Dreaming California - the fifth largest economy in the World

California recently came back to the fifth position in the list of the largest economies in the World, following US, China, Japan and Germany.

California’s gross domestic product (GDP) grew $127 billion between 2016 and 2017 to more than $2.7 trillion. Higher than Uk and France.

London is suffering the Brexit and the depreciation of the Pound, whilst California has two great and consistent assets in cinema industry and Silicon Valley. A small but significant part of this wealth comes from the agriculture and in particular from the wine production.

Of course California is not an independent country, even if some independent movements are pushing for that. But it is interesting to think how impressive is the economy of a state of Usa in comparison with the states of Europe (only Germany is better).

GDP is not the best indicator of the wealth of a country, but it defines well how a country can be powerful. And California is definitely a benchmark for high-tech and entertainment. 

It is also interesting to take a look at the full list from the 15 top economies in the World:

1. United States $19.391 trillion
2. China $12.015 trillion
3. Japan $4.872 trillion
4. Germany $3.685 trillion
5. California $2.747 trillion
6. United Kingdom $2.625 trillion
7. India $2.611 trillion
8. France $2.584 trillion
9. Brazil $2.055 trillion
10. Italy $1.938 trillion
11. Texas $1.696 trillion
12. Canada $1.652 trillion
13. New York $1.547 trillion
14. South Korea $1.538 trillion
15. Russia $1.527 trillion

(From Business Insider)

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No shopping on Sunday! What do you think?

Poland recently approved a law that ban Sunday trading. This means that from today (11th March)  every other Sunday the bans will take place (with the exception of some Sundays before religious holidays). 

In Poland the law is the result of the pressure coming mainly by the Church and Solidarnosc, in order to allow employees to spend more time on Sunday with their family and participate in the Religious Ceremonies.

The discussion is really wide, as you can see on Wikipedia.

From one side, it is good to see that people already working the entire week in a shop can have one day break on Sunday and spend it with their families and friends. And for sure, as consumers, we can survive buying what we need in the remain 6 days of the week.

On the other hand, the risk to cut many part-time jobs or push some companies to open during the night or extend their open hours during the week is real, and it wouldn't improve the conditions of the workers at all.

I personally think that Sunday is a good day to rest for everybody. But if a good law is needed to regulate the ban of shopping, it is also needed to regulate the rest of the week, if not the workers will have to work more on the other days. 

Common sense and balance are always the elements the Legislator should consider to regulate a sector.

And you? What do you think?

For more information about Polish Sunday trading ban, you can check Wroclaw Uncut website.

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Can Trump be the new "glue" of Europe?

Trump is the 45th President of United States. 

We cannot predict what he will do, but for sure he will have a totally different approach of his predecessor and for sure his Presidency will have a huge impact in the World.

Definitely huge effects are expected in the relation between US and Europe. Few days ago Trump attacked the European Union institution, pointed out the uselessness of NATO, stated the will to improve the relations with Russia and drafted an economic policy based on autarchy more than on globalization.

Under those considerations, which Europe can we expect in the next 4 years?

Few points should be highlighted.

First, the declarations of Trump had the effect to compact the Eu Leaders. The pride to be Europeans came up suddenly. We love to criticize Eu, but sometimes we are also able to see how positive can be, and we will probably see it more after Brexit.

Second, and this can be considered a good news, the TTIP seems definitely over. New US President wants to renegotiate even NAFTA, o we cannot expect free trade agreement with Europe and it is probably better for us. 

Third, if Trump will go ahead with a release from NATO of US, countries like Poland or Baltic States will be somehow forced to get closer to Eu. And Eu will be forced to take care by herself about the security of the Region.

We are already missing Obama, probably not so much for what he really did, but for what he represented. But maybe this change will give new life to Europe and, this is my wish, we will see a united power trying to fight against terrorism, iniquity, social conflicts.

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Volkswagen scandal: there is nothing to enjoy

It is a normal human feeling to enjoy when the first of the class makes a mistake.

In the case of the VW scandal, we are not just talking about a good student, but about the excellence in the automotive market, one of the best symbol of Germany, the richest and most powerful country in Europe, our model and our inflexible teacher.



But few numbers can give us the dimension of this fraud.

11 million vehicles affected (around 3 only in Germany), 18 billion Euros as potential penalty by the Us environment Agency Epa, 35% of value lost in Stock exchange.

Moreover, the total production of VW in 2014 touched 10 million units, with an income of 11 billion.

Looking at the numbers, it seems like this fraud can delete the production of one entire year. The consequences of this scandal will deeply affect the brand of VW, but moreover, they will impact on the production.

The CEO already resigned, with a possible bonus of 25 million Euros. But we are not considering the most important number of Volkswagen: the 592,586 employees around the World. What will it happen to this people?

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Do we really need the TTIP?

The Transatlantic Trade and Investment Partnership (TTIP) is a proposed free trade agreement between the European Union and the United States.

US and EU together represent 60% of global GDP, 33% of world trade in goods and 42% of world trade in services. The barriers between the two most important economies in the world are already law, but the purpuse of the TTIP is to consolidate the relations, improving the trade between the parts, facilitating the competition and creating new jobs.

This agreement is strongly criticized for the method of the negotiation and for the potential effects of it. In fact, the negotiation is held in a confidential way, that doesn't allow the public opinion to know the details of the agreement and it doesn't facilitate a public discussion.

Moreover, this agreement could bring damages to the consumers, to the workers and to the environment. From one side, there should be specific Institutions that could judge about the litigations between States and private companies outside the national jurisdiction. This could give more power to the biggest private corporations. From the other, Us didn't ratify many agreements related to labor rights and environment protections, and this could bring a sort of social dumping against Europe.

We can draft two kinds of considerations. First, more economic freedom can raise the level of competitions in the markets and this is reflected also in the prices: but which is the social cost of it? Second, the negotiations must be subjected to the public opinion, because the effect of TTIP will deeply touch our life.

The 10th of June the European Parliament had to express an opinion about TTIP in a special session in Strasbourg. Thanks to the pressure of a huge majority in the Parliament, the vote and the discussion has been postponed. We will see how much force the Parliament and the voice of the public opinion can have in the future discussion, also considering the pressure of G7 to reach an agreement.

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Posh low-cost shops? The way of Tiger

The ways of shopping have deeply changed in the last decade. In particular, the economic crisis has consolidated the growth of the Discount Supermarkets, but it has also left a space for some other kinds of low-cost and posh shops, like the case of Tiger.

Tiger is a variety shop originally born in Denmark. The first store opened in Copenhagen in 1995 and today the chain has 314 stores in Europe and not only (there are also 18 shops in Japan).

What is the origin of this success?

The answer is in the kinds of products sold. Tiger sells quality and fancy products at a quite low price: toys, notebooks, pens, different items for hygiene, stuff for kitchen and many other things.

With the crisis, many people cannot spend  a lot of money. The double idea of Tiger is to sell different item with a low price but that also look nice and appealing. 

It is interesting to point out that, from one side, consumers are always more oriented towards the quality and the good look of the product even if they cannot spend a lot of money. From the other, there is always the way to create a smart and creative business. Even in a such a difficult period like the one we are living in.

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Is ECB the strongest opponent to austerity?

The European Central Bank has chosen the way of a "quantitative easing" to stop the crisis and push the growth. 

The announcement, made by the President Mario Draghi, has been received successfully by the investors and by the most part of the European Countries, except for Germany and the block of Nordics.

The general aim of this operation is that, buying 60 billion Euros of public debt per month, ECB could reduce the value of Euro, facilitating the export and also the access to the bank credit. This decision should increase the inflation tax and bring benefits to all the economy.


The Us Federal Reserve adopted this decision already in 2008, why in Europe did we have to wait till now?

The answer is quite obvious: the resistance of Germany. From Berlin, the  austerity and the internal reforms were the ways to reduce the National debts and improve their economies, without considering the social  (and then also political) effects.

That is why the media reaction to the decision of the ECB has not been positive in Germany. At the opposite, in the rest of Europe the operation has been considered necessary and with positive effects for everybody.

It is impossible to predict which will be the real effect of this decision. But we can draw two considerations. First, this choise is the first wide and robust action of the ECB, as indepent Istitution of the European framework. Second, the economic policy adoped till yesterday must be dismessed because it didn't work.

Euro can be an advantage just if the economic policy can represents and help all the Countries. It is impossible to be under a unique currency and adopting only the German perspective. In the last years we have seen the contraposition between Berlin and the rest of Europe. It seemed that Angela Merkel imposed her strategy to exit from the crisis. But today something is changing: the elctions in Greece and Spain could modify the political scenario in Europe. Over all Mario Draghi won a match against the austerity and maybe he represents the strongest opponent to Germany in the European arena.

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Christmas Markets: a multi-million business

Nowadays it is a tradition: when Christmas is coming, also the Christmas Markets  are opened in many Cities. Originated in the German-speaking part of Europe, this tradition finds its roots in the late Middle Age: the first one was created in Dresden in 1434. 

One of the most beautiful Christmas Market - Vienna (Austria)

Even if the most beautiful Christmas Markets are located in Germany and Austria, they are spread in many different places. We can find them in Naples, as well as in Madrid and in Edinburgh, there are also markets opened in US and Canada, mainly on the idea of some German immigrants. Even in Japan there are Christmas Markets, in Osaka and Sapporo.

The diffusion of these markets is easily understandable: they are an incredible touristic attraction and a very good business. 

But which is exactly the value of this business? 

Obviously it is difficult to estimate it, considering that touches various Countries.
I found and interesting research made by JFC about the phenomenon of Christmas Markets in Italy.

The amount of this business is around 766 million Euro per year: 284 directly from the trade, and the rest from restaurants, hotels and shops. The most attractive markets are located in the region of Trentino - Alto Adige, near the border with Austria. But there are about 556 in Italy, that can last from just one to 72 days and that will host more than 12 million visitors.

The main products sold are decorations and groceries. Interesting also to point out that Italians like those markets for the atmosphere, for the traditional food and also the entertainment through concerts, exhibitions, and fireworks.

In conclusion, those markets give a positive effect to the economy and generate a business that, at least in Italy, represents about 8% of the total expence made for Christmas (about 9 billion Euro). It is also a good occasion to rediscover local traditions.

So...long live Christmas Markets!

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Is it worth hosting a major sporting event?

Few days ago the 2014 World Cup has began in Sao Paolo in Brazil. It is estimated that the economical effort to build all the infrastructures for Word Cup and Olympic Games (that will take place again in Sao Paolo in 2016) will touch the amount of 33 billion US Dollars (24 bl Euros).

Such an expense for the organization of a sporting event is creating many protests from the population. Brazil is a country with wide economical disparities, an high crime rate and a large part of the population  (15%) under the poverty threshold.

Many Brazilians think that such a big amount of money should have been used to solve those problems and not for a sporting event. A recent poll has showed that just 35% of people think that World Cup can have a positive effect on the national economy.

So it is spontaneous wondering if hosting a major sporting event can be an economic advantage or a loss. To answer we can take a look at the history of past International Sport Events.

Just few years ago, for example, the State of Canada has run out the debit for the Olympic Games of Montreal, that took place in 1976. Athens 2004 was a fantastic show, but its cost, around 10 billion Euros, have speeded up the collapse of the economy. 

A research has estimated that for the London Olympic games in 2013 there have been an immediate retuns of 800 million Euros, 5 billion will come back before the end of 2015 with a 0.3-0.4% of GDP growth rate. Considering that the total cost have touched the 10 billion Euros, there will be probably many years to refund the debit. 

Barcelona 1992, instead, was a fantastic opportunity for the renovation of the imagine of the city, that has become one of the most attractive touristic city in the world. Also Turin has changed its international image after the XX Winter Olympic Games in 2006, at the price of 3 billion Euros. 

Panoramic of the costs of the most recent Olympic Games (www.tradingfloor.com)

It seems that hosting sportive events is not always a good investment. The returns are not enougth  to cover the costs, or they can do it on a very long period (30 years for Montreal...). Moreover, the structures built for those kinds of events are often not reutilezed anymore. It is, once again, the case of Athens, where the beautiful Olympic park has been left to the decay. 

Maybe, it is the moment to rethink to the organization of major sporting events, from one side to preserve the tradition and to the other to face to the current economic situation, unless we want to see these events taking place just in Dubai or similar places.

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Behind the F1 Gp of Bahrain: a Country in revolt

The 10^th edition of the F1 Gran Prix of Bahrain has ended few hours ago. The media attention has been focused on the sportive event, that generates millions of dollars each year. But the internal situation of the Country has been completely clouded.

The race was cancelled only in 2011, when the revolts of the population began. But in the last years the Bahrain International Circuit seemed like a happy island, far from the divisions present in the Country.

But what is the current situation in Bahrain?

First of all, it’s is important to keep in mind few data about the Kingdom of Bahrain. It is a small archipelago in the Persian Gulf with a population of 1.300.000 habitants and a GDP per capita of around 28600 $, 34^th in the International Monetary Fund classification of the richest Countries in the world.

Bahrain was part of the British colonialist empire till 1971, when it reached the independence. Now it is under the kingdom of Hamad bin Isa al-Khalifa, last exponent of the Sunni family of al-Khalifa, linked to the Royal Family of Saudi Arabia.

The conflicts began in 2011 after the Arab Spring. The origin of the revolt is religious. In fact, even if the 70% of the population is Shiite, King Hamad and the ruling class of the Country is Sunni. Shiites, that don’t have access to the highest positions in the State, ask the transformation of Bahrain in a Constitutional Monarchy, with the possibility of electing a democratic Parliament and with the recognition of their rights.  

The revolt didn’t stop since four years and the reaction has been reflected in  tortures, rapes and deaths. The Monarchy has the support of US that want to maintain a strong relation with this strategic Country, situated between the Shiite Iran and the Sunni Saudi Arabia.  it is not a coincidence that Bahrain hosts the V fleet of the US Navy.

Finally, can geopolitical and economical interests hide social conflicts? Apparently yes. Therefore, “The show must goes on”. But till when? 

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Do you have a problem with your Public Debt? Follow Belgium

Belgium is a very strange Country. Eleven millions of habitants live in a territory of 11 thousands km2, organized in three Regions and three Communities, with three official languages, Flemish, French and German.

Atomium - The symbol of Brussels

The internal contrast between Flanders, the richest part of the Country and Wallonia has blocked the political and institutional life in the last years. In 2011 Belgium reached a new world record regarding the absence of an official government: in fact, after the election of June 2010, the political forces couldn’t get an agreement to create a new government.

For 18 months Belgium was led by a caretaker government, beating the previous record held by Iraq. Anyway, even with limited budget, the government performed well and the economy of the Country could have an incredible +2% of growth in 2010-11.

But Belgium could shock us also with another miracle. In 1993 its public debt was 138% of GDP: Belgium was the Country with the highest debt in EU. Fourteen years later, in 2007, the debt reached the impressive number of 84%. Even if in the last years the debt increased, it didn’t exceed the limit of 100%.

How was it possible?

First, a fiscal reform has been implemented. The aim has been the simplification of the taxation and the increase of the fiscal rates. Second, all the reforms put in practice from the Government have been realized without any additional cost for the public balance. More income and a fix amount of expenses have brought a surplus in the state balance allowing a stable decrease of the debt.

Of course this is not a result reachable from every Country. Belgium is located in one of the richest area in the world and it could also take benefit from its German neighbor. But it is a symbol of pride for such a complex Country, that has to face many internal contrasts.  

To understand more about this strange and interesting Country, I advise you to watch this funny video – Belgium for dummies @  http://youtu.be/QlwHotpl9DA. 

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Poland: the leading outsourcing destination in Europe

I want to dedicate the first post of this blog to Poland, the country in which I live.

Poland is a really interesting case in Europe, in the last years has seen a robust economic growth in a reverse trend with respect to the crisis that has touched Europe bringing a slowdown of the economy and an increase of the unemployment rate and social contrasts.

Wroclaw 

Poland has used very well the Eu funds and the Government has implemented incisive structural reforms also helped by the stability of the political system.

A key element of the Polish development is represented by the delocalization of services like accounting, customer care and IT support from the West to the Eastern Europe. In the last ten years, many corporations have decided to create shared services centers in Poland in order to develop their business, maintaining high quality of service and bringing down costs.

There are two processes to be distinguished: outsourcing and offshoring. Outsourcing is the contracting out of a business process, previously performed internally, to an independent organization from which the process is purchased back as a service. Instead offshoring describes the relocation by  a company of a business process from one country to another: in this case the process rests within the company. It often happens that a company decides to implement both processes: it can create, for instance, a internal centre (but in another country) to delocalize some internal processes, and at the same time, it can commit other processes to an outsourcing center. It also can happen that the same company creates a BPO (Business Process Outsourcing) for external clients and a Global service center for its internal processes.

It is interesting to notice that there are an estimated number of 500 offshore outsourcing centers in Eastern Europe, and Poland is poised for major expansion in the coming years (www.sourcingline.com). According to KPMG, an audit and consultancy firm, Poland ranks third for shared services centers and business process outsourcing in the world after India and China. Poland's key assets are considered its trained and educated workforce, the economic and political stability and the depreciation of the zloty (the local currency).

The importance of Poland in the outsourcing strategies is evident also from the list of the 100 most important outsourcing Cities 2012 (http://www.cuti.org.uy). Although India took 13 places in the list (Bangalore got the first position) and China 8, Poland with 3 cities, Krakow (10st), Warsaw (36th) and Wroclaw (75th), is the most represented European country.

There are two main consequences of this phenomenon. First of all, investments in outsourcing have brought wealth, reflected in new and modern infrastructures, new international power and in a reinforcement of the domestic demand. Secondly, Poland is becoming a point of attraction for international workers, pushed to leave their own Country by the economic crisis of the last years.

Ten years ago in the Western Europe there was the fear of the famous Polish plumber, ready to invade France, Italy and Germany providing a low cost service. Today instead, it is estimated that over 600 thousands foreigners are officially residents in Poland and this number is estimated to increase. It seems to be an historical victory for a Country that came out just 20 years ago from the Soviet grip.

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