Same ol'e story... See Business Week article.
Well, it seems as if the battle we had for 2009 and 2010- the battle on derivatives trading and futures, especially in the commodities market- will be the battle again for 2011.
Don't look for the GOP to make any substantial headway in this issue. They are more in line with Wall St. than the Democrats. Even though a few key staff from the Obama administration have gone on to work for Wall St. and he also has plucked a few Wall St. folks to work for his administration.
Will we see $5.00 a gallon oil by 2012? Yes, if the trend continues and nothing is done about the futures market for oil. What does that mean for the rest of the world? Well, for China is means higher costs for production, which means higher cost for the inexpensively made goods many people import from China.
For the Caribbean, it means another year of skyrocketing prices in almost everything. Damaging the prospects of strong growth. The Bahamas has been well over $4.00 for a gallon of gasoline. Everywhere, except for Trinidad, has seen oil prices at ghastly levels. In fact, Trinidad produces oil and they have kept their oil per gallon price to under $1.00. Can you imagine that? Gas for a buck US?
It isn't fair... but, blame the US congress for not acting more strongly on separating the oil market from the dollar. And, now, also blame Ben Bernanke for mulling- in open forum- the possibility of a $600 billion dollar injection of cash into the American economy- which no one has made the attempt to ensure that the flow of this injection, goes only to Main St. and not at all Wall St.
This is the life.
Friday, December 31, 2010
Saturday, December 25, 2010
Merry Christmas folks..
From the staff- mainly me- from Global View Today, I wish to send out a very Merry Christmas and a Happy New Year!
Have a blast!
Blessings!
Youri
Have a blast!
Blessings!
Youri
Wednesday, December 15, 2010
All hopeful for a better 2011!
As it turned out, 2010 certainly is a year most people could afford to forget, if the traumatic effects of economic uncertainty weren't so fresh. I haven't given up on predictions, but just that predictions are predicated on what the nature of the policy prescriptions allow. As with the fluid nature of the tender times in economic history, projections, can be changed or affected within day's notice. With that, growth forecasts perhaps need to adjust to what are the drivers and causes for fear or misconception on the economy currently and about what could, should, is and has been allowed to happen on a month on month basis!
Regionally, there hasn't been any Caribbean country, aside from Trinidad and Tobago, that had anything to be gleeful about- T&T has natural resources, mainly oil, so, the cost of production of local goods as well as the export of oil and oil bi-products to supplement their economic model, served them well. For everyone else- political issues aside- it has been dismal.
Latin America, as with the African continent, began and is going through the structural adjustments that many have wanted for at least 50 plus years! Hence, their seeming stability, through the worst of it, should be of no surprise. They have embraced freer markets, began curbing the tendencies of an over saturating the public sector, as well as received Chinese investment, to the tune of billions. Also, moving forward in a most progressive manner, they have taken a diagnostic approach to their development and have, as policy, employed the techniques- while still under review- of diagnostic methodology like the Human Development Index and Human Opportunity Index, as a staple of economic adjustment and performance barometers.
Switching gears towards our neighbor to the North: America is still in the doldrums. It's so seriously difficult to address that commentators have stopped talking about the economic numbers and simply reverted to the old method of tax policy to affect some type of change in the circumstance. In addition to the fact that 2010 was an election year, the economy took a back seat to the Tea Party, posing as paragons of economic virtue. The "comprehensive" economic stimulus was ineffective as well as with the tax policy as a component of it, as employment still hovers around 10 percent. While much was done in the past two years president Obama was in office structurally, it appears as if not enough was done to stimulate American productivity and boost exports in addition to unlocking consumer loans from banks.
Additionally, the USA is now mulling over what analysts would coin "American Stimulus 2!" To be fair: it's American Stimulus 3! The Troubled Asset Relief Program (TARP) of 2008- while it was coined as a bailout for financial firms and the toxic assets they were exposed to- was a stimulus plan in itself, in that it attempted to stimulate banks to lend by removing the risk to exposure to the investment products that were creating higher risk portfolios, which in effect were preventing them from lending. The second plan was the American Reinvestment plan of 2009, which did more to add value to an uncertain American future on the global economy, rather than it providing short term strengthening domestically.
Europe isn't any better. The Euro-zone is in a particular and severe crisis. The problems with Portugal, Ireland, Greece and Spain (PIGS), has put the idea of the largest currency union at its harshest testing point. The risk of a disintegrating Euro-zone through the debt contagion of weak performing Euro-zone economies has everyone concerned. While inflation has been stable, the euro isn't- the Euro, being the glue that holds the zone not only together in strength, but together in anguish.
The European Central Bank (ECB) can do nothing about the risk of a devaluing euro as a result, if countries continue to fudge their financial statistics and report, falsely, on the dynamism of their economies, in addition to them having the lack of political fortitude to revalue their economies to what it should be- i.e., weak performing, Euro-zone economies, not on the scale of France and Germany, especially as it relates to agriculture, manufacturing and financial markets. Furthermore, the markets have dealt, severely, with the PIGS as sovereign bond yields have risen as well as the market for homes has collapsed with the financial sector, frozen in fear.
Additionally, the ECB has done very little about inflation, even though it has remained stable. The issue with inflation is that employment is still very soft. So, glittering reports on a stable inflation rate in the Euro-zone may be misdiagnosed, due to a lack of appreciation on the real reason behind inflation drivers in Europe.
Inflation in Europe is tied directly to production and production is tied directly to employment. Employment is tied to consumer demand and consumer demand, is soft because of uncertainty in the labor market as the labor market as with the United States is affected by higher productivity levels in Asia- China and South Korea, respectively. When understanding that the unemployment rate through Europe is over 10 percent, while bond yields have plummeted- which signifies a state financing issue that was caused by weakness in the general economy- the issue shouldn't be low inflation, but current deflation with the risk of hyper inflation when the economy picks up again, if the drivers for current inflation statistics remain misdiagnosed.
China looks stronger than normal over any other Asian countries. The Renminbi has been revalued, almost simultaneously as the Chinese stimulus package began to turn consumer spending inward, as opposed to their export focused economic model This not only giving the Chinese consumer more purchasing power, but makes investment into China more expensive at value. Additionally, the Chinese government has taken steps towards cooling their overheated real estate market, which was grossly inflated due to speculation- the revaluing of the Renminbi is a part measure as it would limit investments in all areas and not just real estate, in addition to an imposition of a real estate tax as well as imposing a higher down payment requirements for persons wishing to purchase a second home.
As for the Bahamas: we are in a cast to ourselves. The market for tourists in the US is still soft, while tourist arrivals are up in The Bahamas from last year this period, but not back to their previous levels.
Foreign Direct Investment related projects are getting a fresher look. Baha Mar, as well as with the fourth phase of the Atlantis/Kerzner development, should be enough to keep many Bahamians busy in 2011.
There should be greater assurances that these developments impact on a greater, more meaningful scale. One can only wait to see how the dynamics of the socio-economic agenda push matters moving forward. Certainly there should be a close eye on all and sundry, as money begins to be spent on these developments.
With all things of note, I wish for everyone, from family, to friends, to my loyal readers and the editors of the news outlets that keep my commentary in the public square for all to share, a very Merry Christmas and a Prosperous New Year!
Regionally, there hasn't been any Caribbean country, aside from Trinidad and Tobago, that had anything to be gleeful about- T&T has natural resources, mainly oil, so, the cost of production of local goods as well as the export of oil and oil bi-products to supplement their economic model, served them well. For everyone else- political issues aside- it has been dismal.
Latin America, as with the African continent, began and is going through the structural adjustments that many have wanted for at least 50 plus years! Hence, their seeming stability, through the worst of it, should be of no surprise. They have embraced freer markets, began curbing the tendencies of an over saturating the public sector, as well as received Chinese investment, to the tune of billions. Also, moving forward in a most progressive manner, they have taken a diagnostic approach to their development and have, as policy, employed the techniques- while still under review- of diagnostic methodology like the Human Development Index and Human Opportunity Index, as a staple of economic adjustment and performance barometers.
Switching gears towards our neighbor to the North: America is still in the doldrums. It's so seriously difficult to address that commentators have stopped talking about the economic numbers and simply reverted to the old method of tax policy to affect some type of change in the circumstance. In addition to the fact that 2010 was an election year, the economy took a back seat to the Tea Party, posing as paragons of economic virtue. The "comprehensive" economic stimulus was ineffective as well as with the tax policy as a component of it, as employment still hovers around 10 percent. While much was done in the past two years president Obama was in office structurally, it appears as if not enough was done to stimulate American productivity and boost exports in addition to unlocking consumer loans from banks.
Additionally, the USA is now mulling over what analysts would coin "American Stimulus 2!" To be fair: it's American Stimulus 3! The Troubled Asset Relief Program (TARP) of 2008- while it was coined as a bailout for financial firms and the toxic assets they were exposed to- was a stimulus plan in itself, in that it attempted to stimulate banks to lend by removing the risk to exposure to the investment products that were creating higher risk portfolios, which in effect were preventing them from lending. The second plan was the American Reinvestment plan of 2009, which did more to add value to an uncertain American future on the global economy, rather than it providing short term strengthening domestically.
Europe isn't any better. The Euro-zone is in a particular and severe crisis. The problems with Portugal, Ireland, Greece and Spain (PIGS), has put the idea of the largest currency union at its harshest testing point. The risk of a disintegrating Euro-zone through the debt contagion of weak performing Euro-zone economies has everyone concerned. While inflation has been stable, the euro isn't- the Euro, being the glue that holds the zone not only together in strength, but together in anguish.
The European Central Bank (ECB) can do nothing about the risk of a devaluing euro as a result, if countries continue to fudge their financial statistics and report, falsely, on the dynamism of their economies, in addition to them having the lack of political fortitude to revalue their economies to what it should be- i.e., weak performing, Euro-zone economies, not on the scale of France and Germany, especially as it relates to agriculture, manufacturing and financial markets. Furthermore, the markets have dealt, severely, with the PIGS as sovereign bond yields have risen as well as the market for homes has collapsed with the financial sector, frozen in fear.
Additionally, the ECB has done very little about inflation, even though it has remained stable. The issue with inflation is that employment is still very soft. So, glittering reports on a stable inflation rate in the Euro-zone may be misdiagnosed, due to a lack of appreciation on the real reason behind inflation drivers in Europe.
Inflation in Europe is tied directly to production and production is tied directly to employment. Employment is tied to consumer demand and consumer demand, is soft because of uncertainty in the labor market as the labor market as with the United States is affected by higher productivity levels in Asia- China and South Korea, respectively. When understanding that the unemployment rate through Europe is over 10 percent, while bond yields have plummeted- which signifies a state financing issue that was caused by weakness in the general economy- the issue shouldn't be low inflation, but current deflation with the risk of hyper inflation when the economy picks up again, if the drivers for current inflation statistics remain misdiagnosed.
China looks stronger than normal over any other Asian countries. The Renminbi has been revalued, almost simultaneously as the Chinese stimulus package began to turn consumer spending inward, as opposed to their export focused economic model This not only giving the Chinese consumer more purchasing power, but makes investment into China more expensive at value. Additionally, the Chinese government has taken steps towards cooling their overheated real estate market, which was grossly inflated due to speculation- the revaluing of the Renminbi is a part measure as it would limit investments in all areas and not just real estate, in addition to an imposition of a real estate tax as well as imposing a higher down payment requirements for persons wishing to purchase a second home.
As for the Bahamas: we are in a cast to ourselves. The market for tourists in the US is still soft, while tourist arrivals are up in The Bahamas from last year this period, but not back to their previous levels.
Foreign Direct Investment related projects are getting a fresher look. Baha Mar, as well as with the fourth phase of the Atlantis/Kerzner development, should be enough to keep many Bahamians busy in 2011.
There should be greater assurances that these developments impact on a greater, more meaningful scale. One can only wait to see how the dynamics of the socio-economic agenda push matters moving forward. Certainly there should be a close eye on all and sundry, as money begins to be spent on these developments.
With all things of note, I wish for everyone, from family, to friends, to my loyal readers and the editors of the news outlets that keep my commentary in the public square for all to share, a very Merry Christmas and a Prosperous New Year!
Sunday, December 12, 2010
Raising the price on the poor...
Cool article from the McKinsey Quarterly about the success in Bangladesh with Grameenphone and their ability, through commercially driven methods, of delivering more socio-economic benefits to the poor rather than government sponsored programs for the telecommunications market.
See article.
The only issue is that this is only in terms of undeveloped markets in telecommunications. Also, undeveloped markets where services is not only sub-optimal, but also unavailable to many people, let's say, at least 1/4th of the population, enough for initial private investment to gain scale from new consumers.
Other than that, it was great insight into some of the complexities of private led vs. govt. sponsored programs.
See article.
The only issue is that this is only in terms of undeveloped markets in telecommunications. Also, undeveloped markets where services is not only sub-optimal, but also unavailable to many people, let's say, at least 1/4th of the population, enough for initial private investment to gain scale from new consumers.
Other than that, it was great insight into some of the complexities of private led vs. govt. sponsored programs.
Monday, November 29, 2010
Diagnosis before presumption!
Development economics has evolved over the last 30 years. The "new school" has been shifting from the free market, or, market sensitive ideology of economic development and more towards the development of individuals from a structural standpoint. In this vein, the view is that markets don't make people- people make the markets and hence a focus on people, is vital.
The reason why economists are now taking the development agenda to another height, is because of the obvious fact that unfettered free markets, without social responsibility or human development components built in with them, leads to instability if safety measures aren't put in place to protect market participants from fraud, malfeasance, external shock to the system or the loss of confidence in the market and its actors, which will result in it inhibiting trade and commerce- just as we have seen the system collapse under the previous global crisis. All of which has cost taxpayers trillions of dollars world wide, reduced productivity and retarded civilization.
Under any circumstance, the market can and will be controlled, massaged or shocked by an actor or actors, which in a sense is the logical first effect out of any earthly circumstance. This, in the most direct sense, means that actors, from all sides, whether they are private developers, consumers, the government or welfare recipient, all play a part in the system and a system which is shaped by their attitude and behavior.
However, structural developmental approaches to the economy isn't without its critics. Some say that market forces rule and should not be ignored. Yet still, the argument that markets rule, emanates from proponents that, ironically, do more to make the market move- especially when money talks. Some also would argue that people are better off to themselves- if this would be the case, we would not need laws, rules, regulations in the market or in society. So, the arguments against incorporating a more people approach, are left wanting at their fundamental core- who else would make changes, keep order and ensure things go smoothly, if not people.
To be quite candid: there is not, never was and never will be a free market in the truest sense. Subsequently, there is not and never will be effects caused by trickle down in the truest sense, without intervention. The market is nothing without the actors. And, with regard to trickle down economic theory- which many authors have unconvincingly, to this author, argued their theoretical understandings on why they adhere to the trickle down effect- it never is trickle down. In fact, the trickle down, happens after an actor, or, actors, have loosened the pump to allow water to flow- to be as poetic as I can possibly be.
To go even further with regard to trickle down theory: actors not only have to first loosen the pump for trickle down to even begin to, in fact, "trickle down", but also, persons, to whom this trickle down is presumed to be trickling, must be in a position to catch the water that is supposed to be trickling. What use is it to give a man a hammer, if he knows not to use it? What good is it to give a woman an apron, if she knows not where the apron is to be used? What good is it to open a door, if the person knows only to enter in through the window? What good is it to assume or presume that the allocation of any benefit or entitlement, would go towards the best suited purpose? Under which theory, will there be a setting, or, set, of indicators and variables, where it is decided that this is and will be the best fit for one and all? There isn't any. Just ill fitting presumptions, assumptions, catch phrases, idioms and "well established facts" to bolster misplaced conventional wisdom in an evolving world.
This fundamental underpinning of market economics and as a result, development economics, is the challenge of the new century for developing nations and the under served in emerging markets and developed markets- i.e., the overall challenge of having all parties, from all sides of the spectrum, understand their role in the scheme of things from the position that they make the market and not the other way around.
To segue: Keynes and his work on demand side economics, after long hours of intensive analysis, made his position clear when his idea by blatantly speaking to, at least, government led intervention in the economy to spur growth.
The mixture of private sector innovation, government intervention, support, the level of market closure, investment incentives or socio-economic programming and policy making, is where the test of a market system and its resilience becomes a matter of ideological importance. In addition, what information and salient idea should take form, at what time, when, where and how it will be administered under it's best fitting relative purpose- after variables have been delineated for a particular outcome- should also be of critical importance. To this extent, diagnosing the nature of the problem as well as prescribing solutions that affect a desired, positive, outcome, in addition to it not doing damage to the existing structural successes, is also vitally important.
Being diagnostic rather than presumptive should be the first thought of approach when dealing with structural development matters. But, how do you ask a policy maker to diagnose a problem where he feels that it is not his position to be in the diagnostics business? How do you impress that the "well established facts" are irrelevant to what folks are dealing with today, during an economic downturn, or, worse, when things are "good"- especially under the pretense of market forces led laissez faire?
It comes down to the mode, thinking and ability of the actors in the system to always have in mind ways of removing binding constraints from the system, increasing the market share for a greater amount of persons entering the marketplace as active participants and taking all parties involved to make the right determinations on what fits best for persons to have an opportunity at a larger piece of the pie.
Technical expertise is valuable at all times. Knowing that you have to diagnose the problems, knowing what tools to use out of your diagnostic kit and then having the will and wherewithal to sustain continual diagnostics and act upon all first best information, is no easy task- probably why the presumptuous of us prefer to just assume things will happen as it "always" has. However, putting ourselves in the right frame of mind to have the confidence to attempt it, is critical even at this juncture where thought on what's right and presumptions on conventional wisdom seems to be popular again.
The reason why economists are now taking the development agenda to another height, is because of the obvious fact that unfettered free markets, without social responsibility or human development components built in with them, leads to instability if safety measures aren't put in place to protect market participants from fraud, malfeasance, external shock to the system or the loss of confidence in the market and its actors, which will result in it inhibiting trade and commerce- just as we have seen the system collapse under the previous global crisis. All of which has cost taxpayers trillions of dollars world wide, reduced productivity and retarded civilization.
Under any circumstance, the market can and will be controlled, massaged or shocked by an actor or actors, which in a sense is the logical first effect out of any earthly circumstance. This, in the most direct sense, means that actors, from all sides, whether they are private developers, consumers, the government or welfare recipient, all play a part in the system and a system which is shaped by their attitude and behavior.
However, structural developmental approaches to the economy isn't without its critics. Some say that market forces rule and should not be ignored. Yet still, the argument that markets rule, emanates from proponents that, ironically, do more to make the market move- especially when money talks. Some also would argue that people are better off to themselves- if this would be the case, we would not need laws, rules, regulations in the market or in society. So, the arguments against incorporating a more people approach, are left wanting at their fundamental core- who else would make changes, keep order and ensure things go smoothly, if not people.
To be quite candid: there is not, never was and never will be a free market in the truest sense. Subsequently, there is not and never will be effects caused by trickle down in the truest sense, without intervention. The market is nothing without the actors. And, with regard to trickle down economic theory- which many authors have unconvincingly, to this author, argued their theoretical understandings on why they adhere to the trickle down effect- it never is trickle down. In fact, the trickle down, happens after an actor, or, actors, have loosened the pump to allow water to flow- to be as poetic as I can possibly be.
To go even further with regard to trickle down theory: actors not only have to first loosen the pump for trickle down to even begin to, in fact, "trickle down", but also, persons, to whom this trickle down is presumed to be trickling, must be in a position to catch the water that is supposed to be trickling. What use is it to give a man a hammer, if he knows not to use it? What good is it to give a woman an apron, if she knows not where the apron is to be used? What good is it to open a door, if the person knows only to enter in through the window? What good is it to assume or presume that the allocation of any benefit or entitlement, would go towards the best suited purpose? Under which theory, will there be a setting, or, set, of indicators and variables, where it is decided that this is and will be the best fit for one and all? There isn't any. Just ill fitting presumptions, assumptions, catch phrases, idioms and "well established facts" to bolster misplaced conventional wisdom in an evolving world.
This fundamental underpinning of market economics and as a result, development economics, is the challenge of the new century for developing nations and the under served in emerging markets and developed markets- i.e., the overall challenge of having all parties, from all sides of the spectrum, understand their role in the scheme of things from the position that they make the market and not the other way around.
To segue: Keynes and his work on demand side economics, after long hours of intensive analysis, made his position clear when his idea by blatantly speaking to, at least, government led intervention in the economy to spur growth.
The mixture of private sector innovation, government intervention, support, the level of market closure, investment incentives or socio-economic programming and policy making, is where the test of a market system and its resilience becomes a matter of ideological importance. In addition, what information and salient idea should take form, at what time, when, where and how it will be administered under it's best fitting relative purpose- after variables have been delineated for a particular outcome- should also be of critical importance. To this extent, diagnosing the nature of the problem as well as prescribing solutions that affect a desired, positive, outcome, in addition to it not doing damage to the existing structural successes, is also vitally important.
Being diagnostic rather than presumptive should be the first thought of approach when dealing with structural development matters. But, how do you ask a policy maker to diagnose a problem where he feels that it is not his position to be in the diagnostics business? How do you impress that the "well established facts" are irrelevant to what folks are dealing with today, during an economic downturn, or, worse, when things are "good"- especially under the pretense of market forces led laissez faire?
It comes down to the mode, thinking and ability of the actors in the system to always have in mind ways of removing binding constraints from the system, increasing the market share for a greater amount of persons entering the marketplace as active participants and taking all parties involved to make the right determinations on what fits best for persons to have an opportunity at a larger piece of the pie.
Technical expertise is valuable at all times. Knowing that you have to diagnose the problems, knowing what tools to use out of your diagnostic kit and then having the will and wherewithal to sustain continual diagnostics and act upon all first best information, is no easy task- probably why the presumptuous of us prefer to just assume things will happen as it "always" has. However, putting ourselves in the right frame of mind to have the confidence to attempt it, is critical even at this juncture where thought on what's right and presumptions on conventional wisdom seems to be popular again.
Sunday, November 28, 2010
Ireland gets Financial Aid...
Well, the stabilisation of the weaker EU countries has begun. See here an article from the Business Week online Magazine on how Ireland has just now won a financial aid package from the EU and IMF to the tune of 85 billion Euro's-- just over 113 billion USD. Business Week article
The fear is the contagion of the financial crisis. As you well know, contagion risk after the first financial crisis, brought on by the USA, was not seen as quickly and hence, the current global recession was deeper and more severe.
Ireland is no where near the level of the USA in terms of financial clout, or interconnectivity throughout the world, but it may seep slowly in through to other, relatively, smaller EU countries and emerging markets that dabbled in Irish markets- particularly with sovereign bonds.
Ireland was not on the same stabilisation package as Britain was during the onset of the US led financial crisis. So, help reaching Ireland was late and was not an option at the time- as the thought was that their impact and contagion would be minimal.
However, fears over spread of contagion is evident, by at least IMF and EU leaders.
The fear is the contagion of the financial crisis. As you well know, contagion risk after the first financial crisis, brought on by the USA, was not seen as quickly and hence, the current global recession was deeper and more severe.
Ireland is no where near the level of the USA in terms of financial clout, or interconnectivity throughout the world, but it may seep slowly in through to other, relatively, smaller EU countries and emerging markets that dabbled in Irish markets- particularly with sovereign bonds.
Ireland was not on the same stabilisation package as Britain was during the onset of the US led financial crisis. So, help reaching Ireland was late and was not an option at the time- as the thought was that their impact and contagion would be minimal.
However, fears over spread of contagion is evident, by at least IMF and EU leaders.
Tuesday, November 16, 2010
Cholera epidemic in Haiti..
Over 10,000 people are suspected to have Cholera in Haiti. This is a serious concern. The news broke a while ago, but it is worth repeating. As you know, the Bahamas has more than their fair share of Haitian immigrants that come to the Bahamas-- an epidemic in Haiti, may mean a spread of the disease in the Bahamas.
At the very least, we should all be concerned about Haiti, overall. As you would be well aware, the earthquake last year in Haiti, still has the country on it's knees. Development Aid is still hard to get to the areas that need it the most. And, with a major disease outbreak, things may get more difficult and hard to manage. See attached a video from the UN on the seriousness of the outbreak.
At the very least, we should all be concerned about Haiti, overall. As you would be well aware, the earthquake last year in Haiti, still has the country on it's knees. Development Aid is still hard to get to the areas that need it the most. And, with a major disease outbreak, things may get more difficult and hard to manage. See attached a video from the UN on the seriousness of the outbreak.
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