Nobel economics has already been detected in Portugal and problems – TVI24

Nobel economics has already been detected in Portugal and problems – TVI24

The Nobel Prize in Economics in 2014, Frenchman Jean Tirole, was in Portugal in 2010, a conference sponsored by the Bank of Portugal, even before the bailout troika. At that time, already alerted to the “extreme gravity” of the indebtedness of the private sector and banks.

In a speech that addressed the banking and borrowing countries, reflecting on the regulation, reform and accountability institutions, spoke about the Greek bailout, already begun at the time, but wove also considerations of Portugal, pointing the debt crisis and and lack of competitiveness.

He went further, to classify as ‘very serious problem’ over-indebtedness of households and firms, as well as the excessive leverage of banks. And warned of the “sudden danger” of Portuguese banks could be excluded from global markets.

Jean Tirole defended the need for reforms in the labor market and some sources of productivity growth, such as tourism, which had a ‘significant potential’. Called for increased budgetary control – and that adjustment came with force a year later, with the entry of the troika on the scene for the bailout, and the government want to go beyond the demands of the IMF, European Commission and ECB.

The French economist at the University of Toulouse, who also worked at MIT in the USA, summarized at the end of his presentation, the two key issues for Portugal were thus over-indebtedness private banking and lack of competitiveness.

Banking is, moreover, one of the most prominent sectors in its investigations. Jean Tirole admits that “it is very difficult to regulate,” but understands that the challenge is even on the side of governments and the type of regulation that put in place to avoid collapses like Lehman Brothers in 2008

This Monday, the journalists, the laureate Jean Tirole explained that, during the crisis, banks took big risks without ensuring the existence of collateral, ie, a guarantee for failure. The million dollar question that the economist aims to answer is about the balance that governments should find that this does not happen: a balance between excessive regulation that blocks innovation, and too fragile regulation, which allows the accumulation of systemic risks, advocates.

In other words, the governments puts greater when dealing with mergers or cartels responsibility, and regulation of monopolies or oligopolies, so that more than minimize negative consequences for the economy, they do not come to pass. If you think about it, many industries are dominated by a few large companies or even by a single monopoly. This reality is not, moreover, nothing unknown in Portugal. Banking, energy and telecommunications, the examples are now becoming more obvious than in 2010 />