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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

segunda-feira, 28 de novembro de 2011

TEc - No land of giants - Britain's manufacturing

A brief overview of Britain's relative manufacturing demise spanning three decades also accompanied by sheer financial inebriation.
As the country's industrial heartlands were being ravaged by successive factory closures, the City in London bragged about its financial prowess. As if it could on its own lastingly represent a substitute for production of tangible goods.
I never could understand how a nation of solid manufacturing credentials dating back to the 18th century seemed wilfully contented - at the highest levels except for a few disgruntled voices - with its new-found role as one of the world's financial hubs.
Not the sophistication and volume of financial services - Britain was always known for them - but its increasingly unchallenged dominance as if the rest of the economy could simply be sidelined irreversibly condemned to decline.
After all if China and other low cost producers would happily become manufacturing powerhouses why not surrender without a fight to overwhelming evidence of economic sense(?).
Most of those who made decisions over the years will have thought no further than immediate profit, cost and scale while politicians patted on their backs unaware of far-reaching looming consequences.
The UK's economy's weakness is now fully exposed.
Facing an appalling trade deficit and insufficient yearly revenue from the mighty Services the country's current account balance threatens to remain permanently in the red. That means seeking external finance to fill the gap adding to the already massive public and private debt pile.
How short-sighted it was not to have sought the commitment from Britain's top businesses to continue to mass-produce at home first and foremost.
If the economic model has not not fundamentally changed from the 80's - consumption of durables is still key - will it ever be less than relevant where goods are actually made?
Giant or no giant companies the UK needs to reinvent itself tracing back to its industrial roots what truly put Great before Britain.
Rebalancing the UK economy is the only way to address structural imbalances reflected in the macro facts and figures that have now become ingrained in the British set-up.
It takes time, investment, policy and a vision for the country in the years ahead.

quarta-feira, 23 de novembro de 2011

TEc - Latitude - North and South in the EU

The charts do back the text and deliver a quick snapshot of the two groups should countries be so lumped into each group.
It is questionable if this should be done as individual assessments clearly provide widely disparate initial and final standpoints.
Nonetheless, assuming there is financial, economic, cultural and climatic parenthood between countries as grouped then their performance is only a reflection of what was known all along. Right from the Euro's inception to this day. Only made worse.
Still, can an eminently industrial economy as Italy's - a longtime member of the G7 - be bagged with Greece?
That said, there is and there has always been a North-South divide of sorts in Europe. There is one worldwide too as indeed within most countries even.
The creation of the single currency was about achieving gradual economic convergence among diverse participating nations. Over a long timespan certainly.
On balance it may now be said that the opposite came true.
The most disturbing chart of all is on industrial production - wealth-driver, showing a 15% drop in the South compared to a near 10% rise in the North over 10 years.
If the Euro is to succeed and survive through another decade countries north and south of the divide have to strive harder for sound economic growth.

terça-feira, 22 de novembro de 2011

TEc - Dance of the giants - USA & China

The theater may be South-East Asia, the body of water the South China Sea.
The hard evidence however is that America is increasingly turning its attention to the Asia-Pacific region. Rightly so.
The reasons are plain for everyone to grasp ranging from economic interdependence between the US and China to the net worth of each of the countries brimming with self-confidence and robust economic growth.
On the downside, self-inflicted relative irrelevance is increasingly growing out from Europe now compounded and fully absorbed by the Euro crisis. Complex as it is, Eurozone troubles underpin a general malaise felt across Europe only just sparing a few nations.
These have buckled multiple trends witnessed in most countries and could indicate that Europe is not irreversibly past its prime.
But for now positive action is taking place in South Asia, South-East Asia and Asia-Pacific, Central and South America, Africa and the Middle-East.
America's leadership has long sensed that.
It is highly significant that the US should try to reassure traditional friends in the Asia-Pacific region ahead of a fast emerging China.
China for its part - judging by some of its most outspoken mouthpieces - may sound bullish beyond what might reasonably be expected of a rising major country.
A country that has long yearned to re-take its rightful place in the world.
In this game of power and influence both the US and China will only do so much.
Most individual countries in the region continue to boom and will, for the better part, seek to accommodate both giants furthering their own national interest first and foremost.
Dance they may - China and the US - but the tunes will have to cater for local listening tastes - from Taiwan to Australia - too.

sexta-feira, 18 de novembro de 2011

TEc - Mapping migration - China's and India's diasporas

If anything these figures tell us that the world's two most populous nations have comparatively small diasporas.
Migration from these two potentially major points of origin has taken place in waves that match specific historical contexts.
Latter outflows have seen Indians flock to the Middle East in relatively large numbers mainly as temporary economic migration. This is totally unlike longtime settlers full-fledged citizens of ethnic Indian origin in places as far apart as Mauritius, South Africa or Trinidad and Tobago to mention but a few. The same goes to citizens of Chinese origin scattered around every country in South-East Asia.
Can many among these many millions appropriately be referred to as part of the diaspora?

quarta-feira, 16 de novembro de 2011

The Nico and Angela show - France and Germany

Nicolas and Angela are the leaders of the day entrusted with running the two EC founding members/core countries of France and Germany. The weight of their economies and demographies, albeit relevantly gapped, catapulted them to the foreground amidst a deepening Eurozone crisis.
There are enough variables to the entire Eurozone equation such that they would not fit into this brief comment.
It should not be left unsaid that while Germany strengthened from within since globalization took hold in earnest, every other big European/EU economy - France, the UK, Italy - weakened to varying degrees and for different reasons.
Economic growth was mostly sluggish across the 4 - the UK showing mostly paper-based growth now undone - but unlike the other 3 Germany stood its ground insofar as industry is concerned.
To my mind this is by far Germany's major underlying strength setting it apart from the rest of the pack.
It does have the capacity to kickstart growth at short notice - export or domestic consumption-driven - as seen by the rebound of 2010 and 2011.
The other big 3 cannot leverage growth in quite the same way. Industrial sectors have retreated somewhat in France and Italy. The UK has long witnessed an industrial slide/departure to which the weakness of up-until-recently booming financial services has been added.
The other surplus countries in the EU - to scale a few may even surpass Germany - might feel broadly represented in the ongoing discussions to sort out the Eurozone.
Anyway Europe is not run by France and Germany, or Germany alone.
Not formally at least.
But the de facto situation of the EU - the Eurozone in particular - is one that calls for action by heavy-weights without whose engagement no solution may begin to be found.
As long as markets perceive there is no backstop to financially-strapped economies, no lender of last resort able or willing to bank-roll needy States at affordable rates, they will continue to push their gains - speculative or not - until something somewhere gives in. To them the EMU is an oddity worth testing to destruction(?).
The system is as merciless as always acting as a predator ever ready to hunt down the next prey. The very prey it kept on feeding ahead of the chase to kill.
In a fast changed/changing world Germany might be tempted to go it alone. It takes increasingly redirecting its exports(already proportionally redirected as natural flows) to emerging countries, China outstanding by a long shot.
German intelligentsia, political establishment and informed average citizens ought to see much farther than that.
For Deutschland, for Europa.
In the meantime one hopes that the unbalanced duo will succeed in their endeavours to keep the Eurozone-17 going.
They are tasked with huge responsibilities.
Their efforts so far should not be underestimated or naughtily down-played.
By any reckoning it is a daunting challenge politically, economically and financially.
Lastly, countries that overspent to become addicted to external finance are now seeing the extent to which they put themselves in harm's way.
Directly or indirectly this has already caused changes of government in 4 with Spain likely to be added soon.
Unfortunately, it is in the very nature of this business that change of political staff at the top does not mean an end to the sovereign-debt crisis.

domingo, 13 de novembro de 2011

TEc - Staring into the abyss

It is hard to stomach an article as realistic as this one concerning Europe's current fortunes and projecting them into the foreseeable future. Eurozone sovereign-debt triggered woes likely being only a symptom of a larger set of problems besetting the Old Continent.
The broader picture unfolded shows far too many dark spots whose correction is not forthcoming. Unless many can begin to agree on structural causes, consequences and possible reversals.
There is no easy way to fix such complex issues reaching far and wide. If, however, they should get summed up in two words they would be: industrial production.
Individual European countries have fared markedly differently showing strengths (and weaknesses) to widely varying degrees too. The strongest ones are those that after the first decade of globalization still retain their production base largely intact.
Yet as stand-alones no single European country, not even the biggest economy of them all - Germany, will make much of an impact in a fast changing world pecking order. This is why the EU project far from being obsolete or getting demonised should receive renewed impetus from all who can see beyond today and the following day.
I would therefore like to interpret the ongoing Euro crisis as a loud and clear wake-up call.
While the need of the hour is to find a working settlement that will assure the survival of the Euro, the medium to longer run desperately yearns for oversized political action rooted in sound judgment and foresight.

terça-feira, 8 de novembro de 2011

TEc asks - Is Barack Obama a centrist?

If centrist is supposed to mean a politician who holds moderate views on all public issues then yes Barack Obama is very much a centrist.
His leadership has so far shown remarkable endurance in the face of great odds some of which are deeply embedded in the system.
In fact, it is hard to carry forward moderate, no non-sense, balanced policy in a world whose many powers are often shadowy in their workings. Most often than not they run contrary to the public interest.
Some of those who pursue such conflicting interests to the extreme objectively see themselves over and above the law, public scrutiny, regulation or any form of democratic control.
This has become self-evident on multiple occasions over recent years.
BO has permitted a whiff of fresh air to flow in but he has also laid bare the limitations of US government at a time when the country remains fundamentally economically weakened.
His sharp intellect, broad-mindedness and balance remain one of the best assets to be found in America's political class.

segunda-feira, 7 de novembro de 2011

TEc - A Greek bearing gifts

As the Greek Olympian took the torch close to the fuse - and threatened to light it up - Eurozone protagonists were eerily reminded of just how fragile it all is.
The vulnerability is now so starkly exposed that anything may indeed come to be.
Predictability shied away into complete oblivion having been wholly replaced by uncertainty.
A near brush with implosion it was. One that has apparently been averted this time. Just who the next Olympian with suicidal instincts will be - with a willingness to make others share in the experience - is very much open to question.
Italy may soon draw a great deal more attention than Greece, easing perceived pressure on the latter.
Economic growth or the policies that might restore it is far from receiving the sustained focus it deserves.
While stemming the crisis with sovereigns is paramount, austerity alone will not guarantee desired outcomes.
So how to promote meaningful growth while concurrently reining in public finances?
This question is hugely challenging in the wake of years pursuing an utterly wrong model(?) almost exclusively based on debt-fuelled private and public consumption.
Regaining access to financial markets 2, 3 or 4 years hence is meant to then spur economic growth much as it was done up until recently?

TEc asks - Should Greece leave the Eurozone and return to the drachma?

I had to dither briefly before casting a No vote. That is bad enough!
I must add that I never ever understood how Greece was let into the Euro in the first place. Academic now? Maybe, but that also underscores every other view held today as to why Greece should get one last chance. First and foremost for its own sake, brushing aside fears that if it did leave the Euro and the EU might quickly begin to unravel too.
A country of over 11m at Europe's southeastern corner should take the blame for past mistakes committed since 1981. No more.
The sovereign-debt crisis afflicting many others in Europe and the USA is not of their making. It would not go away the following day.
I do not think quitting the Euro is a realistic option any more than Greece escaping from the long direly called-for multiple internal adjustments.
This is the real test for Greek leadership - both political and wider civil society - to reset the country on a new measured footing.
Excessive borrowing could never be healthy. Or could it ever be carried on indefinitely.
The real drama here is that the Euro has been so fundamentally undermined by foolish excesses disguised as economic growth.
Outside the Euro Greece would not be better off. Such a move would only speed up the country's economic and social decline.
Nearly troubling to varying degrees would be the fate of remaining Euro members...

sexta-feira, 4 de novembro de 2011

TEc - The burning fuse - George Papandreous' high gamble

Just when it seemed the Eurozone had taken the boldest step so far ahead of the G20 French Summit Greece succeeded shining the spotlight upon itself.
It did so through the announcement of its ruling PM who, it is now becoming increasingly apparent, was mainly playing internal politics with far reaching external audience and consequence.
Finding himself in a tight corner as he has long been Papandreou figured out he had to act dramatically. So he did.
High gamble it is but what options are there in a country that's in a damn if you do, damn if you don't conundrum?
Will GP's government survive through today?
If it does what next?
If it doesn't what next?

quarta-feira, 2 de novembro de 2011

TEc - A Greek drama

Drama and Democracy are being played out to the full with Greece's PM's latest twist following suit on what appeared like a deal that generously offered the country pardon to the tune of 50%(?) of its debts...
Political gambling has effectively been elevated to the highest point.
George Papandreou deliberately upped the stakes to a level edging on sophisticated blackmailing of his European peers.
From now on Eurozone leaders, the markets, international stock exchanges, investors, bankers, rating agencies and the wider world will know that a small country can wreak havoc on a financial system that has long rested on dubious assumptions.
Should it be seen under a different light and Papandreous' stunt could be likened to an act of political mastery.
Set against all the odds facing Greece it becomes almost academic to know the outcome of the purported referendum.
For the EU uncertainty, unpredictability and a freewheeling course in the near future now seem even more assured.
Words are insufficient to properly describe what is going on.
If yesterday very few knew how to lastingly fix the Eurozone fewer still do as of today.