Carlos Filipe Jorge Manuel Miranda Collaco: julho 2016

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.

sexta-feira, 22 de julho de 2016

TEc - GDP forecasts for 2016 - what should we make of forecasts?

Forecasts by and large remain truthful to themselves only. Forecasts they are and should thus be taken at face value, no more no less.

In the recent past so-called credible institutions produced heaps of forecasts that soon proved to be grossly erroneous misleading professionals and commoners alike.
I have come to believe that such predictions and the frequency of their release aim to become pressure tools rather than the mere hypothetical pointers that they will forever be.

domingo, 17 de julho de 2016

TEc - May time - A new PM takes over

TEc has made it crystal clear where it stood before and after the referendum. As a specialist newspaper on matters pertaining to the economy its dominant line is unapologetically tilted away from pure politics.
Yet the new PM faces the daunting task of gathering many tasks together to then arrive at sensible policies acceptable to both the EU and the UK as a whole. Most of them inherently political in nature. Scotland and Northern Ireland, despite their scale and specificities, cannot be side-stepped at any point in time. A first signal was already given by TMay's early visit to Edinburgh.

The question mark that looms large is whether or not the UK's relevant sticking points are compatible with a EU whose main tenets consistently jeopardise those very points.
Can they ever be made compatible?
My point is that they have to.
The UK is important enough to continental Europe to turn it into a mere case of conditioned access to the single-market. Conversely, the EU, for all its current failings as seen by hard-line Brexiteers, is critical to the UK far more than the 450M+ internal consumer market would suggest.
This is why I can only envisage high Politics eventually taking centre stage during negotiations regardless of how hard or protracted.
When it comes to the nitty gritty of actual decisions being made both sides must bear in mind their relative weight set against a far larger backdrop of European peace, security and the welfare of citizenry across the UK and the EU.

sábado, 9 de julho de 2016

TEc - Theresa May and Andrea Leadsom vie to become Britain's next PM - tough job looming

´Political science in the making´ would be a good label for the fallout from the In/Out Referendum.
150.000 Conservative party members will now decide between two women who backed the opposing sides of the argument. The winner will have the unenviable task of delivering on any number of fronts for the greater good of the UK.
For all the relevant cabinet experience that they may have, at the end of the day it should matter politically the very views each held during the campaign. The result may also show the depth of anti-EU feeling among the party faithful - irrespective of the Parliamentary group - or their wish to soften the stance in view of post-referendum consequences to the British economy and society already felt.
Bottom line is the UK has placed itself in a reasonably tight spot. One that calls for the leadership to show a fair amount of pragmatism, knowledge and ability to compromise. They will have to sail the country through what may only be described as unchartered territory where headwinds are likely to be met.

Carlos Filipe Jorge Manuel Miranda Collaco

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