(qCOSTARICA BLOGS) While China is hardly going broke, it is in one lot of pain and taking dramatic steps to stop a massive sell off of stocks and real estate. Twenty plus percent of the listed companies put an official halt to their trading and the overall market was down 30% by the end of June.
However, Greece and Puerto Rico simply cannot repay their debts.
Costa Rica, on the other hand, has been living hand-to-mouth for years and recently betting its good fortune on historically lower interest rates.
The national deficit, income less expenses, is a whopping negative 5.7%. In the event, as some economists say, the U.S. will unveil, albeit slowly, raising interest rates based on an improving economy, Pura Vida might become toast.
It is a question of “when” and not if.
What is interesting is that two Costa Rican politicos, each at the other end of the spectrum agree that millions and millions of colones are wasted on absurd bureaucratic salaries and perks.
They are, from the far left economist and founder of the ruling PAC part, Otton Solís and from the ultra right Libertarian, MBA Otto Guevara.
And, throwing gasoline on the fire is La Naciόn which has listed the exorbitant salaries and perks for those who work for the government and government sponsored institutions such as ICE, RACSA, RECOPE, CCSS, the cabinet, etc. A secretary in anyone of these types of organizations earns double what the same person would make in private enterprise.
And, what makes all this more horrible is the promise of transparency and yet public salaries, money paid by tax payers, is a well guarded secret. Some believe to publish that a UCR traffic cop earned 2.7 million colones in June was unconstitutional. Once again Sala Cuarta will tell us do we need to know.
In the interim Luis Guillermo Solís, our wanna-be president travel s abroad, encourages his large entourage of deputies to do the same and when time permits tries to figures out, “Should I raise taxes by decree, or reduce government costs, borrow more money to stay afloat a-la Greece and Puerto Rico or face the 600 pound gorilla, or perhaps make a lot of enemies and collect the taxes owed?”
In China, the government has been pressured into using its money to limit losses of stockholders and home owners, Greece got bailed out by the European Economic Community and the IMF with some pretty stiff conditions and Puerto Rico…lost. As a U.S. common wealth, PR cannot declare bankruptcy as did Detroit and Riverside who are legal states with that option.
Costa Rica? How in the world will we be able to pay back our loans, encourage foreign direct investment with the exception of money laundering and a socialization as we now are, who will fall on the sword of the many unions and their angry leaders?
It is good for employment that we have so many call centers and indeed these employees pay income taxes, but the companies they work for do not. How many whamo pharmaceutical centers can we host, sports books and on the more ethical side customer service companies can we afford? Why are the profits of these service centers tax exempt?
As to the mere suggestion that CR will tax foreign entities and income….give me a break. We can’t tax ourselves yet.
I agree with your comments. The only way out of the current economic crisis in Costa Rica with any hope of maintaining the standard of living that most Ticos have become accustomed to, is more foreign investment by multinationals in call centers and the like, stimulated by granting tax breaks and providing a basis for a lower cost of doing business, with the benefit of the increased tax revenue flowing to the Government from the pay-roll deductions of the employees from the increased employment for Costa Ricans that that scenario will create.
1. Completely gratuitous dig at Solis (“Our wanna-be president travels
abroad, encourages his large entourage of deputies to do the same and
when time permits tries to figures out, ‘Should I raise taxes by decree,
or reduce government costs, borrow more money to stay afloat a-la
Greece and Puerto Rico or face the 600 pound gorilla, or perhaps make a
lot of enemies and collect the taxes owed?’”) Actually, in addition to affairs of state, which as president he’s obligated to attend, Solis has been traveling abroad to drum up business, including in case you didn’t notice, twisting Intel’s arm to create better jobs in Costa Rica that it’s sending to Vietnam. And since when did you become a mind-reader able to tell that Solis is confused about what policy course he wants to pursue? Really, pal, relevant criticism ought to be rooted in some remotely verifiable facts, not just angry mental masturbation.
2. Don’t know what your acquaintance is with the US, but Detroit and Riverside are cities, not states. As such they are corporations chartered by their respective states.
3. I get the Greece analogy, sort of, but it’s a bit strained, since it’s dealing with the EU. I’m kind of sympathetic to the analogy with Puerto Rico, since although it’s not a state, it arguably is in a roughly similar dependent relationship with the US that Costa Rica is in. However, it too is strained. But honestly, you’re comparing China with Costa Rica as well as the other two? This is beyond strained and just stupid.
4, The common theme seems to be that you’re pissed and against pretty much everything, plus want to hold court as the authority. My question is: Authority on what? Really, you have no facts about Solis, just intuit what you allege is going on in his head, you don’t know the legal status of the bankrupt US cities you write about, and you throw China, Puerto Rico, Greece, and Costa Rica into the same mixed up pot. The only theme I can find is that you’re pissed off and trying to impose your own subjective order onto things you don’t understand.