TransEconomics

¡Tenemos un nuevo blog!

2011-06-22T10:26:00.002-05:00

Este blog ha terminado, pero permanecerá en línea. Hemos comenzado un nuevo blog, Carpeta Monetaria, en donde Genevieve Signoret está en la conversación global sobre política monetaria.

Gracias por su lectura y sus comentarios. ¡Esperamos verlos en Carpeta Monetaria!

What Roubini said / Lo que dijo Roubini

2010-11-17T00:33:00.005-06:00

(Para español, desplácese hacia abajo.)

Nouriel Roubini made various claims and predictions today in an interview on CNBC:

QE2 will be followed by several more rounds, up to QE4 or QE5. (This prediction matches the TransEconomics view that, if necessary, the Fed will end up more than doubling the size of its balance sheet to to $5 trillion.)
David Cameron and Mervyn King in the UK have an implicit agreement whereby the Bank of England will offset Treasury tightening with monetary loosening. The monetary loosening will take the form of QE2 a l'anglaise and will start as soon as fiscal pain (rock throwing) becomes unbearably intense.
Given falling output in the European Union periphery and deflationary fiscal policy in Europe, the European Central Bank's current resistance to more quantitative easing is "not productive".
We will probably see private orderly restructuring of sovereign debt in Greece first, then Portugal, and finally Ireland.
Restructuring can take the form of exchange deals: sovereigns exchange outstanding bonds for some other assets. This is worked out with bondholders: no supranational entity (EU or IMF) need be involved.
QE2 in the USA coupled with insufficiently fast appreciation of the Chinese yuan can lead to new or enlarged existing asset bubbles in China, even if China tightens credit and money.

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Hoy en entrevista en CNBC, Nouriel Roubini predijo y afirmó:

Después de esta ronda de estímulo cuantitativo (QE2) nos esperan más rondas, hasta QE4 or QE5. (Este punto es consistente con nuestra opinión en TransEconomics de que, si es neceario, la Fed más que duplicará el tamaño de su balance, hasta $5 billones.)
David Cameron y Mervyn King en el Reino Unido tienen un acuerdo implícito según el cual Banco de Inglaterra contrarrrestará la política restrictiva del Tesoro con estímulo cuantitativo. El estímulo tomará la forma de un QE2 a la inglesa y comenzará tan pronto el dolor fiscal se torne insportable (los disturbios aumenten).
Dada la contracción económica en la periferia de la Zona del Euro y la restricción fiscal en Europa, la resistencia del BCE a aplicar más estímulo cuantitativo (que el BCE llama "relajamiento crediticio") "no es productiva".
Probablemente veremos una ordenada reestructuración privada de deuda en Grecia, primero, luego Portugal e Irlanda.
Estos soberanos pueden canjear bonos por algún otro activo. El trato puede hacerse con inversionistas privados, sin que intervenga ninguna institución subpranacional del tipo FMI o Unión Europea.
Aunque China restrinja el crédito y el dinero, QE2 en EEUU y demasiado lenta depreciación del yuan pueden provocar que en China la inflación se acelere y las burbujas financieras se multipliquen y se expandan.

Fed lending standards, Fed Bullard speech, OECD leading indicator

2010-11-08T13:35:00.006-06:00

Here are links to this morning's key global releases:

Fed: The October 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices. Key quote (bold face is mine):

The October survey indicated that, on net, banks eased standards and terms over the previous three months on some categories of loans to households and businesses.² Both large and other domestic banks reported having eased some standards and terms; large banks were primarily responsible for the easing reported in July.³ However, substantial fractions of banks reported in response to a set of special questions that standards for many categories of loans would not return to their longer-run averages for the foreseeable future.

SF Fed Bullard's speech. Highlight:

Bullard said the FOMC must defend its implicit inflation target from the low side as it would from the high side. Since U.S. short-term interest rates are already approximately zero, further disinflation would mean rising real interest rates in the face of a slowing pace of recovery.

Remember that we economists believe that people make saving and investment decisions based on the real interest rate: the nominal rate minus the rate of inflation expected over the investment decision time horizon.

When nominal rates are at zero, as they are today, the Fed needs to persuade the public that in the future inflation will accelerate and stay rather high. (Which is not to say that hyperinflation will set in. Hyperinflation is of cours undesirable, but more importantly, it's in no way an inevitable consequence of QE, in my view. I don't even see it as a threat.)

OECD Composite Leading Indicators. Key content:

OECD composite leading indicators (CLIs) for September 2010 point to diverging patterns of economic growth across major economies.

The CLIs show signs of continuing expansion in Germany, Japan, the United States and Russia, while pointing to a moderate downturn in Canada, France, India, Italy and the United Kingdom.

The CLIs for Brazil and China continue to point strongly downwards, edging below the long term trend and implying that the level of industrial production will fall below its longer-term trend in these two economies.

There's no time to get this into Spanish, now, as I'm heading out the door on a business trip.

Follow me on Twitter: @gisgnoret

Zoellick, explain yourself. Zoellick, explíquese.

2010-11-08T12:57:00.003-06:00

Zoellick wrote this:

The [G20] system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values.

Krugman and De Long have already responded (impolitely).

Martin Wolf argued (persuasively, in my view) against a gold standard last week.

Gold prices move up and down with global levels of fear. We're to link exchange rates to fear? Even when we might fear opposite things (deflation, inflation)?

*****

Zoellick escribió esto (es mi traducción):

El sistema [G20] debería también contemplar el uso del oro como referencia internacional de las expectativas en torno a la inflación, la deflación y cuánto valdrá en el futuro cada divisa.

Krugman y De Long ya contestaron (de manera descortés).

Martin Wolf arguyó en contra de un estándar de oro (en mi opinión de manera persuasiva) la semana pasada.

El precio del oro sube y baja con el nivel global de miedo. ¿Debemos vincular la política cambiaria al miedo? ¿Aunque temamos fenómenos contradictorios (deflación, inflación)?

Hoy sí

2010-11-06T20:16:00.005-06:00

Bernanke explicó QE2 para el público en el Washington Post el jueves pasado. El párrafo clave es el siguiente:

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

Justifca otra ronda de relajamiento cuantitativa (quantitative easing, or QE) con base en lo siguiente:

Funcionó en el pasado (en la primera ronda).
Con sólo anunciar la intención avanzó la bolsa de valores.
Promoverá crecimiento económico: bajando las tasas de interés hipotecarias; bajando los rendimientos de los bonos corporativos (lo que promoverá inversión fija); elevando los precios accionarios, lo que, por enriquecer a los consumidores, puede impulsar más gasto.

En otras palabras, la Fed considera que otra ronda de QE se transmitirá a la economía por que los mismos canales que una decisión de política moonetaria normal (una reducción en la tasa de política monetaria).

Pero con una excepción: antes no se justificaban decisiones de política monetaria por su efecto en los precios accionarios.

Hoy sí.

Sígueme en Twitter: @gsignoret

I'm glad we use Eurostat for Spanish labor data

2010-11-06T19:03:00.005-06:00

Edward Hughes warns us to be careful in interpreting Spanish labor data. It's a good lesson in the perils of trying to perceive changes on the margin from data not seasonally adjusted. Hughes is scathing in tone:

But the way they present the data isn’t interesting, in fact its downright misleading. In particular they chose not to seasonally adjust the data – which in a seasonally driven economy like the Spanish one with significant ups and downs in tourist activity doesn’t make much sense – and this omission is not only lazy, it is negligent. (Read the whole post.)

It turns out that although Spain's statistical agency's (INE's) unadjusted unemployment series shows month-on-month improvement, the seasonally adjusted series shows worsening.

For our own global macro database we have always relied on Eurostat's time series for Spain. We did this for one-stop shopping and comparability with the rest of the Euro Area.

Now we have another justification.

How might QE2 boost commodities prices? ¿Cómo podría QE2 elevar los precios de las materias primas?

2010-11-06T13:09:00.005-06:00

(Para la versión en español, desplácese hacia abajo.)

The Fed's second round of quantitative easing (QE2) can boost commodities prices through four channels. First, by depressing Treasury yields in the middle of the yield curve and (it is hoped) by inflating prices generally, it can exert downward pressure on the U.S. dollar against other currencies such as the euro.

Of course, this would boost global commodities prices in dollar terms only (it would have the opposite effect on prices in euro terms, for example).

This tranmission channel pertains to all segments of commodities. Equally, it pertains to all other traded goods and services priced in U.S. dollars. QE2 is aimed, after all, at inflating dollar prices.

Second, by generating confidence that the U.S. economy will avert deflation and thus stir up hopes that growth will take off, it can draw speculators into the futures markets for industrial commodities: energy commodities and base metals.

Third, by generating fear of hyperinflation even while boosting high hopes for industrial commodities (in an unusual confluence of events), it can provide support for precious metals. Of course, this support will be iffy and unstable, as with any price support that relies on mere raw feelings such as fear.

Fourth, by depressing Treasury yields (in the middle of the curve), it can draw investors desperate for yield into the asset class.

Follow me on Twitter: @gsignoret

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La segunda ronda de relajamiento cuantitativo (QE2) de la Fed puede dar ímpetu a los precios de las materias primas por cuatro vías. Primero, al deprimir los rendmientos de los bonos del Tesoro en medio de la curva, puede deprimir el dólar frente a otras monedas como es el euro.

Claro, este fenómeno reforzaría los precios de las materias primas en términos únicamente del dólar (tendría el efecto contrario en las cotizaciones en euros, por ejemplo).

Esta via se aplicaría a todos los segmentos de las materias primas. Asímismo, se aplicaría a la cotización en dólares de cualquier otro bien o servicio transable. El propósito del QE2, recuérdese, es inflar los precios en dólares.

Segundo, si genera confianza en que la economía estadounidense puede evitar la deflación y así despertar esperanzas de que el crecimientos despegue, puede atraer inversión especulativa hacia los mercados de futuros de materias primas industriales: energéticos y metales base.

Tercero, al generar miedo de hiperinflación al mismo tiempo que despertar esperanzas para las materias primas industriales (en una coincidencia de eventos inusitada), puede dar soporte a los metales preciosos. Claro, dicho soporte será incierto e inestable, como suele ser el caso cuando un precio toma su soporte de puros sentimientos primitivos.

Cuarto, al deprimir los rendimientos del Tesoro (a la mitad de la curva), puede incitar a inversionistas en búsqueda desesperada de retornos a entrar en esta categoría de inversión.

Sígame en Twitter: @gsignoret

More Web jewels found today

2010-10-27T15:33:00.007-05:00

Tim Duy's Fed Watch, Too Little:

Federal Reserve policymakers must be pleased with themselves. Market participants have fallen in line like lemmings off a cliff pursuing the obvious trades as the excitement over quantitative easing builds. Equities, bonds, commodities are all up. Dollar is down. Perhaps more importantly, measured inflation expectations have trended higher. Psychology is a powerful thing. Like leverage. ... (keep reading).

Prajakta Bhide et al (Nouriel Roubini's Economonitor), What's ahead for the Fed?:

An anemic and subpar U.S. recovery amid balance-sheet repair, weak demand, slack in the economy and disinflationary pressures has always been our baseline scenario. By the summer of 2010, the disinflationary bias in expectations had become more evident, and the economy—lacking a self-sustained recovery—had started heading toward a dangerous stall speed. We vocally expressed our concerns around deflation/stagnation/double-dip scenarios and called for more policy action, while recognizing that the effects on the real economy would be limited. (Keep reading.)

Jon Hilsenrath and Jonathan Cheng ($WSJ), Fed Gears Up for Stimulus:

The Federal Reserve is close to embarking on another round of monetary stimulus next week, against the backdrop of a weak economy and low inflation—and despite doubts about the wisdom and efficacy of the policy among economists and some of the Fed's own decision makers. (Keep reading.)

Marshall Eckblad ($WSJ), Banks Turn Their Reserves to Profit:

Call it steroids for bank profits.

The biggest U.S. banks virtually doubled their collective earnings in the third quarter just by injecting $8.1 billion into net income from funds they had set aside to cover loan losses.

There are 18 commercial banks in the U.S. with at least $50 billion in assets, and together they earned an adjusted $16.8 billion in the third quarter. Of those profits, nearly half, or 48%, were from drawing down what bankers call loan-loss reserves, according to an analysis by Dow Jones Newswires. A year ago, the same 18 banks earned $6.2 billion in quarterly profits; at that time, they added more than $7.8 billion to the same reserves, a move that reduced their profits. The analysis omits a $10.4 billion noncash charge to earnings that Bank of America Corp. disclosed during the third quarter. (Keep reading.)

¿Qué significa rendimientos de TIPS negativos para materias primas y crecimiento?

2010-10-27T11:29:00.008-05:00

James Hamilton (Econbrowser) interpreta el hecho de que los bonos del Tesoro protegidos contra la inflación (TIPS) de nueva emisión estén pagando rendimientos negativos.

A quienes llaman "insólito" el evento de rendimentos negativos en TIPS, Hamilton contesta que rendimientos negativos en el mercado de bonos del Tesoro es la regla, no la excepción. Si no se ha presentado antes para el caso de TIPS es probablemente porque los TIPS son instrumentos relativamente nuevos:

Although this appears to be the first time that newly issued TIPS have locked in a negative real return, that's because TIPS have only been offered to U.S. investors since 1997. You can get a longer time series by comparing the yield on a 6-month T-bill at any date with what the CPI inflation rate actually turned out to be over the subsequent 6 months for which investors held that bill, a magnitude sometimes described as the "ex-post real interest rate." That series is plotted below. We've actually been in a period for several years in which short-term loans to the government were a losing proposition in real terms, and the longer-term real yields such as the 5-year TIPS are only now coming down to join them. The recent era of negative real yields was briefly (if spectacularly) interrupted in the fall of 2008, when a sharp deflation in the CPI made short-term loans to the government an excellent deal for the lender in ex-post real terms.

Negative ex-post real rates on short-term securities are thus nothing new. We saw them for much of this decade and for much of the 1970s. Although negative realized ex-post real rates do not establish that investors knew that they were in for a losing bargain in real terms, they persisted long enough in the 1970s that it's hard to believe that people were shocked by the continually repeated outcome. I think if TIPS had been offered at that time, we would have seen a negative real yield then, too.

Nos recuerda de su opinión (que coincide con la de Krugman) en torno a Relajamiento Cuantitativo 2 (QE2): ayudará pero probablemente poco. Hamilton menciona QE2 en una discusión sobre rendimientos reales de TIPS negativos porque precisamente lo que está comprimiendo los rendimientos de los TIPS (inflando sus precios) es el que los inversionistas anticipen que el iminente QE2 cause tasas de inflación más altas a futuro. Me imagino que por eso Hamilton prevé alzas en los precios de las materias primas:

Even so, within those models, there's an incentive to buy and hold those goods that are storable. And in terms of the historical experience, episodes of negative real interest rates have usually been associated with rapidly rising commodity prices.

Hamilton evita caer en el error de varios analistas señalado hoy por Krugman, de decir que, como QE2 puede conducir a precios de materias primas más altos y esto puede deprimir la demanda, QE2 podrá resultar contraproducente para el crecimiento.

Krugman aclara que esto se dará sólo si los precios de las materias primas suben en términos reales:

Higher commodity prices will hurt the recovery only if they rise in real terms. And they’ll only rise in real terms if QE succeeds in increasing real demand. And this will happen only if, yes, QE2 is successful in helping economic recovery.

What this official is saying is a version of the classic freshman mistake: an increase in demand leads to higher prices, and higher prices make people buy less, so an increase in demand leads to lower sales.

En realidad, Krugman omite mencionar un escenario en el que los precios de materias primas no suben en términos reales mas sí en términos nominales frena el crecimiento. El escenario se da cuando las alzas en materias primas aceleran cambios en los índices de precios al consumidor tanto que el banco central se siente obligado a aplicar política monetaria restrictiva.

El riesgo de este escenario es particularmente alto en economías emergentes cuyos bancos centrales han adoptado el régimen de política monetaria por objetivos de inflación.

A nice week-ahead calendar for EM followers. Lindo calendario para seguir mercados emergentes.

2010-10-24T19:49:00.004-05:00

I'm now following the EM blog called beyondbrics at FT.

On Sundays they post a neat week-ahead EM calendar that includes release dates for both macro indicators and and corporate earnings reports.

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Ya estoy seguiendo un blog enfocado en mercados emergentes de FT llamado beyondbrics.

En domingo se publica ahí un lindo calendario semanal que incluye fechas no sólo para indicadores macro sino también para reportes de ganancias corporativas.

G20 communiqué and Geithner's letter. Comunicado G20 y carta de Geithner.

2010-10-24T19:16:00.004-05:00

Por alguna razón, no encuentro la carta de Geithner a los ministros de finanzas G20 en el sitio del Tesoro de EEUU así que proporciono vínculo a la carta proporcionada por WSJ ($). También el comunicado de los ministros G20 resultado del cumbre que se sostuvo este fin de semana.

Mañana daré mi reacción a ambos en relación a su probable impacto en México y en los mercados.

Somehow I can't find Geithner's letter to G20 ministers on the Treasury Web site, so here's the WSJ link ($) to it. And while I'm at it, here's a link to the full G20 communiqué that came out of this weekend's summit.

Tomorrow I'll react to both: What do they mean for Mexico? For markets?

Follow Genevieve Signoret on Twitter: @gsignoret.

Is Mexico a 100 Year Bet?

2010-10-19T15:48:00.003-05:00

The FT' congratulates Mexico on selling $ 1 bn of 100 year notes at 6.1 %, but suggests in the Lex column that this may be "a triumph of hope over experience". Interesting question. What do readers of this blog think?

Diez funciones de un estado efectivo (ten functions of an effective state)

2010-10-12T01:19:00.002-05:00

Fuente: Institute for State Effectiveness.

¿Desendeudamiento: cuánto tiempo más? Deleveraging: how much longer?

2010-10-09T20:18:00.005-05:00

Gillian Tett de Financial Times se preguntó antier cuánto falta para que termine la fase de desendeudamiento:

What is not evident, however, is how much further that debt now needs to decline to produce any sense of normality. We do not know, in other words, how far along we are into this “deleveraging” process, nor what this might mean for growth or asset prices.

The current data on the issue looks mixed. In some respects – and in some sectors – there might seem to be reason for cheer. The latest capital markets monitor from the Institute of International Finance, published this week, reports a “sharp decline in the liabilities of the US shadow banking system this year”, amid “ongoing deleveraging – in particular by US households”.
Total liabilities of the shadow banks have dropped from almost $22,000bn two years ago, to nearer $17,000bn, or where it was five years ago. “Debt levels for US households, businesses and particularly financial institutions continue to decline” the IIF notes, as a proportion of gross domestic product, towards levels seen earlier in the last decade.
A separate recent report from Citi’s European credit team reinforces that point. This data also suggests that a sharp deleveraging has already occurred for banks. And in the non-banking corporate world, net debt to ebitda for S&P non financials is now running at around 140 per cent, down from 210 per cent at the peak in late 2008. For the EuroStoxx non-financials, the ratio has moved from around 230 per cent to 170 per cent.
If the pattern seen in earlier economic cycles were to play out, investors should welcome this news. With debt levels suitably reduced, banks and companies should now feel confident enough to start borrowing again – and thus raising investment, spending and so on. But that does not appear to be occurring: after cutting debt, companies are still (for the most part) sitting on vast piles of cash; so, it seems are households. Meanwhile banks are resolutely refusing to make large volumes of new loans.
Why? One reason may be that the household sector is still running a big debt burden by historical standards, and is beset by unemployment. Another is that regulatory uncertainty is sapping corporate nerves. However, the Citi team thinks the biggest issue is that rising public sector debt is undermining confidence too, or creating a climate of “fear”, as Alan Greenspan wrote in the FT yesterday. Most notably, even as the private sector has delivered, public debt has exploded.

Termina en una nota pesimista:

Thus the total scale of leverage in the system – namely the sum of both non-financial public and private debt – has not fallen markedly in the last two years (in America, for example, it is now running at around 220 per cent, compared to 170 per cent at the start of the decade.). Hence, Citi argues, investors cannot expect a “normal cycle”; companies and consumers alike are too shell-shocked by the recent past – and so uncertain about how governments will deal with all that public debt in the future. The most likely path for the next few years therefore is one of sluggish growth at best.

Financial Market Team update (English, 13 Aug 2010)

2010-08-13T17:02:00.005-05:00

Stocks
Since last Friday, stocks around the globe have fallen by about 4%. The next figures represent changes since last Friday. The DJIA fell 3.3%; the S&P, 3.8%. In Europe, UK's FTSE 100 fell 1.1% while the German DAX fell 2.4%. In Asia Japan's Nikkei 225 fell 4% while Hong Kong's Hang Seng fell 2.8%. In Latin America Mexico's IPC fell 2.5% and Brazil's Bovespa fell 2.7%.

Currencies
The yen and the euro weakened against the dollar.

Debt
The European Central Bank revealed today that the number of Spanish banks that borrowed from the ECB grew in July. Investors are being driven to German bonds. German 10-year Bund yields are at 2.39%, their all-time low. US 10-year Treasury yields are also lower, at 2.68%.

(Read more about financial markets in this FT article $)

Patrick Signoret and Georgina Lara

Financial Market Team update (data for 13 Aug 2010)

2010-08-13T16:45:00.003-05:00

16:30 ET

DJIA: -0.16% to 10303
S&P 500: -0.4% to 1079
Mexico IPC: +0.18% to 32100
Brazil Bovespa: +0.45% to 66264

FTSE 100: +0.18% to 5275
DAX: -0.4% to 6110

Nikkei 225: +0.44% to 9253
Hang Seng: -0.16% to 21072

US$1.00= 0.78 euros
US$1.00= 12.73 Mexican pesos
US$1.00= 86.2 yen (+0.3%)
EUR$1.00= 1.28 USD (-0.6%)

WTI crude 1m: -0.46% to 75.39 USD/bbl.
Corn 1m: +1.3% to 427 USD/bu.
Wheat 1m (CBT): -1.28% to 734 USD/bu.
Gold 100 oz 1m: -0.01% to 1217 USD/t oz.

Aug 13 (Aug 12)
Ted spread: 21 (22)
T bill 3m: 0.15 (0.16)
USD Libor 3m: 0.37 (0.38)

Power and Policy Team update (English) , 12 Aug 2010

2010-08-12T14:01:00.007-05:00

Korea's monetary policy decision
The Bank of Korea maintained the Base Rate unchanged at 2.25%. A 25bp increase had been expected. (Read the BoK's statement.)

U.S. border security
U.S. Senators approved unanimously a new border security bill which gives the federal administration 600 million dollars which will allow, among other things, to send 1,500 more troops to the southern border. According to this article published by the La Times, lawmakers think that securing the border is the first step to a more comprehensive immigration reform.

Israel and Iran
According to this month’s Atlantic Monthly magazine there is a 50 percent probability that Israel will attack and destroy Iran’s nuclear program by next summer. However, according to The Christian Science Monitor, these allegations are only rhetorical games to pressure Obama to attack Iran.

Patrick Signoret and Isabel Gil

Financial Market Team update (data for 12 Aug 2010)

2010-08-12T13:10:00.002-05:00

13:51 ET

DJIA: -0.69% to 10307
S&P 500: -0.69% to 1082
Mexico IPC: +0.06% to 32078
Brazil Bovespa: -0.04% to 65765

FTSE 100: +0.4% to 5266
DAX: -0.31% to 6135

Nikkei 225: -0.86% to 9213
Hang Seng: -0.89% to 21106

US$1.00= 0.78 euros
US$1.00= 12.74 Mexican pesos (-0.07%)
US$1.00= 85.86 yen (+0.63%)
EUR$1.00= 1.28 USD (-0.28%)

WTI crude 1m: -2.24% to 76.27 USD/bbl.
Corn 1m: +3.22% to 424 USD/bu.
Wheat 1m (CBT): +3.86% to 753 USD/bu.
Gold 100 oz 1m: +1.46% to 1217 USD/t oz.

EMBI+Mex: 137
Cetes 28d: 4.5%

Patrick Signoret and Georgina Lara

Financial Market Team update (English, 12 Aug 2010)

2010-08-12T12:38:00.006-05:00

13:37 ET

Stocks
Yesterday, the S&P 500 and the DJIA reached their lowest level since July 23. Today, both have been trading steadily below yesterday's close. At the end of the day, the FTSE100 managed to pare earlier losses. Major American, European and Asian markets fell today, continuing yesterday's trend.

Currencies
After reaching a 15-year high, the yen is being closely monitored by Japan's central bank although no specific action has been mentioned.

Commodities
Oil continues to fall for the fifth straight day. Gasoline futures reached a five-week low. Gold continues to rise and has reached its highest for a month. Floods in Pakistan are making sugar prices climb since 200,000 acres of cane were destroyed.

Patrick Signoret and Georgina Lara

Choices in Economic Policy (USA...)

2010-08-11T17:35:00.004-05:00

The IMF's Chief Economist and head of fiscal affairs argue in today's FT that 'measures that improve the long-term fiscal outlook in those countries with high deficits and debt' should receive top priority, and they suggest that reforms of pensions and health are among the politically feasible options. The only economist who has not jumped in to the debate on Stimulus vs. Austerity must be Karl Marx, and he is indisposed. I would like to see a requirement that all writers of Op-Ed pieces on this subject be required to suggest just how their proposals could actually become reality in the current dysfunctional US political system? What sort of crisis that cannot be foreseen (a 'Black Swan Event' ?) will it take to bring about the needed political consensus? A grandes males, grandes remedios?

Financial Market Team update (data for 11 Aug 2010)

2010-08-11T16:18:00.003-05:00

16:30 ET

DJIA: -2.49% to 10379
S&P 500: -2.82% to 1089
Mexico IPC: -1.92% to 32059
Brazil Bovespa: -2.13% to 65790

FTSE 100: -2.44% to 5245
DAX: -2.1% to 6154

Nikkei 225: -2.7% to 9293
Hang Seng: -0.83% to 21295

US$1.00= 0.78 euros
US$1.00= 12.75 Mexican pesos (-0.01%)
US$1.00= 85.28 yen (-0.05%)
EUR$1.00= 1.29 USD (-0.02%)

WTI crude 1m: -3.54% to 77.41 USD/bbl.
Corn 1m: +0.49% to 411 USD/bu.
Wheat 1m (CBT): -0.24% to 725 USD/bu.
Gold 100 oz 1m: +0.18% to 1200 USD/t oz.

EMBI+Mex: 134
Cetes 28d: 4.53%

Aug 11 (Aug 10)
Ted spread: 23 (25)
T bill 3m: 0.15 (0.15)
USD Libor 3m: 0.38 (0.4)

Patrick Signoret and Georgina Lara

Financial Market Team update (English)

2010-08-11T16:06:00.004-05:00

15:09 ET

Monetary policy statements depress markets
The Bank of England's Mervin King said that "the UK recovery is likely to continue, but the overall outlook is weaker". (Read Mervin King's statement here.) The Fed and the Bank of England determined that quantitative easing would continue but would not be expanded. Major American, European and Asian stock markets fell today by more than 2%.

Currencies
The euro is at its lowest level for a month. It was down by more than 2%, representing its steepest one-day drop since January 2009. Although the yen reached its lowest level against the dollar earlier today (Y84.79), it is paring losses.

Treasury bonds
2-year, 5-year, 7-year and 10-year Treasuries have been falling; at one point during the day they reached record-low yields.

Commodities
According to the International Energy Agency's Oil Market Report released today, global demand for 2010 and 2011 is expected to rise as a result of an expected GDP increase. However, because of the BP's oil spill, a supply shortage is expected in 2011. Crude oil continues to fall for the fourth day and is now below US$80. Wheat futures are slightly down while corn futures are rising. After sugar rose yesterday on speculation that Russia's production of beets would be affected by the drought, it fell today on expectations of Indian exports.

(Read more about global markets in FT $ )

Patrick Signoret and Georgina Lara

Power and Policy Team Update (Español)

2010-08-11T12:29:00.004-05:00

Recortes presupuestales en Europa
Los recortes presupuestales se han convertido en estrategia común entre los países afectados por la crisis bancaria reciente de acuerdo al artículo publicado hoy en Le Monde. Los “planes de ajuste” han implicado la disminución del gasto en diversos sectores de las economías nacionales. En España, por ejemplo, se han congelado cerca de 200 proyectos que incluyen carreteras y ferrocarriles; en Gran Bretaña, los proyectos afectados son principalmente cárceles, colegios y hospitales. (Le Monde)

México: Lucha contra el narcotráfico
El ex presidente Vicente Fox publicó su carta “Momento de reflexión y propuestas” en la que critica la estrategia de Calderón en la lucha contra el narco. Bajo reserva del Universal habla de las críticas del ex mandatario a la estrategia del actual y de las posibles fracturas dentro del PAN.

Ley Antiinmigrante en Florida
Bill McCollum, fiscal general de Florida, propuso una ley contra la inmigración ilegal en su estado. De acuerdo con su despacho, la ley va un paso más allá que la propuesta en Arizona. (Más de esto en Reforma.)

Patrick Signoret e Isabel Gil

Power and Policy Team Update (English)

2010-08-11T12:22:00.006-05:00

U.S. Mid-term elections
Several states held primary elections. There was no clear trend in the results: incumbent candidates, candidates backed by party establishment, Tea Party candidates, outsiders, candidates endorsed by Obama...all kinds of candidates won. Read about the mixed results in the Washington Post. On the other hand, Politico says it was a good night for Democrats, because their big establishment candidates won, while the Republican's winning candidates were mostly outsiders who don't look strong for the general election (November 2).

In other election analysis, The Economist warns that the ethics trials of two senior Democrats could spell trouble for the party in November. Congressmembers Charles Rangel and Maxine Waters' districts are safely Democratic, but other districts are not.

Turkey: emergency security summit
Days before the upcoming referendum, Turkey’s Prime Minister convened an emergency security summit in response to information received by the government about plans to create chaos in 30 districts prior to the September 12th referendum. More about the summit and the events leading to it in this Sabah article.

Iraq’s new government
In its Weekly Geopolitical Update, Barclays discusses the absence of a new government in Iraq as the withdrawal of U.S. troops approaches. No alliances have been made, violence has risen, and relationships between Iraq and its neighbors are growing more and more tense.

Patrick Signoret and Isabel Gil

Global indicators published 10 Aug 2010

2010-08-10T23:42:00.003-05:00

Click on the table to enlarge it.

Power and Policy Team Update (español)

2010-08-10T17:16:00.002-05:00

Venezuela y Colombia restablecen relaciones
Hugo Chávez viajó a Colombia para reunirse con el nuevo presidente de Colombia, Juan Manuel Santos. Acordaron restablecer las relaciones diplomáticas. Entre otros acuerdos, Chávez dijo que no tolerará a las FARC en su territorio. Habían cortado las relaciones cuando Colombia acusó formalmente a Venezuela de apoyar a los guerrilleros colombianos, hace menos de un mes. (Vea las declaraciones de Santos, y las declaraciones de Chávez.)

Patrick Signoret e Isabel Gil

Power and Policy Team Update (English)

2010-08-10T17:08:00.006-05:00

Monetary policy decisions
The Bank of Japan agreed unanimously to leave its rates unchanged. (See the bank's statement.)
The Federal Reserve maintained the federal funds rate at 0-0.25%. The FT, among others, interpreted the decision and the statement as a) a downgrade in the Fed's economic outlook; b) a move towards monetary easing by "reinvesting proceeds from expiring mortgage-backed securities in longer-term Treasuries, thereby preventing a natural shrinking" of the central bank's balance sheet. (Read the Fed's statement.)

Afghanistan civilian deaths
The first six months of 2010 have seen an increase of 31% in conflict-related civilian deaths compared to the same period in 2009, according to a United Nations report published today. According to the report, two critical developments increased harm against civilians: anti-government elements (AGEs) "used a greater number of larger and more sophisticated improvised explosive devices (IEDs) throughout the country; and, the number of civilians assassinated and executed by AGEs rose by more than 95 per cent and included public executions of children." (Hat tip: NYT)

H1N1
The World Health Organization declared on Tuesday that the H1N1 influenza pandemic is officially over. The H1N1 virus killed 18, 499 people. (We read this in this LA Times article.)

Colombia and Venezuela restore diplomatic ties
Hugo Chávez went to Colombia, met with Juan Manuel Santos, Colombia's new president, and they restored diplomatic relations. Chávez had broken ties with Colombia when the latter formally accused Venezuela of supporting leftist Colombian guerrillas, less than a month ago. (See the video of Santos' statement.)

Patrick Signoret and Isabel Gil

Financial Market Team update (data for 10 Aug 2010)

2010-08-10T13:15:00.003-05:00

14:06 ET

DJIA: -0.88% to 10605
S&P 500: -1.01% to 1116
Mexico IPC: -0.82% to 32568
Brazil Bovespa: -1.05% to 67151

FTSE 100: -0.63% to 5376
DAX: -1.03% to 6286

Nikkei 225: -0.22% to 9551
Hang Seng: -1.5% to 21474

US$1.00= 0.76 euros
US$1.00= 12.67 Mexican pesos (+0.36%)
US$1.00= 85.8 yen (-0.16%)
EUR$1.00= 1.31 USD (-0.82%)

WTI crude 1m: -1.98% to 79.87 USD/bbl.
Corn 1m: -1.61% to 411 USD/bu.
Wheat 1m (CBT): -1.85% to 730 USD/bu.
Gold 100 oz 1m: -0.36% to 1198 USD/t oz.

Patrick Signoret and Georgina Lara

Financial Market Team update (English)

2010-08-10T13:07:00.005-05:00

Commodities
Commodities are falling. Gold prices fell for the second straight day. Copper prices are down, reaching a one-week low. Russia's drought has affected beet production and beets are used to make sugar, so sugar prices are rising. However, wheat and corn prices are down about 1.5%. A wheat producing region in Australia, the world's fifth exporter of wheat, is forecast to receive much needed rains. Read about Australia's wheat situation, in this FT article ($).

WTI prices fell the most in five weeks, despite a storm forming in the Gulf of Mexico which made drilling on a BP relief well stop.

Currencies
The dollar is rallying against the euro and the pound, although it is weaker against the yen.

Fixed income and credit
5-year and 10-year Treasuries are reaching their lowest yields for the year.

(Read more about today's financial data in this FT$ article, and in this Bloomberg webpage)

Patrick Signoret and Georgina Lara

Financial Market Team update (data for 9 Aug 2010)

2010-08-09T15:38:00.003-05:00

16:03 ET

Aug 9 (Aug 6)
Ted spread: 25 (26)
T bill 3m: 0.15 (0.15)
USD Libor 3m: 0.40 (0.41)

DJIA: +0.42% to 10698
S&P 500: +0.55% to 1127
Mexico IPC: -0.24% to 32837
Brazil Bovespa: -0.34% to 67862

FTSE 100: +1.47% to 5410
DAX: +1.47% to 6351

Nikkei 225: -0.72% to 9572
Hang Seng: +0.57% to 21801

US$1.00= 0.76 euros (+0.36%)
US$1.00= 12.62 Mexican pesos (-0.57%)
US$1.00= 85.88 yen (+0.43%)
EUR$1.00= 1.32 USD (-0.36%)

WTI crude 1m: +0.98% to 81.49 USD/bbl.
Corn 1m: -0.48% to 418 USD/bu.
Wheat 1m (CBT): +0.1% to 734 USD/bu.
Gold 100 oz 1m: -0.15% to 1203.5 USD t/oz.

Patrick Signoret and Georgina Lara

Financial Market Team update (English)

2010-08-09T15:35:00.006-05:00

Stocks
The Federal Reserve will announce its monetary policy decision tomorrow. Markets are expecting the Fed to keep interest rates at their current level, 0-0.25. However, FT and Bloomberg report that they anticipate some kind of measure to release more cash into the economy to provide a stimulus. Bloomberg believes this is the reason both American and European stocks advanced today.

Commodities
Crude oil remains near $81 as it went up in today's trading session. Grain prices continue to rise after the export ban in Russia. This has not only affected wheat but other grains as well. (Read about the grain prices in FT$.)

Patrick Signoret and Georgina Lara

Power and Policy Team Update (English)

2010-08-09T13:33:00.003-05:00

UK budget cuts
Budget cuts in Great Britain, $130 billion over the next five years, have been labeled by a UK think tank as the “longest, deepest sustained period of cuts to public services spending since World War II.” (Hat tip: NYT.)

North Korea
Tensions escalated between North and South Korea as the North fired more than 100 rounds of artillery in response to war drills performed by the South last week. (Read about it in the LA Times.)

Iran
This LA Times article describes how China, Russia, India and Turkey are seizing opportunities in Iran and are undermining the sanctions imposed on Iran by the West. “Efforts by the United States and its European allies to build a united front to halt Iran's nuclear program are facing increasingly bold resistance from China, Russia, India and Turkey…”. Sanctions took effect on July 1st.

Patrick Signoret and Isabel Gil

2010-08-07T12:01:00.001-05:00

Would like the meet this fellow in Queretaro who is often in the FT

Lengua incógnita

2010-08-06T21:34:00.001-05:00

http://ast.wikipedia.org/wiki/Burkina_Faso

Parece castellano, pero no lo es. Y de existir, existe. La gracia es descubrir qué idioma o dialecto es sin seguir ningún enlace revelador en la página propiamente tal.

Financial Market Team update (data for 6 Aug 2010)

2010-08-06T16:21:00.009-05:00

17:07 ET

DJIA: -0.2% to 10654
S&P 500: -0.37% to 1122
Mexico IPC: +0.03% to 32918
Brazil Bovespa: -0.46% to 68095

FTSE 100: -0.62% to 5332
DAX: -1.17% to 6260

Nikkei 225: -0.12% to 9642
Hang Seng: +0.59% to 21679

US$1.00= 0.75 euros
US$1.00= 12.69 Mexican pesos (+1.02%)
US$1.00= 85.51 yen (-0.36%)
EUR$1.00= 1.33 USD (+0.69%)

WTI crude 1m: -1.34% to 80.91 USD/bbl.
Corn 1m: +0.48% to 420 USD/bbl.
Wheat 1m (CBT): -7.36% to 755.25 USD/bbl.
Gold 100 oz 1m: +0.67% to 1207.3 USD/bbl.

Aug 6 (Aug 5)
Ted spread: 26 (27)
T bill 3m: 0.15 (0.15)
USD Libor 3m: 0.41 (0.42)

Patrick Signoret and Georgina Lara

Financial Market Team update (English)

2010-08-06T15:59:00.004-05:00

Stocks
U.S. unemployment was higher than expected, and German industrial production fell in June. Markets fell in America and Europe. (Read about this in Bloomberg.)

Currencies
The dollar reached its lowest point of the year against the yen, and is approaching a 15-year low against the Japanese currency.

Commodities
WTI oil prices fell along with the Western markets, but remained near their highest level since May.
Gold continued to rise, reaching its highest price in a month.
Russia banned wheat exports, making wheat prices reach their highest level in two years. The move “caught traders and food producers by surprise”, says FT ($).

Patrick Signoret and Georgina Lara

Power and Policy Team Update (English)

2010-08-06T12:35:00.004-05:00

Global Report on Terrorism: Mexico section
The U.S. Department of State published its Country Reports on Terrorism. It states that there is no reason to believe there are terrorist organizations operating in Mexican territory. However, it warns that rising violence in Mexico, especially along the U.S. border, could give terrorists opportunities to slip into the U.S. among the chaos, confusion and vacuum of power. (Hat tip: Reforma.)

Patrick Signoret and Isabel Gil

Power and Policy Team Update (español)

2010-08-06T12:12:00.006-05:00

Seguridad en la frontera México- EUA
Un proyecto de ley que contempla 600 millones de dólares para mejorar la seguridad en la frontera de México fue aprobado por unanimidad en el Senado de Estados Unidos. (Hat tip: Reforma)

México: Narcotráfico
A demás de reconocer la colaboración de México con Estados Unidos en la lucha contra el crimen organizado y el terrorismo; el Reporte Anual de Terrorismo en el Mundo, publicado por el Departamento de Estado de los Estados Unidos, afirma que no hay indicios de que en México existan organizaciones terroristas. Sin embargo, resalta la creciente tendencia de los cárteles mexicanos a recurrir a tácticas terroristas. (Leer sobre el reporte en El Reforma $.)

Turquía
El día de ayer concluyó la sesión anual del Consejo Supremo Militar turco. Lo que normalmente era considerado un trámite meramente burocrático y militar se convirtió en un suceso político importante para el gobierno de Erdogan. Este consejo es para decidir la renovación de la cúpula militar de acuerdo con los valores heredados del fundador de la República de Turquía, Mustafá Kemal Atatürk. El primer ministro logró que el general Hasan Igsiz, acusado de la trama golpista Ergenekon, no subiera al poder. (Leer sobre esto en El País.)

Patrick Signoret and Isabel Gil

Indicadores globales publicados 5 agosto 2010

2010-08-05T17:03:00.008-05:00

Hacer click en la tabla para ampliarla.

Power and Policy Team update (English)

2010-08-05T16:39:00.002-05:00

U.S. midterm elections polls
These New York Times Senate Race Ratings and House Race Ratings suggest that the Senate will remain Democratic and the House will be divided. In the Senate, 51 seats are solid or leaning Democratic, 39 seats are solid or leaning Republican, and 10 are tossups. RealClearPolitics’s poll average gives a similar picture. In the Senate: 49 seats are likely/leaning Democratic, 43 seats are likely/leaning Republican, and 8 seats are tossups. In the House: 202 seats are at least leaning Democratic, 201 seats are at least leaning Republican, and 32 seats are tossups. A party needs 218 seats in the House to have the majority.

Monetary policy decisions in Europe
Both the Bank of England and the European Central Bank maintained their monetary policy rates (0.5% and 1%, respectively). No rate change had been expected. See the UK decision and the ECB decision. In his speech today, Jean Claude Trichet said that economic forecasts for the third quarter of 2010 look better than expected.

Greek crisis
According to the report released today by the EC, ECB and IMF, Greece has made impressive progress in reducing its deficit. The first part of the program, the strong cuts in public spending and the structural reforms made it possible for Greece to reduce the first-half deficit by 45%. (Read about it in FT $.)

Israel and Lebanon
Fears of a bloodier and more destructive conflict between Israel and Lebanon had kept both countries relatively calm, says this International Crisis Group report, which was published the day before last week’s violent clash. Read about the conflict in this LA Times blog.

Patrick Signoret and Isabel Gil

Conferencia de Prensa IMSS: Estabilidad en el cálculo de pensiones

2010-08-04T23:22:00.004-05:00

Mi parte favorita viene al final, cuando Daniel Karam nos desea "Muchísimas tardes y que tengan muy buena tarde".

A ver quién me explica por qué entonces hace apenas unos días parecía que este resultado no se podría dar sin una reforma legal.

Why is deflation bad? (¿Por qué es mala la deflación?)

2010-08-04T22:58:00.004-05:00

This is the question I am most often asked at my presentations. In the latest round, we increased the probability of our deflation scenario for advanced economies to 40%.

Krugman answers it here. I quote:

There are actually three different reasons to worry about deflation, two on the demand side and one on the supply side.

So first of all: when people expect falling prices, they become less willing to spend, and in particular less willing to borrow. After all, when prices are falling, just sitting on cash becomes an investment with a positive real yield – Japanese bank deposits are a really good deal compared with those in America — and anyone considering borrowing, even for a productive investment, has to take account of the fact that the loan will have to repaid in dollars that are worth more than the dollars you borrowed. If the economy is doing well, all this can be offset by just keeping interest rates low; but if the economy isn’t doing well, even a zero rate may not be low enough to achieve full employment.

And when that happens, the economy may stay depressed because people expect deflation, and deflation may continue because the economy remains depressed. That’s the deflationary trap we keep worrying about.

A second effect: even aside from expectations of future deflation, falling prices worsen the position of debtors, by increasing the real burden of their debts. Now, you might think this is a zero-sum affair, since creditors experience a corresponding gain. But as Irving Fisher pointed out long ago (pdf), debtors are likely to be forced to cut their spending when their debt burden rises, while creditors aren’t likely to increase their spending by the same amount. So deflation exerts a depressing effect on spending by raising debt burdens – which, as Fisher also points out, can lead to another kind of vicious circle, in which depressed spending because of rising real debt leads to further deflation.

Finally, in a deflationary economy, wages as well as prices often have to fall – and it’s a fact of life that it’s very hard to cut nominal wages — there’s downward nominal wage rigidity. What this means is that in general economies don’t manage to have falling wages unless they also have mass unemployment, so that workers are desperate enough to accept those wage declines. See Estonia and Latvia, cases of.

Obama's update on BP spill

2010-08-04T22:15:00.002-05:00

Tabla de avances (prueba)

2010-08-04T20:35:00.002-05:00

Power and Policy Team update (English)

2010-08-04T18:22:00.005-05:00

Iraq’s neighbors
This Los Angeles Times article describes the struggle between some of Iraq’s neighbors to fill the void that the United States might leave. “Iran, Saudi Arabia, Syria and Turkey are all pursuing their agendas and taking sides along a Sunni-Shiite divide. That could become dangerous as U.S. troops withdraw.”

Pakistan
Raza Haider, the leader of the Muttahida Quami Movement (MQM), was assassinated on Monday. His death set off a wave of violence that has left at least 47 people dead the southern port of Karachi, Pakistan’s largest city. (See NYT report.)

BP Oil Spill
According to the White House 75% percent of the oil spill has been “captured, burned off, evaporated or broken down”. (Source: The Guardian.)

U.S. Supreme Court
Debate on Elena Kagan’s nomination started in the Senate. She has the support of all Democrats and some Republicans, and is expected to be confirmed by the end of the week. (More in NYT.)

Health care reform setback
Voters in Missouri approved a measure “intended to invalidate a crucial element of President Obama's health care law — namely, that most people be required to get health insurance or pay a tax penalty.” The effect of the vote remains uncertain, since the insurance requirement does not take effect until 2014 and since by then the courts “are likely to weigh in on the provision”. (See NYT report.)

Israel and Lebanon
Israeli and Lebanese forces exchanged fire among the border. At least four people were killed, the deadliest incident in the border since 2006. Lebanon and Israel traded accusations, but neither seemed interested in escalating the conflict. (Seen in FT$.)

Patrick Signoret and Isabel Gil

Financial Market Team update (data for 4 August 2010)

2010-08-04T17:51:00.004-05:00

16:30 ET

DJIA: +0.41% to 10680
S&P 500: +0.61% to 1127
Mexico IPC: +0.40% to 32900
Brazil Bovespa: +0.40% to 68272

FTSE 100: -0.19% to 5386
DAX: +0.37% to 6331

Nikkei 225: -2.11% to 9489
Hang Seng: +0.43% to 21549

US$1.00= 0.76 euros
US$1.00= 12.53 Mexican pesos (-0,41%)
US$1.00= 86.28 Yen (+0,58%)
EUR$1.00= 1.32 US$ (-0,56%)

WTI crude 1m: -0.01% to 82,54 US$/bbl
Corn 1m: +2.72% to 415,00 US$/bbl
Wheat 1m+6.45% to 755,50 US$/bbl
Gold 100 oz 1m: +0.76% to 1196.50 US$/bbl

Aug 04
Ted spread: 26
T bill 3m: 0.16
USD Libor 3m: 0.42

Patrick Signoret and Georgina Lara

FDI in Mexico in 2009 drops by 50% from 2008: What to do?

2010-08-04T17:08:00.005-05:00

FT's Adam Thompson cites a UN study showing that Mexico has dropped out of the top 20 destinations for foreign direct investment.

With the safety valve of emigration closing month-by-month, what can Mexico's federal and state governments do to attract more investment? Bombardier's happen once in a generation (viz Queretaro). It is the medium-size foreign enterprises that struggle with bureaucratic jungles and CFE.

The one industry that offers seemingly unlimited job opportunities is the one that Mexico is trying to shut down: the narco-cartels.

Financial Market Team update (English)

2010-08-04T16:05:00.011-05:00

Mexicana files for bankruptcy in Mexico and U.S.
Mexico’s airline filed for insolvency proceedings in Mexico and for bankruptcy protection in U.S. to avoid (more of) its airplanes to be seized by its creditors. It’s struggling to restructure its liabilities and to come to an agreement with its employees’ unions. The Mexican government is not planning on bailing the company out.
(El Financiero, Wall Street Journal)

Stocks
U.S. stocks advanced today after unexpected growth in the jobs and service industries.
Brazil's Bovespa started to rise again, after yesterday's fall had ended an 11-day winning streak.
European markets closed with mixed results and minor changes.
Asian stock markets, fell on yesterday's disappointing home sales and factory orders releases.
(FT$, Bloomberg)

Commodities
After crude oil rose 7.2% in four days, today it remains almost unchanged. U.S. gasoline inventories increased more than expected, but U.S. economic indicator releases were positive.
Gold rose for the sixth straight day.
(FT$, Bloomberg)

Patrick Signoret and Georgina Lara

Power and Policy Team update (español)

2010-08-04T14:46:00.010-05:00

IMSS no modificará pensiones
"El monto para calcular sus pensiones seguirá aplicándose al límite general de 25 salarios mínimos". Así lo dijo Daniel Karam, director del IMSS.
(El Economista)

México: Narco violencia
De acuerdo con Calderón el 90% de las muertes violentas del país corresponde a miembros de grupos criminales, el 6% a autoridades y el 1% por ciento a víctimas inocentes. Afirmó que no cederá en la lucha contra el narco y no dejará de enfrentarse a los criminales, aún si parte de la opinión pública cree que es la única manera de que disminuya la violencia. Ayer el CISEN confirmó que, en la administración actual, han habido 28 mil muertes relacionadas con el narco. (Reforma $)

Patrick Signoret e Isabel Gil

Financial Market Team update (español)

2010-08-04T14:43:00.005-05:00

Crisis de Mexicana
Ayer (martes 2 de agosto) Mexicana de Aviación “solicitó acogerse al concurso mercantil en México y su equivalente en Estados Unidos. La aerolínea enfrenta un fuerte pasivo con sus acreedores, en particular con arrendadores de aviones”, y la acción buscó evitar que más de sus aviones fueran confiscados a solicitud de sus acreedores. Sólo 9 de sus 64 aviones son propios. El gobierno mexicano ha rechazado rescatar a la aerolínea.
(El Financiero, Wall Street Journal)

Patrick Signoret y Georgina Lara

Business Cycle Team update (English)

2010-08-04T14:34:00.005-05:00

Brazil’s industrial production and Selic rate
The lower than expected level of industrial production in June (released on Tuesday) makes Credit Suisse reinforce its expectation that Brazil’s monetary policy rate will not be raised again in September.
(Credit Suisse)

U.S. non-manufacturing PMI
The Institute of Supply Management’s non-manufacturing PMI rose to 54.3 from 53.8 in June. It had been expected to fall.
(WSJ)

European PMIs
July’s final services and composite PMIs were published today. Although the Euro Area, Germany and France indices all improved compared to June, they were all below the flash estimates published July 22. The services PMIs fell in Spain and Italy. Italy’s services PMI, at 49.6, is the only index below the neutral level of 50.
(Markit Economics)

Patrick Signoret and Mariana Bulos

Financial Market Team update (English)

2010-08-03T17:03:00.005-05:00

16:02 ET

DJIA: -0.36% to 10636.38 (Close)
S&P 500: -0.48% to 1120.46 (Close)
Mexico IPC: -0.15% to 32768.08 (Close)
Brazil Bovespa: -0.76% to 67997.36 (Close)
FTSE 100: -0.01% to 5396.48 (Close)
DAX: +0.25% to 6307.91 (Close)

Nikkei 225: +1.29% to 9694.01 (Close)
Hang Seng: +0.21% to 21457.66 (Close)

USD-EUR: 0.7557
USD-MXN: -0.0018% to 12.582
USD-JPY: -0.7428% to 85.857
EUR-USD: +0.3949% to 1.3232

EMBI+Mex: 140
Cetes 28d: +0.009% to 4.61%

Aug 02 Aug 03
Ted spread 28 27
T bill 3m 0.16 0.16
USD Libor 3m 0.44 0.43

Stocks

US stocks fell and traded below yesterday's levels all day today on disappointing reports on home sales, factory orders, and consumer spending.

Bovespa, having advanced for 11 days straight (+9.9%), fell today after investors learned that industrial output had fallen in June by 1% from its May level.

European stocks changed little during the day. FTSE 100 fell by 0.01%, while the German DAX climbed 0.25%. DAX reached its highest level since April 26 despite the below-forecast results for U.S. home sales and factory orders.

Asian stocks rose after yesterday's better-than-expected reports on US manufacturing.

(FT, Bloomberg)

Commodities

Oil prices continue to move up on news that a tropical depression was approaching the Gulf of Mexico. After having risen by 3% yesterday, the WTI forward-month oil contract again advanced, by 1%, to $82.38. This is its highest level since last May.

Wheat prices declined after Russia reported that not all crops had been lost in the recent drought and that export volumes would hold stable. Analysts, however, warn that if Russian producers meet their export quotas, domestic shortages may ensue. Calls for a pause in grain exports have grown louder. We will continue to monitor the Russian wheat situation.

(FT, Bloomberg)

Patrick Signoret and Georgina Lara

Power and Policy Team update (español)

2010-08-03T15:33:00.002-05:00

Irán
El presidente Iraní Mahmud Ahmadineyad propuso a Obama un encuentro “cara a cara” para discutir las sanciones impuestas a Irán por su programa nuclear. El presidente afirmó que ninguna iniciativa ha logrado detener el programa nuclear iraní, que sigue argumentando que no tiene fines bélicos sino objetivos civiles. (El País)

Narcoviolencia en México
El titular del CISEN, Guillermo Valdés, afirmó que este gobierno no ha logrado reducir la violencia derivada del narcotráfico y reveló que en el periodo presidencial de Calderón se reportan ya 28 mil muertes. (Reforma)
Por otro lado, el presidente Calderón argumenta que su gobierno no ha sabido explicar la lucha contra el narcotráfico. Afirmó que a pesar de que el gobierno federal no desea ocultar información, no tiene control sobre la información de los estados. (El Universal)

Se plantea limitar depósitos en pesos
La Asocación de Bancos de México propuso limitar los depósitos a un máximo de 50 mil pesos en efectivo, para combatir el lavado de dinero. (Reforma)

Efectos de derrame de petróleo en México
México ha gastado 35 millones de dólares en monitoreo, sobrevuelos y recorridos para tener la información necesaria para combatir el derrame de petróleo. Hasta ahora no se ha detectado presencia de crudo en territorio mexicano (se había previsto que llegara a finales del año). El Secretario de Medio Ambiente aseguró que el gobierno mexicano pedirá al de Estados Unidos por los gastos. (Reforma)

EUA: acción del gobierno federal frena más leyes antiimigrantes
Otros estados que habían considerado adoptar leyes como la de Arizona han decidido no hacerlo todavía, después de que el gobierno federal haya intentado exitosamente de bloquear las partes más controversiales de la Ley Arizona. (Reforma)

Patrick Signoret e Isabel Gil

Power and Policy Team update (English)

2010-08-03T14:38:00.006-05:00

Italy no-confidence vote on Wednesday
The vote will be a test to see if Berlusconi’s ruling coalition can survive the defection a breakaway faction of 33 members (Gianfranco Fini and his new Future and Liberty group). It’s not clear what the result will be. The motion was brought by opposition parties, not by the breakaway faction, and the Future and Liberty group considers itself center-right (same as ruling government coalition).
(FT)

U.S. Fed considers “symbolic shift”
The Wall Street Journal reports that the Fed is considering a “modest but symbolically important change in the management of their massive securities portfolio “ in a meeting next week, in the wake of a slowdown in growth. It might use the cash it receives fom mature mortgage-bond holdings to buy new mortgage or Treasury bonds, instead of allowing its portfolio to slowly shrink. Here is the complete article.

Koreas
North Korea continues to threaten the South with retaliation, in response to a series of war drills planned by the South to start on Thursday. These exercises are considered by the North as a direct military invasion. (NYT)

Pakistan and Afghanistan
According to the Pakistani president, the war against the Taliban is being lost. The international community, he said, has failed to win hearts and minds. These declarations were made just before his visit to the UK, with whom relations are tense after the accusations following the document leaks, which accused Pakistan of playing a double game in the Afghan war, and David Cameron’s cozy visit to India. (The Guardian)

Patrick Signoret and Isabel Gil

Business Cycle Team update (English)

2010-08-03T14:14:00.003-05:00

Mariana Bulos and Patrick Signoret

PMIs: China’s falls, India’s rises
China’s PMI for July fell below 50, reporting a final 49.4. Employment was the only index that improved. But the non-manufacturing PMI stays at 57.8 for July. In India, manufacturing PMI for July rose 0.6% to 57.6. PMI and exports data reinforce the JPMorgan view that there will be a new 25bp raise in the policy rates on September 16.
(Credit Suisse, JPMorgan)

Mexico’s Banxico survey
Inflation expectations for the end of 2010 (4.59%), end 2011 (3.90%), average for 2011-2014 (3.69%) and average for 2015-2018 (3.53%) were all slightly lower than in the June survey.
The survey’s median expectation for GDP growth was 4.5% in 2010 and 3.6% in 2011.
(Banxico, Credit Suisse)

Euro Area producer price index
Producer prices grew a 12m 3.0% in June, after a rate of 3.1% in May. Barclays notes that this increase in producer prices has still not been passed on to core consumer prices.
(Barclays)

Income and spending in United States
June personal income and consumer spending had zero growth in June, while the consensus forecast was 0.2% and 0.1%). This was in line with the softer than expected GDP growth rate published last Friday.
(Barclays)

Power and Policy Team update (Español)

2010-08-03T03:06:00.003-05:00

Isabel Gil y Patrick Signoret

Frontera México-EUA
El dispositivo de 1,200 soldados que el presidente Obama envió a reforzar la seguridad en la frontera estará funcionando plenamente a finales de septiembre.
(El País)

Estados donde estaba “Nacho” habían sido más violentos
En los meses previos a la muerte de “Nacho” Coronel (líder de cártel de drogas muerto la semana pasada en operativo militar), los tres estados que controlaba habían tenido un alza enorme en la violencia según Reforma. Estos estados son Jalisco, Nayarit y Colima. Seguir el número de muertes por estado podría ser una forma interesante de ver los efectos de los cambios de líderes y conflictos entre los cárteles de drogas.
(Reforma)

Patrimonio gigantesco del SME
El líder de los disidentes del SME, Alejandro Muñoz, pide repartir los bienes del sindicato equitativamente entre los trabajadores. Estima que cada trabajador podría recibir 300 mil pesos. Él y sus seguidores se oponen al liderazgo de Martín Esparza.
(Reforma)

Amenazas a sheriff de Arizona
Fox News difundió imágenes y sonido de mensajes de texto y voz ofreciendo dinero a quien asesine al sheriff Joe Arpaio, quien es conocido por ser duro contra los imigrantes ilegales. Los mensajes ofrecen 1 millón de dólares y proveen un número de teléfono para conseguir instrucciones. Sin embargo, esta noticia no parece haber sido importante en los grandes diarios de EUA.
(Reforma)

Power and Policy Team update (English)

2010-08-03T02:51:00.004-05:00

Isabel Gil y Patrick Signoret

War in Iraq
By August 31st America´s mission in Iraq will end, said president Obama. According to the promises made during his campaign, by the end of this month there will only be 50,000 troops in Iraq, which will be in charge of supporting and training Iraqi security forces. These troops will leave Iraq at the end of 2011. Meanwhile, Iraq is in political deadlock, five months after the parliamentary elections. Here’s a link to Obama's full speech: http://tinyurl.com/24w3j95 (NYT, FT, White House)

Israel
Ban Ki-moon formally announced the creation of a commission to investigate the incident of the Gaza flotilla. Israel, who had previously been reluctant, announced its cooperation on Monday.
(NYT)

Bernanke speech
One week before the next interest rate setting meeting, Bernanke gave a speech in South California where he argued that even though the financial crisis seems to have passed, the U.S. has still a long way to go in order to achieve full economic recovery. “A long way to go” and “caution” were the main words that stuck in markets and newspapers.
(FT)

Financial Market Team update

2010-08-03T01:43:00.004-05:00

Georgina Lara y Patrick Signoret

13:07 ET

DJIA: +1.75% to 10649.1
S&P 500: +1.93% to 1122.88
Mexico IPC: +1.14% to 32676.39
Brazil Bovespa: +1.59% to 68587.32

FTSE 100: +2.65% to 5397.11 c
DAX: +2.34% to 6292.13 c

Nikkei 225: +0.35% to 9570.31 c
Hang Seng: +1.82% to 21412.79 c

USD-EUR: 0.759
EUR-USD: +0.9539% to 1.3176
USD-JPY: +0.0174% to 86.485
USD-MXN: -0.5749% to 12.573

Corn 1m: 0% to 406.75
WTI future 1m: +3.14% to 81.43
Gold spot 1m: +0.08% to 1184.8

Stocks
********
U.S. stocks are climbing after last week's fall after today’s release of positive construction spending and manufacturing reports. Both surpassed market expectations. Better-than-estimated earnings at companies may also have increased confidence in the economic recovery.

European stocks advanced in general after HSBC and BNP Paribas rallied. Production indices in the Euro Area showed mainly increases. Germany's situation as the biggest economy in Europe and the one leading the pace to economic recovery in the zone may have boosted investors’ optimism. UK stocks reached the highest level in two and a half months.

Asian stocks advanced following PMI reports that made investors confident that the region is growing.

(FT, Bloomberg)

Commodities
***********
U.S. crude oil continues last week’s trend and has risen more than 3%. The rise in oil prices may be due to the controlled supply by OPEC countries and the growing demand by some emerging markets like China.

Gold also continues to rise after several days of falling.

Soybean and corn prices rose again reaching the highest level since January after the drought in Russia, and other parts of Europe, harmed crops. The demand is now being satisfied by U.S. production.

Auroba y Diebold describen y explican la recesión

2010-01-28T13:13:00.004-06:00

English

En su nuevo borrador de trabajo para NBER, titulado "Real-time monitoring: real time macroeconomic activity, inflation, and interactions" ("Monitoreo en tiempo real: actividad macroeconómica, inflación e interacciones en tiempo real"), S. Boragan Aruoba y Francis X. Diebold resumen su método para medir la actividad económica en tiempo real y, con base en dos índices resultantes, describen y explican la recesión reciente.

Los autores (desarrollan un marco de trabajo con múltiples indicadores y un único factor latente que extraen vía un filtro de Kalman, y) construyen índices para actividad e inflación reales.

Para construir su índice de actividad, se apoyan en cinco indicadores: nóminas, producción industrial, ingreso personal real descontando transferencias, ventas reales en manufactura y comercio, y PIB real.

Para su índice de inflación, incorporan seis indicadores: el índice de precios al consumidor, el índice de precios al productor de bienes terminados, un índice de precios de materias primas no energéticas, el precio spot de petróleo, el deflactor del PIB y remuneraciones por hora de los trabajadores.

Con respecto a la reciente recesión en EUA, concluyen lo siguiente:

La Gran Moderación no fue una ilusión –la volatilidad en la actividad económica real se moderó notablemente entre 1985 y 2007.
La actividad real alcanzó su mínimo en enero 2009.
La recesión terminó en julio 2009. (Los autores definen el final de una recesión como el regreso en su índice de actividad a su nivel promedio de cero).
Comparada con recesiones pasadas, ésta fue bastante profunda. Pero un hecho más notorio es que fue larga (19 meses).
La deflación comenzó más tarde (en el verano de 2008) y duró menos que la recesión (seis meses). Pero, de acuerdo con los autores, dado que tanto la actividad como la inflación se desplomaron, la causa de la recesión parece haber sido un shock de demanda y no uno de oferta.

Yo tengo cinco comentarios:

El shock de demanda al que se refieren los autores es claramente la crisis financiera.
Los autores están desarrollando una versión global de su índice. Espero que su definición de “global” incluya a economías emergentes como la de México.
¿Qué se supone que un analista de México use en lugar del ingreso personal descontando transferencias? ¡Anhelo un indicador como ese para México! (¿Me estás oyendo, INEGI?)
Los precios de materias primas siguieron subiendo hasta el verano de 2008, incluso cuando la actividad comenzó a disminuir. Quizás durante los primeros siete meses de la recesión la economía de EUA pasó por shocks de oferta y demanda al mismo tiempo.
Para un macroeconomista, el término "inflación" se refiere a un aumento generalizado en los precios, no a un cambio en precios relativos. Ambos fenómenos mueven los precios promedio. ¿Por qué todas nuestras medidas de inflación consideran promedios e ignoran cuán amplio fue el cambio en los precios? Esto confunde al público sobre la inflación y la política monetaria, y la confusión erosiona la credibilidad del banco central. Bancos centrales como Banxico pueden contrarrestar ese efecto educando al público sobre la diferencia entre los dos fenómenos.

En mi siguiente nota voy a ampliar el comentario 5.

Aruoba and Diebold describe and explain recession

2010-01-27T09:20:00.011-06:00

Español

In their new NBER working paper "Real-time monitoring: real time macroeconomic activity, inflation, and interactions," S. Boragan Aruoba and Francis X. Diebold summarize their methodology and use two resulting indices to describe and explain the recent recession.

The authors (develop a state space framework with multiple indicators and a single latent factor extracted via a Kalman filter to) construct a real activity index and an inflation index.

For activity, they use five indicators: payroll employment, industrial production, real personal income less transfers, real manufacturing and trade sales, and real GDP.

For inflation, six: CPI, finished-goods PPI, a non-energy commodity prices index, spot oil prices, the GDP deflator, and hourly compensation.

With regard to the recent U.S. recession, they conclude the following:

The Great moderation was no illusion—volatility in real economic activity moderated notably from 1985 to 2007.
Real activity troughed in January 2009.
The recession ended in July 2009. (The authors define the end of a recession as a return in their activity index to its historic average of zero.)
Compared with past recessions, the recession was quite deep. But, more notably, it was long (19 months).
Disinflation started later (in the summer of 2008) and was shorter than the recession (six months). But, according to the authors, because inflation and activity both dropped, the cause of the recession seems to have been a demand shock, not a supply shock.

I have five comments:

The demand shock to which the authors allude is clearly the financial crisis.
The authors are working on a global version of their index. I do hope that their definition of "global" includes emerging economies such as Mexico.
What is a Mexico analyst supposed to use in lieu of a real personal income less transfers? I yearn for such an indicator in Mexico! (INEGI, are you listening?)
Commodity prices blew up until the summer of 2008, even as activity began to slow down. Perhaps because for the first seven months of the recession the U.S. economy was experiencing a supply and a demand shock both.
Macroeconomists speak of inflation as a general rise in prices, not a change in relative prices. Both phenomena move average prices. So why do all our inflation measures consider averages and ignore how broadly prices are changing? This confuses the public both about inflation and monetary policy, and the confusion unjustly erodes central bank credibility. Central banks such as Banxico can counteract by better educating the public about the difference between the two phenomena.

In my next blog entry, I'll expand on comment 5.

Stiglitz en dos idiomas. Stiglitz in two languages.

2010-01-05T21:40:00.008-06:00

¡Me encanta el Project Syndicate! Permite leer a Stiglitz sobre regulación financiera en inglés o en español.

Su tesis:

Lo que se necesita es una estrategia de múltiples puntas, que incluya impuestos especiales, mayores requisitos de capital, una supervisión más estrecha y limitaciones al tamaño y las actividades de toma de riesgo.

Al leer las dos versiones, no sólo puedes absorber los comentarios provocativos de Stiglitz sino también adquerir un glosario genial sobre megabancos y riesgo sistémico:

Too-big-to-fail = Demasiado grande para quebrar
Too-complex-to-fail = Demasiado complejo como para quebrar
Too interconnected to fail = Demasiado entrelazadas como para quebrar
Excessive risk taking = Una toma de riesgos excesiva.

***********

I love Project Syndicate! It gives you Stiglitz on financial regulation in English and Spanish both.

His thesis:

What is required is a multi-prong approach, including special taxes, increased capital requirements, tighter supervision, and limits on size and risk-taking activities.

By reading both versions, you come away with not only Stiglitz's provocative sommentary but also a nifty glossary on megabanks and systemic risk:

Too-big-to-fail = Demasiado grande para quebrar

Too-interconnected to fail = Demasiado entrelazadas como para quebrar
Excessive risk taking = Una toma de riesgos excesiva

Lo que estoy leyendo. What I'm reading.

2009-09-09T19:26:00.017-05:00

For English, scroll down.

Sigo educándome en política mexicana y Stata. También estoy refinando mi conocimiento de planeación basada en escenarios.

Estoy leyendo un libro que mencioné en mi artículo del 30 de marzo 2008 en este mismo blog: Los Socios de Elba Esther, por Ricardo Raphael.

Advertencia para quienes no sean mexicanos y lean esto: si no saben quién es Elba Esther Gordillo o cuánto poder tiene, entonces no entienden la política mexicana y no pueden estimar correctamente la posibilidad de que México experimente crecimiento económico acelerado.

Pueden seguir la pista de los escritos de Ricardo Raphael, la mayoría de los cales aparecen en el diario El Universal, de Ciudad de México, haciendo clic en el siguiente vínculo: Instituto de Estudios para la Transición Democrática.

Ya abrí el libro Statistics with Stata de Lawrence C. Hamilton, pero estoy decepcionada. Aunque es un buen manual de referencia, no es lo que esperaba cuando lo ordené. Yo quería un libro que me ayudara a entrenar a mis asistentes en estadística y Stata al mismo tiempo. Resulta que el libro es sólo un recurso para usar Stata. Ya teníamos varios de esos.

Lo que sí me va a ayudar a entrenar a mis asistentes en análisis estadístico aplicado es el libro Your Statistical Consultant de Rae R. Newton y Kjell Erik Rudestam. Lo compré hace mucho, pero apenas empecé a leerlo. ¡Es tan sencillo e intuitivo! Pero su mejor uso es como guía para revisión y como un manual de métodos. Y también tengo una advertencia para usuarios de este libro: se promociona como un libro que no es de matemáticas, pero el contenido no va a tener mucho sentido para quien lo lee sin haber aprendido al menos lo básico de las matemáticas involucradas.

Para preparar un proyecto para clientes, estoy llevando a cabo la deliciosa tarea de releer el excelente libro Scenarios: The Art of Strategic Conversation, escrito por Kees van der Heijden.

El libro de Van der Heijden no es ligero. Si quieren uno que sí lo sea, lean el de Peter Schwartz.

(Esta lista se está volviendo vergonzosa porque parece que sólo estoy releyendo libros. No lo puedo evitar.)

Lo admito: los siguientes libros sólo están relacionados indirectamente con la economía global y los mercados financieros, pero estoy releyendo la versión en prosa por R. K. Narayan del poema épico anónimo El Ramayana. Este libro me estremece. También descubrí a una poetisa nueva para mí, Julia Copus, y un maravilloso poema suyo: "The Back Seat of My Mother's Car".

Como saben, Andrés Aranda, mi analista de commodities saliente (sollozo) y el excelente traductor de este blog, es tímido, pero me permitió decirles que está leyendo Infinity and the Mind de Rudy Rucker. Hoy me envió unas selecciones muy atractivas, en que el autor cuenta sus peregrinaciones a la oficina de Kurt Gödel en el Instituto de Estudios Avanzados. También está intentando descifrar Her, de Lawrence Ferlinghetti y un puñado de libros sobre grupos de permutaciones y teoría de modelos.

¿Qué están leyendo ustedes?

***************

I continue to educate myself on Mexican politics and Stata. I am also refining my knowledge on scenario-based planning.

I am rereading a book that I mentioned in my 30 March 2008 post: Los Socios de Elba Esther, by Ricardo Raphael.

Non-Mexicans beware: If you don't know who Elba Esther Gordillo is or how much power she wields, you don't have a clue about Mexican politics and can't properly gauge Mexico's prospects for accelerated economic growth.

You can follow author Ricardo Raphael's writing, most of which appears in the Mexico City daily, El Universal, by clicking here: Instituto de Estudios para la Transición Democrática.

I've opened but am disappointed with Statistics with Stata by Lawrence C. Hamilton. Even though it's a fine reference manual, it is not what I expected when I ordered it. I wanted a book to help me coach my staff in statistics and Stata at the same time. It turns out that it's a resource on Stata alone. We already had plenty of those.

What will help me coach my junior staff in applied statistical analysis is Your Statistical Consultant by Rae R. Newton and Kjell Erik Rudestam. I had bought it long ago but only just now opened it. So simple! So intuitive! But it's best used for review and for a how-to handbook. A warning, however: it's touted as non-mathematical but it will make little sense if you haven't first learned at least the basics of the math.

To prepare a project for clients, I'm engaged in the delicious task of rereading the excellent Scenarios: The Art of Strategic Conversation by Kees van der Heijden.

Van der Heijden's book is not lite. If you want lite, read the Peter Schwartz book.

(This list is getting embarrassing, because all I seem to be doing is reread books. I can't help it.)

OK, these are only indirectly related to the global economy and financial asset markets, but I'm rereading R. K. Narayan's gorgeous prose rendition of the anonymous epic The Ramayana. This book makes me tremble. Also, I've discovered a new poet, Julia Copus, and a marvelous poem by her: "The Back Seat of My Mother's Car."

As you know, Andrés Aranda, my outgoing (sniff!) commodities analyst and this blog's excellent translator, is shy, but he said that I could tell you that he's reading Infinity and the Mind by Rudy Rucker. He sent me enticing excerpts from it today, in which the author recounts his pilgrimages to Kurt Gödel's office at the Institute for Advanced Study. He's also trying to decipher Lawrence Ferlinghetti's Her and a bunch of books on permutation groups and model theory.

What are you reading?

Krugman's latest is must reading

2009-09-07T10:06:00.009-05:00

Read Krugman on how economists got it wrong.

(Hat tip to Leonardo Vera via Tamara Herrera.)

El más reciente artículo de Krugman es lectura obligatoria

Lean el artículo de Krugman sobre cómo se equivocaron los economistas.

(Hat tip a Leonardo Vera a través de Tamara Herrera.)

The Mexican Fracture (La Fractura Mexicana)

2009-09-04T09:21:00.011-05:00

(For Spanish, scroll down)

Only now have I discovered anthropologist and sociologist Roger Bartra, having just read La Fractura Mexicana: Izquierda y derecha en la transición democrática (The Mexican Fracture: Left and right in the transition to democracy, so far unavailable in English).

Published in May 2009, La Fractura's prescient thesis is that, if the PRD and PAN don't modernize, the PRI can resurge.

By "modernize", Bartra means, for the PRD, democratize; for the PAN, secularize.

Bartra lays out his thesis persuasively. Along the way, he teaches his readers about the histories of and threads running through Latin American populism and Mexican Catholic political thought--I found this to be highly useful and illuminating.

Moreover, Bartra can write. His style is always pleasing and often lyrical. He's learned yet direct.

One thing irked me about La Fractura Mexicana, however. Its entire story fits into the first four of eight chapters. Chapters five through eight, self-contained essays on diverse themes distinct from that of Mexico's political fractures in 2009, don't belong. Random House Mondadori would have done better to publish a slimmer volume that cohered.

Notwithstanding this flaw in his book, I'm keen to read more from the author: I shall now start to follow Bartra's blog at Letras Libres.

La Fractura Mexicana

Acabo de descubrir al antropólogo y sociólogo Roger Bartra, a través de su libro La Fractura Mexicana: Izquierda y derecha en la transición democrática.

El libro se publicó en mayo 2009, y su tesis profética es que si el PRD y el PAN no se modernizan, el PRI puede resurgir.

"Modernizarse" en el sentido que sugiere Bartra, significa democratizarse para el PRD y secularizarse para el PAN.

Bartra expone su tesis de manera convincente. Al mismo tiempo, enseña a sus lectores acerca de las historias y tramas del populismo latinoamericano y del pensamiento político de los católicos mexicanos. Esto me pareció muy útil y esclarecedor.

Además, Bartra es un buen escritor. Su estilo es siempre placentero y a menudo lírico. Es a la vez erudito y directo.

Sin embargo, algo me molestó en La Fractura Mexicana. Toda la historia cabe en los primeros cuatro capítulos. Los capítulos cinco a ocho, que son ensayos autocontenidos sobre temas distintos de las fracturas políticas de México en 2009, sobran. Habría sido mejor que Random House Mondadori publicara un volumen más delgado, pero coherente.

A pesar de esa falla en el libro, me interesa leer más de este autor. Comenzaré a seguir el blog de Bartra en Letras Libres.

What does North Korea want? An interview with Jenik Radon.

2009-06-30T19:17:00.007-05:00

(For Spanish, scroll down)

It's quarterly forecast time at TransEconomics, which means time to revisit the geopolitical assumptions that embed our forecast for the global economy and its impact on Mexico.

To that end, this morning I called my friend Jenik Radon, Adjunct Assistant Professor of International and Public Affairs at Columbia University, and left a simple message on his voice mail: "Jenik, this is Jenny. What does North Korea want?"

Jenik's answer came in a subsequent phone interview.

Jenny, you've asked a very hard question. North Korea cannot be analyzed in traditional terms and accordingly does not act in any traditional way. It has proven to be unpredictable in its actions, and thus there is no clarity as to its goals. It's one thing to shoot a missile, another to conduct a nuclear test, and a third thing altogether to threaten to aim a missile at Hawaii. This does not make sense.

What do I read in this? Not any specific goals but a statement: "We are here. We can stand up. We want attention and we will get it—as a player equal to all. So don't disregard us. No one can dictate to us." Status seems to be the prime motivator. Certainly economics is not.

Moreover it must always be kept in mind that, although North Korea is dependent on China, North Korea is neither interconnected to nor engaged with the rest of the world. As long as China is willing to tolerate unconventional behavior, this gives North Korea a sense of security.

So this is not about money? North Korea's aim is not extortion but attention getting?

Precisely.

Can you expand on North Korea's relationship with China? How does it affect North Korea's behavior?

North Korea can behave this way only as long as its main benefactor does not really object. Until North Korea's May 25 nuclear test, China, although periodically annoyed by North Korean actions, had not seriously objected.

So perhaps my original question should have been, what does China want?

Before I answer that, note that China voted with the United States this time on the National Security Council. That was highly unusual. Stunning. China's tolerance clearly has limits, and North Korea this time went too far.

Now to your question. China gains a few things from North Korea's actions. One is a way to signal feelings to Japan. Japan has still not apologized for Nanking and the commission of other World War II atrocities. Until remorse is shown by Japan, China and Japan cannot be true friends.

In short, as long as North Korea really only annoys Japan, North Korea acts within some sort of limits.

Second, it prevents a unified Korea, which eventually would be stronger nation than today's divided one.

Granted, that would take time. Look at how long it is taking East and West Germany to re-integrate fully, and West Germany was much wealthier than South Korea is today.

In the case of the Koreas, the gap is not just economic. It's also cultural. I reckon it would take 50 years for the two cultures to come together. Think of the extreme isolation of the North and the lack of the development of any functioning economic system in the North. Sadly, one need only look at how difficult it has been for North Korean refugees to integrate into the social and economic systems of South Korea.

But China takes the long view. One Korea in the long view would be a strong economic neighbor and and competitor. So two Koreas are better than one.

China of course should view it differently. You are only as strong as your weakest link. And an unpredictable and poor neighbor, here North Korea, is simply a weak link and is costly. It weighs on, burdens, China’s relations with the USA, and forces China’s to guard its borders to prevent a rush of millions of hungry refugees.

Third, through continuous efforts such as the Six-Party Talks, China can pursue a peace policy that deflects attention from the two-China issue: Taiwan – Mainland China.

What's the downside for China?

China likes foresight and predictability. This explains its recent loss of patience with North Korea. China now needs to worry that North Korea could become even more unpredictable.

Any thoughts on Kim Jong-woo, Kim Jong-il's apparent successor?

He'll likely take over as head of state but won't have much control at first. Real control will rest in the hands of his mentor in the old oligarchy, Jang Song-taek.

Thank you, Jenik.

My pleasure.

¿Qué quiere Corea del Norte? Una entrevista con Jenik Radon

Es temporada de pronósticos trimestrales en TransEconomics, lo que significa que es momento de revisar los supuestos geopolíticos en que se arraigan nuestras proyecciones para la economía global y su impacto sobre México.

Por eso llamé esta mañana a mi amigo Jenik Radon, Profesor Asistente Adjunto de Asuntos Internacionales y Públicos de la Universidad de Columbia, y dejé un mensaje sencillo en su contestadora: “Jenik, soy Jenny. ¿Qué quiere Corea del Norte?

La respuesta de Jenik vino en una entrevista telefónica más tarde.

Jenny, has hecho una pregunta muy difícil. Corea del Norte no se puede analizar en términos tradicionales y tampoco actúa de manera tradicional. Ha demostrado ser impredecible en sus acciones, y por lo tanto sus metas no son claras. Una cosa es lanzar un misil, otra es conducir una prueba nuclear, y todavía otra completamente distinta es amenazar con apuntar un misil hacia Hawaii. Esto no tiene sentido.

¿Qué es lo que veo en esto? No una meta específica, sino una declaración: “Aquí estamos. Nos podemos hacer notar. Queremos atención y la obtendremos, como participantes iguales a los demás. No nos desdeñen. Nadie puede mandar sobre nosotros.” El estatus parece ser la principal motivación. la economía ciertamente no lo es. Además siempre debemos tener en mente que, aunque Corea del Norte depende de China, no está interconetada o comprometida con el resto del mundo. Mientras China esté dispuesta a tolerar su conducta, Corea siente cierta seguridad.

¿Entonces no se trata de dinero? ¿La intención de Corea del Norte no es extorsionar, sino obtener atención?

Precisamente.

¿Puedes explicar con más detalle la relación entre Corea del Norte y China? ¿Cómo afecta al comportamiento de Corea del Norte?

Corea del norte se puede comportar así mientras su principal benefactor no ponga objeciones. Hasta la prueba nuclear del 25 de mayo, China mostraba periódicamente molestia por las acciones de Corea del Norte, pero no las había objetado seriamente.

Quizás mi pregunta original debió ser, ¿qué quiere China?

Antes de que responda eso, nota que China votó en el mismo sentido que EUA en el Consejo de Seguridad. Esto fue inusitado. Para quedarse perplejo. La tolerancia de China claramente tiene límites, y esta vez Corea del Norte fue demasiado lejos.

Ahora respondo tu pregunta. China gana algunas cosas por las acciones de Corea del Norte. Una de ellas es un medio para enviar señales a Japón. Japón no se ha disculpado por la masacre de Nanking y por cometer otras atrocidades durante la Segunda Guerra Mundial. China y Japón no se pueden llevar verdaderamente bien mientras Japón no muestre remordimiento.

En pocas palabras, mientras Corea del Norte sólo moleste a Japón, puede actuar dentro de ciertos límites.

En segundo lugar, evita que Corea se unifique, lo que eventualmente conduciría a una nación más fuerte que la dividida.

Es cierto que tomaría tiempo. Mira cuánto le ha tomado a Alemania reintegrarse completamente, y Alemania Occidental era mucho más rica que Corea del Sur.

En el caso de las Coreas, la brecha no es sólo económica, sino también cultural. Estimo que tomaría unos 50 años que las dos culturas se unificaran. Piensa en el extremo aislamiento del Norte y el escaso desarrollo de cualquier sistema económico funcional. Tristemente, uno sólo tiene que ver cuán difícil ha sido para los refugiados norcoreanos integrarse en los sistemas social y económico de Corea del Sur.

Pero China tiene visión de largo plazo. Una Corea en el largo plazo sería un vecino económicamente fuerte y un competidor. Entonces dos Coreas son mejor que una.

Por supuesto que China debería ver esto de otra forma. Una cadena es sólo tan fuerte como el más débil de sus eslabones. Y un vecino impredecible y pobre como Corea del Norte no es sino un eslabón débil y costoso. Pesa en las relaciones de China con EUA, y obliga a China a resguardar sus fronteras para evitar la entrada de millones de refugiados hambrientos.

En tercer lugar, a través de esfuerzos continuos como las pláticas entre seis naciones, China puede seguir una política de paz que desvíe la atención del asunto de las dos Chinas: Taiwán y la China continental.

¿Cuál es la desventaja para China?

A China le gusta la visión a futuro y que las situaciones sean predecibles. Esto explica por qué perdió la paciencia con Corea del Norte recientemente. China ahora necesita preocuparse por que se Corea del Norte se vuelva todavía más impredecible.

¿Tienes algún pensamiento sobre Kim Jong-woo, el aparente sucesor de Kim Jong-il?

Es probable que tome el cargo de jefe de estado pero que no tenga mucho control al principio. El verdadero control quedará en manos de su mentor de la vieja oligarquía, Jang Song-taek.

Muchas gracias, Jenik.

Fue un placer.

New blogs (for me) on Middle Eastern politics

2009-04-17T08:22:00.005-05:00

Concerned about news reports that tensions and perhaps violence are rising in Iraq, I've started identifying blogs that might help me monitor things there.

Juan Cole writes in breezy fashion, providing above all a useful news roundup that in recent days has focussed on human rights. (I say "in recent days" because I'm new to the blog so can't speak of its history.)

Of higher added value---that is, containing less news and more meaty analysis---is Marc Lynch's blog at Foreign Policy.

I'd appreciate help from readers in identifying good Spanish-language blogs on Middle Eastern affairs.

******************
Preocupada por los aumentos en tensión y quizás también violencia en Irak reportados enlas noticias, he comenzado a identificar blogs que me puedan ayudar a monitorear la situación.

Juan Cole escribe de manera ligera, sobre todo apuntando a noticias de importancia y enfocándose, al menos en días recientes, en los derechos humanos. (Digo "en días recientes" porque descubrí el blog hace poco y no puedo hablar de su historia.)

De mayor valor agregado --es decir, con menor contenido de noticias y mayor contenido analítico substantivo-- es el blog de Marc Lynch en el sitio Foreign Policy.

Agradecería la ayuda de mis lectores para identificar buenos blogs sobre asuntos del Medio Oriente.

Thinking about the bottom

2009-02-03T14:09:00.007-06:00

I'm trying to envision the market bottom. What might trigger it? Yesterday's Financial Times (subscription required) reported something intriguing:

Non-financial companies worldwide raised almost $170bn through bond sales in January, the largest amount for that month on record, according to data from Dealogic, as they rushed to take investor money while it was available.

It turns out that, because of risk aversion, the spreads on prime corporate bond yields are attractively wide for investors; whereas, because of low global monetary policy rates, their levels are attractively low for corporations.

An increase in frequency of news like this could be an early signal that the crisis is peaking and the market is nearing a bottom.

Read the whole thing.

***********

Intento visualizar el momento en que el mercado tocará fondo. ¿Qué evento lo detonará? Ayer en el Financial Times (se requiere una suscripción) se reportó algo intrigante:

Las corporaciones no financieras en todo el mundo captaron casi $170 MMn por ventas de bonos en enero, el mayor monto para el mes de enero en la historia, según datos de Dealogic, en una carrera para tomar el dinero de los inversionistas mientras estuviera disponible.

Resulta que, por la aversión al riesgo, los diferenciales amplios de los rendimientos que paga la deuda corporativa prime atraen a los inversionistas; mientras que, por las tasas de política monetaria globales bajas, sus niveles bajos atraen a las corporaciones.

Un incremento en la frequencia de noticias de este índole podría ser un signo temprano de que la crisis se acerca a un pico y el mercado a un valle.

Léase el artículo entero.

Cemex arranca operación parque eólica

2009-01-23T02:51:00.006-06:00

Reuters:

JUCHITAN DE ZARAGOZA, México, ene 22 (Reuters) - La mexicana Cemex arrancó el jueves la operación de un parque de energía eólica en el sureste de México, con lo que espera reducir un 10 por ciento sus costos de electricidad y evitar la volatilidad del precio de la energía generada por otros medios.

El parque Eurus, ubicado en el estado de Oaxaca, es desarrollado en asociación con la española Acciona (ANA.MC: Cotización) y tendrá una capacidad de generación electricidad de 250 megavatios, que será consumida principalmente por Cemex (CMXCPO.MX: Cotización).

"Eurus tiene uno de los mayores índices de reducción de emisiones por capacidad instalada y, además, es el segundo parque de energía eólica más grande del mundo registrado ante el Mecanismo de Desarrollo Limpio de las Naciones Unidas", dijo el presidente de Cemex, Lorenzo Zambrano. (Léalo completo aquí.)

(No olviden el symposium sobre cambio climático de IMEF Grupo Querétaro y Club de Industriales en Querétaro el 25 marzo 2009. Entre otros conferencistas, Pablo Rión de Pablo Rión & Asociados platicará sobre las oportunidades de negocios en México en materia de energía solar, eólica e hidráulica. Informes aquí.)

Blog roundup after three whole days

2009-01-23T01:56:00.006-06:00

Obligatory
Felix Salmon: Nationalize Citigroup
Steve Waldman (hat tip: Felix Salmon): Why nationalize the banks, how to do it, how to manage them once nationalized, and how to reprivatize them

Frightening
Krugman: Corporate bond spreads
Edward Hugh: Chinese GDP is probably contracting

Illuminating
Krugman: Why Spain is in trouble
Krugman: Why fiscal policy
Krugman: What's wrong with Good Bank Bad Bank
Buiter: Why nationalize the banks
Calculated Risk: What A2/P2 measures
Linda Bilmes via Alex Tabarrok: Fiscal stimulus will cause waste and fraud

Newsworthy
Reuters: Citigroup not planning to sell Banamex (Hat tip to Felix Salmon. Although in his blog entry he erroneously refers to Banamex as a monopoly.)
Reuters (hat tip: Guillermo Parra-Bernal): Menor nota Cemex no afectaría reestructuración deuda
Guillermo Parra-Bernal: S&P cuts Vitro ratings
Justin Delacour: Lula cozies up to Chávez

Strategic
John Jansen: MOF official says that $1.00 = 85 yen is BoJ threshhold
Brad Setser: Central bank portfolio rebalancing could help the pound (or not)

New (to me)
Good analysis on Europe: Fistful of Euros
Good tidbits of LatAm corporate news: Guillermo Parra-Bernal at Market Memorandum

Moral
Nationalize (and never EVER go away for three whole days).

Greenspan, Obama, and Pooh Bear

2009-01-19T00:11:00.007-06:00

This is embarrassing, but a long time ago I got sidetracked reading Greenspan's memoirs, The Age of Turbulence, and am only just now finishing it. So here he has already come out with a second edition, and I'm still plodding through the first one.

I'm also finally reading Obama's Dreams of My Father.

You see, my New Year's Resolution #53 is to become The New Jenny, a Serial Monogamist when it comes to books rather than the Polygamist that I had been.

Part 1 of Greenspan's book, a narrative of his life, is fascinating. Part 2 is The Greenspan View on Everything. Now maybe it's because I'm a professional Fed watcher --for years I've made a living in part by reading every word of every Fed speech-- so already knew the Greenspan View on Everything, but for whatever reason, I am finding part 2 dull. I'm tempted to ditch it unfinished.

You may ask, "Jenny, how would you compare and contrast the two men?" Well, Greenspan strikes me as a Very Simple Man, who knows exactly who he is and what he believes. Obama, by contrast, is A Tortured Soul.

You may ask, "Jenny, do you see yourself at all in either these two Great Men?" Yes I do. For example:

Greenspan loves data. Signoret loves data too. She slurps it up.

Obama is a tortured soul. Signoret is a tortured soul too. She broods and can't say anything without prefacing it with long lists of caveats.

Greenspan and Obama have ideologies, but at the end of the day, they're both pragmatists. Signoret is a pragmatist too. She gets things done.

Greenspan and Obama are Famous and Powerful Men.

Signoret is a pragmatist too.

++++++++++

Speaking of Obama, I have to tell you something funny about Winnie the Pooh. (You may ask, but Jenny, what does this have to do with the global economy? I answer you this: EVERYTHING is about the global economy. Why do you think I "specialize" in it?)

Last summer I hired a mathematician who very quickly turned into a budding analyst, and just as quickly into A New Friend.

So one day on our Tea Break at the Quarry Stone Table, we decided to form A Book Club. We scrawled out some rules:

Our Very Speshal Book Club Rools

Lend to Club Members, one by one, all your favorite books. ("On the planet?" asked Andrés.)
Before deciding to quit reading a borrowed book, read it all the way to page 50. ("Do we have to?" asked Andrés. "Yes," I said.)
When traveling with borrowed books, protect them in Ziploc bags. ("You mean so they don't get wrinkled?" asked Andrés. "Creased", I corrected.)
Make little jokes that allude to borrowed books for the rest of your lives. ("That's my favorite rule," Andrés said happily.)

I knew just what book to lend to Andrés first! I ran the whole four steps home from my office, then all the way back to "work" and breathlessly handed him, in a single volume, Winnie the Pooh and The House at Pooh Corner.

(Yikes. I just remembered that I once shipped this book as a gift to a colleague who's a Very Refined Former Central Banker. What is it with me and Winnie the Pooh?)

Now, one of the best reasons for having a Book Club at work is that you and your co-workers can sprinkle Sophisticated Literary Allusions into office communication. For example, just the other day Andrés exclaimed, "Get a load of the title of Obama’s stimulus plan! It was written by A. A. Milne." I peered at his print-out of the plan and my eyes found the title: Barack Obama's Plan to Stimulate the Economy and Protect American Families. Indeed, how Milnesque!

We go on like this, you see. Just the other day, I confessed to Andrés, "You know, Andrés, don't tell anyone, but sometimes, when pondering credit derivative swaps, I feel like a Bear of Very Little Brain."

He says it in Spanish: "Todavía soy un Oso de Cerebro Pequeñito en cuestiones de política monetaria de la India".

And then there was last Friday's Skype message of his: "Did you see Japan's new factory orders? -14%. I'd say the global economy is in a Very Deep Pit."

Tell the truth now: don't you wish that you too worked at TransEconomics so you could do the literary thing with us?

Brazil's monetary decision, part III

2009-01-16T13:36:00.003-06:00

While I find Guillermo Parra-Bernal's forecast for -75pb by the Bank of Brazil perfectly plausible, I am unpersuaded by his claim that the Bank's decision to to help Brazilian producers roll over foreign debt maturing in 2009 raises the probability of a cut that size.

The Bank's help extended to suppliers is financial crisis management: the central bank is acting in its role as lender of last resort in global conditions of tight access to credit. A forecast rate cut of 75bp on January 21 is justified by the outlook for Brazilian inflation.

A rapid pace of disinflation in annual terms and outright deflation in monthly terms will now set in. Industrial output is collapsing, raw materials costs are moderating, demand has eroded so quickly that currency depreciation (of 20+% versus the dollar since the fall of Lehman) is scarcely passing through to consumer prices, and inflation expectations as measured by surveys of professional forecasters have stabilized.

********

Es perfectamente plausible el pronóstico de Guillermo Parra-Bernal's de un recorte de 75bp por el Banco de Brasil. Sin embargo, no me convence su su afirmación de que la decision del Banco Central de ayudar a los productores brasileños a cumplir con deuda por vencerse en el 2009 aumente la probabilidad de un recorte de esa magnitud.

Dicha medida del Banco Central es una medida para lidiar con la crisis crediticia: BCB está ejerciendo su papel de prestamista de última instancia. Una proyección de un recorte de 75pb el 21 de enero se justifica por el panorama de los precios al consumidor.

Se prevé ahora para los índices de precios rapída desinflación en términos interanuales y franca deflación en términos intermensuales. La producción industrial se colapsa, los costos de las materias primas se moderan, la demanda se erosiona tan rápido que la depreciación de la moneda (de 20+% frente al dólar desde la caída de Lehman) prácticamente no se ha traspasado a los precios internos y las expectativas sobre la inflación medidas por las encuestas a los pronosticadores profesionales ya se estabilizaron.

Krauze: Venezuela's democracy is better than Mexico's

2009-01-15T22:20:00.007-06:00

No encontré en los blogs de Letras Libres lo que buscaba (algo sobre cambio climático o la violencia en Gaza), pero sí una interesante comparación por Enrique Krauze de las culturas políticas venezolana y mexicana. Puede que su tesis les sorprenda, pero está en sintonía con mi impresión del nivel de la discusión en Caracas cuando visité en el 2005:

En términos culturales, la democracia venezolana es superior a la mexicana. Lo es, en primer lugar, por el nivel del debate nacional. A despecho de su crispación y envenenamiento, en Venezuela la discusión de los asuntos públicos es más seria, variada, intensa y focalizada que en México. (... Continuar leyendo la entrada de Krauze.)

*****

I didn't find what I was looking for in the Letras Libres blogs (something about climate change or the violence in Gaza), but I did find an interesting comparison by Enrique Krauze of Venezuelan and Mexican political cultures. You may find Krauze's thesis surprising, but it jives with my own impression of political debates in Caracas in 2005.

In cultural terms, Venezuela's democracy is superior to Mexico's. For one thing, the level of Venezuelan political debate is loftier. Despite its edge and venom, Venezuelan debate on public affairs is more considered, motley, intense, and focussed than in Mexico. (...Keep reading Krauze's post.)

Hamilton interprets Bernanke

2009-01-15T18:59:00.009-06:00

James Hamilton explains how to interpret the Treasury's $20 bn in supplementary loss protection mentioned by Bernanke in his 13 January 2009 speech about the recent blowing up of the Fed's balance sheet. Full interpretation today would require foreknowledge of how much the Fed will end up lending through its latest facility, TALF:

Bernanke also discussed some of the Fed's new plans:

In addition, the Federal Reserve and the Treasury have jointly announced a facility that will lend against AAA-rated asset-backed securities collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration. The Federal Reserve's credit risk exposure in the latter facility will be minimal, because the collateral will be subject to a "haircut" and the Treasury is providing $20 billion of capital as supplementary loss protection. We expect this facility to be operational next month.

Here at least we have a number-- $20 billion-- that will give us some idea of what Bernanke assesses the ballpark risks to be. If, for example, we see that the Fed lends $100 billion in this program, I'd take that to mean he's thinking the underlying assets are really worth at least 80 cents on the dollar; if $200 billion, we're talking about 90 cents on the dollar. If this gets into the hundreds of billions, it's hard to see how $20 billion would be regarded as a significant equity cushion.

Thanks, James Hamilton.

Martin Wolf on Obama plan

2009-01-15T18:17:00.005-06:00

Read this and everything else that Martin Wolf writes.

Or your name is mud.

***

Lean esto y todo lo demás que escribe Martin Wolf.

¡Socorro! No sé traducir "Or your name is mud". (¿"O te doy nalgadas"?)

Sullivan on Israel and Gaza

2009-01-15T16:44:00.009-06:00

I agree with my brother Tom, who says that Andrew Sullivan probably got it right in his January 2 post:

From the perspective of intent, there does seem to me to be moral clarity between Israel and Hamas. Hamas refuses to recognize Israel's right to exist in peace; Israel refuses to recognize Hamas' right to exist as a legitimate polity in Gaza because Hamas does not recognize Israel's right to exist. Hamas also was the first to break a barely-held ceasefire recently. There seems to me to be no question that Israel has the higher moral ground from the perspective of recent events.
At the same time, Israel's actual resources of military and economic power far exceed Hamas's; and its pulverization of Gaza has led to a huge imbalance between the victims of Hamas's war on Israel and Israel's war on Hamas. The Palestinians are suffering something like ten times the trauma and deaths of Israelis. What they have endured in Gaza for the past couple of years must also be taken into account. It is not a function of appeasement or wimpiness or fondness for Jihadism that makes this conclusion inescapable. It is simply being human.

And so you have an excruciating confluence of the questions of proportionality in a just war and asymmetry in the war against terrorism. What renders the current awfulness particularly wrenching is that the immoral means Hamas uses are logical from the point of view of an entity that is committed to Israel's destruction but not powerful enough to achieve it. And the response of Israel is logical from the point of view of a Western country enduring constant terrorist bombardment. Hence the never-ending argument in which both extremes reinforce themselves. This is not, one remembers, a Likud government. This is what the center left needs to do in Israel to stay in power at this point. And it has the backing of Egypt.

The nature of the conflict therefore ensures that Israel will kill and injure and traumatize far more human beings than Hamas can, even though Israel's intentions may be more honorable (and the relative lack of civilian deaths, given the pounding that has been going on in Gaza, is striking evidence for Israel's relative scrupulousness). This means that Israel will continue to lose the war of ideas and that Hamas will benefit from the impasse. Meanwhile, Jewish Israelis face a demographic reckoning and the forces of Jihadism gain a new recruiting tool. Abbas is temporarily weakened; and Iran's ideological strength temporarily waxes. Democracy, pace the neocons, is not a panacea: Hamas has more democratic legitimacy, it seems to me, than Mubarak.

This is all horrible news for the Jewish people; and deeply disturbing for the rest of us. America's president and president-elect must ensure that the US is not drawn into this battle on one side or the other any more than is absolutely necessary. The West's interests in the Middle East are not exhausted by a defense of Israel's existence and security, especially when such a position comes allied with Arab autocracy and repression.

The one silver lining I can see is that Sunni Arab fear and loathing of Iran is still very real, and can be exploited. (If Arab powers are now reduced to acquiescing in the deaths of Palestinian children from Israeli bombs, you can see how vulnerable they feel toward the wave of religious extremism sweeping the region.) The best you can hope for in the Middle East is that one axis of hatred will temporarily eclipse another. Generally speaking, adherents of one religion hate each other more than they do adherents of another sect altogether, so the prospects for some advancement of Israeli and American self-interest in a broader Muslim civil war are real. With Muslim anti-Semitism, of course, we might have stumbled onto a rare exception.

I would appreciate a translation to Spanish of the quotation from Sullivan. Any volunteers?

How about a thoughtful blog post on the topic in Spanish that I should know about? (Perhaps Enrique Krauze has written something. I must venture over to the Letras Libres blogs ...)

***

Concuerdo con mi hermano Tom quién en una carta expresó que probablemente tiene razón Andrew Sullivan en su artículo citado arriba sobre las cuestiones éticas relacionadas con Gaza hoy en día.

Agradecería una traducción del texto citado de Sullivan al español. ¿Algún voluntario?

¿Y, alguien me puede dirigir a un artículo de blog bien meditado sobre este mismo tema pero en español? (Tal vez Enrique Krauze haya escrito algo. Habría que dar una vuelta a los blogs de Letras Libres ...)

Brazil's monetary policy decision: the story continues

2009-01-15T15:43:00.002-06:00

Guillermo Parra-Bernal has answered me:

''The experience of Brazil during the 2002 crisis is valid for the time being. When Brazil had this speculative attack ahead of the 2002 election (you probably remember that the currency dropped 50 percent in three months) the issue of trade financing and credit problems couldn´t be dealt with properly becasue international reserves were falling dramatically and the economy was undergoing a hike in inflation.´´
''The bank raised the Selic by 300 bps on Oct. 14 (forgive if I am wrong, using my memory here) and kept borrowing costs high for a few months until price pressures subsided. Trade lines remained shuttered for as many as seven months, until markets realised the Lula administration was willing to honour the national debt. The situation here is the opposite, except for the credit crunch. Inflation is down dramatically -- and it will keep falling, -- and the government is quite concerned with jobs and activity in certain key industries (commodities, foods, mining and energy.) The country has plenty of reserves at this moment, and Brazil didn´t suffer the currency tumble that other EM nations (especially EE countries) did. Reserves are at similar levels to those before the crisis!!!´´
''Having said that, the same way Arminio Fraga´s BCB overreacted by raising the Selic by 300 bps in an extraordinary meeting in a mid-October afternoon, Henrique Meirelles´s BCB will be a bit more measured, to show market participants his board is both agressive and prudent. People in the markets expect a half-point cut, but at this juncture I think that 75 bps is the most likely size. It´s a balanced cut (big for Brazilian standards, although small if you see the gravity of the crisis that is coming.)

I am mulling his arguments. Stay tuned.

China GDP growth and social unrest

2009-01-15T13:13:00.008-06:00

Li Yanping and Philip Lagerkranser of Bloomberg News report that Liu Mingkang, China's banking supervisor, and Zhou Xiaochuan, governor of the central bank, both see the risks tilted to the downside for the government's 2009 growth forecast of 8%.

More tidbits:

Liu said last month that an expansion of 7 percent or less could trigger social instability.

(...)

The regulatory commission will drop its target of reducing the balance and ratio of bad loans after five years of declines, and instead aim to prevent a “massive and rapid rebound” in soured debts, Liu Mingkang said.

I could go on, but it's so packed, you're better off reading the whole article.

I also recommend Victor Shih's persuasive rebuttal of a UBS research report claiming that Chinese inmigrant workers are incompetent at organizing revolts.

***

Li Yanping y Philip Lagerkranser de Bloomberg reportan que el supervisor bancario de China, Liu Mingkang, y el gobernador del banco central, Zhou Xiaochuan, ven los riesgos sesgados a la baja del pronóstico oficial de crecimiento en el PIB en China para el 2009 de 8%.

Más detalles del mismo artículo:

Liu said last month that an expansion of 7 percent or less could trigger social instability.

(...)

The regulatory commission will drop its target of reducing the balance and ratio of bad loans after five years of declines, and instead aim to prevent a “massive and rapid rebound” in soured debts, Liu Mingkang said.

Podría continuar, pero está tan repleto, mejor recomiendo que lo lean todo.

También recomiendo la réplica persuasiva de Victor Shih a una nota de investigación de UBS que cuestiona la competencia de los campesinos chinos para rebelarse.

Does BCB plan change Brazil's interest rate outlook

2009-01-15T12:25:00.005-06:00

Guillermo Parra-Bernal believes that the new $20 billion Banco Central Brasil plan to help Brazilian producers refinance maturing foreign debt raises the odds that BCB will lower the monetary policy rate on 21 January by 75bp to 13.00%:

A plan outlined last night by Banco Central Brasil President Henrique Meirelles to ready $20 billion in funds to help local companies refinance maturing debt overseas indicates that corporate liquidity problems will probably persist for another quarter or two. Meirelles, the former Bank Boston executive, reaffirmed a commitment made in November that the government will use any sources of money at hand (even international reserves) to help about 4,000 companies roll over maturing obligations. Brazil had $205 billion in reserves at the start of this year.

We discussed in this a few days ago the problems facing Arantes, Cosan and other commodity, food and cellulose producers. Access to credit will normalise in a few months, but the problem is time and availability of funds. According to ING Bank, Brazilian companies face more than $60 billion in bond and loan maturities throughout the year. Trade loans were cut off at the height of the crisis in early October -- the central bank had to intervene and commit more than $9 billion in reserves money for that purpose.

If there is a consequence to this announcement -- apart from the sigh of relief that some corporate managers might have made following Meirelles remarks, -- is that the BCB will engage with a more aggressive interest rate-cut than initially planned for next week. My bet is a 75 basis-point cut, what is yours?

but he doesn't explain why.

I shall ask him.

*******

Guillermo Parra-Bernal considera que el nuevo plan de $20 mil millones anunciado por el Banco Central de Brasil para ayudar a productores brasileños a refinanciar deuda extranjera que vencerá en el corto plazo aumenta la probabilidad de que el BCB reducirá su tasa de política monetaria el 21 de enero en 75pb a 13,00%, pero no explica por qué.

Se lo preguntaré.

Portal sobre mercados de energéticos y carbono

2009-01-15T11:33:00.007-06:00

Mi involucramiento con la organización de un simposium de IMEF Grupo Querétaro sobre el cambio climático me está impulsando a cumplir mi resolución de año nuevo de reactivar este blog.

Encontré este portal sobre mercados de energéticos, incluyendo el carbono: PointCarbon.

Tiene información interesante, pero la mayoría parece estar a la venta.

¿Algún lector conoce portales similares pero con contenido gratuito?

(El simposium es un joint venture con el Club de Industriales de Querétaro y tendrá lugar el 25 de marzo 2009 en Querétaro. Para mayores detalles, envíe un correo a IMEF Grupo Querétaro.)

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My involvement in organizing a climate change conference with IMEF Grupo Querétaro (25 March 2009, Club de Industriales, Querétaro) is building a fire under me to fulfill my new year's resolution to reactivate this blog.

I found this Web site on energy (including carbon) markets: PointCarbon.

It has interesting stuff, but most of it seems to require a paid subscription.

Perhaps some read knows of similar sites but with all-free content?

(Our symposium, a joint venture with Club de Industriales de Querétaro, will take place on 25 March 2009 in Querétaro, Mexico. For further details, please send an e-mail to IMEF Grupo Grupo Querétaro.)

TransEconomics mentioned in León newspapers

2008-04-27T18:39:00.014-05:00

I was checking something on Google when I stumbled across two León, Guanajuato newspaper articles from last 29 February 2008 that mention TransEconomics. One appeared in Periódico A.M. The other in Correo.

I had participated the day before as the globalist in a forum on the outlook for the León economy beautifully organized by the Guanajuato Chapter of the Mexican Institute of Financial Executives (IMEF).

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Estaba verificando algo en Google cuando me encontré con dos artículos publicados en periódicos de León, Guanajuato el pasado 29 de febrero de 2008 donde se menciona TransEconomics. Uno salió en Periódico A.M. El otro en Correo.

Había participado el día anterior como la globalista en un foro sobre perspectivas para la economía leonense impecablemente organizado por el Grupo Guanajuato del Instituto Mexicano de Ejecutivos en Finanzas (IMEF).

NBER Ice Cream Flavor of the Day

2008-04-27T10:24:00.018-05:00

When I was a kid, the younger four of us nine kids would pile with our parents into my dad's Buick and ride from Southeast Minneapolis an eternal two hours and forty-five minutes to visit our aunt and uncle and cousins in Hayward, Wisconsin.

Upon arrival, we would jump out of the car, rush through an obligatory greeting of our aunt, then race to the corner and just around it to "The Dairy"---our name for West’s Hayward Dairy. Our uncle owned it.

I’d blast in the glass door, be boosted by some older sibling up onto a swivel chair at the soda fountain, and begin to scan the ice cream flavors from which I could command of my cousin my first ice cream cone of the weekend. This ice cream sitting in round manila buckets was not that low-fat rubbery muck. It was thick high-cholesterol creamy freshly made Hayward Dairy ice cream. I disinctly remember saliva rushing into my mouth as I sat in ecstatic agony choosing.

Why do I recall this scene today, 40 years later? Because this morning, my weekly free subscription e-mail “The Latest NBER Research” arrived. And, upon scanning 33 new National Bureau of Economic Research working paper abstracts, I drooled.

Now you're asking urgently, Jenny, which flavor did you choose! Miguel, Edward, Sebastián M. Saiegh, and Shanker Satyanath (2008), "National Cultures and Soccer Violence.

This study reports findings of "a strong relationship between the history of civil conflict in a [soccer] player's home country and his propensity to behave violently on the soccer field, as measured by yellow and red cards."

The researchers measured player home country histories of civil conflict by the number of years that country were stricken with civil war between 1980 and 2005. They justify using civil war experience as a proxy for cultural attitudes to violence by citing findings from ethnographic studies that national tolerance for violence goes up after a civil war. I did not read the cited ethnographic studies, so don't know how the sociologists who conducted them measured the change in norms. I wonder why Miguel et al didn't use the same metrics as the sociologists. (Why measure norms by proxy if we know how to measure them directly?)

According to the authors, how does war act to change norms? And translate into violent soccer habits? They explain that the data "tentatively suggest that childhood and adolescent exposure to national violence may be the causal channel", given that "the proportion of years before a player reached age 18 that his home country experienced civil war strongly predicts violence on the soccer field."

Sadly, the results also suggest that violent norms acquired through childhood exposure to war tend to persist:

If individuals can be socialized into a violent culture, then they could also potentially unlearn their national culture over time if they moved to a different society, yet our data do not offer strong support for this hypothesis. In a variety of specifications not reported above, we tested whether the impact of a player’s home country civil war history diminishes over time for older players, or for those with more experience in the European professional leagues, but in no case are these interaction terms statistically significant at traditional confidence levels (not shown). Violent national cultures appear quite persistent, at least over the time frame of the typical soccer playing career. (Page 14.)

My first reaction is that this reinforces my long-term bleak outlook for the size of the risk premium in global oil prices. I believe that, long after the civil war in Iraq officially ends, violence (including sabotage to oil installations) will persist for decades, rendering Iraqi oil supplies persistently chancy. As they are today in Nigeria.

My second reaction is more academic. I have some ideas for follow-up studies. The authors might consider testing whether alternative norms or clusters of norms--distinct from but related to or underlying social tolerance for violence--are what truly drive the correlation between a player's home country and his propensity to collect yellow cards in soccer.

One candidate alternative norm to study is social tolerance for breaking formal rules generally, not just rules prohibiting violence. Dependent variables in the follow-up study would include soccer fouls that are not violent, such as the illegal use of hands.

A second alternative norm is empathy, or solidarity, especially among elites toward those not in power. I suspect that the two things, empathy and adherence to rules, are connected. And believe that they might underlie a social propensity to violence.

As a proxy for empathy, I would consider formal institutional checks against dictatorship, which, for democracies, could be checks against dictatorship by the majority. I suspect that higher empathy among the powerful toward the weak raises the likelihood that minority rights protection will be written into law. I also suspect that such societies with the highest empathy levels are the most most rule abiding.

Digging more deeply into causality, my hunch is that empathy is driven in the first place by people's experience with authority. Over history, have those in power generally been fair? Have they voluntarily subjected themselves to controls that limit their conduct? Or have they behaved capriciously and illegally?

By my (surely unoriginal) theory, well-founded trust in authority bumps societies up a spiritual step from adherence to jungle-like norms (screw others, lest they screw you) to adherence to empathetic norms (do unto others as you would have them do unto you).

Conversely, a sense of vulnerability derived from governance by capricious and rapacious rulers leads people to watch out for themselves only. This becomes manifest in a calculating approach to following rules (apply selfish cost-benefit analysis when deciding whether to adhere to rules), versus an empathetic approach (treat opponents fairly, even at the risk of temporarily losing power to them--do this because you trust that you won't be burned).

Because norms depend on a nation’s historical experience of authority, social norms are path dependent.

Finally, the rise to power of individual leaders can be path-switching events. A particular leader—often a charismatic one—can reshape norms and thus change a nation's cultural tracks for decades or centuries. Gandhi, Hitler, King, Chávez, Lincoln, Hussein, Bush, Bin Laden all have shaped societal norms.

Norms that later become manifest on soccer fields.

(The Spanish translation of this post is still pending.)

Greenspan: It was the conundrum

2008-04-07T03:03:00.013-05:00

In my review of favorite blogs for watching the financial crisis, I omitted one of the best: Economists' Forum on the Financial Times (subscription) site. On it, Big Shot Bears and Bulls react to a Wolf.

Yesterday's edition featured Alan Greenspan: A response to my critics. The former Fed chairman defends himself against charges that Fed policy under his watch earlier in this century was overly loose, and that it engendered the house price bubble the bursting of which landed us in the crisis that we're dealing with today.

His argument works like this:

Claim: "Remarkably similar housing bubbles ... emerged in more than two dozen countries between 2001 and 2006." In fact, "the US bubble was close to median world experience."
Implication: So Fed policy cannot explain the U.S. bubble.
Counter-theory: "The dramatic fall in real long term interest rates statistically explains, and is the most likely major cause of, real estate capitalization rates that declined and converged across the globe."

This fall in long-term rates that Greenspan mentions occurred between 29 June 2004 and 2 February 2005, during which time the federal funds rate rose by 150 basis points, while the long-term bond yields fell by 70 bps. Normally, long- and short-term rates move together.

In his now famous 2005 testimony before Congress, Greenspan pondered the enigma out loud:

For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum.

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En mi reseña de blogs preferidos para observar la actual crisis financiera, omití uno de los mejores: Economists' Forum en Financial Times (suscripción).

En la edición de ayer de este foro, se publicó Alan Greenspan: A response to my critics. El ex presidente de la Fed se defiende de cargos de que la política de la Fed bajo su conducta a inicios de este siglo era excesivamente expansiva, y que engendró la burbuja en vivienda cuya ruptura causó la crisis actual.

Su argumento se estructura así:

Afirmación: "Burbujas de vivienda asombrosamente similares ... surgieron en m[as de dos docenas de países entre 2001 y 2006." Y de hecho "la burbuja en EE.UU. coincide con la experiencia mediana."
Implicación: Así que la política monetaria en EE.UU. no puede ser la explicación de la burbuja en EE.UU.
Teoría alternativa: "La caída dramática en las tasas de interés reales explica estadísticamente, y probablemente es la principal causa de, el declive de y convergencia en las tasas de capitalización para bienes raíces a través del globo."

La caída en las tasas de largo plazo que menciona ocurrió entre 29 junio 2004 y 2 febrero 2005, cuando la tasa de fondos federales escaló en 150 puntos base, mientras los rendimientos para bonos de largo plazo bajaron en 70 pb. Normalmente las tasas de corto y largo plazo suben y bajan juntos.

En su ahora famoso testimonio ante el Congreso de febrero 2005, Greenspan ponderó el enigma en voz alta:

Por el momento, el comportamiento generalmente inesperado de los mercados de bonos globales permanece un acertijo.

Chávez nationalizes cement industry

2008-04-04T01:19:00.003-06:00

Chávez nationalizes cement industry (Reuters).

Chávez anuncia nacionalización de la industria del cemento en Venezuela (unionradio.net).

Mike McGlone's commodity report

2008-04-03T15:09:00.004-06:00

Michael McGlone's Commodity Perspective is out. Mike is the commodity director at Standard & Poors.

I'm hooked on this concise monthly report, because it:

Illustrates changes in subindices and individual assets that are driving (or deviating from) changes in the headline index;
Connects fundamentals to total returns;
Explains asset interconnections;
Reviews theories as to what's going on and why.

You need to read it right away when it comes out though. It's perishable.

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Ya se publicó el informe de Michael McGlone, Commodity Perspective. Mike es el director de commodities en Standard & Poors.

Estoy adicta a este informe mensual conciso, ya que:

Ilustra cambios en subíndices y activos individuales que marcan la pauta (o se desvían) de los movimientos en el índice general;
Conecta los fundamentales con los movimientos en los índices;
Explica conexiones entre clases de activos;
Repasa teorías acerca de qué sucede y por qué.

Recomiendo leer el informe cada mes tan pronto como salga. Es perecedero.

"I'm a cow" will remain untranslated

2008-03-31T21:53:00.005-06:00

I'm very sorry not to have provided a translation to "I'm a cow". It's beyond my translating skills.

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Siento mucho no haber proporcionado una traducción a "I'm a cow" ("Soy vaca"). Excede mis poderes de traducción.

I'm a cow

2008-03-31T19:13:00.015-06:00

For those new to my favorite game, called "Crisis Watching on the Blogs," I'll list some entry points. Now don't worry--they all link to each other. You can enter anywhere.

You'll find that, because this is about crisis watching, most of the players are Bears.

Take Noel Roubini. He's not just any bear--he's a Dark Black Bear. No matter how dark your outlook, his is darker.

I must warn you: this sells, and to capture the revenue, Dark Black Bear has an irritating blog site.

But just try avoiding his blog site! You'll last an hour. He sets the agenda. He is crystal clear. And he was right when I was wrong.

I do sometimes wonder whether by issuing dark prophesies he knows will be amplified through the blogs he can act upon our financial future, guaranteeing that he'll be right.

Then I think, nah. If that were possible, Bernanke would do it. We'd have no crisis.

(Though sometimes I do totter back into superstition and think, won't it be a glorious day when Noel Roubini finally wakes up in a good mood? My guava tree will have euros growing on it!)

Paul Krugman is Grizzly Bear. He gets mean when discussing Republicans.

And mean also seems to sell. Ask The New York Times.

But hell, he gives me access to his brain. Only a generous man could be the teacher that he is.

Brad Setser is Little Unassuming Bear. Though on Black Bear's site he looks like a Little Bull.

Setser is so appealing, so modest and unassuming next to Haughty Bears just described, he makes you want to read line after gory line of forensic tracking down of missing Middle Eastern billions of international reserves.

I'm teasing him. His is wonderful stuff, imperative reading , and holder of links to all other imperative reading.

He steered me, for example, to Professor EconBrowser Bear, who is actually Two Bears. Siamese Twin Bears. I say this because I read them for months before realizing that they were Two Different Bears.

I sometimes get to wondering, who am I in this game? Am I Pooh Bear? (she says modestly because she's from the midwest). Because, when pondering financial crises, I do sometimes feel like a Bear of Little Brain.

But then I think, wait a minute--I'm no bear at all. In the TransEconomics base scenario, all creatures great and small emerge safely out of the woods later on this year. (Of course I also have alternative scenarios, with probabilities assigned to them. Perhaps I'm Professionally Cautious Bear. Or Wimpy Bear.)

I guess this makes me a Bull. But with all my estrogen?

I'm a cow.

Gore for President?

2008-03-31T03:16:00.003-06:00

Senior Democrats mull Al Gore's nomination.

(Hat tip: RealClearPolitics.)

What else I'm reading, or I'm RICH!

2008-03-30T18:04:00.022-06:00

Here are some other books I'm reading:

The Moor's Last Sigh, by Salmon Rushdie. Once I pick it up, I can't put it down. Once I put it down, I can't pick it back up. Until one day I finally do. And so it goes. It's been six months now.

Ricardo Raphael, Los Socios de Elba Esther (non-Mexicans: Elba Esther Gordillo is the crooked head of our crooked teacher's union). This is a great book: researched deeply, argued intelligently, and laid out in compelling narrative.

By the way, I'd like to meet Ricardo Raphael. I've tried e-mailing him at CIDE, to no avail. If you know him, please ask him to get in touch.

Charles Kindleberger's Mania, Panics and Crashes (yes I know: surprise, surprise). This is more than a must-read. It's a must re-read. It had been five years, so I was due. (Oh yes, and there's the small matter of a financial crisis going on.)

Scenarios: The Art of Strategic Conversation by Kees Van der Heijden. A rather cerebral textbook on scenario-based strategic planning, which we're believers in at TransEconomics. We help corporations plan this way by providing multi-scenario global and Mexico forecasts and constructing detailed narratives for each. This is my second time through the book, which I began the moment I put it down after my first time through. Because it's dense. (Or I am.)

The Art of the Long View: Planning for the Future in an Uncertain World, by Peter Schwartz, touted as the best breezy and practical companion to Van der Heijden's book. I'm not really into breezy and practical, but anyway I'm reading it to gauge (don't you think that should be spelled "guage"?) whether to give it to corporate consulting clients to help them integrate our scenarios into their planning.

Both Schwartz and Van der Heijden worked in the Scenario Planning group at Shell (today Royal Dutch/Shell), which is, I believe, where the movement started. You can download Royal/Dutch Shell introductory material on the topic and actual scenarios here.

Harvard Business Essentials Guide to Negotiation. Interesting and useful. Negotiation is a complex art that is part science--it can be broken down and analyzed, and taught. Printed on crummy paper, though, for a $19.95 paperback.

Narcotráfico: el Gran Desafío de Calderón. Author Alejandro Gutiérrez is an investigative journalist for Proceso with deep expertise on his topic.

Here's a fun book with an extremely boring title: Principles of Forecasting. Before reading this book, Dumb Old Economist Me thought that forecasting = econometric or macro simulation modeling. But these topics take up only a sliver of this fat book, which covers soft approaches such as such as role playing and expert opinion consultation also.

And then there are the books that I should be reading. Their purpose is to sit on my desk and cause me guilt:

Pemex: La Reforma Petrolera, by David Shields (published by Planeta but missing from Planeta's online catalogue.) I know. I'm an analyst. I should read this. It just doesn't look like any FUN. (Can't I have some FUN?)

Calderón, Presidente: La Lucha por el Poder, by Jorge Fernández Menéndez (published by Grijalbo and available late last year at the Querétaro Librería Ghandi but missing from both online catalogues . . . sheesh.) And Carlos Tello Díaz, 2 de Julio. These rehash the Mexican post-electoral conflict of of 2006--high drama that split the country and weakened everyone: the Federal Electoral Institute (IFE), Calderón, and AMLO.

The World is Flat, by Thomas Friedman. I think I'm waiting for this book to become totally obsolete, so that I'll be off the hook. (Can't I get points for just owning it?)

I'm going to have to learn how to make money on all these Amazon links. I mean, just think about it: pretty soon I'm going to have about 200 million visitors a day . . . times let's say . . 10 cents per click . . . I'm RICH!

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¿Qué otros libros estoy leyendo?

The Moor's Last Sigh, por Salmon Rushdie. Cada que lo abro, no lo puedo dejar de leer. Cada que lo dejo de leer, no lo quiero abrir. Hasta que un buen día lo abro. (Así llevo meses).

Ricardo Raphael, Los Socios de Elba Esther (atención no-mexicanos: Elba Esther Gordillo es la lideresa chueca de nuestro sindicato de maestros chueco). Es un estupendo libro: basado en investigación profunda, formado de argumentos inteligentes y un narrativo adictivo.

A propósito, quisiera conocer a Ricardo Raphael. He mandado mails a su dirección en el CIDE, pero sin suerte. Si lo conoces, favor de pedirle que se ponga en contacto.

De Charles Kindleberger, Mania, Panics and Crashes (qué gran sorpresa). No sólo leerlo es obligatorio. Leerlo repetidamente lo es. Ya hacía cinco años que no lo leía así que era tiempo. (Bueno, OK, y está eso de la crisis financiera en Estados Unidos.)

Scenarios: The Art of Strategic Conversation by Kees Van der Heijden. Un libro de texto un tanto cerebral sobre la planeación estratégica por el método de escenarios. Somos adherentes a este método en TransEconomics. Ayudamos a nuestros clientes corporativos a planificar proporcionando alternativos de escenarios con pronósticos globales y mexicanos y construyendo narrativos detallados para cada uno. Es la segunda vez que leo este libro. Tan pronto lo terminé la primera vez lo comencé a leer nueveamente. Es que es algo denso. (O yo lo soy.)

The Art of the Long View: Planning for the Future in an Uncertain World, by Peter Schwartz, supuestamente el mejor libro ligero y práctico para acompañar el libro de Van der Heijden. Yo no soy mucho de libros ligeros y prácticos, pero lo estoy leyendo para evaluar si puede servir a clientes corporativos para que aprendan a integrar en su planeación los escenarios de TransEconomics.

Tanto Schwartz como Van der Heijden trabajaron en el Grupo de Planeacion por Escenarios en la petrolera Shell (hoy día Royal Dutch/Shell). Tengo entendido que fue aquí que el movimiento comenzó. Se puede descargar del sitio Web de Royal/Dutch Shell material introductorio sobre la planeación por escenarios, además de escenarios en sí.

Harvard Business Essentials Guide to Negotiation. Interesante y útil. La negociación es una arte compleja que también es ciencia--puede ser desglosada en taxonomías y analizada, y enseñada. El libro está impreso en papel de calidad mediocre considerando su precio de $19.95 (pasta blanda).

Narcotráfico: el Gran Desafío de Calderón. El autor es Alejandro Gutiérrez, periodista en Proceso profundamente conocedor de su tema.

Ahí les va un libro divertido con un título aburrido: Principles of Forecasting Antes de leer este libro, Yo Gran Economista Ignorante pensé que pronosticar = construir modelos macro econométricos o de simulación. Bueno, pues esos temas ocupan tan sólo una rebanadita de este libro gordo, que cubre métodos no cuantitativos también: el de jugar roles, de pedir su opinión (proyección) a los expertos, y otros. Cada capítulo abre con un resumen ejecutivo sensacional.

Luego están los libros que debería de estar leyendo. Su propósito es descansar sobre mi escritorio y engendrar en mí sentimientos de culpa:

Pemex: La Reforma Petrolera, de David Shields. De la editorial Planeta, pero excluido de su catálogo en línea. Ya lo sé. Soy analista así que debería de leerlo. Es que no luce divertido. ( ¿O no tengo derecho a divertirme?)

Calderón, Presidente: La Lucha por el Poder, by Jorge Fernández Menéndez. Publicado por Grijalbo y el año pasado disponible en la Librería Ghandi de Querétaro pero excluido de los catálogos de ambas empresas (!). Y Carlos Tello Díaz, 2 de Julio. Ambos libros analizan el conflicto post-electoral mexicano de 2006--el drama que fracturó el país y debilitó a todo el mundo: el Instituto Federal Electioral (IFE), Calderón y AMLO.

The World is Flat, por Thomas Friedman. Creo que estoy esperando que este libro se vuelva completamente obsoleto para ya no tener la obligación de leerlo. (Oigan, ¿no se puede ganar puntos por simplemente poseerlo?)

Veo que tendré que aprender a hacer dinero con los clicks a Amazon, porque, a ver . . . pronto tendré yo diría unos 200 millones de visitantes al día. . . por . . . qué será . . . unos 10 centavos de dólar por click . . . ¡Ya soy RICA!

Blog is now bilingual

2008-03-30T16:50:00.005-06:00

As you can see from the last post, this blog is now bilingual. (How do you say "post" in Spanish?)

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Como se observa en el último post, este blog ya aparece en dos idiomas. (¿Cómo se dice "post" en español?)

Obama's book

2008-03-30T15:47:00.006-06:00

Barack Obama's Philadelphia speech, which I commented on briefly last week, led me to his book, The Audacity of Hope.

I recommend it to anyone interested in politics--either as an observer or an actor--and to anyone seeking inspiration as a leader, for its:

Engrossing nitty-gritty on how American senators get elected and do their jobs ;
Nuanced thinking about global and U.S. problems;
Refreshing honesty and humor (these derive from the author's healthy ironic distance from life--he watches himself, and sees his own vanity and the absurdity of things);
Inspirational look into the mind of a leader who struggles every day with his exacting conscience.

I yearn for your comments.

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El discurso que dio Barack Obama en Filadelfia, que comenté brevemente la semana pasada, me condujo a su libro, The Audacity of Hope.

Lo recomiendo a todo aquel que tenga interés en la política--sea como observador, sea como actor--o que busque inspiración como líder, por:

Sus fascinantes detalles sobre cómo se elige y trabaja un senador en Estados Unidos;
Su análisis sutil sobre problemas globales y estadounidenses;
Su honestidad y humor refrescante (se derivan de una irónica distancia que tiene Barack de la vida --él se observa a sí mismo y reconoce su propia vanidad y lo absurdo de muchas cosas);
Una mirada inspiracional a la mente de un líder que lucha diario con su exigente consciencia.

Anhelo sus comentarios.

Obama's Philadelphia speech

2008-03-19T00:30:00.007-06:00

This Slate version of Obama's March 18 Philadelphia speech contains the full text.

He has the courage and self-confidence to ask Americans to be nuanced.

Fed: -75 bp; commodity prices will flatten

2008-03-18T12:53:00.009-06:00

The Fed decision is out: -75 basis points to 2.25%.

Comments:

Dissent is up. Plosser and Fischer both voted for "less aggressive action." In the January 30 FOMC meeting, Fischer alone dissented, preferring "no change" in the monetary policy rate. On January 22, Mishkin was absent, thus didn't vote; those present voted unanimously.
FOMC members recognize accelerating inflation and upward shifting inflation expectations, but hold to their view that weak demand will pull inflation rates down.
In particular, they expect commodity prices to stabilize. They appear not to embrace Jeffrey Frankel's favorite explanation for rising commodity prices in times of recession--the current low level of real interest rates--given that their rate decision of today will contribute to it.
Nor do they seem to agree with former Fed Chair Alan Greenspan, who said in a recent interview about his own low interest rate policy, "You can't do that any more."

Greenspan stands by his record: omitted hat tip

2008-03-18T12:43:00.003-06:00

In my last post, I omitted a hat tip for the Greenspan video. It goes to Dealbreaker.

Greenspan stands by his record

2008-03-18T12:33:00.002-06:00

Frankel theory on high commodity prices

2008-03-18T12:04:00.004-06:00

Jeffrey Frankel is Brad Setser's guest blogger for a few days. He's focussing on why commodity prices are up if the global economy has turned down. His answer? Real interest rates:

If strong economic growth is not the explanation for the large increases since 2001 in prices of virtually all mineral and agricultural commodities, then what is? One wouldn’t want to try to reduce commodity markets to a single factor, nor to claim proof of any theory by a single data point. Nevertheless, the developments of the last six months provided added support for a theory I have long favored: real interest rates are an important determinant of real commodity prices.
High interest rates reduce the demand for storable commodities, or increase the supply, through a variety of channels:
- by increasing the incentive for extraction today rather than tomorrow (think of the rates at which oil is pumped, gold mined, forests logged, or livestock herds culled)
- by decreasing firms’ desire to carry inventories (think of oil inventories held in tanks)
- by encouraging speculators to shift out of spot commodity contracts, and into treasury bills.
All three mechanisms work to reduce the market price of commodities, as happened when real interest rates where high in the early 1980s. A decrease in real interest rates has the opposite effect, lowering the cost of carrying inventories, and raising commodity prices, as happened in the 1970s, and again during 2001-2004. It’s the original “carry trade.”

Professor Frankel is cross-posting this material on his own blog too.