The Minister of Finances is currently captivated with strong delusions of grandeur as he stretches his arms into the air and gloats with patronising speeches about socialism and wage increases.
Malta is currently bereft of an in-depth discussion on its economic-social and environmental model which is forcing the youth to leave for literally, greener pastures in Europe. By now, Clyde Caruana should stop enjoying his power trip and get down to serious business. Not the distribution of cheques and social aid: that’s easy to do when you enter office and find a strong public balance sheet. What’s most important is what you leave behind and Labour is going to leave a wreck of a country.
I call Malta’s current economic model Greek Dubai: a low-wage and low-productivity economy backed with debt and leverage graced by the ECB’s loose monetary policy. Incidentally, this is a rent-seekers’ paradise where corruption is rife and the major economic players are backed by the Party in government in an ideal symbiotic relationship. Those who benefit the most are the property moghuls who basically are accumulating ever more increasing excessive power as time goes by. The result is social disorganisation. Many are being priced out of the property market, especially the youth. The results of this process are going to be maddening. There are rumors that Joseph Portelli has already taken over the property market in Gozo with all Gozitan contractors being on his payroll. At this rate, it’s not going to be very difficult for literally a couple of moghuls to control all of Malta’s property market.
There are many aspects to this story, which I am very happy to study and publish gradually in my blog. Here’s one aspect. Our banking sector is practically leveraged on the property market – commercial and industrial activity barely feature if at all. This the loan exposure of Malta’s biggest bank: Bank of Valletta.
Now, here’s another part of the story. This is how a Maltese moghul grows on a year on a year basis and how profitable a property project is. These are the profits of the Tumas Group across the years charted as part of the research I am doing on Tumas Group thanks to donations from my readers back in February (the research will be published later this November). 2018 was the year Tumas Group had sales on their new property project in Portomaso. Now, keep in mind, that these organisations and moghuls are accumulating ever more properties, businesses and assets in their portfolio, increasing their footprint in the economy and adding more political leverage. Think how exponentially they will keep growing in contrast to the smaller competitors and then remember that this is all having a direct effect on the market which eventually trickles down to the retail buyer into higher prices. Note that I did not change the LM figures into Euros which I still have to do and this is a work in process.
Greek Dubai is basically a system where public finances keep the poor on subsistence levels as the rich get extremely richer.