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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

sábado, 24 de setembro de 2011

TEc debate motion - This house believes the Yuan will the world's main reserve currency within 10 years - Perhaps not but it is early days to say...

How did the US$ come to be the world's main reserve currency?
You get that answer right looking back to America's rise to economic prominence over the course of the 20th century and you may stand a good chance with this question too.
I believe it is still early days in China's ongoing economic rise matched by America's relative decline.
However, current trends in trade volumes and value, financial clout, foreign exchange holdings, production levels, educational and scientific outputs all point to China's fast acquiring an increased role all-round.
Some of the former plus many other indicators not mentioned may seem unconnected, irrelevant even, to this debate. The fact, nonetheless, is that with a big-sized economy come major wide ranging practical changes to what has been the 'established order' so far.
While it is not possible for me to say at this point in time that plausibly the yuan will become the world's reserve currency in 10 year's time, the opposite is also true.
Much will hinge on where China's economic and financial heft goes from here on relevant counts: GDP size, share of world trade and international creditor position.
That is China's side of the equation. All look set on strengthening continuously.
How about the USA?
Which way is America headed to in the face of a changing world economic order?
The yuan will rise in stature along with China as much as the US dollar's relevance will eventually shrink along with America's relative or absolute decline.
The world might go through an intermediate stage of having two competing major reserve currencies.

quarta-feira, 21 de setembro de 2011

TEc - Debts, deficits and markets

Indeed there is no simple gauge to explain investor sentiment when one goes for a general comparative analysis.
On assessing case by case, i.e. each country on its own strengths and weaknesses then a sharpened picture emerges.
It still does not explain every single move by the markets but their judgment starts to make a great deal more sense.
Having arrived at such a critical crossroads - the Eurozone has gone on to a worse one everytime - key questions need to be addressed and settled before long. They were always there and known to most but this winding path had to be footed first(?).
Going by official speech the break-up of the Euro is not on the cards.
How much longer can politicians hold off the markets when under current assumptions nearly all has been said and done?
The blame game is long up. It never paid any dividends anyway.
That brings us back to square one. To how a monetary union of 17 diverse cultures and economies (there being overlapping between them doubtless) can be made to work reliably.
Economic efficiency being largely divergent by groups of countries underscores the fact, by contrast, that financial intertwinning has advanced greatly.
This is why default by a single member poses a real threat to all.
To the Eurozone, the larger EU and the wider world to a limited extent.
There was never a time when the adage sounded truer:
United we (Eurozone) stand, divided we (Eurozone) fall.
A glance at the chart suggests others should have been 'assaulted' first. They haven't.
A deeper look reveals why they haven't.

sábado, 17 de setembro de 2011

TEc asks - Does the Eurozone need a political and fiscal union?

As it is the Euro-zone is unlikely to get by much longer. The unfolding saga and measures taken to address it have proved extremely edgy, exhausting, costly and ultimately innefective.
Above all it has become clear they do not meet structural flaws in the Euro edifice, a strong currency sitting on unprotected foundation.
Which way to go then?
Not easy for laymen to say but political and economic leadership at various levels have to search and find a way out.
Shoring up the Euro project aiming to elevate it to the next stage.
Whether this "big jump" is achievable or not is another matter.
Closer political and fiscal integration is only a logical step to make a monetary union successful in the longer run.
How this might work now looks very complex and hard to do in a given timespan, yet options left standing aren't many.

quinta-feira, 15 de setembro de 2011

TEc - The celestial economy

Unlike previous attempts at foretelling the future of economic ranking of countries - all failed in their rather boisterous unsubstantiated pre-notices(!) - this time real trendlines and relevant variables are driving predictions.
The world is now definitely at a different juncture than it was in decades past. While the Soviet bloc or Japan despite the latter's astounding vibrancy both had natural dampers to them quite the opposite appears to be true in China's or India's rise to economic prominence.
A lot more could be said or written but in a nutshell evidence is rife that a new world economic order is fast emerging.

domingo, 11 de setembro de 2011

TEc - Ten years on - 9/11 terrorism

There's hardly a word to be added as relevant comment to this well researched all-encompassing excellent article on a very tough decade.Every significant detail being mentioned makes a complex world look easier to understand.
Bereft of excessive interpretation 9/11 should be regarded for what it truly was: a machiavellian plan drawn up by a small group of wicked-minded individuals, carried out with near perfect efficiency (only one target wasn't hit) whose practical outcome outplayed the mastermind's best expectations.
When man is stripped of his own humanity he is capable of the worst atrocities always finding full justification for them.
This is why the fight against terrorism is an ongoing challenge - invincible to an extent - where each one must know where they stand. And must not waver in conviction while calling for State resolve, retribution or protection from.
9/11 was no more than an overpowering premeditated murderous outrage. No ideology, political cause least of all religious zeal may be invoked in support of such disproportionate, callous and cowardly action.
The only aim of terror events - by definition - is to cause maximum damage and pain to the maximum number.
But this is what has become of the real world. This is what needs a clear stand and commitment on.
A single man on an evil mindset can unleash terrible levels of physical and psychological suffering as the world was recently reminded of by that notorious Norwegian loner.
Nothing that hasn't been accomplished in the past or that can be fully prevented in the future.
Mistakes aside, dubious colateral decisions made duly condemned there can be no two ways dealing with acts of sheer terrorism.
Radicals, fundamentalists, sick minds who take to random killing of the innocent caught in the wrong place at the wrong time cannot expect understanding from the overwhelming majority of humankind.
If this simple equation should change a much more sinister world would emerge.

sexta-feira, 9 de setembro de 2011

TEc "Germany's Euro question" - rhetorical but increasingly less so, one hopes...

A fitting title, an exceptionally fitting sub-title to a question that looms large over the Euro Area and larger EU.
That the first mutterings by the German leadership (on a new approach to the Euro crisis) are heard is confirmation that a policy shift is needed.
Maybe it has got its own time to ripe given how complex and multiple major variables are.
Maybe the path to this point had to be travelled first.
For the rest of us, mere onlookers of a-by-now long unfolding saga, words have lost their meaning after being led into believing the Euro had been mostly a success story.
The impotence of the EU leadership is such that every effort made so far was effectively too little too late.
Reckless indebtedness in some countries - while stronger ones incentivised, chose to look the other way or both - brought the far-sighted Euro project pegged to closer European integration to its knees.
I resent seeing democratically elected leaders supposed to represent us being literally shoved, pushed and kicked around by financial markets.
Making decisions on the brink. Only to find the markets were not impressed and wanted more blood.
The workings of the system being what they are means little option remains other than cowering to it preparing for the worst while hoping for the best(?).
The time has come for politics to speak louder.
To retake centre stage, to show leadership and vision into the future.
To put good governance across the EU top of the agenda while creating better tools to deal with financial markets.
The time has come for elected governments to act boldly clearly choosing between the vital few and the trivial many.
Regaining the upper hand, the leading role, the initiative to do away with current fragility.
At the end of (another) day the Euro remains strong but the weaker economies are weaker still.
They suffer the triple whammy of long overdue internal adjustment, drastic austerity measures aimed at fiscal consolidation and renewed competition from the global economy.
To top it all their relative loss of competitiveness is compounded by a currency - their currency - hardly ever dented in value by smaller economies.
The break-up of the Euro would be a far greater disaster but answers to this ordeal have to start coming in regardless.
Sooner rather than later.
Will they?

TEc debate motion "This house believes that punishing wrongdoers is fundamental to securing lasting peace" - Yes, by all means.

To answer this question positively as I just did one needs to stand back, drop names, episode and circumstance to decide in the abstract. With conviction yet based on simple thoughts.
Why is it punishment has been inherent in the human condition since the dawn of time?
Is it because we wish to pass judgment on others for judgment sake, is it for some other hideous reason or is it much clearer than all of that?
The simple truth (that unfortunately cannot be dismissed) lies in that good and evil live within each one of us.
Most are able to tell between the two, identifying with the former while utterly rejecting the latter.
Just as well, as it should be lest we developed into individual rascals ever-ready to do the utmost best to turn human relations into something unbearable.
If one accepts that most phenomena around us - in the broadest sense - follow the Gaussian distribution then it becomes fairly easy to comprehend that it is both the fringes that need permanent checking.
While extreme goodness - yes there are such types - is no threat, evilness and extreme forms of badness certainly are.
This is where the concept of punishment kicks in. To different levels of severity no doubt, nevertheless a forceful retribution on someone who did what should not have been done.
Peace isn't something to be taken for granted. A lasting and qualified peace requires checks and balances to be pursued at all times.
Justice is not a far-fetched ideal when so many everywhere are confronted daily with horrendous dids and situations.
The unchangeable enduring nature of humankind lends overwhelming evidence to the fact that some form of repression - call it punishment, reprimand, rebuke, reproach or what you will - must be exercised to safeguard essential values most of us would wish were naturally shared by all.
They are not, they've never been, they never will be and it would be wishful to think otherwise.
Given the same set of circumstances different people behave differently. A few will always be ready to seek immediate self-gain no matter what, how or when.
Punishment may not be a nice thing to call for nor is punishment always proportional and fair.
But what would society look like if there was no judiciary, no courts, no jails, no police, etc.(?).
Not a single component of what came to be the 'punishment system', no matter how imperfect, and took ages to build...

segunda-feira, 5 de setembro de 2011

TEc "Brazilian equivalents" - An upward moving economy/country beset by internal imbalances

Informative interactive maps go some way to putting countries in perspective. Widespread regional imbalances become starkly evident. So too comparative analysis with other countries across the world.
The missing news, however, is Brazil's starting point 10, 20 or 30 years ago. No need to stretch further back.
If that were reflected in the maps then a more positive read would inevitably emerge.
Brazil is relentlessly playing catch up, some of its States already have on many counts. Even if it still is a half-finished job.
That the State of São Paulo may now be fully measured up against Poland - across the three indicators - is quite relevant.
Or even RGS's against Gabon. Gabon's GDP per capita is heavily skewed, yet it is substantial enough to rank it among middle-income nations. There is inequality in RGS and Gabon but would anybody put both on an equal footing?
Brazil is definitely a fast emerging economy but, as always, it does have major internal imbalances to address.
The external hype has more to do with most people's being contented with skimming at the top rather than objective in-depth assessment of whatever issues.
Should the country continue to grow apace a lot will have changed 20 years hence as far as backwater States such as Piauí.
As long as sound public policy is pursued at the Federal and State level.
Will it?

TEc "The great train robbery" - High-speed rail has its cons.Many. What about the pros?

The Economist makes a compelling case against high-speed rail based on factual evidence that it may actually add to regional imbalances besides being costly to build and unprofitable to run.
Nonetheless, the article seems to take a narrow view of potential benefits.
It falls in line with the hard times of overstretched State budgets and overburdened heavily indebted economies on the retreat.
To beginwith I believe each country has a different case for high-speed rail depending on factors that do not necessarily overlap.
Size and geography are of utmost importance but strategically located small countries like Belgium, the Netherlands, Switzerland and Austria may prove critical and hugely benefit from a comprehensive Europe-wide high-speed railway network.
In other words a high-speed link within each may not make sense or bring about any meaningful gain to people and economy but cross-border connections to integrate a larger network certainly does.
It may just be that the time is not right to push ahead with massive investments that show no quick returns.
Upgrading existing lines to reasonably high speed operations is a permanent challenge facing railway companies. It should not be tied to the development of, or longer term approach to, high-speed lines.
Resources now being scarce will dictate decisions into the foreseeable future unless private stakeholders pitched in to build and run such lines...,which obviously they will not! Unless the State provides enough sweetners or picks up all losses incurred.
To bluntly shelve these projects branding them as totally non-viable appears as short-sighted as the hollowness of politicians who endlessly sang praises to them.
Without sound cause or consequence.
Without ever bothering to do the right sums - all the sums - first.