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A minha foto
Lisboa, Portugal
Nasci no dia 11 de Junho de 1964 na cidade da Beira, MOÇAMBIQUE.

A Estação dos CFM, Beira

A Estação dos CFM, Beira
Ex-libris da cidade, 1966

The Euro, as a single currency, should be abolished

Another black and white motion statement leaving me no option but to choose No.
While I agree to the first part I am not prepared to contemplate the idea that the Euro should get abolished.
Abolished? Then what?
All 17 countries now sharing the single currency would revert back to their old monies?
Or a new version of yesteryear's currencies?

Simplistic as I made it out to be packed in a few odd questions, every single serious economic, financial and social consequence is inextricably wrapped up within each.
That is where the stakes are high enough to ensure that the Euro is given a new lease on life.
It calls for closer European integration.
What form and shape this will take is for policymakers and far-sighted politicians to grasp and propose.

It would seem to me that the Euro has many underlying strengths but will not - contrary to the founder's beliefs - assure convergence between all the economies it services. How could it?
The divide has been felt acutely lately (1-2 years) the logical consequence of relevant economic under-performance among member-countries.

There has obviously got to be a political solution rooted in realistic economic fundamentals.
The road traveled so far proved artificially smooth during the first 10 years I dare say but unsurprisingly very bumpy in the last 1-2.
It could not have been otherwise given the structural differences setting these countries apart. And excessive spending pursued mostly by a few Southern European States who could not see beyond the present.
Adherence to the Maastricht criteria never again seemed to be taken seriously once countries landed themselves inside the Euro club. Not to mention Greece that never fulfilled the criteria in the first place or ever bothered to balance its books.

Very disappointing to admit but the Euro Zone is indeed right in the middle of a storm testing its main crews to the limit.
The latest summit decisions seem to indicate that where there is a will there is a way.
It may have just been one first small step in the right direction.

The specifics are very hard to work on.
Yet it would seem to me that the 17-member Euro Zone and the larger EU can hardly afford shooting down the Euro.
The broader picture needs to come into full view.
An hypothetical demise of the single currency would deal another severe blow to Europe's economic fortunes.
Its relative decline vis-a-vis the rest of the world would get a further boost.

I do not like misplaced calls for solidarity from Southerners but would rather see the stronger half of the dividing line realize where their medium-to-long interest lies.
To that end many balances across the Euro Zone need to be restored at the earliest.

Europe agrees a "shock and awe" bailout for Greece

A rescue package of epic proportions, epic challenges for the Greek government and people, epic uncertainties and epic stakes for the single-currency.

It was the Euro's defence that ultimately forced politicians from Germany to Malta to perform a hard balancing act whose overall success is far from assured.Each finance minister has enough reasons to fret and grumble about.It being the Euro as a common currency, because of Greece despite Greece.
Up to now every 'least damaging' approach failed miserably to cool down the financial markets that remained as unimpressed as ever throughout.
For its part Greece is effectively the main winner in this high-finance gamble.The country bought time the markets were not willing to give it once confidence vanished.Precious time desperately needed to restore credibility and good governance at home.
A daunting internal fix with daunting external implications.
Three full years is what the government and Greek society top-down and bottom-up now have to set the record straight in so many ways.
Literally and figuratively.

For the other 15 Eurozone countries - each facing own troubles to varying degrees - keeping fingers crossed would be mild to describe the monitoring of Greece's performance over the coming 36 months.Potentially they are all losers, starting out by losing simply to avoid bigger losses!
There are so many relevant questions that might be asked to which full answers ought to be provided.
They won't get asked or get answered.
Tellingly, each and every single one of them would now seem rhetorical or at best an exercise for academia.

The spectre that haunts Europe

I am still hopeful that Greece will not require a bail-out in whatever form pinning my hopes on the PM's own words.

He did sound very bold and brave in the face of such overwhelming odds but until a deal is actually in place I would rather believe the Greeks can and will take care of themselves.

My stance is wholly based not on immediate needs triggered by the Western financial meltdown that led to the economic downturn.This in turn led to a collapse in tax revenues across countries caused by economies shrinking badly.

To a large extent Greece is indeed a one-off case-study for the worst reasons, its latest fiscal deficit the sum total of profligate spending, widespread cultural-rooted tax evasion, underbudgeting, creative accounting, weak notion of public service and duty, etc - all conspiring over decades to bring the country to the brink of bankruptcy.

I am sure many Greeks will have seen it coming and warned their governments in years past.To no avail as even the present government was elected as recently as late 2009 on a platform to increase spending.

According to EMU rules public finances were clearly to remain national responsibilities.A considerable chunk of sovereignty for States to manage through their democratically-elected governments of the day.
Would the Greeks have liked their Finance Ministry to be ruled or dictated to from Brussels or Frankfurt just so the Maastricht-agreed criteria could not have been so despondently ignored?

Current turmoil is the Euro's hardest test ever but one that will also represent a defining moment in the single-currency's future.

It is a fact that Southern European countries are faced with similar issues though not on the same scale and urgency.Others in Northern Europe, the US and Japan also recorded their biggest fiscal deficits and added up noticeably to their debts in 2009.
Each one has its own track-record, however.
This is exactly what sets Greece apart from the rest.
Each country is unique in its own way, there being obviously overlapping between them.

International rating agencies must make the effort to closely monitor and register those differences and then advise financial markets.

After all it is sovereign countries and sovereign debt one is dealing with.

There is much more at stake than strictly soulless bundling of nations.

Arquivo do blogue

domingo, 28 de fevereiro de 2010

TEc asks "Hero, villain or a victim of the global age?" - This is my answer

If one could briefly disengage Gordon Brown from Labour the question should get popped whether or not New Labour deserves to stay on in power.
For all his personal failings GB represents fairly well the renewed party that convincingly staged a comeback on a fresh ticket for Britain.
In the intervening 13 years - a long enough period for a government to leave a lasting imprint - has the UK, on balance, moved ahead?
The question may not seem easy to answer given the ups and downs of goverment on both domestic and foreign issues.
While there are a considerable number of positives, Labour's track-record is controversial on important matters at the very least.

Talking up the benefits of the global age doesn't automatically dispel the many losses and fears that have accompanied it.
If anything, again on balance, the UK is likely to have thus far incurred greater loss than gain to current globalisation.
Worst still is noting that the American-led financial meltdown caught out the UK at its weakest contrary to pre-recession common belief.
This goes some way explaining the UK being the last major developed economy to emerge from recession, a full-fledged 6-consecutive-quarter dip that resulted in a staggering 6.2% GDP contraction for 2009.
When a big mature economy shrinks that much and is left breathless with a massive budget deficit, a soaring public debt and a sizeable trade deficit and there is no clear indication as to a future path to growth questions loom largest than ever.

Gordon Brown may talk impressively about the global age - which is here to stay no doubt.He may even feel comfortable discussing global issues with his peers, to which there must be global answers.
Yes indeed some of them will only find resolution through collective across-the-world answers.
The problem is most of his peers appear to be doing the same in their countries which often leaves big voids in societies basically demanding local solutions to their local problems.

To my mind Gordon Brown is neither a hero nor a villain nor a victim of the global age.Not yet anyway.
He, like many of us, is only just beginning to mull over how to find a way forward in countries now looking spent to a worrisome degree.Following a decade of 'silly' make-believe worthless paper expansion.

Last year's GDP drop should be regarded as a painful adjustment to which more will follow simply to rein in public finances.

sábado, 27 de fevereiro de 2010

TEc "The beef in Buenos Aires" - The UK-Argentina dispute over the Falklands/Malvinas

I'm afraid this will be only another twist in the long-running dispute between the UK and Argentina on sovereignty over the Isles Malouines, Islas Malvinas, Falkland Islands.
The latest round of diplomatic disagreement is condemned to blow over after a spate of high-charged rhetoric not adding to or detracting from the core issue.
The islands changed names are themselves testimony to the rivalries of European nations in the heydays of overseas expansion, empire-building or claims to newly-found territories, inhabited or not.
The underlying historical fact witnessed across the world is that Portugal and Spain preceded France, the Netherlands and the UK by 100-200 years.
The French, Dutch and British initiated themselves to become sea-faring nations as pirates coveting 'possessions' of the former two.This led to increased clashes, wars, temporary or permanent occupation of territory previously held by Portugal and Spain.

As the Spanish empire declined with most of its Central and South American colonies attaining independence through the 19th century, Great Britain achieved the peak of its power.
Loss of the 13 American colonies in 1776 did not undermine confidence that Britannia with its vast flotilla of ships effectively ruled the waves.

That was the setting for the British takeover of Islas Malvinas in 1833, a time when Argentina had already emerged as an independent country inheriting previously Spanish ruled mainland provinces as well as the thinly inhabited or uninhabited islands of the South Atlantic.
The Argentinean Constitution maintains Islas Malvinas to be part of the country.

As The Economist rightly puts it there are any number of anomalies in the world's political/administrative order today.These were mostly produced by a past history of conquest, conflict or acquisition.

Quick solidarity displayed by the Latin American bloc also underscores the Continent's common European origins proudly shaken off when not rejected at independence.
This is why too the Falklands are sometimes referred as a colonial question when at best it relates to a legacy from Britain's empire that outlasted Spain's.

In this particular case can geography or a relatively lightly-seated historical claim be a binding argument in the dispute?

Also, the minimal size of the human settlement makes it unfeasible for the Falklanders to go it alone ever.
They will always show a number of dependences, defence not least.
The islands destiny seems tied to the UK for the foreseeable future.

If oil is struck the UK will have yet another powerful argument not to relinquish its grip over this "far-flung relic" of the once mighty British Empire.
The recent brief war that claimed nearly 905 lives on both sides is a reminder that to Argentina this remains an open question.
Despite dropping the use of military force the Argentinean Constitution and nation have not dropped the issue.

1982 was indeed a closer-run conflict strictly militarily speaking.
The Royal Navy cannot forget the sinking of HMS Sheffield or HMS Coventry and other battle ships sunk or damaged.
Particularly hard - it could have signalled a turning point and a different outcome to the war - was the loss of the container-ship Atlantic Conveyor laden with much-needed military hardware.
Those Exocet-carrying Super Etendard, Dagger and Skyhawk pilots of Argentina's Air Force delivered very painful punches to the British task-force.
American spy-satellites and the French embargo on those feared missiles proved vital help.

quinta-feira, 25 de fevereiro de 2010

Financial innovation boosts economic growth.Does it?

However much I would have liked to vote yes I am compelled to vote no.

I deliberatly skipped the views for and against and the moderator's opening remarks so as not to frame my own just yet.
The reason is crystal-clear to anyone who may value private rewards which lead to wider public gain as the only real worthwhile driver for financial innovation.
I fail to see how else a financial system can be looked at if not one that supports and spurs economic activity in a sustained way.
It is not possible or indeed desirable to overlook the massive abuse of financial tools committed recently all produced under the banner of innovation.Such innovation became inward-looking seeking to obtain first and foremost ever increased gain to the wizards who designed them.This is why the system bubbled over to burst suddenly bringing crashing down major financial houses and dragging many more to the brink.
The ensuing damage to the economy need not be told.
The final tag for losses incurred by the economy will never be known but the way governments everywhere stepped forward to shore up the system is telling enough.

The financial sector needs to redefine itself and come up with innovative products in the future that do not overshoot their primary goals.If we look back over a long timeline we'd generally agree that financial innovation has played a crucial role expanding the economy.
Perhaps it will do the same going forward but only if the right kind of innovation is pursued for the right reasons.

What makes Germans so very cross about Greece? - demands TEc, I set down one possible answer

With these notes Charlemagne is sharply clear on one aspect of what is messy in Greece.
It goes some way explaining why it has become the focus of attention for all the wrong reasons.

Disturbingly, it displays the potential knock-on effect on other EU-member countries.
It is about much more than the pensions system that is in dire need of major overhaul following years of overblown actions.
It boils down to that when you find out a country is living way above its means, making up for the shorfall from external borrowing.
The current Greek government has no choice but to come to grips with the real issues.Even if it should seem politically suicidal Greek society must be made to adjust to the country's resources.

Furthermore, their international reputation is in the gutter.
If this should seem important to the leadership then I believe those adjustments will go ahead.

TEc Kabuki economics - On Japan 2010

Most news out of Japan say perhaps in the last 15-20 years sound like the country is mired in some sort of trouble.
This, however, may be a little unfair on a society that attained a fully mature developed economy and generally high levels of performance all-round.
True many of Japan's current woes are rooted in underlying trends across the developed world to which a number of specific factors may be added.

Despite its geographic location - the farthest of the Far East - Japan has up until recently been mostly tied to and regarded as a Western bloc developed country.
However, its growing economic ties with China, ASEAN countries, Australia, and India particularly strong trade flows with the first two probably represent an increasingly Asian-bound Japan.
As long as Western markets remain flat or sluggish most opportunities for the country's renowned exporting powerhouse will arise in the Asia-Pacific region.
That astonishing surge in exports to China is quite telling indeed.
A fallback adjustment will only reflect a more stable at high levels two-way trade between the world's 2nd. and 3rd. biggest economies whose spots now look interchangeable.

Japan's strengths may yet disprove those who dwell excessively on the 'lost decades' - while we may agree on the first,the second is open to question.
Before the financial meltdown the country had been picking up speed.
There is less room for expansion when an economy reaches maturity - a stable home market no longer able to generate first-time new demand from public and private sources.

In my view Japan will continue to seek and gain advantage from the buoyant regional markets closest to its borders.
These will provide a major contribution to enhancing growth, much harder to achieve in highly developed mature economies.

TEc Brown's way forward - a personal view

Gordon Brown's task is to win back the trust of the British people who have grown increasingly apathetic towards Labour.
Some of it is down to normal wear caused by 13 years uninterrupted rule, most of it because of the anxieties brought on by globalisation highlighted throughout the latest 'freak' recession.
1997 saw Labour return to power amid hopes that a New path for the party would also determine a New path for Britain in the wake of prolonged Tory rule.
Now it appears a majority are either disaffected or tired which is why the Conservatives are likely to be reinstated.

Circumstances have changed considerably though to the extent that there are probably not very wide differences to policy choices between the two parties.
Despite all the rhetoric on global problems, so dear to so many these days, the fact remains politicians and eminent members of society may think global but will continue to act local.
At the very least they can never lose sight of the local 'scheme of things'.
Bridging the two often clashing realities in today's world is the biggest challenge for the years ahead.

Gordon Brown may put up a brave fight, perhaps his last.
If this should confirm his political demise it is to a degree a certain type of laissez-faire capitalism Brown so vividly encapsulated - as Chancellor of the Exchequer to Blair - that begs questions too.

Ironically, given the state of Britain's finances and economy it may be the Tory's responsibility to bring it all under sharp focus and review.

Pegged to The Economist's 'Oil and troubled waters'

What is the UN's stand on these islands?
Perhaps it matters not depending who you side with in a conflict that appears intractably bogged down in hopeless diplomatic stalemate.

While the British stance looks visibly enhanced by the 1982 military showdown, a residual yet permanent settlement on the islands and a successful economy that has strengthened itself, Argentina's is based on historical claims and downright nationalism.
What then is held in store now that oil has become a trigger for UK bashing again?

If oil is found and the Falklands strike it rich and plentiful a new chapter in UK-Argentina relationship is sure to follow.
It remains to be seen what form that relationship will shape into.
Could Argentina be bought out into finally recognising UK sovereignty by, say, sharing oil revenues or would that add insult to an already injured national pride?

No dispute can be so intractable as to make otherwise friendly nations - sharing a common Western root - go to war.
1982 was odd enough but there was then a military dictatorship on one side and a mature democracy led by an Iron Lady on the other.
The Generals wished for domestic distraction by stirring up nationalist feeling, Mrs. Thatcher was aiming to put Great back to Britain.

2010 presents a substantially different scenario.
Yet the two countries look set to continue to agree to disagree...
Oil could turn out a curse or a blessing to the dispute.

sábado, 20 de fevereiro de 2010

The Economist asks 'What are they afraid of?' I do not seek to answer but offer a short comment

On reading 'watchingchina' and strongly recommending to anyone seeking broader insight from someone who has experienced daily life in Shanghai I will attempt a brief comment of my own.
A country as wide and populous as China should be approached responsibly to evidence multiple variables not least the social, economic and cultural background.
It simply cannot be easy to rule a country that big on all counts coming from a recent past of utter poverty and despair for the vast majority.

Yet Chinese leadership has succeeded pulling the country together and forwards to a present and future that never looked as promising to hundreds of million.
While it may be simple for some of us in the West to make general pronouncements on formal freedoms and Democracy as we know it, the Chinese have had a different set of social/historical circumstances explaining their set-up besides every other distinguishing factor.

I can imagine undercurrents of many sorts pulling in diverging directions which would inevitably undermine the country's collective goals were it not for the existence of a strong uniting force.
The West should stand up for that which it believes in hoping to see change taking place on the regime's more obscure ways.

It cannot and must not, though, expect Chinese authorities to be pushed around and give in to what the West believes is best for the world, China included.

On reading 'A Grimm tale of euro-integration' from The Economist

The boosters, the bashers and the follow-the-early-facts analysts such as The Economist will reach different verdicts on the Euro's predicament.
I still firmly believe, despite current scepticism rooted in the very original edifice of the single-currency, that it is a formidable mostly successful pan-European endeavour.The people who worked tirelessly on it over many years will have been aware and will have weighed the strengths and weaknesses of the project as it was getting hammered out.There is no denying that at the time of its coming together it was politically driven by the higher goal of an ever closer European integration.
A single-currency being one step further in that direction.

Indeed a bold visionary move whereby participating countries gave up their national currency - surrendering one sovereignty tool - in exchange for a common currency that would be strong and stable backed by a newly founded institution - the European Central Bank - to manage monetary policy.
National governments would have to fulfil the very reasonable set of criteria agreed on at Maastricht.
Importantly those very reasonable set of numbers would remain compulsory targets for the years ahead.
Each country would therefore still exercise substantial sovereignty and have full control over its budget, economy and finances.
A fiscal union was not an issue because it was thought such a stage was too far-fetched - then as it still is today - without greater political union.
I can't imagine how it could be implemented within the current workings of national governments.

This is a trying time for the Euro, a terrible aftershock of the American led financial meltdown that knocked off Europe's economies especially hard causing fiscal deficits to skyrocket.
Yet, I do believe Greece was on course to produce damage to the single-currency anytime irrespective of the international slump.

Despite all the talking going around I wish and remain hopeful that Greece will sort itself out unaided.
If worst came to worst, however, then more than a serious re-think of the fundamentals of the Euro and the pillars on which it stands - as presuppositions - becomes inevitable.

What I think about 'Let the Greeks ruin themselves' by The Economist

Just about everything has been said on Greece and the drag it has become on the Euro.
Many saw it looming large from day one as pointed out in the article.I must add I never quite understood the Greek 'miracle' then performed in the eleventh-hour dash for the Euro.

While Portugal and Spain made a serious sustained effort to fulfil the Maastricht-criteria - which both did - including the two-year ERM stint to get into the core 11-member founding group, I thought Greece had somehow jumped lightly on board .
I also remember the concerns expressed then by qualified Germans as to the economic and financial track-record of Southern Europe.
It is definitely unacceptable to deal with Mediterranean countries as if they were a single entity despite similarities largely dismissed when this particular issue is closely assessed.

There are objectively wide differences between them none more so than with Greece whose EU-membership credentials are hazy at the very least.
Since joining in 1981 the country has benefited the most on per capita net revenue from EU assistance under multiple funding programmes.Yet governments there whether led by Pasok (mostly)or by New Democracy engaged in and actively sponsored what can only be termed as short-term view irresponsible populist government.As long as they could get external finance and could sell their dodgy billing to EU partners.Or quietly go unnoticed.

Other than defending the Euro for the Euro's sake I do not see any good in coming to Greece's rescue.It would be tantamount to rewarding recurrent misbehaviour at the highest levels.
Worse still it would likely put off once again significant internal adjustments in Greek society.

quarta-feira, 17 de fevereiro de 2010

'Old dogs and new tricks' from The Economist, below a personal short comment on political backlash in the aftermath of financial meltdown and ensuing recession

Excellent analysis of the might-have-been consequences to the political right of capitalism's latest crisis.
The answer lies in local conditions - both present-day and historical - in each of the countries mentioned as well as wide acceptance that despite failings the free-market economy provides the best hope of creating wealth that might then be channelled to the greatest number.

The difference not being clearly made I would underline that most people even when unable to distinguish, rightly perceived 'this crisis' to have originated in a financial sector that became flawed. A sector controlled by 'mavericks' who took to an entirely liberal if not irresponsible interpretation of the workings of the system aided by complacency from governments irrespective of their political backgrounds.
How else can one begin to understand creative financial tools known as derivatives and the likes of such?
Apparently not even the inventors of those innovative financial products were ever able to credibly define their creation!

Electorates everywhere basically expect lean efficient government that delivers within a system of checks and balances which curbs the excesses of a great economic system.
It can never be allowed to run so free that it turns wild to the disadvantage of many and benefit to the few.

In the present context old political divides along clear-cut lines of left and right no longer make practical sense.This is the main reason why there was no backlash against the right.

Hopefully the right will redefine itself by taming the more liberal impulses from within.
When exercising power it should draw full lessons from the limitations of capitalism as seen throughout the financial meltdown.
Perhaps unexpectedly this broadly applies to the political moderate left as well.

WTO and trade disputes, trailing The Economist's: When partners attack

Perhaps the world is mired by trade disputes because it still remains stuck with out-of-date concepts such as protectionism and dumping.
All efforts must go into building a new framework through which trade is made to become mutually beneficial sectorwise, countrywise and multiwise.Not easy to achieve - an overambitious search for perfect trading relationships that would prove a win-win to all.
Yet I fail to see how else we can advance economies everywhere which amounts to saying fostering economic advance everywhere simultaneously.

The article makes it look like it's a jungle out there wherein the WTO is as close as countries (or the international community) will ever get to restore some law and order.
There are however more than a few glimmers of hope that the WTO does deliver.I would like to underscore the mention made to 70% of disputes finding settlement.
Since the days of GATT the exchange of goods between countries has never been a straightforward, linear business conducive to mutual advantage.

Nevertheless the WTO remains the best effort made to date to achieve generally agreed goals.
China's recent membership was timely, representing a big additional challenge to the organisation too.
The country's accession was feared by many but a sound evaluation of the period that has elapsed would likely reach the conclusion that more has been gained than lost.
Trade flows have surged and may now be better regulated than before.Or potentially they may be so.

As China displaces Germany to become the world's biggest exporter the focus must shift to fair trade.
There being no perfect solutions in an imperfect world the WTO is the best hope that free trade can flow beset by disputes yes - on and off - that at least have a forum where they may be "...settled by negotiation, presumably to the satisfaction of both parties".

terça-feira, 16 de fevereiro de 2010

US diplomacy towards China seen by The Economist and my view

Realpolitik is setting in as might be expected in bilateral relations between States now so closely locked in.
China's line has been pretty predictable and standard over the years when it comes to affairs or personalities it deems a threat to the internal order.

America's may be changing by the combined effect of a changed leadership no doubt as well as the realisation of the Asian partner's growing relevance.
America-China interaction will define international relations to a considerable degree for the foreseeable future.
For the West as a whole it is important that America adopts a measured yet independent stand on main issues afflicting the world.

As a beacon of freedom and democracy and looked up to as such by millions, it should never back away from sensitive matters like human rights wherever.
My expectation is one of China evolving as we go along and the country gets richer, to become a freer society whose authorities respect all manner of human rights - basic, formal and informal.

Time will tell which way Chinese leadership chooses to go but America cannot give up ever on what it firmly believes in and stands for.
Despite Realpolitik.

On China's increasing prominence in Africa:is it a good thing?

Dear Sir,
I glanced through your opening remarks so too the statements of the two distinguished personalities for and against the motion.
All three have highlighted brilliantly the main issues at stake.

I strengthened my relatively long-held view that on balance, which is the only credible yardstick to use, it should be a good thing for Africa.
There are any number of mutually beneficial dealings where Africa can supply and China can readily buy and vice-versa.
This is exactly what has developed between the two - the African Continent as a single unit lumping together its 53 States and China - since 2000.
It caught the world's attention because it started off from a meagre value base to a sizeable one backed up by a rather conspicuous physical presence to show for it.

To my mind knowing Africa's scarcities set against a backdrop of immense natural resources and matching those to China's requirements and goods and skills on offer all add up to produce a potentially tightly interlocked bilateral relationship.
Well managed over the years it could indeed turn out a generally win-win for the parties concerned.

In any case African nations despite the many failings of their governments are sovereign to decide who they wish to engage with.
They should be eager to promote development faster to the benefit of their peoples.Therefore all countries/businesses that can bring in some added-value should be welcomed with open arms.
Going by the 10-year experiment it would seem to me that increased Africa-China interaction has been mostly successful.
The friction and the highs and lows that have surfaced occasionally are not to be downplayed but should never be overstated either.

segunda-feira, 15 de fevereiro de 2010

On Singapore after reading The Economist's 'Stingy nanny'

I've not been there myself but have read or heard about Singapore since my early years.

The insight I got added up to a largely positive picture of a small yet economically proportionately outsized city-State.

The very fact so much is heard of and spoken about on Singapore reveals a success story on most counts from the flagship airline to the cleanliness of the city's streets.
No small achievement over decades of strict rules and hard work as laid out by an autocratic leadership no doubt.
On balance, strong purposeful government has served Singapore and its citizens right.
It has been a home-grown model to suit a mixed population of around 5m living on less than 700 square km.

Also, there are local components to the territory's history that played an important part as to how it evolved.

I would not like to compare the beginnings, growth and implementation of Europe's, or the US's, or Canada's welfare systems to that of Singapore.
Social, economic, philosophical and political backgrounds are quite different at root which would render any conclusions underwhelming.
Nor would I be drawn into general discussions on institutionalised laziness and waste without going through relevant data first.

However, I am in no doubt that many countries in the West, including my own, should indeed look into some of the remarkable 'top-marks' Singapore has obtained by dint of its 'harsh' ways.
Not necessarily to emulate but to improve existing systems here aiming to achieve greater efficiency by developing the concept of purpose.
The welfare State as we've known it in advanced democracies was a major development in societies that embraced it measuredly.
The very concept is now increasingly questioned not for in-built flaws that likely developed.Rather it is the ageing populations and the wild economic globalisation pitching against each other countries with entirely diverging cost-structures that is a threat.
This has spawned very hard questions as to how to keep such systems self-sustaining in the future.

It would be oversimplistic to condemn Europe's cherished welfare State while overstating the pluses of Singapore's restrained model.
I strongly believe we can learn from each other.

Attached to The Economist's 'The sick men of Europe'

For once The Economist has got it right with a dead-on title that fittingly describes the current Euroarea predicament.
Other EU countries not sharing the single currency face similar devastating economic scenarios - if not worse such as the Baltic Republics - the brave exception being Poland.

That so many countries should become trapped in negative territory for this long poses internal questions in each of them.Although the outcomes are similar to varying degrees it must be stressed that prevailing conditions before and after the onset of the downturn differ widely.
Not to mention size and type of economies - broadly understood - as well as the ability of national governments to deliver on pledges made and targets agreed upon and track-record.

Indeed if anything the latest figures and trends backed up by economic history recorded since the beginning of "this crisis" points to and confirms an exceptional context.
It also highlights the need for Europe to look for new growth engines to sustain it over the coming years.Given the rather loose way the EU seems to work on economic coordination I fail to see any cross-country drive.This therefore puts the main thrust on individual country's ability to kickstart their economy while benefiting from overall improved performance within Europe and worldwide.
The Euroarea can only begin to expect climbing out from the hole it is now in when both France and Germany strengthen their growth from feeble to noticeable.

For the time being I fully agree that the only good news about Greece's sudden(????) vulnerability - despite its rather smallish contribution to total Euroarea GDP - is the weakening of the Euro.
A mighty currency made to adjust to reflect Greece's disappointing, when not irresponsible, role since long.It survived through the boom years because everybody was too busy trading with each other to notice the looming troubles brewing in the Southeastern tip.
Euroarea companies encouraged by the lower Euro should now seize the moment to double their efforts to sell more across the globe.
Economies will behave differently but it may be while before European consumers start spending meaningfully.

domingo, 14 de fevereiro de 2010

Hooked on to The Economist's - Should Greece be left to go bust?

The question is increasingly on everybody's minds but the Greek PM and his government appear cool enough having assured European peers that this is their call to heed.
Indeed it is.

Greece has been playing it easy with accounting for too long.If I can stretch my memory back to 1980 when the country joined the European Community I recall concerns being voiced on how it spent funding from Brussels and kept track of it since.
The answers have been provided by the PM a few days ago when he candidly spoke about the internal malaise.The Greek economy and society have been on a merry-go-round for years with too powerful unions and lobbyists calling the shots.

Now a decent man has come along who realises there is no room for manoeuvre, no stopgap measures available, no way going forward other than facing up to the problems assertively.
I believe a bail-out should be ruled out because individual States through governments of the day need to be accountable and not count on European Union 'largesse' to take on board - most often than not - their own long-established overspending sprees.
This is certainly Greece's case only made worse by the latest financial crunch.

For the moment the Greek PM is putting up a brave face.
Hopefully he will succeed carrying with him the better part of his country.

Anyway, what Otmar Issing says cannot be argued against

The EU as I see it, posted on to The Economist's Rompuying along

The EU is going through a particularly rough patch as measured by any yardstick.

All problems and trends have been made worse by the severe economic slump that forced itself by contagion via the American invented financial crunch.
It is as if the Union's weak links came under the spotlight overnight, European leaders either caught napping or unable to charter a new course.Or both.

The 2000 Lisbon agenda set out overambitious general goals that would have been hard to achieve even under the best of circumstances.If anything, its utter failure should help the EU get real about real issues faced by a bloc that constantly calls for nurturing and strengthening from within.
Who ever thought European integration would be easy?

It was a decade of multiple challenges in a fast changing world pecking order.Up-until-recently second or third players have risen both in prominence and impact on Europe's social model.
It cannot be denied that the short-medium to long term implications have hardly been evaluated as if there was little to nothing that could be done.

President Obama's snub sends out a clear signal that the US is changing foreign relations focus according to their interests while showing displeasure for European unwillingness to readily commit militarily when requested to do so by America.
In a different light it also conveys American impatience with the EU's grand summit routines long on words but often short on realistic delivery.

The Eurozone is now experiencieng its toughest test to date, one that is stretching the 16-member club to breaking point.
Somehow I find it would be ironic if that point were reached due to Greek failings, of all nation/States.Not because it would surprise but mainly because it is Greece in spite of the Greeks.

There are underlying weaknesses to the European way and some of those have been stated in this article.
The EU has until 2014 - a 5-year period - to show that it can pull itself together and remain a major world power.
Such power will only rest secure if built upon a strong economy, the sum total of the bloc's large, medium and small economies.

sábado, 13 de fevereiro de 2010

China, Taiwan and the US posted to The Economist's Facing up to China

A bilateral relationship that will be defining for the remainder of the 21st. century.
China's increasing clout and confidence is already impacting the world order as we've known it thus far.

The main sticking point in Sino-US relations remains that comparatively tiny island that so bravely chartered its own course in defiance of but mainly in opposition to the communist takeover of the mother country.
It is not feasible to predict the future least of all that of China, it still being a relatively introspective country full of surprises.
The giant mainland might itself evolve politically to become a part-fledged(?) democracy - who knows(?) - in which case the Taiwanese might themselves see gain in 'rejoining' the motherland.Perhaps an arrangement based on the model found for Macao and Hong Kong - however different the histories, sizes and scale of these two territories are.
The Chinese people are a very persevering, resourceful and patient lot who often draw on their millennia-old wisdom to settle issues of the day.

As it is China and Taiwan will find an accommodation platform between themselves, Taiwan continuing to seek comfort and muscle support from the US while China vehemently protesting against what it always regarded as poky foreign interference in an internal affair.One that it would wish to settle by winning over the hearts and minds of rebellious brothers and sisters who once upon a time fled to the island.
The coming decades will take care of the divisive issues affecting the China-Taiwan relationship.

What is truly vital for the rest of the world, especially the US in this particular context, is not to drop guard by passively surrendering economically to newly rising, self-confident nation-States.
Existing imbalances should lead to a welcome correction not to a full tipping eventually spawning a new imbalance.

My views on Toyota's present woes posted to The Economist's Accelerating into trouble

There are of course no perfect corporations or perfect all-weather full-proof corporate governance culture to guarantee limitless upward trajectory and endless success to every single company.

Toyota, despite current problems especially highlighted because of the company's unblemished past, will rebound by reassuring customers and dealing smartly with the media who are responsible, as would be expected, for a lot of the hype surrounding the snags found.
In a way the company has fallen prey to its own astounding success, as happens so often.Damage control is never an easy public relations exercise when there are any number of interests seeking more blood.
There is however nothing to suggest that Toyota is not living up to its reputation or that it did too little too late only after being pushed into a corner.
For the most part Japanese corporate governance has served the country's companies right making many American and European majors - organisations and individuals - study or seek to emulate them to a degree.

Although there is no case of foul play it is nonetheless a remarkable coincidence that Toyota's troubles began just as the company became the world's biggest carmaker in 2008 - and the Big Three - more so GM and Chrysler than Ford - are finally recovering from the dumps they got themselves into.They could do with a little extra room in the US market.
A welcome breathing space no doubt.
In a nutshell what truly counts is quality and reliability and customer service.
If Toyota stays focused on those it will only be a matter of time before current accelerator fault becomes part of technical history.
A failure only allowed to doers.

As for corporate governance the Japanese might also learn that a loosening of stiff culturally-entrenched-ways could help move ahead in changed times.