Comic this
week: Social harmony
Stagflation: why it is happening
That there is inflation and that it has sky-rocketed is not in doubt.
We have the eyes and the ears to look at and to listen to the stark
realities that have pushed inflation way up.
But editorials are not supposed to be note pads, they are there to
serve as useful eye-openers.
Why is stagflation taking place?
First of all it is important to understand what inflation is. The
technical definition would be the process by which the price level rises
and money loses its value.
Inflation, economists will tell us, is a monetary phenomenon, it is
when the price level and the value of money changes but not the price
of a commodity.
Inflation happens because of a number of factors, which we would do
well to note:
Decline in money supply
Decrease in government purchases
Decrease in price level or real GDP in the rest of the world
An increase in money wage rates
And an increase in the price of raw materials
Looking at these criteria could help us understand why inflation is
indeed on the up.
New financial procedures and proper banking facilities, reduced economic
activity and confidence contributes to the decline in money supply.
An attempt to reduce public expenditure and contain the public sector
is the contributing factor for a decrease in government purchases.
The drop in GDP in Europe and the world is an indicator that reflects
directly on our economic performance.
The last two considerations mentioned above deal with the rise in
salaries, the direct result of unending union intervention and the price
tag of raw materials.
To address these issues, we need to break through some nettle-infested
ground.
Todays government believes that one solution is getting into
Europe at all costs. They argue quite rightly that in
Europe we will have new opportunities.
The Opposition react to this by stating that perhaps one needs to
inculcate a relaxed mentality in the psyche of the Maltese.
For the last five years they have had to endure constant screaming
about a deficit and an ailing economy.
Business is about chemistry, if the conditions are not right nothing
is catalysed.
We need to stop talking about taxation, about deficit and debt and
get on with life.
We need to have faith in ourselves and start to believe that the next
hurdle - Europe - will bring improved changes to our lives.
Unfortunately on this point Maltese society needs more reassurance
for its future. Then and only then will we enjoy the sweeter taste of
economic growth on our shores.
Privatisation on the move
The privatisation at Malta International Airport comes at an opportune
moment. The global economy is suffering from serious setbacks and Malta
is no exception to this trend.
The privatisation at MIA will not only allow for a limited amount
of immediate revenue but it will also provide for some value-added in
this dynamic industry.
Regardless of who the prize would go to at the end of the day, the
vying Malta Mediterranean Link or Alterra, the deal must go through
without delay in order to capitalise on the timing of the deal.
The mechanics of the deal are now being clarified to the public to
assure all concerned that there is no hidden agenda in the governments
privatisation drive.
The future processes governing privatisation are not expected to be
very different from the one we have just witnessed!
Saviour
Balzan
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