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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

sexta-feira, 30 de dezembro de 2011

TEc asks - Will the Euro survive 2012 intact?

I am utterly and wholly unable to answer this question.
As it turns out the Euro's survival no longer depends on politicians' ability to convince financial markets that they are prepared to mount its defense at any cost.
In 2012 the markets will continue to push yields up - they will have plenty of opportunity to do so picking one country at a time - taking the EMU to the brink.
Which domino will eventually withstand upright drawing a neat line beyond survivability mode?
For the rest of us mere passive onlookers there remains only uncertainty on top of uncertainty.

terça-feira, 27 de dezembro de 2011

TEc - The dating game - China's rise

Well done!
Simple and easy for any layman to understand what is going on regarding China's largely perceived rise to economic prominence.
Readers are afforded fiddling to their liking with two variables that sum up economic performance thus obtaining different overtaking year-dates.
One assumption, however, goes unmentioned but is internally concocted(!?) as a certainty: China will sooner rather than later become the world's biggest economy ending the long presidency of the United States of America.
It has lasted well over a century until China woke up from a long slumber to make the ongoing impressive dash to the top.
While common folk don't quite understand yet what the implications are/will be - they can't be blamed for that anyway - I often wonder if American leadership generally does. And if so, what action will it undertake to at least hold US ground.
Not by seeking to arrest China's inexorable growth but aiming to achieve and keep a decent second.
Or keep the number one spot for as long as decent growth in a mature market/economy may assure?
Far too many questions remain unanswered in the tectonic shifts brought about by gobalisation as has taken hold.
Maybe they will not get asked until it becomes self-evident what follows from economic decadence.

sexta-feira, 23 de dezembro de 2011

TEc - Running out of steam - Asia's ascent

The future is not predictable with accuracy yet trendlines and historical data provide useful clues.
When it is about countries as collective entities - each one being a rather complex reality on its own - fast paced development is fuelled by internal as well as external variables.
Both these remain largely favourable to fast economic growth even if slower than up to now.
Besides, Asia is not a homogeneous bloc that moves forward unhindered by what happens internally within each country and elsewhere.
It does share one important specific characteristic: emerging economies possess vast untapped potential both in demography and unfulfilled needs.
This is totally unlike countries that already reached developed status long ago such as Japan and the original Asian tigers to a lesser degree.
I would group Asian countries into three tiers: developed, middle-income developing fast and low-income developing very fast.
All together make up the world's fastest growing continent with the greatest potential to keep growing for many years to come.
It is way too soon to claim that their rise is running steamless as much as overstating that ascent in the longer run.

terça-feira, 20 de dezembro de 2011

TEc asks - Will Britain avoid a second recession?

Sadly I have voted No knowing that chances are high a technical recession is in the offing, if only briefly.
It has been an unfolding never-ending saga in the Eurozone where prospects remain uncertain at the very least.
Britain's economic performance largely hinges on how the Euro crisis and its fallout play out over the course of 2012.
Unlike Germany's broad based industrial sector ever ready to deliver the goods to willing buyers, Britain's strengths and outreach are considerably more limited.
Financial services regardless of their size can hardly make a bigger contribution than they already made over the boom years.
The underlying question is how to get excessively debt-ridden countries - Britain included - on the path to sound economic growth.
I would hope to see some solid answers come in over 2012.

segunda-feira, 19 de dezembro de 2011

TEc - Trading places

A very significant milestone no doubt.
It may be regarded as a welcome development that suggests a better balanced world broadly understood to mean more evenly spread purchasing power across countries.
Nevertheless, it is worrisome to realise this is a combination of a positive and a negative. The positive is of course growing disposable personal incomes in emerging economies. The negative is the seemingly excessive contraction taking place in many developed economies.
While the former should be seen as a natural development in absolute and relative terms, the latter if unchecked is very disturbing indeed.
Slow or near stagnant growth is often a logical consequence of mature markets in developed nations.
More balanced global trade flows are only a reflection of current and a decade-long of economic performance worldwide. Itself a consequence of re-location, globalisation, absolute free trade, free western-market access and free capital flows.
They disguise the fact that individual countries are facing severe overall downturns and poor prospects.
Feeling the pinch much harder than others with little or no room for manoeuvre.

sábado, 17 de dezembro de 2011

TEc - A comedy of Euros

I'm beginning to wonder whether there's any use left for Summits that don't deliver on fundamentals.
Or whether there is anything at all politicians can do to right wrongs especially when up against those-by-now infamous financial markets and rating agencies.
Setting aside rhetorical questions that keep nagging nevertheless, the latest Summit fell far short of expectations raised to make or break status. What next?
Pace of events will continue to be determined by the bond-market/s. Politicians have been cast to the sidelines merely reacting after the fact.
Germany's Angela Merkel is again a winner in that her long adopted step-by-step approach remains firmly in place.
We move into 2012 not knowing if the Euro can endure much longer under current assumptions and self-imposed strictures by the relevant institutions underpinning it.
If only I could spot a ray of hope besides believing (wishfully?) most leaders are fully aware of where the stakes are should the Euro fail.
Every nation in the EU - and further afield - will be a loser the difference being the size and permanence of the loss.
But also if hard-pressed financially-strapped countries fail to resume sound economic growth.

quinta-feira, 8 de dezembro de 2011

TEc - Double your income

The two charts confirm a faster pace of income growth taking place in the two demographic superpowers of the world.
The real name of the game is: catching-up.
Which is exactly what China and India aimed for and are achieving to different levels of success.
Narrowing the wide wealth gap between rich and poor nations is about economic growth rates being bearish in mature markets while remaining bullish in less developed ones over many decades.
If current trends stick a new world order is dawning.
What has been seen so far is only a foretaste.

quinta-feira, 1 de dezembro de 2011

TEc - Into the storm - Britain's economy

Britain's case is every bit as important as the Eurozone's for reasons stretching well beyond current woes affecting the latter.
The United Kingdom is one of the long-established nations of the industrialised world.
It chose to retain its own currency as well as every other tool to manage the economy sovereignly.
Evidence shows, however, that it is hardly in any better shape than most other highly indebted countries of the developed world, large or small.
Unless that single one-word question is correctly addressed there can be no proper resolution to the daunting challenges facing the UK economy.
It must also be said that this is despite financial markets still eyeing the UK with extreme favour.
How else can Britain's low borrowing costs be seen when set against its macro figures and real growth prospects?
Each country is one of a kind presenting clearly an individual track-record, present strengths and weaknesses and future prospects.
Close analysis quickly offers multiple data to back up relevant differences.
It would seem that the Chancellor of the Exchequer did not have an option other than to cut back on runaway spending. Where he failed was that overconfidence that his policies would spur growth quicker.
But how can that come about when recent past growth was owed mainly to overblown banking and financial services, excessive public and private spending adding up to those towering debts?
Like the so-called periphery the UK also embarked on a limitless spending spree. In fact the country's fiscal deficit and debt-to-GDP ratio combined or independently, is worse than most in Southern Europe, Greece the odd exception.
Furthermore, total debt - public + corporate + household - is by far among the highest, Ireland the odd exception here.
Then there is the powerful argument of growth potential, a meaningful one doubless. Used by market analysts to severely punish Southern countries but what truly will drive British growth in the future?
Having already been revised downwards through 2014 one wonders why financial markets remain so benevolent towards the UK while battering others including Germany lately.
There must be a one and only explanation: the Bank of England.
As long as the institution remains rock-solid in place as the government's lender of last resort markets and investors may stay calm almost irrespective of the debt pile's height?
George Osborne's efforts are therefore right in the sense that throwing debt on top of debt is unsustainable by definition.
It has got to stop at some point in time.
In the UK's case that point was reached years ago.
So too in most countries who overspent as nearly the only means to cause the economy to grow.
A very difficult balancing act now faces governments in the US and many in Western Europe.
In the immediate reining in public finances to rational and sustainable levels is paramount.
The underlying issue much broader.
It is about industrial production and other wealth drivers that may sustain rich economies over time.
In this regard the UK is relatively ill-equipped unless more than a few embedded trendlines are quickly reversed.