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September 29, 2012

Spain Misery Index

Below the last Misery Index, defined as the combination of inflation and unemployment.

Following this week announcement of a surge in Spanish inflation which soared from 2.7% to 3.5%, it is clear that the Misery in Spain has never been higher.

... which for some context - is double the misery of the average European or Italian and triple that of an American...

Charts: Bloomberg

Valletta Marina

September 27, 2012

Bunga is Back!

Our Bunga buddy is back, warming up for the soon coming Italian circus of dancers, pimps, crooks and wise guys (i.e. Italian elections in May); here he is again blessing us with his wisdom:
It appears he has a new plan (Allow Germany to leave) and start the printing press to inflate the country out in thin air while sedating the population with horny shows and lame soap operas.
Vote Bunga!

Palazzo Falson

Palazzo Falson was originally a one-storey high courtyard house that was built around the first half of 13th century on the remains of an even earlier structure known as La Rocca.  This area has also been associated with a synagogue and there is a strong verbal tradition which holds that the refectory and kitchen area of the house were part of the synagogue structure where the Mdina jewish community worshipped.
Palazzo Falson was inhabited by the de Falsone family and today is a unique palace-museum preserving an extensive collection of art. There are a number of 17th century paintings in this collection, including one by Mattia Preti, and others attributed to David Teniers the Younger, Nicolas Poussin and Bartolomé Esteban Murillo.
The silver collection includes more than 800 items, and includes some noteworthy and significant pieces of Maltese, Continental and British silver.
An extensive collection of arms is on display in the Armoury, the walls of which are hung with an interesting array of swords, polearms, pistols and guns.
The library at the Palazzo boasts over 4,500 books consisting mainly of historical titles and renowned literary works in various languages.  Some highly valuable manuscripts can also be found in this collection.
More than 80 Oriental rugs make up this collection, hailing from different areas such as Azerbaijan, Afghanistan and Turkmenistan, most of which are displayed in the Carpet Gallery.

For more info:     

The Courtyard

The Artist's Studio

The Library

The Kitchen

The Old Arch

September 25, 2012

Rob Legato: The art of creating awe

Rob Legato creates movie effects so good they (sometimes) trump the real thing. In this warm and funny talk, he shares his vision for enhancing reality on-screen in movies like Apollo 13, Titanic and Hugo.

Daphne Koller: What we're learning from online education

Daphne Koller is enticing top universities to put their most intriguing courses online for free -- not just as a service, but as a way to research how people learn. With Coursera (cofounded by Andrew Ng), each keystroke, quiz, peer-to-peer discussion and self-graded assignment builds an unprecedented pool of data on how knowledge is processed.

One third of Athens' Businesses Shuttered

Greek unemployment surged by 1% in one month to 24.4%, and by the end of the year is likely to be nearly 30%. What this means in practical tax revenue terms (if the tax collectors were actually doing their job collecting taxes, instead of striking) is that there is nobody generating any economic products and services, and thus no state revenues.
Kathimerini confirmed in a report that almost a third of all business in Athens have now shuttered: "The number of shuttered shops on the capital's busiest commercial streets, Panepistimiou and Stadiou, also hit a record high in August, reaching 34.7 percent on Panepistimiou and 42 percent on Akadimias, up 14 percent in the last six months."

Greece's deep recession has forced almost a third of businesses in the capital's commercial district to close down as shrinking incomes and frequent strikes drive Athenians away.

Tens of thousands of small businesses, which make up a big chunk of the struggling economy, have shut since Greece secured a 110-billion-euro bailout package in 2010 in exchange for promises of painful austerity measures.

On the capital's cobbled pedestrian shopping streets, long lines of shops are boarded shut while others have «Everything must go» signs plastered across their windows. Some arcades, once bustling with activity, are empty and enclosed by derelict buildings.

In the city's «commercial triangle», where generations of merchants had run successful businesses a stone's throw from the central Syntagma Square, an August census by retail lobby group ESEE found 31 percent of shops had closed.

"There are no signs that this percentage will fall and this is very worrying,» said ESEE head Vassilis Korkidis, estimating that about 63,000 Greek businesses were at risk of closing down within the next year.

Economic Freedom of the World

The Fraser Institute's massive volume on the Economic Freedom Of The World - based on the following five factors: Size of Government, Legal System & Property Rights, Sound Money, Freedom to Trade Internationally, and Regulation - covers 42 variables with the goal of quantifying the key ingredients of economic freedom.
When it comes to Europe, Italy manages to leave behind Greece by 2 positions achieving a very dishonourable 83rd position, Spain and Ireland respectively 34th and 12th stays among the most free economies in the world, Portugal is still green in the 60th while Greece at 81 still manage to fare better than Italy.

For those interested to find out what is making Italy so appalling please check the full data below.

Travels: Mdina, Malta

Mdina is the old capital of Malta a medieval walled town situated on a hill in the centre of the island.
If you are looking for a traffic and noise free experience with art and sophistication everywhere, this is the place you should visit. Worth spending a night or a weekend at Xara Palace one of the most unique hotels in Europe. The experience of staying in a 17th Century Palazzo with seventeen individually designed rooms and suites featuring unique pieces of antique furniture and paintings will justify the hefty bill.

September 23, 2012

Daily Photo: Presidential Garden

A country for old men

The column on the right is the figure to look into when evaluating how bad EU countries are doing. With the exception of Turkey (not in the EU) Italy is the worst country even above Greece when it comes to robbing an entire generation of their future.
NEET stands for "not in employment, education or training".
Practically it means that the most dynamic section of the population is not being developed and it is not contributing to the growth of the country.
Italy has always had a horrible record in developing young talents pushing the best and brightest out of the country or to the margin of society. Unfortunately with the crisis instead of capitalizing on the young it is pushing more and more of them to the brink.
Italy remains a country for old men, with an outdated mentality and little or no prospects of modernization to support the growth of a stalled economy.

September 15, 2012

Daily Photo: Auberge de Castilla

Competitiveness in the Eurozone

Deutsche Bank in his report on competitiveness noted the following:

"investors invest in companies and the countries are the platform of the companies. Therefore, an understanding of global competiveness of countries is key for investors"

It is most helpful to look at the combination of competiveness and hourly wages.

The more competitive a country is, the higher its wages can be justified.

There is a clear relation between the two variables. Countries below the regression curve have a strong competiveness rank relative to their labour costs while countries above the curve have a lower competiveness rank relative to their labour costs.

and here why PIIGS are screwing up:

Italian SME decline

The EU SME Fact Sheet is a must read to understand the world of Italian SME and the current crisis.
In few words what is happening is that SME are being strangled by a combination of factors, most notably:

  • Very high cost of energy
  • Lack of infrastructure
  • Massive bureaucracy
  • Dysfunctional Civil justice system
  • Public administration delayed payment of bills
  • High pressure from criminal organizations
  • Lack of financing
  • Very complex and contradictory laws
  • High level of corruption 
  • Lack of competitiveness on global markets
  • Low productivity
The backbone of the Italian economy is disappearing fast and it is not being replaced, if no rapid changes will take place in 1-2 years the Italian industrial panorama will not be dissimilar from that of Detroit.

SMEs in Italy – A Brief Fact Check

There are approximately 65 SMEs per 1000 inhabitants in Italy, which is substantially above the EU27 average of ca 40. In line with this, the relative importance of SMEs for the Italian economy exceeds by far the EU average, as illustrated by a considerably above-EU-average share of persons employed and value added accounted for by SMEs. It should be noted, that this elevated importance is mainly due to the micro enterprises, while medium enterprises are, in fact, underrepresented vis-à-vis the EU average.

Italy SMEs

Italy SMEs vs. EU

  • 94.6% of Italian businesses are "Micro Businesses" vs. EU Average of 91.8%
  • 47.1% of Italian employment is by "Micro Businesses" vs. EU Average of 29.6%
Unemployment Rate in Italy

A loss of 200,000 jobs would raise Italy's Unemployment Rate by about .9 percentage points, from 10.7% to 11.6%.

Italy's Insane Labor Rules

Wall Street Journal published a report Employment, Italian Style which helps explain Europe's economic crisis. Here are a few key passages:
Imagine you're an ambitious Italian entrepreneur, trying to make a go of a new business. You know you will have to pay at least two-thirds of your employees' social security costs. You also know you're going to run into problems once you hire your 16th employee, since that will trigger provisions making it either impossible or very expensive to dismiss a staffer.

But there's so much more. Once you hire employee 11, you must submit an annual self-assessment to the national authorities outlining every possible health and safety hazard to which your employees might be subject. These include stress that is work-related or caused by age, gender and racial differences. You must also note all precautionary and individual measures to prevent risks, procedures to carry them out, the names of employees in charge of safety, as well as the physician whose presence is required for the assessment.

Now say you decide to scale up. Beware again: Once you hire your 16th employee, national unions can set up shop. As your company grows, so does the number of required employee representatives, each of whom is entitled to eight hours of paid leave monthly to fulfill union or works-council duties. Management must consult these worker reps on everything from gender equality to the introduction of new technology.

Hire No. 16 also means that your next recruit must qualify as disabled. By the time your firm hires its 51st worker, 7% of the payroll must be handicapped in some way, or else your company owes fees in-kind.

Once you hire your 101st employee, you must submit a report every two years on the gender dynamics within the company. This must include a tabulation of the men and women employed in each production unit, their functions and level within the company, details of compensation and benefits, and dates and reasons for recruitments, promotions and transfers, as well as the estimated revenue impact.

Businesses with no more than 250 employees may also still be enjoying their three-year profit-tax holiday, which was granted in 2010 for small and medium-sized firms that reinvest their profits in forging "networks" for "innovation" with other small businesses nearby.

All of these protections and assurances, along with the bureaucracies that oversee them, subtract 47.6% from the average Italian wage, according to the OECD. Two-thirds of that bite comes before payroll, meaning many Italian workers are unaware of their gross cost to employers.

Best of TED - Marc Goodman: A vision of crimes in the future

The world is becoming increasingly open, and that has implications both bright and dangerous. Marc Goodman paints a portrait of a grave future, in which technology's rapid development could allow crime to take a turn for the worse.

September 2, 2012

Spain bank-run reaching disastrous levels

The central bank of Spain just released the net capital outflow numbers and they are disastrous.

During the month of June alone $70.90 billion left the Spanish banks and in July it was worse at $92.88 billion which is 4.7% of total bank deposits in Spain.

For the first seven months of the year the outflow adds up to $368.80 billion or 17.7% of the total bank deposits of Spain and the trajectory of the outflow is increasing dramatically.

The Spanish ten year now yields a 6.81% and their thirty year is yielding 7.34%.

Spain has now set up a fund for its regions to tap of $22.6 billion and this may not even be close to what is asked for or required with the regions needing some $50-75 billion in assistance. Many of the regions in Spain are not paying suppliers or their other local debts and the situation is clearly out of control.

On top of this Bankia, late Friday, reported out bad loans of $8.24 billion and an operating loss of $5.58 billion causing the government to promise to inject $5-6 billion into the bank immediately to prevent its collapse.

Furthermore, Spain has the highest unemployment rate in Europe, even higher than in Greece, with a 25.1% jobless rate. For those under twenty-five the job situation is extreme with a 53% unemployment rate.

Between December of 2011 and the end of March 2012 the Spanish banks bought $109 billion of the Spanish sovereign debt. Much of this was facilitated by the ECB who lowered the collateral rules and handed the money to the Spanish banks in such a size that very bad things will result if Spain hits the wall and defaults.

Then since March the trend has reversed and the Spanish banks have sold $21.3 billion of Spanish sovereign debt with $11.7 billion in July alone as capital flees from the Spanish banks.

Daily Photo: Trabuxu, Valletta


Italian Revenue original tax meter: Napkinmeter

The Italian Government has deployed an unusual system to track tax dodgers in Italy, in the case of restaurant owners the Italian Revenue Authority is using a system called "Tovagliometro" o "Farinometro"  literally translated as napkinmeter or flourmeter to estimate how many clients a restaurant or a bakery had and the amount of revenue generated.

It consists of the following; they use consumption of the above items to estimate the amount of activity in the establishment and they send a tax request to the activity based on such calculation. The activity is forced to pay the tax in advance based on such calculation, of course businesses can ask for a revision of this decision which normally takes from 12 to 24 months to be completed if admitted.
The Italian courts following appeals from vexed businesses has confirmed the validity of such tools and is endorsing new creative ways to estimate tax evasion with everyday items regardless of their usage.
The fact that a Tax Agency is using such methods is a clear signal how corrupt is the situation in Italy and how desperate is the government to collect Revenue.
Stockpiling has become a dangerous activity for Italian businesses, if you buy too many napkins you could be taxed to death!

From FiscoOggi (translated from Italian via Google):

Once Upon a Time tovagliometro, now comes the bottigliometro. The Court of legitimacy, with ruling no. 17408 of July 23, gives equal dignity to both the build tools presumptive income. Logic dictates, in fact, that the reasoning according to which, for each room, the client of shift work towards a single napkin and, therefore, the "net" number of napkins used (ie not comprising those used for different purposes, such as meals employees) is the real representation of meals actually "served" can be naturally transferred to the consumption of mineral water bottles.For the Supreme Court, "the consumption of mineral water must be considered a fundamental ingredient, if not essential, in both food and drink purchased in the restaurant industry that the pizza."
It all began, in fact, a tax audit, conducted by the Bureau of Internal Revenue Caserta in a restaurant-pizzeria, which results in an adjustment of the increase in turnover and the subsequent recovery in taxation of a higher taxable income.The investigation, which started from the assumption that the company had not adapted to field studies, was carried out taking into account the fact that food purchased were not proportionate to the number of meals indicated in the receipts. The office, in particular, concentrated control over the consumption of bottles of mineral water, proceeding, then, for presumptions.
The taxpayer has no recourse to the Supreme Court and is based on two reasons:

despite the assumed office, it is considered reasonable and consistent with industry studies. The Regional Tax Commission, therefore, did not take into account the lack of basis for the assessment
its accounting records are regular, so there may be legitimate the inductive method applied against it (and even if the criterion used was "legal", it would be more realistic if it is based on other factors such as the consumption of gas, electricity , tablecloths, napkins, etc.).
The judgment of legitimacyAs anticipated, the judges of the Supreme Court, in rejecting the appeal of the company, have found fertile ground in their own settled case-law. In other similar occasions, for example, have argued that "in the test for presumptions, the relationship between the known fact that unknown and must not have character of necessity, it being sufficient that the existence of the fact to prove resulting as a consequence of the known fact in the same way of fees reasonable probability (see Supreme Court, judgments nos. 51/1999, 6465/2002, 9884/2002). "For the togas of legitimacy, the consumption of mineral water in a restaurant-pizzeria (as well as that of napkins), known fact, it may well become a test which suggests the number of meals actually served, unknown fact. This is because, according to "standards of reasonable probability," it can be shown that the existence of the latter is a consequence of the first.In addition, "the flexibility instrument is presumptive origin and foundation of their art. 53 of the Constitution, not being able to admit that the income is determined automatically, no matter what is the ability to pay of the person tested. "

Best of TED - Peter Norvig: The 100,000-student classroom

In the fall of 2011 Peter Norvig taught a class with Sebastian Thrun on artificial intelligence at Stanford attended by 175 students in situ -- and over 100,000 via an interactive webcast. An interesting speech if you want to learn more on how to attend free university courses online and how the education system is changing.
Worth checking also the following sites offering free university education open to everyone aand everywhere in the world.


EdX (MIT, Harvard, Berkeley) :