We recently traveled to Portugal to take a “boot on the ground” view of the conditions and economic activity in the second largest Portuguese city: Porto.
As Zero Hedge explains:
The economy is still contracting. The IMF assumes real GDP growth of -2.3% in 2013 and +0.6% in 2014 and unemployment reaching 18.5% next year. There have been clear signs of adjustment fatigue with Finance Minister Gaspar’s resignation a reflection of that. The opposition Socialist Party, that withdrew its support for the adjustment programme, is now ahead in the polls.
Still, looking at the large elderly population and at the condition of real estate market, one has to wonder what IMF analysts have been smoking to assume that in a 12 months time growth can resume from -2.3% to +0.6%.
The airport as well as underground transportation facilities are modern, clean and functional, having undergone a massive programme of refurbishment due to the Euro 2004 football championships being partly hosted in the city. However, immediately above ground, the harsh condition of buildings is striking: probably 1 over 10 buildings are abandoned or partially collapsed.
One would expect that abandoned buildings are concentrated in the periphery of the city, but surprisingly even in front of the beach the proportion of ruined and unoccupied houses remains astonishing.
Even in the main square of Porto, where Porto City Hall is located in the Avenida dos Aliados, large historic buildings are left in ruin.
This building is located no more than 500 meters from the Porto City Hall, (by comparison, this is the picture shown on Wikipedia)
With so many broken windows, one would guess that the economy would soon be booming!
House prices only partially reflect the situation:
While looking to gold and silver dealers to check prices and sales, we discovered that the old-fashioned type writers are still found on the desks and used to do business:
An independent journal reports “we are in a war without weapons, an economic war“:
Would Krugman be surprised that in such economic environment, gold buyers are fighting each other with pamphlets and advertisements to get their hands on the barbarous relic still owned by people who need some cash?
Two “we buy gold” in front of each other in the main commercial street of Porto. We asked if they were also selling and the answer was a direct “No, we just buy.”
In case you want to buy, physical comes at a decent premium (I’m sorry my phone did not pick up the prices of bars) you can see silver eagles below going for 35 euros.
A quick e-bay search confirms the prices found on the ground.
In Braga, I picked up these two placards placed in front of the train station. On the left side the socialist candidate (whose advertisements were everywhere) and on the right side the advertisement fort the communist party’s annual festival. I sincerely hope for the Portuguese people that these aren’t the only choices left…