Global Financial Rules

Accordingly with Lorenzo Bini Smaghi:

"[…] if financing were to become easier, it would be unclear how both creditors and debtors would perceive the risk of excessive imbalances. The real danger is that adjustment would take place even later, with imbalances left to accumulate for a longer period of time. Under these circumstances, crises could be even greater, and the adjustments harsher – as occurred under the last world currency, the gold standard."

"A viable international financial system requires a mechanism to keep imbalances in check. An essential element of such a mechanism is to give the IMF a prominent role in two areas: strong and effective surveillance in order to prevent crises, and responsible lending to countries in need, but with appropriate limits and conditionality."

"We don’t need to reinvent the wheel; we just need to follow up on the commitments made ten years ago. Dealing with the short-run challenges of the current crisis should not distract us from the objective of preventing future meltdowns."

"The right reform for the Fed"

En The Washington Post Ben Bernanke apunta "The right reform for the Fed" - Now more than ever - [...] needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation.

Adicionalmente:

"Working with other agencies, we have toughened our rules and oversight. We will be requiring banks to hold more capital and liquidity and to structure compensation packages in ways that limit excessive risk-taking. We are taking more explicit account of risks to the financial system as a whole."

"We are also supplementing bank examination staffs with teams of economists, financial market specialists and other experts. This combination of expertise, a unique strength of the Fed, helped bring credibility and clarity to the "stress tests" of the banking system conducted in the spring. These tests were led by the Fed and marked a turning point in public confidence in the banking system."

"There is a strong case for a continued role for the Federal Reserve in bank supervision. Because of our role in making monetary policy, the Fed brings unparalleled economic and financial expertise to its oversight of banks, as demonstrated by the success of the stress tests."

Source: The Washington Post

JEP

JEP gana el Premio Cervantes

José Emilio Pacheco, galardonado con el Premio Cervantes 2009
Ministerio de Cultura

Cuarto mexicano en ganar el Cervantes

"Africa at Risk "

Accordingly with Meles Zenawi

"[...] Africa is the only continent that has not industrialized. Indeed, since 1980’s the industrialization that had taken place in Africa has by and large been reversed. Africa has thus contributed nothing to the historical accumulation of greenhouse gases through carbon-based industrialization. Moreover, its current contribution is also negligible, practically all of it coming from deforestation and degradation of forests and farmland."

S&P/Case-Shiller Home Price Indices

"Data through September 2009, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index improved in the third quarter of 2009, posting its second consecutive quarterly increase and further improvement in its annual rate of return."

"The 10-City and 20-City Composites continue to show monthly improvement in their annual return figures. Both composites emerged from double-digit annual declines with September’s report, the first time in 21 months. In addition, 19 of the 20 metro areas saw improvement in their annual returns compared to the previous month, Cleveland being the only exception." Full Report

Only time will tell

Accordingly with Barry Eichengreen:

"China is making a big push to encourage greater international use of its currency, the renminbi. It has an agreement with Brazil to facilitate use of the two countries’ currencies in bilateral trade transactions. It has signed renminbi swap agreements with Argentina, Belarus, Hong Kong, Indonesia, South Korea, and Malaysia. Last summer, it expanded renminbi settlement agreements between Hong Kong and five mainland cities, and authorized HSBC Holdings to sell renminbi bonds in Hong Kong. Then, in September, the Chinese government issued in Hong Kong about $1 billion worth of its own renminbi-denominated bonds."

"All of these initiatives are aimed at reducing dependence on the dollar both at home and abroad by encouraging importers, exporters, and investors to make more use of China’s currency. The ultimate goal is to ensure that China eventually gains the flexibility and financial prerogatives that come with being a reserve-currency country."

Start with Free Elections

Accordingly with Daron Acemoglu:

"And yet while Sachs and Diamond offer good insight into certain aspects of poverty, they share something in common with Montesquieu and others who followed: They ignore incentives. People need incentives to invest and prosper; they need to know that if they work hard, they can make money and actually keep that money. And the key to ensuring those incentives is sound institutions - the rule of law and security and a governing system that offers opportunities to achieve and innovate. That's what determines the haves from the have-nots - not geography or weather or technology or disease or ethnicity."

"Put simply: Fix incentives and you will fix poverty. And if you wish to fix institutions, you have to fix governments."

PIB de México

De acuerdo con INEGI

"En su comparación anual, el PIB disminuyó 6.2% en el lapso julio-septiembre de este año con relación a igual trimestre de 2008; producto de las caídas en las tres grandes actividades que lo conforman."

Por componentes, las Actividades Terciarias descendieron 6.5% y las Secundarias lo hicieron en 6.6%; en tanto que las Actividades Primarias mostraron una variación de -1.1% en el tercer trimestre de 2009 con relación al mismo trimestre del año previo.

"La economía del país registró una variación anual de -8.1% en los primeros nueve meses de este año. Por grandes grupos de actividades, el PIB de las Actividades Secundarias mostró una reducción de -9.3%, el de las Terciarias -8% y el de las Primarias aumentó 0.9%, en el lapso en cuestión."

Cifras desestacionalizadas muestran que PIB del tercer trimestre de 2009 presenta un nivel similar al registrado en el primer trimestre de 2005, y la peor contracción observada en el penúltimo trimestre del año en las últimas dos décadas. Considerando tasas interanuales si la economía mexicana experimenta una contracción de 3.5% en el último trimestre del año, al cierre de 2009 la actividad económica presentará una caída de 7% (la peor de América Latina)

NO al "Rentismo"

Según Denise Dresser:

"El problema de México es no la falta de acuerdos, sino la prolongación de un pacto inequitativo que lleva a la concentración de la riqueza en pocas manos; un pacto ineficiente porque inhibe el crecimiento económico acelerado; un pacto autosustentable porque sus beneficiarios no lo quieren alterar; un pacto corporativo que Felipe Calderón -a veces- critica, pero cuyo gobierno no logra reescribir apelando a los ciudadanos. Y así como durante siglos hubo un consenso en torno a que la tierra era plana, en el país prevalece un consenso para no cambiar."

Thik the worst is over? Wrong - US Unemployment

Accordingly with Nouriel Roubini:

"[The jobs just are not coming back] There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation."

"[...] it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more."

NO-VE-ÉL

Bernanke's Outlook for the Economy

"On the Outlook for the Economy and Policy" by Ben Bernanke

"How the economy will evolve in 2010 and beyond is less certain. On the one hand, those who see further weakness or even a relapse into recession next year point out that some of the sources of the recent pickup--including a reduced pace of inventory liquidation and limited-time policies such as the 'cash for clunker' program--are likely to provide only temporary support to the economy. On the other hand, those who are more optimistic point to indications of more fundamental improvements, including strengthening consumer spending outside of autos, a nascent recovery in home construction, continued stabilization in financial conditions, and stronger growth abroad."

"My own view is that the recent pickup reflects more than purely temporary factors and that continued growth next year is likely. However, some important headwinds--in particular, constrained bank lending and a weak job market--likely will prevent the expansion from being as robust as we would hope."

A New World Architecture

Accordingly with George Soros:

"Twenty years after the fall of the Berlin Wall and the collapse of communism, the world is facing another stark choice between two fundamentally different forms of organization: international capitalism and state capitalism. The former, represented by the United States, has broken down, and the latter, represented by China, is on the rise. Following the path of least resistance will lead to the gradual disintegration of the international financial system. A new multilateral system based on sounder principles must be invented."

Medidas ante la Inseguridad

Consulta Mitofsky publicó hace algunos días la encuesta "Medidas ante la inseguridad / Opiniones Ciudadanas"; algunos resultados son:

"Cuando se revisan los 8 conceptos evaluados, vemos que el incremento de castigos y los retenes son las medidas más aceptadas [Feb07 94.8% y 86.8% contra Jul09 96.6% y 90.4% respectivamente]. Aparece con alta aprobación la 'pena de muerte a delitos graves [76.6%] y alcanza mayoría de desaprobación 'hacerse justicia por propia mano' [Feb07 71.6% contra Jul09 51.4%], medida a todas luces inadecuada y generadora de mayores problemas ya que significaría la renuncia ciudadana a vivir en un estado de derecho regido por las leyes."

Un análisis sobre los resultados se puede encontrar en José Antonio Crespo.
Fuente: Consulta Mitofsky & Excélsior

Por una estrategia de largo plazo

De acuerdo con Jorge Chabat

"Si los 'grupos rudos' de Mauricio Fernández prosperaran, ¿a quién habría que llamar luego para combatirlos? ¿A otros grupos de limpieza todavía más rudos?"

"Ciertamente, es más fácil plantear salidas espectaculares que tener una estrategia de largo plazo que resuelva el problema. Lo primero da votos —aunque al final también da más víctimas. Lo segundo tiene costos políticos. Mauricio Fernández está actuando simplemente como un político oportunista: plantea 'soluciones' que le van a dar apoyo popular inmediato, como la introducción de los sapos en Australia. El problema será cuando los sapos se conviertan en plaga. Pero tal vez para entonces él ya no será alcalde de San Pedro Garza García. Esa ya no será su bronca. Será de los habitantes de ese municipio, algunos de quienes hoy aplauden entusiastas la llegada de los sapos cañeros…"
Fuente: El Universal

WSJ survey

Findings of the last (Nov09) WSJ survey:

"On average [analysts] expect the Federal Reserve to raise interest rates around September 2010, a politically sensitive time considering midterm elections will be right around the corner and unemployment is forecast to still be over 9.5%."

"Emerging markets and commodities are the most likely places for another bubble to develop, according to economists, but they only put slightly better than 1-in-3 odds of such an unsustainable run-up in asset prices occurring in the next two years."

"More than half of the respondents see a U-shaped recovery with some slowness followed by solid growth, and 31% forecast a stronger, V-shaped recovery. Just 11% of economists expect an L-shaped rebound where economic activity stabilizes at a low level, and only 7% see a double-dip recession—another drop in gross domestic product after a short rebound—as the most likely scenario."

Charts & Data

Source: WSJ

Cobrar Conciencia

De acuerdo con Mauricio Merino:

"[L]a confianza se hace trizas y los mexicanos vemos cómo se van rindiendo, poco a poco, las instituciones destinadas a proteger nuestros derechos sustantivos. Es un error gravísimo y lo menos que puede pedirse es cobrar conciencia de estos hechos, antes que mandar al diablo las instituciones."
Fuente: El Universal

Doom & LAM (Capital Controls & Outlook)

Un par de artículos sobre LAM por Dr. Doom

Capital Controls

"The danger, of course, is that even when controls are removed, capital inflows will not return. However, as economist Willem Buiter noted in February: 'The example of Malaysia, which imposed capital controls during the Asian crisis of 1997 suggests that foreign capital either has a short memory or can be convinced'."

Latin America Outlook

"Though global liquidity will remain elevated in the upcoming quarters, favoring Latin American asset classes, market anxiety about the timing of exit strategies around the world represents a significant risk. Miscalculations in exit strategies and disappointing economic results pose the main risks to Latin American market dynamics in 2010."
Source: Forbes.com

Are potential "asset-price bubbles" always dangerous?

En un artículo publicado en Financial Times Frederic Mishkin identifica dos tipos de asset-bubbles: "pure irrational exuberance bubble" (Mild) y "a credit boom bubble" (Severe). Las burbujas del segundo tipo (feedback loop) presentan las siguientes características:

"[…] exuberant expectations about economic prospects or structural changes in financial markets lead to a credit boom. The resulting increased demand for some assets raises their price and, in turn, encourages further lending against these assets, increasing demand, and hence their prices, even more, creating a positive feedback loop. This feedback loop involves increasing leverage, further easing of credit standards, then even higher leverage, and the cycle continues. [...] Eventually, the bubble bursts and asset prices collapse, leading to a reversal of the feedback loop."

A diferencia de la perspectiva de Dr. Doom, Mishkin señala que:

"But if bubbles are a possibility now, does it look like they are of the dangerous, credit boom variety? At least in the US and Europe, the answer is clearly no. Our problem is not a credit boom, but that the deleveraging process has not fully ended. Credit markets are still tight and are presenting a serious drag on the economy."
Source: FT.com

De la tortillería al Diseño de Software

Denise Dresser plantea retos y describe el deplorable estado de la educación en México. Considero que "La Revolución Educativa" es la gran reforma que México necesita. Citó:

"[…] Urge derribar la pared mediante un cambio de actitud, un cambio en los maestros y un cambio en las reglas. Urge un conocimiento básico de la deplorable situación de la educación actual para reformarla, porque de momento tenemos lo que nos ofrece y con eso nos conformamos. Urge mejorar a los maestros, porque ningún cambio puede hacerse sin o contra ellos, pero tampoco ningún cambio significativo puede dejar sin modificar profundamente la estructura institucional vigente, creada para un modelo autoritario y vertical, corporativo y opaco. Urge cambiar las reglas para que la educación no sea vista como un instrumento de ingeniería social del régimen o de reclutamiento electoral del gobierno, sino un trampolín para la prosperidad de los mexicanos."

Fuente: El Mañana

"Es que soy bajo de pecho"

A propósito de las declaraciones de la semana pasada. Comparto un interesante artículo sobre "el fin" de la recesión en México.

De acuerdo con Arturo Herrera:

"¿[C]ómo se determina cuándo finaliza una recesión? Ésta es una pregunta que ha acompañado a la macroeconomía casi desde su inicio, las metodologías usualmente aceptadas son las desarrolladas por el National Bureau of Economic Research (NBER) en Estados Unidos. El criterio que por mucho tiempo utilizó esta organización (y que por cierto se sigue manteniendo en muchos países) es que un periodo de expansión termina cuando hay dos caídas consecutivas en términos reales en la serie desestacionalizada (es decir la que ajusta asuntos estacionales como navidad, vacaciones de semana santa, etc.) del Producto Interno Bruto (PIB) trimestral. Dos trimestres, no uno. De manera simétrica, una recesión terminaría cuando el PIB crece durante dos trimestres consecutivos."

"Esto del sobreoptimismo y la aversión a la pérdida me hacen recordar a Obelix, el robusto personaje del cómic francés Asterix y Obelix. Cuando sus amigos en son de broma le recuerdan que está gordito, Obelix responde indignado que eso es falso, lo que pasa dice, 'es que soy bajo de pecho'."

Fuente: El País

"Green Shoots" vs. 10.2%

Source: The Economist

TWENTY YEARS AGO

En esta nota citó algunos artículos en los que se realiza una evaluación de la esperanza y progreso, la ambigüedad del What if, y el cambio en la geopolítica (el nacimiento de la Asia Moderna) tras la caída del muro de Berlín.

Ian Buruma invita a la promoción de la justicia, la equidad y la libertad en el mundo:

"Still, 1989 was a good time to be alive (except in China, where the democrats were put down). Many of us felt that we were seeing the dawn of a new liberal age, in which freedom and justice would spread, like fresh flowers, across the globe. Twenty years on, we know this was not to be."

"[…] what is needed to revive liberal idealism is a set of new ideas on how to promote justice, equality and freedom in the world. Reagan, Thatcher, and Gorbachev, assisted in the end of an ideology, which once offered hope, and inspired real progress, but resulted in slavery and mass murder. We are still waiting for a new vision, which will lead to progress, but this time, we hope, without tyranny."

Por otra parte, Meyer nos plantea un escenario What if Evolución vs. Revolución

"[What if] Strictly speaking, the Wall would not have fallen. It would have been opened, not breached. The Communists, not the people, would have done it. Change might have come by evolution, not revolution. Might Krenz (Communist boss of the German Democratic Republic) and the Communist reformers who had seized power just weeks earlier have been able to channel popular unrest, or even defuse it? Instead of a unified Germany today, could there still be two Germanys, East and West?"

Finalmente, Chellaney señala la reconfiguración geopolítica global a partir de la caída del muro y enfatiza el nuevo rol económico de Asia.

"For Asia, the most important consequence of the fall of the Berlin Wall was that the collapse of communism produced a shift from the primacy of military power to economic power in shaping the international order. To be sure, rapid economic growth also occurred during the Industrial Revolution and in the post-WWII period. But in the post-Cold War period, economic growth by itself has contributed to altering global power relations."

RBS & Lloyds get 31.3 billion pounds in second Bank Bailout

"Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc will receive 31.3 billion pounds ($51 billion) in a second bailout from the U.K. taxpayer as the two banks agreed to cap bonuses."

"Today’s bailout for RBS and Lloyds follows the 37 billion pounds the two lenders received last year and will bring the government’s stake in RBS to more than 84 percent from 70 percent. Barclays Plc, the U.K.’s second-biggest bank, and HSBC Holdings Plc, Europe’s largest, haven’t taken state aid."

See Bloomberg for the full article

Risky asset prices have risen too much, too soon

De acuerdo con Nouriel Roubini:

"Since March there has been a massive rally in all sorts of risky assets – equities, oil, energy and commodity prices – a narrowing of high-yield and high-grade credit spreads, and an even bigger rally in emerging market asset classes (their stocks, bonds and currencies). At the same time, the dollar has weakened sharply, while government bond yields have gently increased but stayed low and stable."

"Easy money, quantitative easing, credit easing and massive inflows of capital into the US via an accumulation of forex reserves by foreign central banks makes US fiscal deficits easier to fund and feeds the US equity and credit bubble."

Agrega:

"But one day this bubble will burst, leading to the biggest co-ordinated asset bust ever: if factors lead the dollar to reverse and suddenly appreciate – as was seen in previous reversals, such as the yen-funded carry trade – the leveraged carry trade will have to be suddenly closed as investors cover their dollar shorts. A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggers a co-ordinated collapse of all those risky assets – equities, commodities, emerging market asset classes and credit instruments."

Source: FT.com