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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

quinta-feira, 14 de dezembro de 2017

TEc - Is China the best role model for emerging markets? - why I think not...

A very suggestive title to have picked to introduce theme China.
A country that has unabashedly copied any number of tangibles and intangibles from around the world. They have done so to their own considerable advantage and gain.
To add context one of the latest examples is the perfect Lego-type set of pieces produced by a Chinese maker.

On fair assessment, it may be said that copying has served Chinese interests right.
Economic, social, trading interests foremost.
It has allowed the country to effectively leap-frog several stages and reach pole position across many tables.
Importantly, in the process China got massive help from Western multinational companies - large, medium and even small - that relocated production there to then import and sell here at marginally lower prices, if at all.

But that which has worked for a 1.4bn nation with its specifics does not necessarily apply elsewhere. Moreover, on many counts China's reality is only partially known to us.
Several aspects driving its astonishing success in a short time-span should be closely followed nonetheless.
A strong administration/government with a sense of collective purpose? 
Why ever not, especially if we compare projects delivered - at national, provincial, regional and local level - to those of many weak rudderless governments captured by vested interests?

Why has the world taken notice of China if not for its growing economic clout? Political, financial and military power derives from it, not the other way around.
Many lessons may be learned from them and adapted to local conditions.
Their willingness to forge win-win links with other countries, where verified, must also be seized upon.

To my mind, China is not the best role model for emerging markets.
Is there any?

sexta-feira, 10 de novembro de 2017

TEc - Imports bad, exports good? - striking the right balance should be the goal

A challenging question that baffles simple answers.
Neither deficits nor surpluses are necessarily a good thing to whichever country.
First and foremost an assessment of a particular country's stage of development and needs across the economy should be made. Then we know that country's social, economic and productive set-up.
Finally, self-evidence shows that Germany and Japan grew incredibly rich on massive export drives over several decades. The same applies to South Korea, Canada, Singapore or to emerging China as we write. Or Italy and France and many more. France has now been in the red for a while.
It can afford to as long as it doesn't become structural. Or leads to massive losses of industrial production with far-reaching implications.
A stretched timeline is called for to gauge each country and overall economic performance.

Imports are certainly not bad especially if they produce greater dynamism in an economy: raising the quality of products, pushing manufacturing prices down, increasing positive competition across the board.
Excessive imports over long periods generating large-scale deficits (in goods is bad enough, goods and services much worse) are certainly a symptom of other ills in any given economy. Besides, a point in time is reached when it becomes ever harder to finance them. An economy becomes unable to create wealth, the country persistently consumes over and above its production capacity. A society that is plagued by low-paying, low-skilled jobs with an oversized State. Perhaps a small high-paying private sector prospers becoming the envy of the rest.

measure of balance are the keywords that deserve repetition and action.
In short, over a 10-year period, an economy may do well by counting up 5 deficits and as many surpluses.

terça-feira, 19 de setembro de 2017

FT - Portugal's comeback is the Eurozone's Socialist success story - there's more to it than news hype

As far as I'm concerned it is good news plain and simple - no more than that: just Good News! Assessments are utterly predictable - even the choice of words - you read one, you've read them all.
That said, due merit falls to both current and former governments but especially to a people who bore the brunt of a deliberately-driven financially troubled country that clearly overreached itself.
The financial system, however, will always want (and need) credit-hungry economies to borrow wildly. The wilder the better. Give them enough rope and let them (only just) hang themselves... Let them have a ball while the going is good. Then, suddenly, pull the plug and stop the music.

The leadership will grumble but the vast majority picks up any tab regardless. (one ex: VAT on electricity bills shot up from 13 to 23%, millions pay millions more each month - looks like a one-off but the rate is unlikely to ever come down).
Financial markets thrive in the so-called leverage/deleverage cycles.
Creditors-in-waiting fill the void when serious imbalances loom and markets shut down.
IMF heads cannot disguise their contentment.They become important overnight.
Another one bites the dust.

If the local leadership did not learn a thing (Centeno - the Finance Minister, has meanwhile momentarily(?) displayed remarkable caution...hats off) the next Schauble in Berlin will smile wryly again down the line. His country's sovereign debt is large enough but well under control and manageable.

By then, Centeno, like his predecessors, will be taking care of himself and kin.
Portugal gets by.
This time the noose was fairly tight but not tight enough.

segunda-feira, 5 de junho de 2017

TEc - Europe must seize the chance to fix the Euro - will it?

No one quite knows what form or shape the missing blocks in the Euro construction will look like.
The reason being that the underlying causes for the hesitations of the recent past remain as ubiquitous as ever.
However, I believe that a long overdue point in time will eventually arrive when it becomes untenable not to act.
Surplus and deficit economies can hardly survive indefinitely in a single currency bloc without some sort of realistic arrangement that addresses imbalances.
But such is the known context over which action must ensue.
Indeed, already there is a relatively severe mismatch between the Euro's two major economies of France and Germany. This is only amplified when the Netherlands and Germany (and a couple more) stick to one side while on the other most of the rest may be found.
Unless a broad-based common vision for the Euro is adopted by the 19, the currency will limp on but is unlikely to survive into the future. Financial turmoil hitting again is a when not an if.
In fact, words are increasingly becoming meaningless for excessive repetition and lack of consequence.
Germany's general election is the next stop in a long timeline that has not witnessed much change since Draghi's grand stopgap move?
Should Germany's leadership remain as frozen as they have been or should Macron fail in his attempts to get those who matter to do what it takes, then our cherished single currency - still loved by most across the Eurozone - faces a perilous future.
As with all times that beg bold decisions, statesmanship is direly needed.

sexta-feira, 12 de maio de 2017

EIU - Could water scarcity lead to water wars?

It is dreadful to even begin to contemplate the prospect of water wars.
While the issue pops up occasionally and is pressing to various degrees in several parts of the world, much less is known of real policy/ies being implemented to manage, mitigate or overcome the macro problem altogether.
Despite instances of acute shortages, it would seem to me that so far water scarcity is very localized. It is mostly tackled in ways deemed as pragmatic rather than scientific. Such approaches do fix the urgency of the minute but hardly address the structural issue, if and where one is identified. Here a line must be drawn to distinguish between droughts on a return period and the unavailability of water.
There have always been regions prone to water scarcity for natural reasons.
Climate factors cannot be micro-managed or reinvented which is why large human settlements set down on fertile soils close to river banks, water bodies or areas of regular rainfall. 

To answer a troubling question, I'd say that I do not envisage a water war as such.
There will continue to be water conflicts and strife at local and regional level. The clashes may perhaps scale up in seriousness, tone and frequency. The geographic location of potential conflict should remain largely unaltered. Unless the root-causes there are dealt with meaningfully to literally quench the thirst permanently.

The top priority of policymakers is to heed the call from those who have already closely studied the problem. Their conclusions, recommendations based on science, practicalities and volumes - natural and both human and material - must be taken into account building feasible long-lasting solutions.
If humans can get it all right, it will still be Mother-Nature having the final say...

segunda-feira, 1 de maio de 2017

TEc - How to deal with the world's most dangerous regime? - It's a catch-22!

Opinion does not count for regimes such as North Korea's. We've seen it before across the world. The true mindset of tinpot dictators, 'goldpot' dictators or simply strong-headed strongmen, as single leaders, is predictable. It delivers behaviour in whimsical if not sickly fashion regardless. As long as they are seen to command full authority in the State's hierarchy, mainly among relevant people in arms to toy with, nothing else ever seems to matter.
This is why NK needs to be closely monitored and eventually prevented from building up more threatening and far-reaching deadly weapons.
Can it be done?
Should it be done?
Will it be done?
Speculate we may but the overwhelming issue is crystal clear. No one in his sane mind would wish for war - knowing the odds and the potential for rapid escalation and outrageous loss of life - but a longstanding question looms larger than ever: what to do if and when NK becomes the full-fledged nuclear power it appears so intent on becoming?
While existing nuclear powers are taken for granted - as it is we assume existing nuclear weapons to be in safe hands (even if we cannot be entirely sure) - NK has drawn oversized attention for its special focus on getting there as well.
Their purpose is also very clear to most, a quest to bully other nations and perpetuate regime survival in the current form. If such a day does dawn, whoever leads the regime might also attempt to blackmail South Korea into reunification on the North's terms.
The stakes are therefore extremely high in Asia's Far East. A catch-22 situation.
Geopolitics there is being kicked around by a single country whose survival has remained assured by its giant neighbour. China could cause NK to collapse in weeks if it so wished.
However, it will only act in the event that it should no longer regard NK as a convenient buffer:
to contain American presence in the peninsula at arm's length,
to keep Japan uneasy on its toes but, barred by its own constitution, hardly able to do much else and, importantly,
to strengthen and advance China's own case, influence and interests in the region.
For China, NK is the convenient State and I don't see how this will change in the near future.

segunda-feira, 3 de abril de 2017

TEc - Averting a Chinese-American trade war - No war of any sort, certainly fairer deals

No fair-minded person wants a trade war or a war of any kind with China. There are many stated facts - unfortunately, to my mind - in the world's global economy that few are prepared to question on grounds of common sense no less.
We do know about the workings of the modern economy/world, global supply chains and every other single practical concept that has taken root. What I do question in a long while is whether or not the time has come to assess the very trading model we have happily built over the years.
All relevant input data are there, so too the wide-ranging consequences, painful to many and ultimately signalling the rapid rise of new economic powers and the demise of others. If the former is welcome it is the latter that should raise far more concerns. The volumes conveyed by the figures spell a great deal more than mere economics as delivered by capitalism in earnest. Eight words might accurately define it: maximise profit, minimise cost regardless of everything else.

What if Boeing decided to relocate its entire business to China for sound managerial reasons?
We've heard the arguments before with every decision made by whichever company.
Would that be OK in the larger scheme of things?
I say NO. It would further tilt America's already appallingly unbalanced trade relation with China just as the country expands significantly its fleet of jets over the coming decades.
This would then be the arithmetic consideration. What about every other whose relevance needs no telling?
America's goods trade deficit with the world is unsustainable for sheer size and stubbornness.
It has become a permanent fixture in a country whose hefty US$18.5-19tn economy cannot indefinitely stomach it all.
Surplus countries/nations will never find fault with the current arrangement.
Should they swing into the red and they would be first in the line shouting foul.
It is up to chronically deficit countries to find ways that will restore at least a semblance of balance to bilateral and multilateral trade flows.

terça-feira, 28 de fevereiro de 2017

TEc - Military spending by NATO members - The US has a point

A very relevant article that presents a stark picture providing enough food for thought.
Even if comparisons should need some detail to make them more representative, there is no denying that the US remains by far the dominant force within NATO on all counts. If a fairly modest set target of 2% of GDP has not been taken seriously by most member-countries after nearly a decade, then the US is fully entitled to call everyone's attention to listen up.
Among the other major economies of the West - Canada, Germany, Italy, Spain and France - the level of spending ranges from ridiculous to barely survival mode. Whatever reasons led successive governments to play down the military and scale back their budgets, the time is overly ripe for a policy and attitude reversal.
Germany's case (and Canada's in North America) is especially striking.
That a major country/biggest European economy whose coffers have been overflowing since long, should make a smaller effort than minor countries with dire public finances is utterly unacceptable.
Indeed, only the US still has the leverage to press German leadership to step up to the plate and do their share.

quarta-feira, 22 de fevereiro de 2017

TEc - America, China and the risk of a trade war - stakes are high for both countries

No fair-minded person would suggest an all-out destructive US-China trade war. There would be significant losses inflicted on both countries and world trade generally would suffer as well.
Besides, it simply doesn't sound right to pursue such a confrontational path. An exercise in self-harm too.Yet the big question remains unanswered if not unaddressed at all:Can a country run a massive trading deficit indefinitely?The US has had a deficit with China since 1985.The issue, however, is that the deficit ballooned beyond any reasonable imbalance, particularly from 2000. Furthermore, it has transmuted into a structural shortfall by US manufacturing that gets plugged by Chinese production. We know about the supply chains in place in today's global economy. Isn't that exactly the problem?Trade balances are not righted by executive decree. It will be up to private industry (thousands of companies) to review and reset the geographic location of major/many suppliers. This is as much an industry problem as it is a policy issue arising from quick-paced free-for-all globalisation where only two variables ever mattered: cost (minimisation) and profit (maximisation).The sum total is clearly reflected in the goods trade figures that have so consistently built up. Menacingly, dare I say.To my mind, they are obviously unsustainable and have been for some time. Implications are far wider than economics.If 10-15 years have not been enough to extract useful insight, more of the same into the next 10-15 will see an entirely changed reality in China-US relations.Inevitable?Many will likely nod yes, others will shrug off with indifference.It is up to national government and policymakers to determine - as far as possible - the macro framework within which an economy operates.To my mind, free trade is only so good as long as there are winners on all sides. Or manageable deficits for a given time at worst.Not seemingly permanent winners and permanent losers that do not swap places.
The winners do not complain about the model in place.
Should the losers?

TEc - The busiest airports in Europe - is sky the limit?

The top 10 busiest airports in Europe show an adaptable 3-tier structure. Topmost is Heathrow well ahead of the pack, ParisCDG a distant second.
Not when it comes to aircraft movements presenting a far more mixed picture. 

Now a decision has been made to add a third runway to LHR it may be said that capacity there (movements and pax throughput) will rise by 50%. That would mean additional 40M passengers may go through its 5 Terminals into the future. Will they?

That begs a final question: what is LHR's ultimate capacity that will permanently saturate the facility, both Aerodrome and Terminals?

sexta-feira, 3 de fevereiro de 2017

FT - EU looks to Merkel as rattled leaders weigh response to Trump - EU must do a lot more to disprove DJT

The EU badly needs its institutions - Commission, Council and Parliament + ECB - to gain prominence, power, initiative, independence and lead the EU from the front in the interests of every single member-State in the bloc. The reason Europe looks in a shambles is that Germany subtly acquired an overwhelming weight since the financial meltdown of 2007-8. Internally, nothing in the EU can move without its tacit or overt agreement. In many ways, the institutions work as near conduits or mouthpieces for the German interest. Inconsequential bodies in practice, in the minds of many Europeans tired and fed-up with a state of limbo that brings them no direct benefit.
In a nutshell, the so-called European political project is moribund, the result of accumulated weaknesses by the leaders from relevant countries not least AMerkel herself. The fact that she displayed remarkable will and strength on several matters - and must be applauded for that - does not hide from view her country's every major failing that so contributed to stalling the EU.
Brexit is primarily an internal UK issue - has long been - but majority opinion in Britain would never have swayed the way it did if not for the looseness of a drifting Union that lost its appeal to the learned let alone to the common man. Many Europeans may even eye AMerkel with sympathy but they resent coming under the German wing and always will. Germany as the EU's dominant force, which is, rightly or wrongly, a common perception. A Union that has seen one clear winner, a few satellite winners around it and far too many losers. Not to mention the domestic problems each country faces anyway.

Above all, no common EU goal appears in sight despite the Commission's official rhetoric.
Viewed from outside the reality of German dominance likely feels even greater.
And suddenly DJTrump comes along and now sits at the White House. His manner and style may not be right but is it not the case that the man does have a point on far too many issues? Or is it too hard to acknowledge just that because of strong dislike for the messenger?
Germany as the leading country in the EU now has the unique opportunity to show that it does stand fully behind the European project, the Eurozone, the Euro, European defence and all things European. Failure to do this will only prove DJT right over time.

Such a predicament would be very dire for the very survival of the EU as a force to reckon with.
I am factoring a 27-member bloc in the wake of the UK's already sure departure.

terça-feira, 31 de janeiro de 2017

FT - Trump's top trade adviser accuses Germany of currency exploitation - a viewpoint that commands thought

There are any number of ways to look at all the issues related to international trade. Yet I believe a few hard facts will have to be accepted largely undisputed regardless of the messenger:

1.The US has every right reason to worry about its ever bulging massive trade deficit that has disproportionately benefited China, Germany or Mexico. To label as protectionism every move a sovereign country makes to reduce longstanding eye-popping imbalances is simply wrong. Free trade is only so good as long as there are winners only. Not permanent winners and permanent losers that do not swap places.
When oversized surpluses are met by equally oversized deficits I take it can only last for a given period. Needless to point out the reasons, I would imagine.
At the end of the day, the wealth of nations is broadly at stake.
Current German leadership is smartly aware of it and has therefore chosen to keep a low, meek profile while reaping the rewards from multiple sources.

2.Germany has indeed been the one country to have profited the most from the Euro and globalisation of trade as has taken root. Eurozone woes remain as structural as ever with southern European nations struggling to get out of a very tight spot, mainly the regions' smaller economies. All has been said and written about the imbalances within the Eurozone but so far none has been addressed in earnest. Remarkably, to this day the view from Berlin is entirely different!

3.Tellingly, the world's most ardent supporter of globalisation is China, likely the single country to have benefited the most from it. Germany dug in solidly in an enlarged EU single market and selling China every capital and premium goods it wanted to buy.
Whatever the arguments made by the new American administration, I am in no doubt - and have been in a long while - that something has got to change to restore critical balances in trade flows around the world.