Posted Feb 25, 2013 by Martin Armstrong
Portugal is in a massive deep recession with GDP growth coming in more than a negative 1%. Portugal has announced it may cut the corporation tax to boost growth and investment. They are starting to realize that the youth have no jobs. You keep raising taxes and people leave.
More than the tax rate, I have yelled and screamed at governments worldwide. Everyone asks me how to create growth. I routinely explain that they MUST stop this political nonsense with raising and lowering tax rates. Would you sign a lease or mortgage that allow the landlord/bank to raise the amount you pay whenever they spent too much and need money? Someday, we will have to wake up and start managing the economy in a sensible manner. Tax rates CANNOT be altered because politicians fail to be responsible in the fiscal management.
If you expect companies to build plants and create jobs, they run on a business plan. that means there is a budget in the real world. You cannot entice them to build a plant and then you double the tax rate. Whatever the tax rate, it MUST be stable. It cannot fluctuate with every election. Why should a company build a plant when they know everything could change in 2 years?
Portugal is now starting to wake up. We will see these changes materialize in Southern Europe. We may see local currencies emerge as they did during the Great Depression within the United States. We certainly live in interesting times. This is why we are forming the first real international think tank to provide unbiased work that will be critical in avoiding a real meltdown.