tag:blogger.com,1999:blog-8764541874043694159.post7257179016752603369..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: An unjustified ratingFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-8764541874043694159.post-11902098427074908062015-09-28T16:19:14.893+01:002015-09-28T16:19:14.893+01:00Well, the problem is that debt (i.e. public defici...Well, the problem is that debt (i.e. public deficit spending) doesn't seem to produce sustainable GDP growth. It produces domestic bubbles and trade deficits more often than not. So, yes, reducing debt on a downturn leads to recession, but just increasing debt doesn't seem to be the solution.Jim Sliphttps://www.blogger.com/profile/15325962115410722474noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-39470449730678720872015-09-21T12:44:44.611+01:002015-09-21T12:44:44.611+01:00Thanks. This is a very helpful on-the-ground analy...Thanks. This is a very helpful on-the-ground analysis. I think Fitch should have done some local research.Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-30228310720454081692015-09-21T08:27:26.433+01:002015-09-21T08:27:26.433+01:00Excellent writing. The only point I did not get wa...Excellent writing. The only point I did not get was the external debt, which has risen up to 600 blnUSD - what is that exactly speaking? <br /><br />The Finnish state has a gross debt of some 100 blnEUR and the Municipals on top of that together up to some 20 blnEUR, making the Public Debt to some 120 blnEUR (135 blnUSD),...compared to GDP of some 200 blnEUR makes the relative percentages of those roughly 60% today already. And, as said, the alarming issue here is the year-by-year continuing pace of the debt.<br /><br />Larger companies - intl and then domestic - are sacking people at a speed of some 1000 persons per week, job creation is almost non-existent, except for the public elderly nursing jobs and refugee support jobs. All of those just adding to the cost of the public sector and diminishing the incomes of the same sector. Export companies are fleeing Finland as the workhour cost in our industry is some 35 EUR/h and in EU on average 27 EUR/h, in Eastern Europe some 10 EUR/h and in Asia some 3-5 EUR/h - this results in domestic companies closing operation also in Finland naturally as the purchasing power is decreasing all the time.<br /><br />As there is no imminent sector growing - and increasing the earnings and taxes - substantially and meaningfully compared to the size of the economy, the budget deficit just won't ease. Our Municipals are spending every year 8 blnEUR more than they are able to collect in taxes. This is paid by the State. Some 80 Municipals out of 316 could not survive if they raised the the municipal tax even up to 80% - and the concentration of the population still continues to move to the 15 biggest cities and municipalities making soon the rest of the 301 obsolete and dysfunctional.<br /><br />The rising unemployment has hiked the foreclosures of the houses 300% and some house in the deserted municipals are becoming worthless and unable to be collateralised, banks are starting to suffer bit-by-bit of the situation.<br /><br />So: The public debt will just keep on rising as it has done, unemployment costs might even rise on top of the elderly caretaking costs and refugee costs plus some - public income is falling. Industrial work starts to be impossible to be performed in Finland as even the Finns cannot afford to buy anymore any goods made in Finland - they are expensive but still average in innovations and quality: German salaries and Russian quality, innovations based on the 50's and 60's - we say. Very little to grab on in a positive sense.<br /><br />What was the Fitch thinking is also my question?Anonymoushttps://www.blogger.com/profile/14582663171456537290noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-17146802368712567032015-09-21T08:16:12.197+01:002015-09-21T08:16:12.197+01:00Yes they are.Insane is the appropriate word! and i...Yes they are.Insane is the appropriate word! and it will make the deficit and debt greater. Duh.Not Trampishttp://nottrampis.blogspot.com.aunoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-65641774566908319072015-09-21T06:54:01.347+01:002015-09-21T06:54:01.347+01:00Frances,
Good post, only this comment on pension ...Frances,<br /><br />Good post, only this comment on pension funds.<br /><br />In Finland, it is assumed that the pension funds of the private sector are not in danger of being 'stolen' by the government under any circumstances. This is due to the fact that - despite being statutory - those funds are owned by the labour market organisations and managed by private pension insurance companies. It is a peculiar arrangement specific to this country. If the government were to confiscate/nationalise those funds, there would certainly be serious unrest. Trade unions would insist that pension funds represent savings from labour income.<br /><br />However, unlike Finland, many other countries don't have large pension funds. With an ageing population, their governments will have to find funding for pensions, and therefore, they face pressure on their budgets that they may not yet have or don't even anticipate. I wonder how they are going to come to terms with that prospect.<br />Heikki Taimionoreply@blogger.com