the government in its yearly budget estimates to stipulate the price of fuel, tonn taz-zejt, skalora etc. for the following year ?
We are one hundred years behind developed countries in our way of thinking.
Very scary indeed.
We are not talking about the price of tonn taz-zejt and the skalora. We are talking about the price of utilities.
You do not buy futures in skalora, so if there’s anybody who is a 100 years behind in their way of thinking it’s people like you with a village mentality who claps at politicians.
Tonn taz-zejt and skalora do not upset inflation and fuel unemployment; the price of utilities does.
Secondly, the government was never obliged to pay 50 million Euro to the dry docks employees when they were made redundant. Nobody pockets a golden handshake when he gets sacked.
But our government seems to be extreemply frivolous with other people’s money and keeps taxing enterprise to get there.
Can you please publish my post?
[Daphne – When I get to it. I work from the top down, not the bottom up.]
I work that way too. Oh dear I’ve done it again.
Baxxter, red card.
Actually, the matter of devaluation is not as simple as whether a country is a net importer or a net exporter…
What matters is the price elasticity of demand of these imports and exports.
A devaluation is bad for a country whose (a) imports are mainly price-inelastic (ex oil) and
(b) whose exports are also price-inelastic. This is because although imports would be discouraged, the decrease in such imports is of a smaller proportion than the increase in the price we pay for such imports. Total revenue falls.
As for the exports, yes they will be cheaper and more attractive to our buyers, but the decrease in price is of a greater proportion than the sales that will increase from this new and lower price, since consumers of such exported goods are not responsive. Hence revenue falls. This would be the case for a country which exports oil.
reason (a) applies to Malta, yet reason (b) doesn’t – our main export (tourism) is not price-inelastic.
Devaluation is good for a country which imports price-elastic goods and exports price elastic goods. We will pay a higher price for our imports, but since these are not so necessary (ex luxury goods) and we can ‘do without them’, then consumers will respond strongly to this new high price…hence the % decrease in imports outweighs the % increase in their price. This is healthy for the balance of payments.
Our now-lower-priced exports will see a large increase in sales since consumers are very responsive (so tourism really shoots up [ceteris paribus] when a currency falls in value). Said increase outweighs the fall in price. Revenue rises
In Malta’s case, there are elements of both.Our biggest headache with imports is the price of oil – so devaluation is “bad”.
Yet our best export is tourism – so devaluation is “good”
All that said, the “bad” from the price-inelastic-import- argument probably outweighs the “good” from the price-elastic-export argument
What’s for certain is that the Euro is BY FAR a safer bet than a devaluation of our tiny Lira (may she rest in peace).
Nobody has yet stated in a reasoned non-partisan manner where would our economy have been in the current economic crisis, depression (call it what you will) had we been out of the EU and the Eurozone and still tied to the dear old defunct Malta Lira.
Given the nature of such things, nobody knows really.
Kev, do not tell me that you believe in conspiracy theories like the ones produced by Hollywood in their film productions? You must be joking.