Juan Carreón

October 2008

The economic situation is apparently so grim that some experts fear we may be in for a stretch as bad as the mid seventies.

When Microsoft and Apple were founded.

As those examples suggest, a recession may not be such a bad time to start a startup. I'm not claiming it's a particularly good time either. The truth is more boring: the state of the economy doesn't matter much either way.

If we've learned one thing from funding so many startups, it's that they succeed or fail based on the qualities of the founders. The economy has some effect, certainly, but as a predictor of success it's rounding error compared to the founders.

Which means that what matters is who you are, not when you do it. If you're the right sort of person, you'll win even in a bad economy. And if you're not, a good economy won't save you. Someone who thinks "I better not start a startup now, because the economy is so bad" is making the same mistake as the people who thought during the Bubble "all I have to do is start a startup, and I'll be rich."

So if you want to improve your chances, you should think far more about who you can recruit as a cofounder than the state of the economy. And if you're worried about threats to the survival of your company, don't look for them in the news. Look in the mirror.

But for any given team of founders, would it not pay to wait till the economy is better before taking the leap? If you're starting a restaurant, maybe, but not if you're working on technology. Technology progresses more or less independently of the stock market. So for any given idea, the payoff for acting fast in a bad economy will be higher than for waiting. Microsoft's first product was a Basic interpreter for the Altair. That was exactly what the world needed in 1975, but if Gates and Allen had decided to wait a few years, it would have been too late.

Of course, the idea you have now won't be the last you have. There are always new ideas. But if you have a specific idea you want to act on, act now.

That doesn't mean you can ignore the economy. Both customers and investors will be feeling pinched. It's not necessarily a problem if customers feel pinched: you may even be able to benefit from it, by making things that save money. Startups often make things cheaper, so in that respect they're better positioned to prosper in a recession than big companies.

Investors are more of a problem. Startups generally need to raise some amount of external funding, and investors tend to be less willing to invest in bad times. They shouldn't be. Everyone knows you're supposed to buy when times are bad and sell when times are good. But of course what makes investing so counterintuitive is that in equity markets, good times are defined as everyone thinking it's time to buy. You have to be a contrarian to be correct, and by definition only a minority of investors can be.

So just as investors in 1999 were tripping over one another trying to buy into lousy startups, investors in 2009 will presumably be reluctant to invest even in good ones.

You'll have to adapt to this. But that's nothing new: startups always have to adapt to the whims of investors. Ask any founder in any economy if they'd describe investors as fickle, and watch the face they make. Last year you had to be prepared to explain how your startup was viral. Next year you'll have to explain how it's recession-proof.

(Those are both good things to be. The mistake investors make is not the criteria they use but that they always tend to focus on one to the exclusion of the rest.)

Fortunately the way to make a startup recession-proof is to do exactly what you should do anyway: run it as cheaply as possible. For years I've been telling founders that the surest route to success is to be the cockroaches of the corporate world. The immediate cause of death in a startup is always running out of money. The cheaper your company is to operate, the harder it is to kill. Fortunately it has gotten very cheap to run a startup, and a recession will if anything make it cheaper still.

If nuclear winter really is here, it may be safer to be a cockroach even than to keep your job. Customers may drop off individually if they can no longer afford you, but you're not going to lose them all at once; markets don't "reduce headcount."

What if you quit your job to start a startup that fails, and you can't find another? That could be a problem if you work in sales or marketing. In those fields it can take months to find a new job in a bad economy. But hackers seem to be more liquid. Good hackers can always get some kind of job. It might not be your dream job, but you're not going to starve.

Another advantage of bad times is that there's less competition. Technology trains leave the station at regular intervals. If everyone else is cowering in a corner, you may have a whole car to yourself.

You're an investor too. As a founder, you're buying stock with work: the reason Larry and Sergey are so rich is not so much that they've done work worth tens of billions of dollars, but that they were the first investors in Google. And like any investor you should buy when times are bad.

Were you nodding in agreement, thinking "stupid investors" a few paragraphs ago when I was talking about how investors are reluctant to put money into startups in bad markets, even though that's the time they should rationally be most willing to buy? Well, founders aren't much better. When times get bad, hackers go to grad school. And no doubt that will happen this time too. In fact, what makes the preceding paragraph true is that most readers won't believe it—at least to the extent of acting on it.

So maybe a recession is a good time to start a startup. It's hard to say whether advantages like lack of competition outweigh disadvantages like reluctant investors. But it doesn't matter much either way. It's the people that matter. And for a given set of people working on a given technology, the time to act is always now.

México será el país que crecerá menos en AL en los años 2008 y 2009, y pronostica que el PIB de este año será de 2.1% y 1.8% para el próximo, debido a la menor aportación económica que harán los migrantes.

La recuperación de la economía mundial iniciará hasta la segunda parte del año 2009 y será mucho más gradual que la registrada en anteriores procesos de reactivación.

Es lo que consigna el Fondo Monetario Internacional (FMI) en su Panorama económico regional para el Hemisferio Oeste, al que pertenece México.

Refiere que el principal riesgo para las economías de América es la reducción de los precios de las materias primas, que detalla, han sido determinantes en los últimos dos años para impulsar la actividad regional y afianzar la posición fiscal.

En el análisis, enfatiza que México será el país que crecerá menos en América Latina en los años 2008 y 2009, y pronostica que el PIB de este año será de 2.1% y 1.8% para el próximo.

Advierte que las principales tensiones que sufrirá la administración de Calderón en materia económica vendrán de la menor aportación económica que harán los migrantes mexicanos a sus familias, vía remesas; la volatilidad en el precio del petróleo, la crisis de liquidez del mercado mundial y la recesión de Estados Unidos.

En el documento, dedica una nota a explicar el efecto de la situación económica de EU sobre América Latina y enfatiza que “a diferencia de las recesiones anteriores, ahora el consumo y la inversión interna están sufriendo una desaceleración”.
Lo que agudiza el riesgo de que se retrase la recuperación de la economía estadounidense.
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by Daniel W. Drezner

10.21.2008

Over the weekend, the Bush administration announced that it intended to organize a global summit to tackle the global financial crisis. This in and of itself would be unremarkable, except that this wasn’t originally Bush’s idea. He decided to suggest it at the urging of French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso.

The contrast with a decade ago is sharp. Ten years ago, when the Asian financial crisis was in full bloom, both Europe and Japan proposed some tweaks to global governance. Japan floated the idea of an Asian Monetary Fund, and France suggested the creation of an Economic Security Council. And the United States politely ignored both suggestions. When an American president with a penchant for unilateralism starts following the lead of the French, you know that times have changed. Has the crisis revealed a shift in the economic balance of power?

When capital becomes scarce, the countries that are sitting on large reserves could be seen as having all the leverage. In a new Council on Foreign Relations report, Brad Setser argues that increasing external indebtedness will give America’s creditors increasing leverage over U.S. foreign policy. Indeed, a key reason for the timing of the Treasury Department’s takeover of Fannie Mae and Freddie Mac was pressure from the sovereign holders of their debt. And the New York Times’ Keith Bradsher reported on Monday that Washington was tolerating China’s continued efforts to prevent the yuan from appreciating because, “with the United States heavily dependent on China to buy the Treasury bonds needed to finance a bailout of the American financial system, the Bush administration has stopped criticizing China’s trade and currency policies.”

The financial crisis has also led to some strange bedfellows—or at least some serious flirting between polar opposites. As Iceland tottered on the brink of bankruptcy, it started to court Russia as a source of emergency funding. Pakistan’s new democratic president shuttled to China in order to seek a $4 billion injection of capital. Are these entreaties the harbinger of a shift in financial power?

There’s enough panic to go around right now without worrying about a radical shift in financial power. The past few weeks have certainly revealed that financial interdependence forces the United States to listen to its creditors. However, this interdependence cuts both ways. Because of its slowing growth, China has no choice but to continue purchasing dollar-denominated debt in order to goose its export earnings. As for Russia, $500 billion in reserves has not prevented the crash of its own equity markets.

Indeed, despite their entreaties to Moscow and Beijing, Iceland and Pakistan have been rebuffed. These countries have had little choice but to go to the International Monetary Fund for emergency financing.

This does not mean that shifts in financial power are not occurring. Lost amid the financial chaos of the past six weeks was the revelation that China’s State Administration of Foreign Exchange used a $300 million purchase of government bonds and a $150 million grant to Costa Rica in return for that country’s decision to sever diplomatic ties with Taiwan after sixty-three years and recognize the People’s Republic of China.

Being able to offer big carrots to small countries is a very handy tool in great-power foreign policy. And the current crisis suggests that the United States is not the only country that can proffer such carrots.

Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and a senior editor at The National Interest.

Publicado por The Wall Street Journal, EEUU

Beijin.- La boyante economía de China se está enfriando más rápido de lo que la mayoría de los analistas había previsto, desinflando las esperanzas de que la demanda del país podría ayudar a mantener activa la economía mundial en momentos en que el mundo desarrollado atraviesa una crisis financiera.

La oficina de estadísticas de China informó el lunes que el crecimiento económico se desaceleró a 9% en el tercer trimestre con respecto a idéntico lapso del año previo, luego de un avance de 10,1% en el segundo trimestre y de 10,6% en el primero. China acumula una expansión promedio de 9,9% en lo que va del año y es probable que anote su primer año de crecimiento por debajo del 10% desde 2002.

"La crisis financiera global ya ha asestado un severo golpe a la confianza de los inversionistas y los consumidores en muchos países del mundo, y China no es la excepción", dijo Li Xiaochao, portavoz de la Oficina Nacional de Estadísticas.

China ya ha recortado las tasas de interés dos veces desde septiembre y es probable que las cifras recientes, que estuvieron por debajo de las expectativas, aceleren la ofensiva gubernamental para mantener la expansión. Muchos economistas predicen que el crecimiento podría llegar a 8% el próximo año, la menor tasa para China desde la crisis asiática.

Los grandes beneficiados del tórrido crecimiento de China — como los fabricantes alemanes de herramientas, los productores japoneses de maquinaria de construcción y los proveedores latinoamericanos de materias primas— han acusado el golpe. Los precios de las materias primas, por ejemplo, han caído verticalmente en las últimas semanas mientras los mercados toman nota de una menor expansión en China y una menor demanda de países ricos como Estados Unidos y Japón.

El enfriamiento demuestra como, a pesar del espectacular crecimiento de los últimos años, China no ha conseguido la escala necesaria para actuar como el motor principal de la economía global. El país ocupa la posición número 100 entre todos los países en términos de ingreso per cápita y representa un 6% de la economía global, con base en las tasas cambiarias del mercado. Tras ajustar su producción por la paridad de poder adquisitivo, la medida preferida de muchos economistas, China sólo equivale al 10% de la economía global. "Pueden ser un motor de cierta manera, pero lo que suceda en el 90% restante va a importar más", dice Nicholas Lardy del Instituto Peterson de Economía Internacional, de Washington. Y aunque su sistema financiero sigue estando mayormente aislando de la crisis crediticia, China tiene problemas propios. "Todo está marchando por mal camino en cuanto a mantener el crecimiento", dice Lardy.

Las exportaciones se debilitan rápidamente a medida que cae la demanda de grandes clientes como EE.UU. y Europa. Eso ocurre en los precisos momentos en que la caída del mercado inmobiliario amenaza con arrastrar aún más el crecimiento chino. Aunque el gasto en infraestructura sigue en auge y el consumo se ha mantenido alto, es probable que la economía experimente una desaceleración generalizada. La debilidad de las cifras de agosto se atribuyó a los cierres de industrias con motivo de los Juegos Olímpicos de Beijing, pero la persistente desaceleración de la producción en septiembre sugiere que el debilitamiento fue más amplio.

No hay que perder de vista que el crecimiento chino sigue siendo extraordinariamente alto y es probable que lo siga siendo. No obstante, la demanda doméstica china sencillamente no es lo suficientemente grande como para sustituir el gigantesco papel que juega EE.UU. Aunque los 1.300 millones de chinos consumieron cerca de US$1,2 billones (millón de millones) el año pasado, los 300 millones de estadounidenses consumieron US$9,7 billones. China sigue siendo un gran exportador. Entre enero y septiembre, exportó US$181.000 millones más de lo que importó. "Las cuentas no dan", dice Stephen Roach, presidente de Morgan Stanley en Asia. "China todavía es un país relativamente pobre. Tal vez podrá amortiguar un poco el golpe, pero no mucho".

Para los productores de los bienes que china necesita —principalmente materias primas y maquinaria para construir sus casas y fábricas— el auge chino ha sido bienvenido. Alemania, por ejemplo, ha retenido su corona como el mayor exportador del mundo gracias, en parte, a la venta de equipos industriales a China.

Según las estadísticas de la industria alemana de comercio, las exportaciones a China de maquinaria y partes subieron 20% en los primeros siete meses del año, con respecto al mismo período del año anterior. Eso transforma a China en el segundo mercado para la maquinaria alemana, detrás de EE.UU. "China tiene su propia dinámica", reconoce Olaf Wortmann, economista de la asociación de ingeniería VDMA, quien cree que el crecimiento de las exportaciones a China puede mantenerse en alrededor de 10% pese a la desaceleración.

Esa es una buena noticia, dado el bajón en todo el mundo. La demanda china, sin embargo, tiene sus límites. El país es un gran comprador de equipos industriales alemanes, pero no de otros productos. En total, China es apenas el undécimo mercado para las exportaciones de Alemania, absorbiendo un modesto 3% de los 969.000 millones de euros que Alemania exportó el año pasado. Eso no es suficiente para impulsar la economía germana, cuyo crecimiento está cayendo por debajo del 2% este año y probablemente será cero el año que viene.

Puesto que los ganadores del boom de China han estado desproporcionadamente ligados a los ciclos de construcción e inversión, la actual caída del mercado inmobiliario ha causado más daño en esos sectores. A medida que caen las ventas de viviendas y los constructores reducen nuevos proyectos, la demanda de acero, cemento y cobre que se utiliza en los nuevos edificios se ha debilitado.

La desaceleración está forzando a los países vecinos a hacer ajustes. El fabricante japonés de químicos Tosoh Corp. ha reducido la producción de policloruro de vinilo —el material de construcción de plástico conocido como PVC, por sus siglas en inglés— un 15% desde septiembre. Fue el primer recorte de Tosoh en 10 años, el que la compañía atribuyó al gran declive en la demanda de China.

Li, el vocero de la oficina de estadísticas, espera que la crisis financiera internacional disminuya el flujo de inversión extranjera y las exportaciones, dos motores del crecimiento de los últimos años.

La inflación, en todo caso, cayó de 8,7% en febrero a 4,6% en septiembre. Eso ha permitido al gobierno concentrarse en estimular el crecimiento. Se espera que pronto se anuncien nuevas medidas.

By Pavs on October 19th, 2008

This may be the single most important US Presidential election in our lifetime. While there are other very pressing and more important issues to help you make a decision in choosing a candidate; I think it is important to look at where each candidate stands in terms of technology, which most of the readers in this site is passionate about. It would be better if we could have their views on open source more specifically, unfortunately no such information exists to the best of my knowledge.

John McCain on Technology:

- Ban Internet Taxes: “We must make a farsighted, robust, and fervent commitment to innovation and new technologies to sustain our global competitiveness, meet our national security challenges.“

- Answering a question on whether he would “police the Internet culturally, such as for predators & pornography”. His answer: “Absolutely not, but I also want to point out this Internet child pornography is a terrible evil. It’s got to be addressed. And everybody knows the way you stop it is go after the money.“

- Answering a question on whether he “Uses Internet to read news & to get donations”. His Answer was: “Not nearly as well as I should. My wife Cindy is a whiz. And when I want to find out what’s on CNN, or The NY Times, or other communist periodicals, I always go to it. But the phenomenal thing about the Internet [is that] we’ve gotten like $7 million in contributions over the Internet. It’s been marvelous. $7 million, because they want reform, they want the government back.“

- Should we spend government funds to address the “digital divide?” His answer: “No, I wouldn’t do it directly, but there’s lots of ways that you can encourage corporations who, in their own self-interest, would want to provide — would receive tax benefits, would receive credit, and many other ways for being involved in the schools and upgrading the quality of the equipment that they have, the quality of the students, and thereby providing a much-needed, well-trained work force.“

- Introduced bill for “No government control over computer encryption” in 1999:

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Legalize development, sale, and use of encryption.
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Prohibits government from requiring an encryption key (solution) or other computer access.
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Prohibits the government from adopting any standard that establishes an encryption standard for use by businesses other than for federal computer systems.
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Prohibits restricting the export of encryption products.

To highlight John McCain’s campaign promises on technology:

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Encourage investment in innovation
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Develop a skilled work force
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Champion open and fair trade
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Reform intellectual property protection
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Keep the Internet and entrepreneurs free of unnecessary regulation
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Ensure a fully connected citizenry

Sources: 1 -2

Barack Obama on Technology:

- On research funding in technology, “We can’t just focus on preserving existing industries. We have to be in the business of encouraging new ones–and that means science, research and technology. For two centuries, America led the world in innovation. But this Administration’s hostility to science has taken a toll. At a time when technology is shaping our future, we devote a smaller and smaller share of our national resources to Research and Development. I’ll double federal funding for basic research, and make the R&D tax credit permanent.“

- Talking on Broadband in heart of inner cities and rural towns, “Let us be the generation that reshapes our economy to compete in the digital age. Let’s set high standards for our schools and give them the resources they need to succeed. Let’s recruit a new army of teachers, and give them better pay and more support in exchange for more accountability. Let’s make college more affordable, and let’s invest in scientific research, and let’s lay down broadband lines through the heart of inner cities and rural towns all across America.“

- Obama co-sponsored ensuring net neutrality: No corporate-tiered Internet (Jan 9, 2007).

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Broadband service providers shall not interfere with the ability of any person to use a broadband service to access or offer any lawful content via the Internet;
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Only prioritize content or services based on the type of content or services and the level of service purchased by the user, without charge for such prioritization.

- Obama sponsored website for competitive federal awards: A bill to strengthen transparency and accountability in Federal spending. Key elements of the bill includes:

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Recipient performance transparency.
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A unique award identifier that identifies each individual award vehicle.
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The date that the financial award was made.
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The agency and department as well as subagencies and suboffices that have authorized the Federal award.

- On creating “Google for government“, he said, “I worked with Tom Coburn, one of the most conservative Republicans, who John already mentioned, to set up what we call Google for Government, which says that we are going to list every dollar of federal spending to make sure that the taxpayer can take a look and see who, in fact, is promoting some of these spending projects that John’s been railing about.“
To highlight Barack Obama’s campaign promises on technology:

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Ensure an open Internet.
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Create a transparent and connected democracy.
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Encourage a modern communications infrastructure.
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Prepare all of our children for a 21st century economy.
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Improve America’s competitiveness.
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Employ science and technology to solve our nation’s most pressing problems.

http://steve-yegge.blogspot.com/2008/10/universal-design-pattern.html

by Reihan Salam
North America's Other Election

Canada has weathered the global economic crisis with noteworthy grace. Last month, its economy created over 100,000 new jobs, more than in any month in decades. Wages keep growing, and Canada's banking sector is, according to the World Economic Forum, "the soundest in the world." So it shouldn't be surprising that last week, Canadians returned Stephen Harper's Conservatives to power and granted them 19 new seats in Parliament. Harper called the election because he thought he could win it. But the five-week campaign featured wild oscillations—and offered a few glimpses of Canada's fragmented future.

Early on, the Conservatives looked like they might win a majority by expanding their share of the vote in francophone Quebec. The wooing of Quebec's so-called soft nationalists has been at the heart of Conservative electoral strategy since the party's birth in 2003, when the Progressive Conservatives merged with the western-centered Canadian Alliance. Before the early 1990s, Quebec voters who wanted autonomy from Ottawa tended to vote for the Progressive Conservatives. Those who embraced a strong federal government backed the Liberals. But the constitutional crisis of the early 1990s forced a polarization of Quebec's electorate: either you were for a united Canada or against it, which meant that you were either for the federalist Liberals, or for the separatist Bloc Québécois. The politics of the middle way were dead, and the fortunes of the conservative parties in Quebec died with it.

The failure and exhaustion of Quebec's sovereignty movement presented an opportunity for a return of the middle way, and Harper shrewdly seized it. In 2006, the Conservatives won 10 seats in Quebec, far more than anyone had anticipated. Since then, Harper has explicitly referred to Quebec nationhood, and he has sought to raise its profile in international bodies like UNESCO, a clear gesture in the direction of soft nationalists. The Conservatives have also channeled considerable resources to the province. All the same, the Conservatives failed to increase their seat total. Quebec voters still turned to the Bloc Quebecois en masse, even though enthusiasm for Quebec sovereignty remains low.

The Canadian media have pointed to the Conservative government's decision to cut arts funding as well as a number of harsh anti-crime measures as the reason for their dismal showing. But there was much more to it. First, Canada's war in Afghanistan has killed nearly 100 Canadians and is deeply unpopular in Quebec. By pledging to withdraw Canadian forces in 2011, Harper built a consensus with the Liberals and neutralized the issue in most of the country—but not in Quebec. The Bloc wants Canadian troops out of Afghanistan now. Also, the New Democratic Party, which has struggled for decades to displace the Liberals as Canada's party of the left, ran very effective anti-Harper advertisements in Quebec in the hopes of building a beachhead there. But the ads redounded to the benefit of the Bloc instead, both because there was no real prospect of major NDP victories in Quebec and because Quebec voters tend to be, frankly speaking, very tribal.

Quebec aside, there were a few other aspects of Canada's federal election that have resonance for those of us following the American political scene. In Ontario and British Columbia, the Conservatives performed extremely well, thanks in part to a below-the-radar ethnic outreach effort. Whereas the Conservatives had been all but shut out of Canada's biggest metropolitan areas in the last election, the party won a number of unexpected victories in the suburbs of Toronto and Vancouver, and came close in several more seats. Asian Canadians, and in particular Chinese, Filipino, and Korean voters, chose the Conservatives by wide margins across the country, a trend that bodes well for the party's future. (This is in marked contrast to the U.S. Republican Party's failure to break out beyond its increasingly narrow ethnic base, a failure that will likely tilt states like Colorado, Nevada, and Virginia into the Democratic column.) More significant was the shift of middle-class married women in Ontario and British Columbia into the Conservative column, doubtless a response to Harper's very effective tax-credit pandering. Like Bush's Republican Party, the Conservatives have expanded their coalition by appealing to working class voters, but they've mainly done it by using targeted tax policies, like the Clinton-era Democrats.

In the middle of the campaign, Harper and other leading Conservatives created a panic within the party with a series of hamfisted remarks. And although the financial crisis hasn't hit Canada directly, it has certainly created anxiety. Briefly, the Liberals and New Democrats seemed capable of forming a coalition on the strength of Harper's failure to feel the pain of Canada's middle-class families. But on the 14th, the day after Canadian Thanksgiving, those middle-class families turned to Harper as a safe pair of hands. It didn't help that the central feature of the Liberal domestic policy, a carbon tax, was essentially demagogued to death by Conservative candidates across the country. It is easy to imagine Republicans doing the same to a sweeping Democratic environmental plan.

Right now, Liberals see their meager showing—just 26 percent of the vote, one of the worst outcomes in the history of the party—as a serious reversal. At the same time, the Liberals won't be held responsible for the wrenching economic conditions to come. Assuming there is a severe downturn, the Conservative government will be forced into a budget deficit, a serious taboo in Canadian federal politics. The Liberals will eventually find a leader more appealing and charismatic than Stéphane Dion, and when they do, the party will surely make a comeback, not least because the 7 percent won by the flavor-of-the-month Green Party will dwindle to zero.

At the moment, left-leaning Canadians are suffering from a severe case of Obama envy. The Liberals are desperate for a Trudeau-like figure who can present a dashing, cosmopolitan face to the wider world. Stephane Dion is not that man. Michael Ignatieff, the celebrated intellectual and human rights activist and Liberal MP, just might be. After a disappointing and somewhat clumsy start, Ignatieff has proved a fast learner and a keen campaigner. He will, however, having a hard time fending off his old friend and classmate Bob Rae, the former NDP premier of Ontario who has inherited much of Jean Chrétien's old political machine.

All this is to say that Stephen Harper and the Conservatives have an unenviable task of governing ahead of them, and possibly a tough election as well. This minority government bears an eerie resemblance to Joe Clark's Progressive Conservative win in 1979, when for just ten months he led a large minority government that had minimal Quebec representation. Clark mistakenly believed that he had a strong mandate, and he united the fractious opposition parties against him. Stephen Harper may well do the same.

Reihan Salam is an Atlantic associate editor and the co-author of Grand New Party: How Republicans Can Win the Working Class and Save the American Dream (2008).

Social melting pots foster technological innovation

* 14 October 2008
* NewScientist.com news service

BIG cities are the most vibrant centres of innovation - and it's all down to the mathematics of networking.

People in bigger cities are known to be more innovative than those in smaller ones: the figures show that a doubling in the size of a city generally leads to a more than proportionate rise in the number of patents or inventors associated with it.

Now Samuel Arbesman and colleagues at Cornell University in Ithaca, New York, have developed computer models of social networking which show that the sheer size of larger cities generates disproportionately more connections between people with very different personalities and backgrounds. Such bonds tend to foster innovation as they link people with complementary skills, they say.

Octubre 2008. Número 156
Por IGNACIO RAMONET

Portada nº 156 - octubre de 2008Los terremotos que sacudieron las Bolsas durante el pasado "septiembre negro" han precipitado el fin de una era del capitalismo. La arquitectura financiera internacional se ha tambaleado. Y el riesgo sistémico permanece. Nada volverá a ser como antes. Regresa el Estado.

El desplome de Wall Street es comparable, en la esfera financiera, a lo que representó, en el ámbito geopolítico, la caída del muro de Berlín. Un cambio de mundo y un giro copernicano. Lo afirma Paul Samuelson, premio Nobel de Economía: "Esta debacle es para el capitalismo lo que la caída de la URSS fue para el comunismo". Se termina el periodo abierto en 1981 con la fórmula de Ronald Reagan: "El Estado no es la solución, es el problema". Durante treinta años, los fundamentalistas del mercado repitieron que éste siempre tenía razón, que la globalización era sinónimo de felicidad, y que el capitalismo financiero edificaba el paraíso terrenal para todos. Se equivocaron.

La "edad de oro" de Wall Street se ha acabado. Y también una etapa de exuberancia y despilfarro representada por una aristocracia de banqueros de inversión, "amos del universo" denunciados por Tom Wolfe en La Hoguera de las vanidades (1987). Poseídos por una lógica de rentabilidad a corto plazo. Por la búsqueda de beneficios exorbitantes. Dispuestos a todo para sacar ganancias: ventas a corto abusivas, manipulaciones, invención de instrumentos opacos, titulización de activos, contratos de cobertura de riesgos, hedge funds... La fiebre del provecho fácil se contagió a todo el planeta. Los mercados se sobrecalentaron, alimentados por un exceso de financiación que facilitó el alza de los precios.

La globalización condujo la economía mundial a tomar la forma de una economía de papel, virtual, inmaterial. La esfera financiera llegó a representar más de 250 billones de euros, o sea seis veces el montante de la riqueza real mundial. Y de golpe, esa gigantesca "burbuja" ha reventado.

El desastre es de dimensiones apocalípticas. Más de 200.000 millones de euros se han esfumado. La banca de inversión ha sido borrada del mapa. Las cinco mayores entidades se han desmoronado: Lehman Brothers en bancarrota; Bear Stearns comprado, con la ayuda de la Reserva Federal (Fed), por Morgan Chase; Merril Lynch adquirido por Bank of America; y los dos últimos, Goldman Sachs y Morgan Stanley (en parte comprado por el japonés Mitsubishi UFJ), reconvertidos en simples bancos comerciales.
Toda la cadena de funcionamiento del aparato financiero se ha colapsado. No sólo la banca de inversión, sino los bancos centrales, los sistemas de regulación, los bancos comerciales, las cajas de ahorros, las compañías de seguros, las agencias de calificación de riesgos (Standard&Poors, Moody's, Fitch) y hasta las auditoras contables (Deloitte, Ernst&Young, PwC).

El naufragio no puede sorprender a nadie. El escándalo de las "hipotecas basura" (subprime) era sabido de todos. Igual que el exceso de liquidez orientado a la especulación, y la explosión delirante de los precios de la vivienda. Todo esto ha sido denunciado -en estas columnas- desde hace tiempo. Sin que nadie se inmutase. Porque el crimen beneficiaba a muchos. Y se siguió afirmando que la empresa privada y el mercado lo arreglaban todo.

La Administración del Presidente George W. Bush ha tenido que renegar de ese principio y recurrir, masivamente, a la intervención del Estado. Las principales entidades de crédito inmobiliario, Fannie Mae y Freddie Mac, han sido nacionalizadas. También lo ha sido el American International Group (AIG), la mayor compañía de seguros del mundo. Y el Secretario del Tesoro, Henry Paulson (ex presidente de la banca Goldman Sachs...) ha propuesto un plan de rescate de las acciones "tóxicas" procedentes de las "hipotecas basura" por un valor de unos 500.000 millones de euros, que también adelantará el Estado, o sea los contribuyentes.

Prueba del fracaso del sistema, estas intervenciones del Estado -las mayores, en volumen, de la historia económica- demuestran que los mercados no son capaces de regularse por sí mismos. Se han autodestruido por su propia voracidad. Además, se confirma una ley del cinismo neoliberal: se privatizan los beneficios pero se socializan las pérdidas. Se hace pagar a los pobres las excentricidades irracionales de los banqueros, y se les amenaza, en caso de que se nieguen a pagar, con empobrecerlos aún más.

Las autoridades norteamericanas acuden al rescate de los banksters ("banquero gangster") a expensas de los ciudadanos. Hace unos meses, el presidente Bush se negó a firmar una ley que ofrecía una cobertura médica a nueve millones de niños pobres por un coste de 4.000 millones de euros. Lo consideró un gasto inútil. Ahora, para salvar a los rufianes de Wall Street nada le parece suficiente. Socialismo para los ricos, y capitalismo salvaje para los pobres.

Este desastre ocurre en un momento de vacío teórico de las izquierdas. Las cuales no tienen "plan B" para sacar provecho del descalabro. En particular las de Europa, agarrotadas por el choque de la crisis. Cuando sería tiempo de refundación y de audacia.
¿Cuánto durará la crisis? "Veinte años si tenemos suerte, o menos de diez si las autoridades actúan con mano firme", vaticina el editorialista neoliberal Martin Wolf (1). Si existiese una lógica política, este contexto debería favorecer la elección del demócrata Barack Obama (si no es asesinado) a la presidencia de Estados Unidos el 4 de noviembre próximo. Es probable que, como Franklin D. Roosevelt en 1930, el joven Presidente lance un nuevo "New Deal" basado en un neokeynesianismo que confirmará el retorno del Estado en la esfera económica. Y aportará por fin mayor justicia social a los ciudadanos. Se irá hacia un nuevo Bretton Woods. La etapa más salvaje e irracional de la globalización neoliberal habrá terminado.

Notas:
(1) Financial Times , Londres, 23 de septiembre de 2008.

Stephen S. Roach
Chairman, Morgan Stanley Asia

For the second time in seven years, the bursting of a major-asset bubble has inflicted great damage on world financial markets. In both cases--the equity bubble in 2000 and the credit bubble in 2007--central banks were asleep at the switch. The lack of monetary discipline has become a hallmark of unfettered globalization. Central banks have failed to provide a stable underpinning to world financial markets and to an increasingly asset-dependent global economy.

The current post-bubble shakeout is hardly an isolated development. Basking in the warm glow of a successful battle against inflation, central banks decided that easy money was the world's just reward. That set in motion a chain of events that has allowed one bubble to beget another--from equities to housing to credit.

When the bubble burst in early 2000, the optimists said not to worry. After all, Internet stocks accounted for only about 6% of total U.S. equity-market capitalization at the end of 1999. Unfortunately, the broad S&P 500 index tumbled some 49% over the ensuing 2 1/2 years, and an overextended corporate America led the U.S. and global economy into recession.

Similarly, today's optimists are preaching the same gospel: Why worry, they say, if subprime is only about 10% of total U.S. securitized mortgage debt? Yet the unwinding of the far broader credit cycle gives good reason for concern--especially for overextended American consumers and a U.S.-centric global economy. Central banks have now been forced into making emergency liquidity injections, leaving little doubt of the mounting risks of another financial crisis. The jury is out on whether these efforts will succeed in stemming the rout in still overvalued credit markets. Is this any way to run a modern-day world economy? The answer is an unequivocal "no."

It is high time for monetary authorities to adopt new procedures--namely, taking the state of asset markets into explicit consideration when framing policy options. As the increasing prevalence of bubbles indicates, a failure to recognize the interplay between the state of asset markets and the real economy is an egregious policy error.

That doesn't mean central banks should target asset markets. It does mean, however, that they need to break their one-dimensional fixation on CPI-based inflation and also give careful consideration to the extremes of asset values. This is not that difficult a task. When housing markets go to excess, when subprime borrowers join the fray, or when corporate credit becomes freely available at ridiculously low "spreads," central banks should run tighter monetary policies than a narrow inflation target would dictate.

The current financial crisis is a wake-up call for modern-day central banking. The world can't afford to lurch from one bubble to another. The cost of neglect is an ever-mounting systemic risk that could pose a grave threat to an increasingly integrated global economy. It could also spur the imprudent intervention of politicians, undermining the all-important political independence of central banks. The art and science of central banking is in desperate need of a major overhaul--before it's too late.

El Universal

Domingo 19 de octubre de 2008

La crisis, generada ahora en las naciones desarrolladas, ya provocó un daño severo en los países de América Latina, pese a los ajustes que éstos han aplicado en sus políticas macroeconómicas durante varios años, a causa de los problemas financieros que han vivido.

Ahora en la región se observa una fuerte contracción del crédito hacia empresas y familia, baja en el consumo, caída de las principales monedas frente al dólar ante la salida de capitales de los mercados emergentes y un desplome en las bolsas de valores. Aún falta la pérdida del empleo.

Los gobiernos del continente se han visto obligados a tomar medidas para protegerse del lento crecimiento en los países del norte.

Así, Chile optó por inyectar recursos a las pequeñas y medianas empresas, además de a exportadores, para paliar los efectos que tendrán las bajas en el consumo.

Además, el Estado usará sus reservas para darle liquidez al sistema bancario y asegurar la disponibilidad de crédito.

En Brasil, el gobierno también eligió aumentar sus fondos para financiar a exportadores y tomó varias acciones coordinadas para asegurar el precio del dólar.

El paquete de estímulos ya llega a 206 mil millones de reales (unos 9 mil millones de dólares). Hace pocos días, el Banco Central recibió autorización para intervenir en bancos que tengan problemas de liquidez.

En Argentina, el gobierno de Cristina Fernández de Kirchner aseguró en diferentes tonos que el desastre en la banca no afectarían al país porque la economía está aislada del sistema financiero internacional.

Pero en fecha reciente el gobierno negoció una modificación legal que le permitirá usar las reservas internacionales del Banco Central para pagar deuda pública, lo que ahora está prohibido.

En México, se espera un fuerte gasto en infraestructura para impulsar el crecimiento del mercado interno.

'Everything works much better when wrong decisions are punished and good decisions make you rich.'
By BRIAN M. CARNEY
New York

On Aug. 9, 2007, central banks around the world first intervened to stanch what has become a massive credit crunch.

Since then, the Federal Reserve and the Treasury have taken a series of increasingly drastic emergency actions to get lending flowing again. The central bank has lent out hundreds of billions of dollars, accepted collateral that in the past it would never have touched, and opened direct lending to institutions that have never had that privilege. The Treasury has deployed billions more. And yet, "Nothing," Anna Schwartz says, "seems to have quieted the fears of either the investors in the securities markets or the lenders and would-be borrowers in the credit market."
[The Weekend Interview] Randy Jones

The credit markets remain frozen, the stock market continues to get hammered, and deep recession now seems a certainty -- if not a reality already.

Most people now living have never seen a credit crunch like the one we are currently enduring. Ms. Schwartz, 92 years old, is one of the exceptions. She's not only old enough to remember the period from 1929 to 1933, she may know more about monetary history and banking than anyone alive. She co-authored, with Milton Friedman, "A Monetary History of the United States" (1963). It's the definitive account of how misguided monetary policy turned the stock-market crash of 1929 into the Great Depression.

Since 1941, Ms. Schwartz has reported for work at the National Bureau of Economic Research in New York, where we met Thursday morning for an interview. She is currently using a wheelchair after a recent fall and laments her "many infirmities," but those are all physical; her mind is as sharp as ever. She speaks with passion and just a hint of resignation about the current financial situation. And looking at how the authorities have handled it so far, she doesn't like what she sees.

Federal Reserve Chairman Ben Bernanke has called the 888-page "Monetary History" "the leading and most persuasive explanation of the worst economic disaster in American history." Ms. Schwartz thinks that our central bankers and our Treasury Department are getting it wrong again.

To understand why, one first has to understand the nature of the current "credit market disturbance," as Ms. Schwartz delicately calls it. We now hear almost every day that banks will not lend to each other, or will do so only at punitive interest rates. Credit spreads -- the difference between what it costs the government to borrow and what private-sector borrowers must pay -- are at historic highs.

This is not due to a lack of money available to lend, Ms. Schwartz says, but to a lack of faith in the ability of borrowers to repay their debts. "The Fed," she argues, "has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible."

So even though the Fed has flooded the credit markets with cash, spreads haven't budged because banks don't know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is "the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue."

In the 1930s, as Ms. Schwartz and Mr. Friedman argued in "A Monetary History," the country and the Federal Reserve were faced with a liquidity crisis in the banking sector. As banks failed, depositors became alarmed that they'd lose their money if their bank, too, failed. So bank runs began, and these became self-reinforcing: "If the borrowers hadn't withdrawn cash, they [the banks] would have been in good shape. But the Fed just sat by and did nothing, so bank after bank failed. And that only motivated depositors to withdraw funds from banks that were not in distress," deepening the crisis and causing still more failures.

But "that's not what's going on in the market now," Ms. Schwartz says. Today, the banks have a problem on the asset side of their ledgers -- "all these exotic securities that the market does not know how to value."

"Why are they 'toxic'?" Ms. Schwartz asks. "They're toxic because you cannot sell them, you don't know what they're worth, your balance sheet is not credible and the whole market freezes up. We don't know whom to lend to because we don't know who is sound. So if you could get rid of them, that would be an improvement." The only way to "get rid of them" is to sell them, which is why Ms. Schwartz thought that Treasury Secretary Hank Paulson's original proposal to buy these assets from the banks was "a step in the right direction."

The problem with that idea was, and is, how to price "toxic" assets that nobody wants. And lurking beneath that problem is another, stickier problem: If they are priced at current market levels, selling them would be a recipe for instant insolvency at many institutions. The fears that are locking up the credit markets would be realized, and a number of banks would probably fail.

Ms. Schwartz won't say so, but this is the dirty little secret that led Secretary Paulson to shift from buying bank assets to recapitalizing them directly, as the Treasury did this week. But in doing so, he's shifted from trying to save the banking system to trying to save banks. These are not, Ms. Schwartz argues, the same thing. In fact, by keeping otherwise insolvent banks afloat, the Federal Reserve and the Treasury have actually prolonged the crisis. "They should not be recapitalizing firms that should be shut down."

Rather, "firms that made wrong decisions should fail," she says bluntly. "You shouldn't rescue them. And once that's established as a principle, I think the market recognizes that it makes sense. Everything works much better when wrong decisions are punished and good decisions make you rich." The trouble is, "that's not the way the world has been going in recent years."

Instead, we've been hearing for most of the past year about "systemic risk" -- the notion that allowing one firm to fail will cause a cascade that will take down otherwise healthy companies in its wake.

Ms. Schwartz doesn't buy it. "It's very easy when you're a market participant," she notes with a smile, "to claim that you shouldn't shut down a firm that's in really bad straits because everybody else who has lent to it will be injured. Well, if they lent to a firm that they knew was pretty rocky, that's their responsibility. And if they have to be denied repayment of their loans, well, they wished it on themselves. The [government] doesn't have to save them, just as it didn't save the stockholders and the employees of Bear Stearns. Why should they be worried about the creditors? Creditors are no more worthy of being rescued than ordinary people, who are really innocent of what's been going on."

It takes real guts to let a large, powerful institution go down. But the alternative -- the current credit freeze -- is worse, Ms. Schwartz argues.

"I think if you have some principles and know what you're doing, the market responds. They see that you have some structure to your actions, that it isn't just ad hoc -- you'll do this today but you'll do something different tomorrow. And the market respects people in supervisory positions who seem to be on top of what's going on. So I think if you're tough about firms that have invested unwisely, the market won't blame you. They'll say, 'Well, yeah, it's your fault. You did this. Nobody else told you to do it. Why should we be saving you at this point if you're stuck with assets you can't sell and liabilities you can't pay off?'" But when the authorities finally got around to letting Lehman Brothers fail, it had saved so many others already that the markets didn't know how to react. Instead of looking principled, the authorities looked erratic and inconstant.

How did we get into this mess in the first place? As in the 1920s, the current "disturbance" started with a "mania." But manias always have a cause. "If you investigate individually the manias that the market has so dubbed over the years, in every case, it was expansive monetary policy that generated the boom in an asset.

"The particular asset varied from one boom to another. But the basic underlying propagator was too-easy monetary policy and too-low interest rates that induced ordinary people to say, well, it's so cheap to acquire whatever is the object of desire in an asset boom, and go ahead and acquire that object. And then of course if monetary policy tightens, the boom collapses."

The house-price boom began with the very low interest rates in the early years of this decade under former Fed Chairman Alan Greenspan.

"Now, Alan Greenspan has issued an epilogue to his memoir, 'Time of Turbulence,' and it's about what's going on in the credit market," Ms. Schwartz says. "And he says, 'Well, it's true that monetary policy was expansive. But there was nothing that a central bank could do in those circumstances. The market would have been very much displeased, if the Fed had tightened and crushed the boom. They would have felt that it wasn't just the boom in the assets that was being terminated.'" In other words, Mr. Greenspan "absolves himself. There was no way you could really terminate the boom because you'd be doing collateral damage to areas of the economy that you don't really want to damage."

Ms Schwartz adds, gently, "I don't think that that's an adequate kind of response to those who argue that absent accommodative monetary policy, you would not have had this asset-price boom." Policies based on such thinking only lead to a more damaging bust when the mania ends, as they all do. "In general, it's easier for a central bank to be accommodative, to be loose, to be promoting conditions that make everybody feel that things are going well."

Fed Chairman Ben Bernanke, of all people, should understand this, Ms. Schwartz says. In 2002, Mr. Bernanke, then a Federal Reserve Board governor, said in a speech in honor of Mr. Friedman's 90th birthday, "I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

"This was [his] claim to be worthy of running the Fed," she says. He was "familiar with history. He knew what had been done." But perhaps this is actually Mr. Bernanke's biggest problem. Today's crisis isn't a replay of the problem in the 1930s, but our central bankers have responded by using the tools they should have used then. They are fighting the last war. The result, she argues, has been failure. "I don't see that they've achieved what they should have been trying to achieve. So my verdict on this present Fed leadership is that they have not really done their job."

Mr. Carney is a member of The Wall Street Journal's editorial board.

Tomado de El Nacional.com, Venezuela

Nueva York, 24 de septiembre(AP).-
El presidente estadounidense George W. Bush y los mandatarios de los países latinoamericanos que tienen tratados de libre comercio con Estados Unidos hicieron el miércoles un llamado al Congreso de este país para que apruebe pactos similares con Colombia y Panamá.

"Hemos hablado de fortalecer y reformar las instituciones financieras unilaterales y de seguir trabajando para que países como Colombia y Panamá, que quieren un tratado de libre comercio, tengan acceso a él'', declaró la presidenta chilena Michelle Bachelet tras un encuentro entre Bush y sus colegas latinoamericanos.

Agregó que "para Chile, el tratado ha sido extraodinariamente positivo y exitoso''.

Bush destacó que desde que se firmó el acuerdo con Chile, el comercio entre los dos países "aumentó más de un 180%''.

"Hemos compartido estas experiencias. También hemos señalado la necesidad de mantener una economía abierta y de evitar el proteccionismo, que en los países pequeños produce un efecto negativo'', señaló Bachelet. "Estamos trabajando los cancilleres y los presidentes en un acuerdo de apoyo para que el Congreso pueda aprobar el tratado con Colombia y Panamá''.

Uribe, quien participó en la reunión, dijo que hay tres obstáculos ideológicos para que se aprueben más tratados de libre comercio en Estados Unidos, donde hay bastante resistencia a esos pactos, en parte porque se piensa que puede facilitar el traslado de plazas de trabajo al exterior o generar una disminución de los salarios.

El presidente colombiano dijo que, por el contrario, "el tratado es una fuente legal de protección de los derechos de los trabajadores''.

Los otros dos obstáculos, indicó, son el impacto en la pequeña empresa y en el medio ambiente.

Uribe sostuvo que los tratados
"estimulan la intención de crear un ambiente de prosperidad que favorece a la pequeña empresa'' y contienen "provisiones para proteger el medio ambiente''.

Señaló que se asegurarían, por ejemplo, de que la producción de biocombustibles no afecte la selva, exigiendo una producción limpia y sostenible.

Bush declaró que "es importante que el pueblo de Estados Unidos entienda que las exportaciones son un beneficio para los trabajadores''.

"Estos tratados son algo positivo. Nos encaminan hacia la prosperidad'', dijo el mandatario estadounidense en un breve discurso en la Sociedad de las Américas a primera hora de la mañana. Afirmó que son acuerdos "justos''.

"La mitad del crecimiento que tuvimos el año pasado'', manifestó Bush, "fue resultado del comercio. Nos favorece seguir abriendo mercados, particularmente en nuestro propio vecindario''.

En el encuentro a puertas cerradas participaron también los presidentes de México (Felipe Calderón), Guatemala (Alvaro Colom), República Dominicana (Leonel Fernández), Costa Rica (Oscar Arias), El Salvador (Tony Saca), Panamá (Martín Torrijos) y Honduras (Manuel Zelaya).

Con excepción de Colombia y Panamá, todos esos países tienen tratados de libre comercio con Estados Unidos, ya sea bilaterales o como parte de un bloque regional.

Tomado de Yahoo! Noticias

Londres (AP) - Seis bancos centrales, incluyendo la Reserva Federal de Estados Unidos, el Banco Central Europeo y el Banco de Inglaterra, le dieron el miércoles un respiro conjunto a los mercados al recortar de forma coordinada sus respectivas tasas de interés, en un intento por recuperar la confianza en el golpeado sistema financiero del mundo.

La medida logró, al menos de inmediato, frenar la caída de los mercados alrededor del planeta, los cuales repuntaron luego de abrir con caídas.

Se trató de la primera reducción coordinada de tasas desde los atentados terroristas de septiembre del 2001 en Estados Unidos.

Los seis bancos centrales recortaron sus tasas en medio punto porcentual, una medida drástica que busca mandar un mensaje de acción decidida y fuerte para restaurar la confianza, así como para prevenir que la crisis crediticia siga deteriorándose y contaminando al resto de la economía mundial, mientras las compañías enfrentan problemas para conseguir créditos para sus necesidades de corto y largo plazos.

Los bancos están temerosos de prestarse entre sí _ a través de documentos comerciales de corto plazo sin garantía _ por miedo de que no recuperen su dinero.

El banco central estadounidense _ la Reserva Federal _ redujo el miércoles su tasa clave de interés en medio punto porcentual para dejarla en 1,5% y sostener así a la vapuleada economía estadounidense.

La acción significa la reanudación de la campaña del banco central de reducción de tasas, que se había interrumpido en junio debido a las preocupaciones de que esos recortes empeorarían la inflación. Desde entonces, sin embargo, las condiciones económicas y financieras se han deteriorado peligrosamente, obligando a la Fed a cambiar de dirección.

El hecho de que la Fed no pudiera aguardar para tomar una decisión hasta su reunión programada para el 28 y 29 de octubre, subrayó la urgencia de la situación.

"El ritmo de la actividad económica ha bajado notablemente en los meses recientes", dijo la Fed en un comunicado.

"Es más, es probable que la intensificación de la turbulencia del mercado financiero ejerza un refrenamiento adicional en el gasto, en parte reduciendo aún más la capacidad de familias y negocios de obtener crédito", indicó el texto del presidente de la Fed, Ben Bernanke, y sus colegas.

Minutos antes de la apertura oficial, en el intercambio electrónico, el índice de futuros Dow Jones repuntó en respuesta al recorte de tasa de emergencia ordenado por la Reserva Federal. El barómetro subía 102 puntos (1,05%) a 9.640 unidades.

A su vez, el índice de futuros del Standard & Poor's 500 subía 27,60 puntos (2,74%) a 1.032,30 puntos, mientras el Nasdaq 100 a futuro subía 31,75 puntos (2,38%) a 1.368,25.

La Fed actuó claramente ante el temor de una zambullida global en las bolsas de valores. Antes de que la medida de la Fed, Wall Street extendía su desplome, así como los mercados asiáticos y europeos.

En Europa, que también fue golpeada fuertemente por la crisis financiera, el Banco de Inglaterra recortó el miércoles su tasa en medio punto porcentual para dejarla en 4,5%, mientras que el Banco Central Europeo también redujo su tasa en medio punto para dejarla en 3,75%.

Otros bancos centrales que también participaron en la medida coordinada fueron los de Canadá, Suecia y Suiza. China también recortó su tasa, pero no se unió al comunicado en grupo que acompañó a la decisión.

US: Bailing Out a Boat Full of Holes
Taken from Inter Press Service News Agency

Boston, Oct 8 (IPS) - The U.S. Treasury's bonanza from Congress to hand out 700 billion dollars to Wall Street is not what the country needs to right its shaky economy, many independent experts say.

"Despite the bailout, it's clear the economy is going into a deep recession," Robert E. Scott, senior international economist at the Economic Policy Institute, told IPS.

U.S. Federal Reserve Chairman Ben Bernanke warned Tuesday that the U.S. economy is headed downward, hours after The Fed unveiled a programme to buy short-term debt in an effort to stimulate lending among businesses.

The Fed's action followed a drop in the Dow Jones industrial average on Monday to below 10,000 for the first time since 2004, and reports of plunging markets around the world, with markets in Brazil and Russia especially hard hit. Developing nations are bracing for harder times to come.

Banks around the world invested in the same troubled U.S. mortgage products that are deemed largely responsible for the downturn in the U.S. economy.

In Europe, European Union finance ministers on Tuesday urged European nations to coordinate their economic stimulus efforts but did not propose an EU bailout. Ireland and Germany went it alone, and drew up their own stimulus plans.

"This bailout of the financial sector is not doing enough to help the real economy," Scott said.

On Oct. 3, the U.S. Congress approved 700 billion dollars for U.S. Treasury Secretary Henry Paulson to spend as he sees fit, mostly on Wall Street firms reeling from their bad mortgage deals.

After initial failure in the U.S. House, Paulson, who crafted the controversial bailout plan, eventually convinced the U.S. Congress to approve it. U.S. citizens from coast to coast expressed opposition to the plan, and swamped lawmakers with phone calls.

In the end, Congress, nervous about the economy and cowed by swarms of lobbyists from the nation's banks businesses and financial institutions, ignored their constituents and passed the plan. The final House vote was 263 to 171.

About 150 billion dollars in extra spending was added to the bill to woo more lawmakers to vote for it, mostly in the form of tax breaks and programmes for lawmakers' home districts.

According to reports from lawmakers, many citizens had expressed concern about the size of the bailout, the fact that it is directed at Wall Street firms, and that Paulson, a former CEO of Goldman Sachs, a company with a financial stake in the bailout, would oversee the programme.

On Monday, Paulson announced that he had picked Neel Kashkari to run the bailout programme. Kashkari is a 35-year-old assistant treasury secretary and former Goldman Sachs colleague, with about six years of total work experience since graduating from the Wharton School of Economics.

Lead lawmakers said last week that taxpayers needn't worry about mishandling of the funds, which will be doled out in 350-billion-dollar chunks, with some oversight by Congress and agencies.

"The bright light of accountability will protect the taxpayers. We are addressing the real pain experienced by Mr. and Mrs. Jones on Main Street," Speaker of the House Nancy Pelosi said just moments before the final vote.

Lawmakers also vowed tougher regulation of the financial and banking industry to prevent future abuses similar to those in the mortgage and trading industry, widely believed responsible for the current global and U.S. economic crisis.

"It would be a betrayal if we were to stop here. We have to perform serious reform, comparable to the New Deal, with a new set of regulations for all of the financial industry," said Barney Frank, the chairman of the powerful House Financial Services Committee.

Rep. Dennis Kucinich warned that the plan is a mistake, as he cast his vote against it.

"This bill represents an utter failure of the democratic process," Kucinich said. "It represents the triumph of special interest over the triumph of the public interest," he said.

"We could have recognised the power of government to prime the pump of the economy to get money flowing through out society by creating jobs, health care and major investments in green energy," he said.

Many economists continue to sound warnings that the bailout was misguided and that the U.S. government needs to take more action.

Timothy Canova, professor of international economic law at Chapman University School of Law, said nationwide there are 10,000 foreclosures a week. More can be expected without additional help from the government.

"The bailout is directed at the top of the pyramid, it doesn't do much to help the foreclosure waves at the bottom. It keeps pulling down the financial structure," he warned.

The nation needs a moratorium on further foreclosures and new bankruptcy rules that will protect homeowners," Canova said.

"This is an imperfect solution," Scott added. "Most effective would be to inject capital into commercial banks, as they did during the Great Depression."

Overall, the government needs to invest up to 900 billion dollars to stimulate the economy. If it spent the money on shoring up the country's crumbling infrastructure and schools, that would create jobs. States, like Massachusetts and California that are reeling from the economic slowdown, need help from the federal government, too, he said.

"We also must help homeowners, and help them refinance their mortgages," Scott said. The government could create something similar to the homeowner's loan corporation that saved many homes from foreclosure during the depression. The programme would allow homeowners to obtain low-interest loans.

"This would keep people in their homes and cut down on foreclosures," he said.

That would be good news to Emily Rosenbaum, executive director of Coalition for a Better Acre, a non-profit that aims to improve neighbourhoods in Lowell and Lawrence, Massachusetts, poorer communities that are often the first stop for new immigrants.

The organisation aids people facing foreclosure, presently running at 40-50 per month for the region.

"The number of foreclosures jumped last year three-fold. In 2006, there were 93 foreclosures, and in 2007, there were 293. This year we don't know the numbers yet but we are expecting another doubling," she said.

Foreclosures can send a neighbourhood into a "downward spiral", she added.

"Having boarded-up houses on a street, and vacated buildings attracts crime and vagrancy," Rosenbaum said. "We don't know what the effect of the actions in Washington will be. For some time, this has been a challenging environment."

Tomado de la Agencia Inter Press Service

Santiago, 16 oct (IPS) - Sólo algunos países de América del Sur respondieron este año al Llamado Mundial a la Acción contra la Pobreza (GCAP), cuyo lema de campaña es "Levántate y actúa". Las organizaciones sociales vinculadas a esta red global esgrimen diversas razones para explicar su aparente apatía.

Se planificaron actividades en Argentina, Chile, Colombia y Perú, básicamente circunscritas al Día Internacional para la Erradicación de la Pobreza, que se celebra cada 17 de octubre. En Brasil, Uruguay y Venezuela no se planificaron actos.

El Llamado (GCAP, por sus siglas en inglés) es una coalición de cientos de organizaciones que surgió en el Foro Social Mundial de 2005, realizado en la sureña ciudad brasileña de Porto Alegre. Luego se asoció a la Campaña del Milenio de las Naciones Unidas.

Los países del mundo se comprometieron en 2000 a cumplir en 2015 los ocho Objetivos de Desarrollo del Milenio (ODM), que entrañan compromisos en materia de pobreza, salud, educación, igualdad de género, ambiente, desarrollo sustentable y comercio internacional.

Pero en América Latina el GCAP nunca ha logrado la repercusión de regiones como Europa y África, pese a que 35 por ciento de la población latinoamericana, 190 millones de personas, están sumidas en la pobreza, según datos de la Comisión Económica para América Latina (Cepal) de 2007.

Más aún, este año la Cepal informó que el brote inflacionario provocado por la carestía de los alimentos y la energía puede haber elevado la cantidad de pobres a 200 millones de personas. Esto sin contar los efectos de la crisis financiera en curso, que impactará en el crecimiento económico, la generación de empleo y el financiamiento de programas sociales.

Este año, en Argentina se programó un solo acto con periodistas para este jueves. El no gubernamental Foro Ciudadano de Participación por la Justicia y los Derechos Humanos (FOCO) invitó a reporteros a un desayuno para "hablar sobre el problema de la pobreza, a fin de que difundan ese material al día siguiente", explicó a IPS una de sus integrantes, Cecilia Pon.

En Chile y Perú, las actividades se centraron en la desigualdad y en la crisis financiera. La Asociación Chilena de Organismos no Gubernamentales, Acción, y el mapuche Consejo de Todas las Tierras, programaron un acto de carácter político-cultural en la capitalina Plaza de la Constitución para este viernes. Se esperaba una concurrencia de no más de 600 personas.

Además de dar a conocer públicamente sus demandas, los activistas invitaron a los candidatos a alcaldes y concejales de la Región Metropolitana de Santiago, que se medirán en los comicios del 26 de este mes, a suscribir públicamente ese petitorio.

De igual forma, entregaron una carta a la Asociación de Bancos e Instituciones Financieras de Chile, exhortando a sus miembros a actuar con responsabilidad. Les piden frenar la entrega indiscriminada de créditos de consumo y cumplir los llamados
"Principios de Ecuador", firmados recientemente por el sector.

En Perú, el miércoles se efectuó un foro público donde se analizó la forma en que el recorte presupuestal ejecutado en los municipios, como medida preventiva ante la crisis internacional, afectará la seguridad alimentaria de los más pobres.

Este jueves, se manifestó la Federación Nacional de Mujeres Campesinas, Artesanas, Indígenas, Nativas y Asalariadas, se inició una feria de agrodiversidad y comercio justo y se presentó el libro "La política de deuda en el Perú", que aborda los retos de la crisis financiera ante las desigualdades del país.

Este viernes se desarrollará una mesa redonda con especialistas y organizaciones sociales sobre la lucha contra la pobreza y el contexto internacional.

"Lo que deben garantizar los gobiernos es que la crisis no afecte la inversión social. Los presupuestos destinados a salud, vivienda y educación y los diversos programas de ayuda no deben ser recortados como sucede actualmente", señaló a IPS el economista Héctor Béjar, coordinador del GCAP-Perú, principal orador de la mesa redonda.

En Colombia, se programaron acciones educativas y culturales en colegios públicos y privados, como charlas de maestros, conciertos de música rock y obras de títeres, con mensajes dirigidos hacia el problema de la pobreza y la crisis alimentaria.

También se aprovechó una actividad popular que se realiza todas las semanas en una calle de Bogotá para sumar a la ciudadanía en la reflexión. La coalición organizadora contó con el apoyo del Programa de las Naciones Unidas para el Desarrollo (PNUD).

Tanto en Brasil como en Uruguay la falta de financiamiento fue la razón esgrimida para justificar la ausencia de manifestaciones. Los donantes de los proyectos brasileños aprobaron recursos "hace dos semanas", sin posibilidad de liberarlos antes del 17, explicó a IPS Jair Barbosa, asesor de comunicación del no gubernamental Instituto de Estudios Socioeconómicos, con sede en Brasilia, que ejerce la secretaría del GCAP en ese país.

No obstante, Barbosa reconoce que en Brasil siempre ha habido escasa movilización en torno al GCAP por "resistencias" de las propias organizaciones, que consideran que ya están combatiendo la pobreza en sus actividades cotidianas, tanto defendiendo los derechos de las mujeres y de los negros como luchando por ciertas políticas públicas.

Ante esto, la apuesta de Brasil fue asociar la campaña a otras organizaciones y redes afines y sumarse a sus acciones, como una marcha dedicada a Zumbi dos Palmares, héroe del movimiento afrodescendiente, el 20 de Noviembre, Día Nacional de la Conciencia Negra.

En Uruguay, las actividades también han sido siempre aisladas. En 2006 y 2007 la única organización que se movilizó fue la no gubernamental Comisión Nacional de Seguimiento: Mujeres por Democracia, Equidad y Ciudadanía (CNS Mujeres), coalición que este año "no contaba con fondos específicos para la campaña", se informó. En Venezuela no hubo manifestaciones asociadas al GCAP.

"Es un tema organizativo y de cómo se centra la agenda de las organizaciones no gubernamentales y los movimientos sociales en el país", señaló a IPS Marino Alvarado, coordinador de la no gubernamental humanitaria Provea.

La fría respuesta de América Latina se explica por la identificación del GCAP con los ODM, aseguró a IPS Álvaro Ramis, presidente de la chilena Acción.

La primera de las ocho metas del mileno propone reducir a la mitad la proporción de pobres e indigentes en 2015, tomando como referencia los indicadores de 1990.

"Los ODM se han transformado en una agenda que no representa necesariamente la visión de las organizaciones latinoamericanas", sostuvo Ramis. A su juicio, son "menos ambiciosos" que las aspiraciones de cambio de la región.

Para el activista, las organizaciones del Norte vinculadas al GCAP postulan una solución "asistencialista" al problema de la pobreza, mientras que las de la región buscan cambiar los modelos de desarrollo, superar las desigualdades sociales, acabar con la dependencia comercial de los países y transformar las instituciones financieras internacionales.

En este marco, las organizaciones de la región estarían más preocupadas de las profundas reformas que se están llevando a cabo en algunos de sus países, por ejemplo, en el plano constitucional.

"Hemos tratado de impulsar estos debates en el consejo global del GCAP, pero todavía de manera insuficiente. Sin embargo, creemos que es posible hacer alianzas interregionales. En la última reunión tuvimos mucha afinidad con la posición asiática, de India, de Indonesia, no así con África", indicó Ramis.

Para el experto de la Cepal, Juan Carlos Feres, lo propuesto por Ramis equivale a una mirada superficial de los ODM, según dijo a IPS.

Feres recordó que a los países de la región no les ha sido fácil cumplir todos los ODM, aunque éstos parezcan "poco ambiciosos". También sostuvo que las metas del milenio "no se consiguen por mera administración, sino que demandan transformaciones profundas" en el orden político, económico, social y cultural de los países. "Detrás de los ODM no hay ingenuidad", dijo.

En abril de 2009, la chilena Acción asumirá la secretaría latinoamericana del GCAP, que ahora está en manos de organizaciones de El Salvador. Desde ese puesto, se pretende ampliar la mirada del movimiento, concluyó Ramis.

Tomado de Yahoo! Noticias

Washington, 17 oct (EFE).- El presidente de EE.UU., George W. Bush, dijo hoy que el programa de rescate financiero tardará algún tiempo en restablecer el flujo del crédito y prometió que el Gobierno no ejercerá control sobre los bancos.

En un discurso ante la Cámara de Comercio antes de la apertura de la Bolsa en Nueva York, Bush pidió paciencia a los mercados para que surta efecto el programa de 700.000 millones de dólares, que dijo es "lo suficientemente grande y audaz" para funcionar.

"Estas acciones tardarán un tiempo en tener su impacto completo", dijo Bush. "Los mercados de crédito tardaron un tiempo en helarse y va a pasar algún tiempo para que se descongelen".

El presidente afirmó que la compra prevista de acciones de los bancos por parte del Gobierno no significa una nacionalización de esas entidades.

"La intervención del Gobierno no es una toma de control, no pretende debilitar el libre mercado, sino fortalecerlo", afirmó.

Bush dedicó gran parte de su discurso a justificar la intervención pública, que calificó como "el último recurso".

"Yo me opondría a estas medidas en circunstancias normales, pero éstas no son circunstancias normales", señaló.

Bush dijo que el Departamento del Tesoro no entrará en los consejos directivos de los bancos o los dirigirá. "Si el Gobierno no hubiera actuado, el agujero en nuestro sistema financiero habría crecido aún más", afirmó.

El presidente señaló que en estos momentos de crisis Estados Unidos debe "evitar la falsa tentación del aislamiento económico".

En ese sentido, urgió una vez más al Congreso a aprobar "este año" los tratados de libre comercio alcanzados con Colombia, Panamá y Corea del Sur.

Tomado de Univision. com

Washington 17 de octubre(AP) - El caos reinante en los mercados financieros globales podría revivir al Fondo Monetario Internacional, el apagafuegos de las finanzas mundiales, que amenaza con adquirir renovada prominencia mediante la concesión de préstamos y el desarrollo de sistemas de alerta que permitan prevenir nuevas crisis.

Decidido a darle un papel más importante a esta organización de 185 naciones, su presidente, el francés Dominique Strauss-Kahn, se propone hacer que los recursos y los conocimientos del FMI desempeñan un papel protagónico en la economía mundial.

Asegura que está listo para iniciar una reforma a fondo.

Las grandes potencias comprometieron 3 billones de dólares para rescatar la economía, pero países como Islandia, Hungría y Ucrania, que enfrentan problemas fiscales particularmente graves, han dicho que probablemente recurran al FMI para salir del pozo.

En los últimos años el FMI ha perdido prominencia. Muchos países habituados a recibir préstamos suyos buscaron fondos en los mercados de capital y acumularon reservas para no tener que ir a mendigar al FMI.

Además, China y otras naciones ricas han estado ofreciendo préstamos a países en desarrollo, sobre todo africanos, sin condiciones.

El FMI, creado luego de la Segunda Guerra Mundial, se convirtió en una rueda de auxilio de la comunidad internacional en la década de 1990, ofreciendo préstamos a naciones necesitadas e imponiendo estrictas recetas económicas a sus gobiernos.

El presidente egipcio Hosni Mubarak dijo en una ocasión que FMI eran las siglas del Fondo de Miseria Internacional.

El FMI y su pariente, el Banco Mundial, se encuentran uno frente al otro en Washington, a tres cuadras de la Casa Blanca. Son conocidos como las instituciones creadas por el acuerdo de Bretton Woods de hace 65 años, que fijó un nuevo rumbo para la economía mundial. Varios líderes europeos han dicho que es necesario elaborar un acuerdo similar, marcando nuevas pautas.

En un indicio de que el FMI puede estar recuperando prominencia, el primer ministro húngaro Ferenc Gyurcsany dijo a mediados de octubre que estaba en contacto permanente con ese organismo, el cual estaba listo para asistir a Hungría en caso de necesidad y para ayudar a estabilizar la economía mundial.

Strauss-Kahn confirmó que el FMI mantiene estrechos contactos con los húngaros y está dispuesto a analizar "una posible asistencia financiera" y a "responder rápidamente" a cualquier solicitud formal.

Strauss-Kahn indicó que en lo que va del año el FMI había concedido préstamos por 17.000 millones de dólares, comparado con los 110.000 millones que repartió en el 2003.

El abrupto descenso en los ingresos del FMI en concepto de intereses generó un déficit de 400 millones de dólares, heredado por Strauss-Kahn cuando asumió en noviembre pasado. El francés eliminó 400 puestos de trabajo e hizo otros cambios para aliviar las finanzas del organismo, el cual, según dijo, tiene ahora "cientos de millones de dólares" para prestar.

Agregó que acortará a dos semanas el período de tramitación de un préstamo, eliminará muchas de los severos requisitos y se dará prioridad a la respuesta rápida a las crisis.

Edwin Truman, del Peterson Institute for International Economics y ex funcionario de la secretaría del Tesoro estadounidense, pronosticó que el FMI "concederá muchos más préstamos" en el futuro, "pero resta por verse si serán de la magnitud de los de Asia" en la década del 90.

Algunos políticos creen que el FMI no se limitará a conceder préstamos.

El primer ministro británico Gordon Brown recomendó que se reconstruya el organismo para que ayude a resolver mejor los problemas financieros mundiales. Funcionarios estadounidenses han dicho en numerosas ocasiones que el FMI debe ser sometido a profundas reformas para conservar su legitimidad y su importancia.

"El FMI debe ser reestructurado para poder satisfacer las necesidades del mundo moderno. Necesitamos un sistema de alertas para la economía mundial", declaró Brown.

Agregó que en la actualidad se pueden movilizar millones de dólares en un segundo, apretando una tecla, pero que en esta economía global "solo tenemos regulaciones y métodos de supervisión nacionales y regionales".

"Si queremos resolver los problemas financieros globales, hay que buscar mejores métodos", acotó.

Truman opinó que, si bien es positivo el que Brown y otros líderes promuevan un papel más prominente para el FMI en la economía mundial, "no se lo puede transformar en un regulador, en la policía" de las finanzas.

Strauss-Kahn dijo que el comité decisorio del FMI considera que "el fondo es una institución única para un momento como éste, con miembros de todo el mundo, experiencia en cuestiones macroeconómicas y la misión de promover la estabilidad financiera internacional".

Añadió que el comité decidió analizar las lecciones que dejó esta crisis y hacer recomendaciones sobre cómo recuperar la confianza y la estabilidad.

"Nos pidieron actuar de inmediato, y es lo que estamos haciendo", declaró.

KurzweilAI.net, Oct. 16, 2008

Humanity Plus (formerly the World Transhumanist Association) has launched h+, a stylish, web-based quarterly magazine that focuses on transhumanism, covering the scientific, technological, and cultural developments that are challenging and overcoming human limitations.

Bad bets
Oct 16th 2008 | SÃO PAULO

Currency worries in Brazil and Mexico

UNTIL the past fortnight, a crise, as Brazilians call it, had largely bypassed Latin America. No longer. In the week that began on October 6th the Brazilian real and the Mexican peso both plunged sickeningly (see chart), as did stockmarkets. This week saw modest recoveries. But confidence in the region’s new-found stability has taken a knock.

That is because the currency movements were sudden and violent. They prompted both countries’ central banks to intervene. Mexico’s had to spend 10% of its reserves in just a few hours to prop up the peso. Some foreign investors began selling Latin American assets to cover losses at home. But once it started, the currency slide seemed to provoke a collective nervous twitch that led many to seek safety in the dollar. This followed years in which Mexico had worked to create confidence in the stability of the free-floating peso. “Unfortunately you cannot just unlearn a reflex developed over decades of financial crises,” says Damian Fraser of UBS, an investment bank. The peso’s slide was exacerbated by the unwinding of derivatives contracts that had been profitable while the currency was steady. Comercial Mexicana, a big retailer, lost $4 billion on derivatives contracts and filed for protection from creditors on October 9th.

Something similar happened in Brazil. Because Brazil’s exports include a wide variety of raw materials, the real has recently come to be seen by investors as a proxy for global economic growth. When both began to fall, this triggered losses on derivatives, just as in Mexico. Grupo Votorantim, an industrial conglomerate and big exporter, used derivatives for hedging. It made profits of some 2 billion reais ($924m at the latest rate) over the past few years as the real appreciated. But earlier this month the real fell below the band specified in the contracts, triggering penalty clauses. On October 10th the company announced that it had spent 2.2 billion reais to rid itself of the troublesome contracts.

One theory is that the exchange-rate movements were so abrupt because currency dealers find it hard to raise credit, just like everyone else, and that this has cut the volume of transactions. Be that as it may, the currency turmoil will have economic effects. Until recently Brazilians worried that a rapidly strengthening real was making their exports uncompetitive. Now they have the opposite concern. Weaker currencies will mean higher inflation, because imports are more expensive.

Central bankers in both Brazil and Mexico have worked hard to establish their credibility as inflation fighters. Both have raised interest rates over the past year. Now they may have to do so again just as the gathering world recession, and the concomitant fall in commodity prices, is slowing their economies—or else abandon their inflation targets.

Until last month, most forecasters expected next year to see growth of 4.5% in Brazil and 3% in Mexico. They have since lopped about one and a half percentage points off both those figures. Even so, that points not to a bust but a slowdown. In the case of Brazil, that is healthy, since the economy cannot satisfy domestic demand (rising at 8% this year) without higher inflation, reckons Arminio Fraga, a fund manager and former central-bank president.

Even before the currency plunge, companies in both countries had started to feel the credit squeeze. Banks had stopped renewing credit lines for trade finance. Brazil’s central bank has stepped in to provide financing to exporters.

Both countries have recent experience of financial panics. As a result, their banking systems are solid and quite conservatively run. And at least this time currency weakness should not have knock-on effects on public finances, nor raise fears about the ability of governments to service their debts. That is because nowadays both governments can borrow in their own currencies. The lasting question from this bout of currency instability is how long that will remain the case.

Here we go again
Oct 16th 2008 | TOKYO
From The Economist print edition

The world’s financial meltdown stirs uneasy memories across Asia

ASIAN stockmarkets were among the most exuberant of the celebrants who briefly rejoiced at the massive financial interventions by American and European governments. In relief that global finance seemed to have survived its near-death experience, Hong Kong’s equities climbed more than 10% on October 13th. Next day, Tokyo’s soared a record 14%. But as elsewhere, these rallies proved an interlude in the sharp downward lurch. On October 16th Tokyo’s Nikkei index slumped 11%. Relief that catastrophe seemed to have been averted was no substitute for economic confidence. A region itself buffeted by financial crisis in 1997-98 has not forgotten that economic pain long outlasts financial-market rout.

That earlier crisis started with local worries about Thailand’s widening current-account deficit and a property bubble in Bangkok. It astonished the world with the speed and extent of the contagion that spread to other Asian countries, and emerging markets elsewhere, such as Russia and Brazil. This month’s panic had spread even further in Asia, shaking countries that by and large sailed through the late 1990s such as India and Australia.

On October 14th Kevin Rudd, Australia’s prime minister, cited “the economic equivalent of a rolling national-security crisis” and announced that his government would guarantee all deposits in Australian banks and other savings institutions for three years. He followed this with a spending stimulus worth A$10.4 billion ($7 billion), much of it directed at people likely to spend the money rather than hoard it: first-time homebuyers, the poor and pensioners. On October 14th Hong Kong issued a blanket guarantee of all bank deposits, with the aim of preventing the kind of capital flight that wrought havoc with the territory’s capital markets during the 1997-98 crisis. Its monetary authority also announced a new facility for providing capital to the territory’s banks, even though they look robust enough. But it was in the countries worst affected last time—Thailand, Indonesia, Malaysia, the Philippines and South Korea—that the echoes seemed most eerie.

In many ways, the region is far better placed to withstand the present shock. Its banks are stronger, its currency regimes less rigid, its foreign-exchange reserves bigger. On the other hand, a decade of accelerated globalisation has seen every country integrated even more closely into the world economy. None can hope to be immune from a global slowdown. The region may not face the sort of meltdown experienced at the end of the 1990s. But prospects for growth look much bleaker than they did even a fortnight ago. Exports to rich countries still matter, albeit less than they did. And so does trade finance, which lubricates Asia’s trading machinery. Ships are sitting empty in big Asian ports, their cargoes piled up on the dockside because no bank will guarantee them. Despite strong balance sheets, Asian banks may need more capital if they are to make up for a shortage of Western trade credit.

Facing such worries, anger at the apparent hypocrisy of governments in America and Europe has been muted. Asian leaders have complained that they were blamed for bringing the last crisis on themselves, with their misguided exchange-rate policies, opaque financial systems, profligate spending and corrupt politics. The bail-outs by the IMF demanded fiscal austerity at a time of economic hardship. But, since international institutions offered the only financial lifeline, most Asian governments were forced to suck up IMF orthodoxies.

True to form, Mahathir Mohamad, a former Malaysian prime minister, who was among the West’s harshest critics a decade ago, has not resisted gloating. On his blog, he recalls how “the Americans” said Asian companies should have been allowed to go under, but now Americans are preparing bail-outs and nationalisation for their own firms.

China, too, which survived the last crisis fairly unscathed thanks to capital controls and a state-run banking system, has indulged in a bit of point-scoring. Its refusal to allow a faster appreciation of the yuan has been blamed by some for helping build up the huge global financial imbalances that now seem to be unwinding so fast. From China’s perspective, the meltdown vindicates the cautious pace of its liberalisation. But its officials have tried not to sound too smug. Like their counterparts elsewhere in the region, they know it is too early to declare victory. Chinese journalists say the official media have been ordered to tone down or avoid reports about the economic impact on China. As during the earlier crisis China is trying to appear helpful. On October 8th it timed its latest interest-rate cut (of 0.27 percentage points) to coincide with concerted rate-cutting by other central banks. With its massive foreign-exchange reserves, China, like Japan, the other big Asian creditor nation, has too big a financial stake in the global system to feel anything other than anxiety at the possibility of an implosion.

Marking markets

So across Asia, governments have taken measures to allay disquiet (see article). In China the stockmarket has lost two-thirds of its value since last October; the property market is wobbling and growth is slowing. These trends all predated the latest panic. But the government has had to go further to shore up confidence. It tried to revive the stockmarket by abolishing a tax on share-buying and investing in the market itself. Japan, despite the giddy plunge of the stockmarket from October 8th-10th and the bankruptcy of a middling life insurer, Yamato Life, is confident that its financial system, recapitalised at massive public expense a decade ago, is robust enough to survive the latest shocks.

Japan’s money markets have gummed up far less than those in America and Europe. Even so, at a time when its economy is almost certainly in recession, the authorities are taking few risks. Backed by $1 trillion of reserves, the Bank of Japan has promised unlimited dollar funds to the markets. And the government has announced measures to support regional banks. It has also promised not to sell its remaining shares in the country’s biggest banks for the time being, and eased conditions for companies to own shares in each other as a way to support the stockmarket.

This year South Korea’s won has sunk more than any other Asian currency. The country’s current account, in surplus for many years, has slid into deficit. Banks have made a high number of loans in proportion to their deposits. Households are deep in debt and so are many smaller companies (many in dollars). In a radio address on October 13th President Lee Myung-bak insisted that the banks were sound and pointed out that the currency was backed by far larger foreign reserves than it was a decade ago. He begged South Koreans to cut down on foreign spending and energy use, and to increase spending at home.

In India, the closeted banking system is not heavily exposed to the financial crisis. Its most adventurous bank—ICICI—is the only one so far to cause jitters. Long lionised for financial sophistication, the bank is now associated with Western financial sophistry. After its share price halved in a month, it had to send text messages to its depositors reassuring them that their money was safe. Statements of support from the Reserve Bank of India, India’s central bank, and the rating agencies have helped restore confidence.

Indonesia’s government intervened more drastically, halting share trading for three days after sharp falls in share prices and the rupiah. When the stockmarket reopened on October 13th, the government strengthened its guarantee of bank deposits to deter a run on banks.

Reasons for gloom

In the less panicky mood that prevailed this week, such measures appeared to have bolstered confidence. They did little, however, to ease two longer-term worries.

The first concerns countries that are embroiled in political upheaval and which may be ill-placed to cope with the economic storms to come. The second is how severe those storms are going to be.

Thailand, riven by conflict between the elected government and powerful protesters (see article) is especially vulnerable. But Malaysia, whose prime minister says he will step down, also has its political worries. In the Philippines, the latest in a series of doomed but distracting attempts to impeach the president, Gloria Macapagal Arroyo, is gathering steam.

Even if these dangers can be skirted, the region is going to experience a sharp slowdown, though perhaps only Japan and Singapore are already in recession. In China, the slowing of the economy, caused mainly by a fall in net exports, could become a serious worry in the months ahead. Most economists expect GDP growth to fall only to 8-9% next year (from 10.1% in the second quarter of this year and 12.6% a year earlier)—hardly a grinding halt. Most Chinese economists are confident that if the slowdown is sharper, the government can still spend its way out of trouble. But an article last month in a magazine published by a government think-tank warned that a severe slowdown could present China with the kind of social turbulence that ravaged Indonesia in 1998.

China’s growth is increasingly important for the region. This month Australia ’s Mr Rudd rang the Chinese prime minister, Wen Jiabao, to ask about projections for China’s growth, and whether its strong demand for Australia’s minerals was likely to continue. On getting an upbeat answer, Mr Rudd concluded that China was now “critical for Australia’s continued economic performance”. It is also the biggest trading partner for Japan and India. But, according to the Asian Development Bank, 60% of Asia’s exports (not including Japan’s) still go to America, the European Union and Japan. A decline of one percentage point in America’s growth rate, the bank calculates, knocks 0.3 percentage points off Asia’s. That may be optimistic.

To date, one constant since the 1997-98 crisis has been the absence of a co-ordinated regional response. Out of that crisis, a self-help initiative among the region’s central banks known as the “Chiang Mai initiative” was launched. But it seems designed to fight the last war—a concerted attack on a country’s currency—rather than today’s wider financial malaise.

Coincidentally, Asia’s leaders will be meeting counterparts from Europe in Beijing on October 24th for the biennial “Asia-Europe” meeting, ASEM. The Philippines’ Mrs Arroyo has in vain suggested holding a crisis summit of the Asian countries on its margins. She also boasted this week of an agreement to set up a fund to buy toxic debts from banks in South-East Asia, China, South Korea and Japan. But the World Bank, the alleged source of some of the money, and the other countries involved, could not recall such an agreement. So she managed only to heighten the impression of ill-co-ordinated floundering. At least China, the host of the ASEM talk-shop, has overcome its initial reluctance to put impending financial collapse on the agenda. It seems to have realised that it would seem odd indeed if Asian leaders spent much time talking about anything else.

Oct 16th 2008

History has to be rewritten after the market’s recent falls

AT THE end of 1964 the Dow Jones Industrial Average traded at 874.1. Seventeen years later, despite rapid inflation, the average had inched forward only to 875. It was the kind of grinding bear market that drove investors to despair. Near its end, Business Week famously proclaimed “The Death of Equities”.

It is beginning to look as if we are in the middle of another of those great phases, what commentators call a secular, as opposed to a cyclical, bear market. Broadly speaking, the 20th century can be divided into six phases; bear markets from 1901-21, 1929-49 and 1965-82 and bull runs from 1921-29, 1949-65 and 1982-2000.

Those unlucky enough to live through the bear markets saw their savings turn to dust. Equities were shunned in favour of alternatives such as government bonds (in the first half of the century) and property and commodities (in the inflationary second half). In the bull markets, investors made their fortunes, generally driving shares up to excessive valuations.

When the dotcom bubble burst in 2000, share valuations were at ridiculously high levels. In his book, “Irrational Exuberance”, Robert Shiller calculated the cyclically adjusted price/earnings ratio over history. This measure, which takes an average of profits over the previous ten years and adjusts for inflation, is superior to the traditional p/e ratio because profits are highly volatile. In January 2000 the cyclically adjusted p/e on the S&P 500 was 44.3; the previous peak, just before the crash of 1929, was 32.6.

That suggested markets had a long way to fall. And share prices did indeed suffer a long period of decline. In Britain, for example, the FTSE 100 index more than halved between December 1999 and March 2003. At that point, however, the effect of lower interest rates, booming corporate profits and more attractive valuations kicked in. Equities began a four-year bull run that saw the MSCI world index more than double between March 2003 and June of last year.

During that time, it would have seemed ridiculous to ask whether investors were in the middle of a long bear market. But with global equities falling by 41% this year (including the spectacular gyrations of this week), the question is now much more pertinent. The Dow was trading below 9,000 on October 15th, a level it first passed in 1997. In other words, investors who bought stocks more than a decade ago have no capital gains to show for it, only dividends (and yields have been low throughout).

Why does this matter? The existence of a bear market does not preclude the possibility of fantastic returns over shorter periods. Indeed, one striking point about the Dow’s 936-point gain on October 13th was that it climbed more in that one day than it did in the first 85 years of its existence (it was founded in 1896). Two of the very best years in American stockmarket history were 1933 and 1935, right in the middle of the Depression.

But bear markets behave rather like Lucy in the Peanuts cartoon strip. Just when Charlie Brown is persuaded to attempt to kick the football, she snatches it away. Just when investors are persuaded the bottom of a bear market has been reached, share prices slump once more. The Dow closed above 1,000 in 1972, only to fall to 616 by the end of 1974. A rally in 1975 took the average to 852, but it then gained only a net 23 points over the next six years.

Equity markets have again reached a stage where valuations look attractive in historic terms. In America, continental Europe and Britain the dividend yield is higher than short-term interest rates, a rare occurrence in the past half-century. A net 43% of fund managers interviewed by Merrill Lynch for a survey published on October 15th thought that equities were undervalued. That was the highest level in a decade.

However, those managers were not snapping up bargains. A net 49% of them had a higher-than-normal weighting in cash, a record figure. That kind of paralysis is typical of a prolonged bear market.

Even if managers feel that a complete economic catastrophe has been avoided by the bank bail-outs, they are worried about the prospects for recession, and the potential effect on company profits. (Pepsi, a core consumer-goods group, gave a disappointing outlook on October 14th.) They might be proved right in five years’ time by buying now, but they fear being proved wrong (and losing their jobs) before Christmas.

Snapping investors out of their bear-market mentality takes a lot of work. The shortest of the 20th-century phases was 17 years. With luck, time will move faster in the 21st century.

Link by link
Oct 16th 2008
From The Economist print edition

The crash has been blamed on cheap money, Asian savings and greedy bankers. For many people, deregulation is the prime suspect

THE autumn of 2008 marks the end of an era. After a generation of standing ever further back from the business of finance, governments have been forced to step in to rescue banking systems and the markets. In America, the bulwark of free enterprise, and in Britain, the pioneer of privatisation, financial firms have had to accept rescue and part-ownership by the state. As well as partial nationalisation, the price will doubtless be stricter regulation of the financial industry. To invert Karl Marx, investment bankers may have nothing to gain but their chains.

The idea that the markets have ever been completely unregulated is a myth: just ask any firm that has to deal with the Securities and Exchange Commission (SEC) in America or its British equivalent, the Financial Services Authority (FSA). And cheap money and Asian savings also played a starring role in the credit boom. But the intellectual tide of the past 30 years has unquestionably been in favour of the primacy of markets and against regulation. Why was that so?

Each step on the long deregulatory road seemed wise at the time and was usually the answer to some flaw in the system. The Anglo-Saxon economies may have led the way but continental Europe and Japan eventually followed (after a lot of grumbling) in their path.

It all began with floating currencies. In 1971 Richard Nixon sought to solve the mounting crisis of a large trade deficit and a costly war in Vietnam by suspending the dollar’s convertibility into gold. In effect, that put an end to the Bretton Woods system of fixed exchange rates which had been created at the end of the second world war. Under Bretton Woods, capital could not flow freely from one country to another because of exchange controls. As one example, Britons heading abroad on their annual holidays in the late 1960s could take just £50 (then $120) with them. Investing abroad was expensive, so pension funds kept their money at home.

Once currencies could float, the world changed. Companies with costs in one currency and revenues in another needed to hedge exchange-rate risk. In 1972 a former lawyer named Leo Melamed was clever enough to see a business in this and launched currency futures on the Chicago Mercantile Exchange. Futures in commodities had existed for more than a century, enabling farmers to insure themselves against lower crop prices. But Mr Melamed saw that financial futures would one day be far larger than the commodities market. Today’s complex derivatives are direct descendants of those early currency trades.

Perhaps it was no coincidence that Chicago was also the centre of free-market economics. Led by Milton Friedman, its professors argued that Keynesian economics, with its emphasis on government intervention, had failed and that markets would be better at allocating capital than bureaucrats. After the economic turmoil of the 1970s, the Chicago school found a willing audience in Ronald Reagan and Margaret Thatcher, who were elected at the turn of the decade. The duo believed that freer markets would bring economic gains and that they would solidify popular support for the conservative cause. A nation of property-owners would be resistant to higher taxes and to left-wing attacks on business. Liberalised markets made it easier for homebuyers to get mortgages as credit controls were abandoned and more lenders entered the home-loan market.

Another consequence of a system of floating exchange rates was that capital controls were not strictly necessary. Continental European governments still feared the destabilising effect of hot money flows and created the European Monetary System in response. But Reagan and Mrs (now Lady) Thatcher took the plunge and abolished controls. The initial effects were mixed, with sharp appreciations of the dollar and pound causing problems for the two countries’ exporters and exacerbating the recession of the early 1980s.

But the result was that institutions, such as insurance companies and pension funds, could move money across borders. In Britain that presented a challenge to the stockbrokers and marketmakers (known as jobbers) who had controlled share trading. Big investors complained that the brokers charged too much under an anti-competitive system of fixed commissions. At the same time, big international fund-managers found that the tiny jobbing firms had too little capital to handle their trades.

The Big Bang of 1986 abolished the distinction between brokers and jobbers and allowed foreign firms, with more capital, into the market. These firms could deal more cheaply and in greater size. New York had introduced a similar reform in 1975; in America’s more developed domestic market, institutional investors had had the clout to demand the change long before their British counterparts.

These reforms had further consequences. By slashing commissions, they contributed to the long-term decline of broking as a source of revenue. The effect was disguised for a while by a higher volume of transactions. But the broker-dealers increasingly had to commit their own capital to deals. In turn, this made trading on their own account a potentially attractive source of revenue.

Over time, that changed the structure of the industry. Investment (or merchant) banks had traditionally been slim businesses, living off the wits of their employees and their ability to earn fees from advice. But the need for capital led them either to abandon their partnership structure and raise money on the stockmarket or to join up with commercial banks. In turn, that required the dilution and eventually, in 1999, the abolition of the old Glass-Steagall act, devised in the Depression to separate American commercial and investment banking.

Commercial banks were keen to move the other way. The plain business of corporate lending was highly competitive and retail banking required expensive branch networks. But strong balance-sheets gave commercial banks the chance to muscle investment banks out of the underwriting of securities. Investment banks responded by getting bigger.

Expansion and diversification took place against a remarkably favourable background. After the Federal Reserve, then chaired by Paul Volcker, broke the back of inflation in the early 1980s, asset prices (property, bonds, shares) rose for much of the next two decades. Trading in, or lending against, such assets was very profitable. And during the “Great Moderation” recessions were short, limiting the damage done to banks’ balance-sheets by bad debts. As the financial industry prospered, its share of the American stockmarket climbed from 5.2% in 1980 to 23.5% last year (see chart 1).

Risky business

As banks’ businesses became broader, they also became more complex. With the help of academics, financiers started to unpick the various components of risk and trade them separately.

Again, Chicago played its part. Option contracts were known in ancient history but the 1970s saw an explosion in their use. Two academics who had studied, or taught, at the University of Chicago, Fischer Black and Myron Scholes, developed a theory of option pricing. And the Chicago Board Options Exchange was set up in 1973 as a forum for trading.

Whereas futures contracts lock in the participants to buy or sell an asset, an option is more like insurance. The buyer pays a premium for the right to exercise his option should prices move in a set direction. If prices do not move that way, the option lapses and the buyer only loses the premium. The Black-Scholes formula shows that an option’s value depends on the volatility of the underlying assets. The more the price moves, the more likely the option is to be exercised. Calculating that volatility was made a lot easier by the growing power of computers.

The next great development in risk management was the swap. Bond markets had been domestic, with buyers focusing on issuers from their home markets. That created the potential for arbitrage, issuing bonds in one currency and swapping them for another, creating lower interest rates for both borrowers.

It was a short step from currency swaps to interest-rate swaps. Borrowers on floating (variable) rates could swap with those on a fixed rate. This allowed company finance directors (and speculators) to change their risk exposure depending on their view of where rates would go. Rather than pay each other’s interest costs directly, the payments would be netted out.

The final stage emerged only in the past decade. A credit-default swap (CDS) allows investors to separate the risk of interest-rate movements from the risk that a borrower will not repay. For a premium, one party to a CDS can insure against default. From almost nothing just a few years ago, CDSs grew at an explosive rate until recently (see chart 2).

Futures, options and swaps all have the same characteristic: a small initial position can lead to a much larger exposure. Futures contracts are bought with only a small deposit or margin; option sellers have to cover buyers’ losses, which may be many times the value of the premium; the net exposure of a swap counterparty may be smaller but the gross position will be huge, a problem if the counterparty defaults.

This made it hard for regulators to keep track of a firm’s exposure. For years, therefore, they concentrated on improving the infrastructure of the market, making sure that deals were well documented or settled through a central clearing house (something yet to be achieved for CDSs).

The biggest hiccup in the growth of the derivatives markets came after the 1987 stockmarket crash, when a technique known as portfolio insurance took a lot of the blame. This involved investors selling stock-index futures to protect themselves from falls in the value of their portfolios. The problem was that the two markets acted on each other; as the futures price fell, so did the cash value of shares, forcing institutions to sell more futures and so on. That prompted the American authorities to introduce “circuit breakers”, limiting the use of portfolio insurance at difficult times.

Derivatives caused more embarrassment in the 1990s as naive local authorities, such as Orange County in California, and corporate treasury departments lost fortunes in contracts they did not understand. But gradually the authorities learnt to love these markets; Frankfurt, for example, competed hard to win trading in German government-bond futures away from London. The theory was that, by allowing business and investors to spread risk, both markets and economies would become more robust.

Alan Greenspan, the chairman of the Fed from 1987 to 2006, was in the vanguard of this view. In his book, “The Age of Turbulence” (2007), he welcomed the growth of CDSs, arguing: “Being able to profit from the loan transaction but transfer credit risk is a boon to banks and other financial intermediaries which, in order to make an adequate rate of return on equity, have to heavily leverage their balance sheets by accepting deposit obligations and/or incurring debt. A market vehicle for transferring risk away from these highly leveraged loan originators can be critical for economic stability, especially in a global environment.”

Securitisation, which has been at the centre of the current crisis, is another child of the 1970s. It involves bundling loans into packages that are then sold to outside investors. The first big market was for American mortgages. When homeowners pay their monthly payments, these are collected by the servicing agent and passed through to investors as interest payments on their bonds.

Again, this business was encouraged by the authorities as a means of spreading risk. Everybody appeared to win. Banks earned fees for originating loans without the burden of holding them on their balance-sheets (which would have restricted their ability to lend to others). Investors got assets that yielded more than government bonds and represented claims on a diversified group of borrowers. No wonder securitisation grew so fast (see chart 3).

These asset-backed securities became ever more complex. Securitisation eventually gave rise to collateralised debt obligations, sophisticated instruments that bundled together packages of different bonds and then sliced them into tranches according to investors’ appetite for risk. The opacity of these products has caused no end of trouble in the past 18 months.

More fundamentally, securitisation opened a new route to growth for banks. No longer were commercial banks dependent on the slow, costly business of attracting retail deposits. Securitisation allowed them to borrow in the markets. Few imagined that the markets would not be open at all times. In 2007 Northern Rock, a British mortgage lender, was the first spectacular casualty of this false assumption; many more banks have been caught out in 2008.

Asleep at the wheel?

While all this was happening, regulators were not wholly passive. They had to deal with crises such as the failures of Drexel Burnham Lambert, which dominated the junk-bond market, and Baring Brothers, a British bank brought low by a rogue trader. But these were regarded as individual instances of mismanagement or fraud, rather than as evidence of a systemic problem. Even the American savings-and-loan crisis, an early deregulation disaster, was tidied up with the help of a bail-out plan and easy monetary policy, and dismissed as an aberration.

Rather than question the principle of deregulation, some governments redesigned their regulatory structures. Britain devised the FSA in 1997 (even taking away banking regulation from the Bank of England) in a conscious attempt to create a single supervisory body. In America the SEC shares authority with the Commodities Futures Trading Commission, the Federal Deposit Insurance Corporation, state insurance commissioners and so on.

The authorities did make a more fundamental attempt to regulate the banks with the Basel accord. The first version of this, in 1988, established minimum capital standards. Banks have always been a weak link in the financial system because of the mismatch between their assets and liabilities. The assets are usually long-term loans to companies and consumers. The liabilities are deposits by consumers and investors that can be withdrawn overnight. A bank run is hard to resist, since a bank cannot realise its assets quickly; worse still, doing so—by calling in loans—may cause economic havoc by prompting bankruptcies and job losses.

The Basel accord was designed to deal with a different problem: that big borrowers might default. It required banks to set aside capital against such contingencies. Because this is expensive, banks looked for ways around the rules by shifting assets off their balance-sheets. Securitisation was one method. The structured investment vehicles that held many subprime-mortgage assets were another. And a third was to cut the risk of borrowers defaulting, using CDSs with insurers like American International Group. When the markets collapsed, these assets threatened to come back onto the balance-sheets, a prime cause of today’s problems.
Illustration by Brett Ryder
Illustration by Brett Ryder

It would be a mistake to argue that, had politicians rather than bankers been in charge, policy would have been more prudent. Indeed, politicians encouraged banks to make riskier loans. This was particularly true in America, where a series of measures, starting with the Community Reinvestment Act of 1977, required banks to meet the credit needs of the “entire community”. In practice, this was social policy: it meant more lending to poor people. Fannie Mae and Freddie Mac, the two government-sponsored giants of the mortgage market, were encouraged to guarantee a wider range of loans in the 1990s.

The share of Americans who owned their homes rose steadily. But more buyers meant higher prices, making loans even less affordable to the poor and requiring even slacker lending standards. The seeds of the subprime crisis were sown, and the new techniques of securitisation allowed banks to make these loans and then offload them quickly.

Initially, the growth of homeownership was seen as a benign effect of deregulation, as was the ability of consumers to borrow on their credit cards, a habit they took to enthusiastically. The authorities largely welcomed this boost to consumer demand. In the 1970s and 1980s, they might have worried about the effect on inflation or the trade deficit. But technological change in the 1990s, and the impact of China and India in the 2000s, kept headline inflation down, while liberalised capital markets and Asian savings made external deficits easy to finance.

In addition, those countries with big financial centres were delighted to have them because of the tax revenues they yielded. That hardly encouraged them to look too closely at the financial industry. Nor did it hurt that political parties in both America and Britain received a lot of contributions from financiers.

Liberalisation happened for many reasons. Often, regulators were simply trying to catch up with the real world—for instance, the rapid development of offshore markets. In addition, deregulation provided things that voters wanted, such as cheap loans. Each financial innovation that came along became the object of speculation that was fuelled by cheap money. Bankers and traders were always one step ahead of the regulators. That is a lesson the latter will have to learn next time.

Amid the crisis of 2008, it is easy to forget that liberalisation had good consequences as well: by making it easier for households and businesses to get credit, deregulation contributed to economic growth. Deregulation may not have been the main cause of the rise in living standards over the last 30 years, but it helped more than it harmed. Will the new, regulated world be as benign?

Tomado de The Wall Street Journal, EEUU

Washington, 16 de octubre.-Los temores a que Estados Unidos caiga en una profunda recesión provocaron la mayor caída del Promedio Industrial Dow Jones en 21 años, que coincidió con un descenso de las ventas minoristas y las ganancias de los bancos y el debilitamiento de la demanda de materias primas.

Las últimas cifras sugieren que EE.UU. se dispone a entrar en su mayor recesión desde inicios de los años 80. Tal noticia, junto a la reanudación de los problemas en los mercados de crédito, desencadenó una ola de ventas en los mercados que prácticamente borró de un plumazo el gigantesco avance del lunes.

El Promedio Industrial Dow Jones perdió 733 puntos, un 7,9%, para quedar en 8.577,91 unidades en medio de los temores a una recesión y las dudas acerca de las perspectivas del sistema financiero. El declive del miércoles representa el mayor descenso del Dow desde octubre de 1987 y su segunda mayor caída por puntos de la historia. El indicador acumula un declive de 21% en lo que va del mes y de casi 40% desde su máximo de hace un año.

Otros mercados acompañaron su derrumbe. El Índice Compuesto Nasdaq, por ejemplo, cedió 150,68 puntos, un 9,03%, para ubicarse en 907,84 unidades. El miércoles, los inversionistas perdieron US$1,1 billón (millón de millones) en valor de mercado, la segunda vez en la historia que pierden más de US$1 billón en una jornada.

Los inversionistas en renta fija volvieron a refugiarse en los instrumentos más seguros, como los bonos del Tesoro estadounidense a dos años, cuyo rendimiento bajó a 1,6%. El del bono del Tesoro a 10 años subió levemente para quedar en 4%.

El presidente de la Reserva Federal, Ben Bernanke, advirtió en un discurso pronunciado en Nueva York que la economía estadounidense enfrenta momentos muy difíciles. "La estabilización de los mercados financieros es un primer paso, pero... una recuperación más amplia de la economía no ocurrirá de la noche a la mañana", aseveró. "En última instancia, la trayectoria de la actividad económica más allá de los próximos trimestres dependerá en gran medida de hasta qué punto los mercados financieros y crediticios vuelvan a un funcionamiento más normal".

Bernanke dejó sutilmente la puerta abierta para nuevos recortes en las tasas de interés al comentar que las presiones inflacionarias han cedido a raíz de la caída en los precios de las materias primas y las menores expectativas de inflación.

El impacto de nuevos recortes de tasas, sin embargo, está en duda. Los inversionistas están demandando grandes diferencias, conocidos como spreads, sobre las tasas de interés de referencia para realizar préstamos a empresas y consumidores. Mientras los spreads sigan siendo amplios, los beneficios de las reducciones en las tasas se diluyen. Una de las prioridades de las autoridades es aliviar los temores que se han apoderado de los mercados financieros. Eso estimularía la disposición de las entidades financieras a prestar a spreads más bajos.

Mientras tanto, aumentan los indicios de que EE.UU. sufrirá una recesión mucho más cruda que las de 2001 y 1990-91. Los despidos, que comenzaron a principios de año, se empezaron a acelerar el mes pasado, incluso antes de que azotara la crisis financiera.

El Departamento de Comercio anunció que las ventas minoristas bajaron 1,2% el mes pasado, un declive mucho más pronunciado que en julio y agosto. Las cifras confirman que EE.UU. ya se estaba debilitando antes de que la crisis de los mercados entrara en una fase crítica. El consumo, que representa más del 70% de la economía estadounidense, probablemente registrará caídas sin precedentes en el tercer y cuarto trimestre.

Los problemas de EE.UU. están afectando a la economía mundial, cuyas débiles perspectivas han hecho caer los precios de las materias primas. El crudo, sin ir más lejos, perdió un 5,1% en Nueva York para quedar en US$74,54 el barril, su cierre más bajo en lo que va del año.

Mientras tanto, los persistentes problemas en los mercados crediticios probablemente golpearán con fuerza a los bancos en los próximos meses. J.P. Morgan Chase & Co. y Wells Fargo & Co., dos de los bancos más saludables del país, dijeron el miércoles que sus operaciones de banca de consumo experimentarán un deterioro que podría durar meses. J.P. Morgan, uno de los principales emisores de tarjetas de crédito, informó que los préstamos que tuvo que pasar a pérdida equivalieron a un 5% de su cartera de tarjetas de crédito, comparado con el 3,64% del tercer trimestre de 2007. El banco prevé que la cifra crezca a 6% para inicios del año entrante y a 7% para finales de 2009.

Muchos economistas revisaron a la baja sus estimaciones. La consultora Macroeconomic Advisers redujo su estimación y proyecta un descenso de 0,3% en el PIB durante el tercer trimestre."El consumidor estadounidense está en serios aprietos. El crecimiento de los salarios se evapora, el crédito es escaso o no se consigue, los precios de las viviendas siguen cayendo... y los costos de los alimentos y la energía se quedan con una importante porción de sus presupuestos", dice Joshua Shapiro, economista jefe de la firma de consultoría MFR Inc.

"Sin importar lo que haga el gobierno para rescatar el sistema financiero, se nos viene una recesión liderada por el consumo y promete ser grave".

Oficina de Prensa y Difusión del SELA

Caracas, 16 de octubre de 2008.- El 30 de octubre del presente año se realizará en la sede de la Secretaría Permanente del Sistema Económico Latinoamericano y del Caribe (SELA) la Reunión Regional “Los desafíos del adverso entorno económico internacional para América Latina y el Caribe” con el objetivo de realizar un análisis desde la perspectiva latinoamericana y caribeña acerca de la actual crisis financiera internacional y sus probables implicaciones para la región.

La Agenda de esta importante reunión, inicialmente prevista para hacer una valoración de los resultados de la Conferencia de Alto Nivel de la FAO sobre Seguridad Alimentaria, pretende debatir posibles respuestas de América Latina y el Caribe para enfrentar los desafíos derivados de la aguda crisis financiera internacional.

Según la Secretaría Permanente del SELA los probables efectos de la actual crisis internacional sobre las naciones latinoamericanas y caribeñas pudieran impactar distintos sectores y por ende tener implicaciones muy importantes - tanto a corto como a mediano plazo - para la dinámica económica y social de nuestra región.

De acuerdo a este organismo de alcance latinoamericano y caribeño con sede en Caracas, todo indica que se producirá una reducción perceptible en el ritmo de crecimiento económico de la región, lo cual se asociará a la esperada caída de la demanda externa de bienes y servicios producidos por Latinoamérica y el Caribe con la consiguiente reducción de los ingresos por exportaciones.

Igualmente, la muy probable reducción del acceso al financiamiento internacional y de las remesas enviadas por los migrantes latinoamericanos y caribeños, disminuirá la disponibilidad de recursos de la región. A ello habría que añadir una previsible reducción de los ingresos por turismo internacional, lo cual restringiría aún más las condiciones financieras en que se tendrían que reproducir las economías de América Latina y el Caribe.

En la primera sesión de la reunión convocada por el SELA para el próximo 30 de octubre, se hará una presentación del análisis y las propuestas elaboradas por la Secretaría Permanente sobre la crisis financiera internacional y las posibles respuestas de América Latina y el Caribe, la cual culminará con un debate entre los representantes de los 26 Estados miembros del organismo.

En su segunda sesión, la reunión contempla realizar un análisis desde la perspectiva regional de los resultados y principales conclusiones de la Reunión de Alto Nivel convocada por la FAO sobre Seguridad Alimentaria, la cual se desarrolló en la sede de ese organismo multilateral en Roma entre el 3 y el 5 de junio de 2008.

A este respecto, la reunión regional se propone contrastar tanto el diagnóstico como las decisiones adoptadas en la Conferencia de la FAO en Roma con las discusiones y propuestas realizadas en el marco de la Reunión Regional de Alto Nivel sobre el tema que organizó el SELA el pasado 30 de mayo .

Durante el desarrollo de esta segunda sesión, se presentará el documento titulado “El alza del precio de los alimentos: Seguimiento a la Conferencia Mundial de Alto Nivel sobre Seguridad Alimentaria, realizada por la FAO, en Roma, entre el 3 y 5 de junio del presente año”, elaborado por la Secretaría Permanente del SELA.

En el transcurso de esta sesión, se discutirán las perspectiva s de algunos organismos multilaterales y regionales, a partir de la intervención del representante del Director General de la Organización de las Naciones Unidas para la Agricultura y la Alimentación (FAO, del representante de la Directora General del Programa Mundial de Alimentos de la ONU (PMA) y de un representante de la Secretaria Ejecutiva de la Comisión Económica para América Latina y el Caribe (CEPAL).

El propósito final de este importante encuentro al que ha convocado el SELA es lograr un consenso sobre posibles acciones a desarrollar por los gobiernos de América Latina y el Caribe - y los organismos subregionales y regionales - para enfrentar eficientemente los desafíos económicos y sociales derivados de la actual crisis financiera internacional y garantizar la seguridad alimentaria en los países de la región.

José Carreño
El Universal

Jueves 16 de octubre de 2008

jose.carreno@eluniversal.com.mx

Para la mayoría de los mexicanos el presidente ideal de Estados Unidos sería el demócrata Barak Obama, que surgió en la escena política hace apenas cuatro años, por encima del republicano John McCain, que lleva 20 años en contactos con México.

La muy favorable imagen de Obama, que es un virtual desconocido, contrasta con el negativismo hacia McCain, que sin embargo es, de los dos, el que realmente conoce México y tiene, y ha tenido, contacto con los mexicanos.

Al margen de quién gane y sus sentimientos hacia América Latina en general y México en particular, su visión de la relación estará teñida también por conveniencias políticas de momento y la composición del Congreso, no sólo en la relación de demócratas y republicanos sino de grupos de entre esas bancadas.

Pero los dos bandos serían problemáticos, por razones en algunos casos diferentes.

De acuerdo con las declaraciones previas y los idearios de campaña, los demócratas serían más problemáticos para México por su visión del Tratado de Libre Comercio de América del Norte y la idea de que favorece a canadienses y mexicanos por encima de los intereses de los estadounidenses.

Obama y su compañero de fórmula, Joseph Biden, creen que pueden hacerlo mas favorable a su país o corregir sus defectos mediante la imposición de nuevas condiciones de respeto y acatamiento de leyes laborales y del medio ambiente.

La reforma migratoria

Del otro lado McCain, que copatrocinó con el demócrata Ted Kennedy una importante pero fracasada propuesta de reforma migratoria integral, casi perdió la posibilidad de ser candidato debido a su postura en favor de regularizar a los inmigrantes indocumentados en Estados Unidos.

Desde entonces realizó lo que algunos consideran como casi un giro de 180 grados para hacer énfasis en la necesidad de seguridad fronteriza.

La compañera de fórmula de McCain, Sarah Palin, sólo puede alegar en su favor haber visto la frontera de Canadá con Alaska y las costas asiáticas de Rusia. Más allá, silencio.

En términos reales, sin embargo, no se puede decir que uno vaya a ser más o menos problemático que otro.

Mientras McCain, nacido en la desaparecida “zona del canal” de Panamá, ha tenido un largo vínculo con partes de la región y como senador por Arizona una larga relación con temas mexicanos, Obama tiene apenas idea de América Latina, y lo más cerca que ha estado de México es un vistazo a través del Río Grande hace unos meses.

Pero al mismo tiempo, con sus antecedentes como organizador comunitario en Chicago, donde hay minoría latina y en especial su componente mexicano tiene una influencia considerable, Obama puede alegar otra aproximación a los contactos con México y Latinoamérica.

La composición del Congreso será determinante para las relaciones y si como se prevé los demócratas logran un control absoluto, es de esperarse que haya predominio de las voces por la renegociación del TLCAN y tal vez por un nuevo debate migratorio que incorpore temas de seguridad fronteriza.

Asegura que el gran reto hacia adelante está en resolver en qué manos quedará la propiedad del sistema de pagos de cada país.

El plan de rescate implantado en México durante 1995 no es un ejemplo para el mundo, pues de haber sido así “sufriría la pérdida de toda una década”, afirmó el ex presidente Carlos Salinas de Gortari.

Durante su discurso ante estudiantes del St Antony’s College de la Universidad de Oxford, Salinas de Gortari dijo que la historia de la crisis mexicana parece que no se repetirá, “pues los países industrializados no muestran estar dispuestos a cometer desastres similares a los errores que empezaron en diciembre de 1994”.

Aseguró que en México las autoridades “han tomado las decisiones adecuadas”, ya que al lanzar un programa de estímulos al crecimiento y mantener la estabilidad económica, “han evitado la repetición de los errores de 1995”.

“Resulta sorprendente que haya voces dentro de nuestro país que proponen que las autoridades de las naciones desarrolladas adopten un paquete de decisiones similar al introducido en México frente a la crisis de 1995”, añadió el ex mandatario.

En ese sentido, hizo un recuento de todos los errores cometidos en ese año, los cuales “nos dejaron el peor de los mundos”; es decir, con “una deuda monumental adicional de 20 por ciento del PIB que todavía hoy siguen pagando los mexicanos. Con la economía estancada a pesar del petróleo y las remesas, (pero además) con el sistema de pagos de México en manos de los extranjeros y durante una década el país sin financiamiento para su desarrollo”.

Al decir que la etapa de la nacionalización de los bancos será temporal comentó que “el gran reto hacia adelante está en resolver quiénes serán los propietarios finales de los bancos. En qué manos quedará la propiedad del sistema bancario, es decir, del sistema de pagos de cada país”.

Reconoció que ahora los países “tienen que salvar sus bancos y evitar una recesión, frente al reto de las presiones inflacionarias que permanecen y el riesgo de la explosión del déficit fiscal”.

Al respecto, Salinas de Gortari recordó que “los bancos dejaron de prestar y ya no eran propiedad de los mexicanos, (pues) el gobierno entregó la propiedad del sistema de pagos del país a los extranjeros. Por eso, hoy el tema principal es respecto a quiénes serán los dueños finales de los bancos que han sido rescatados en los países desarrollados”.

Añadió que si hoy esas naciones, “en lugar de obligar a los bancos a prestar a las empresas, adoptaran el paquete de 1995, el crédito se colapsaría”.

Al recordar la fuga masiva de capitales por la consulta hecha a los empresarios en 1994, Salinas reconoció las “acciones coordinadas para proteger a los ahorradores”.

Dijo que “si hoy, en lugar de bajar las tasas de interés, hubieran actuado como en 1995, las quiebras de ahorradores y empresas serían masivas”; si no se hubieran reducido las carteras tóxicas, explotarían las quiebras; si hoy no se hubiera promovido un paquete de apoyo para ser recuperado, el costo del rescate explotaría; y finalmente, si no se hubiera lanzado un paquete de estímulo al crecimiento económico, la recesión sería inevitable.

Claves

Según el ex presidente...

• Lo que ha ocurrido es la quiebra de la etapa del capital especulativo que dominó la economía mundial durante la década pasada.

• Ante la quiebra del capital especulativo, no resurge el capitalismo de Estado. Se trata en realidad del Estado subsidiando al capitalismo.

• La migración producto de la política adoptada en 1995 permitió que el costo de la construcción de viviendas en EU fuera reducido.

Richard Dooling

15 October 2008

Beware of geeks bearing formulas.” So saith Warren Buffett, the Wizard of Omaha. Words to bear in mind as we bail out banks and buy up mortgages and tweak interest rates and nothing, nothing seems to make any difference on Wall Street or Main Street.

Years ago, Buffett called derivatives “weapons of financial mass destruction” — an apt metaphor considering that the Manhattan Project’s math and physics geeks bearing formulas brought us the original weapon of mass destruction, at Trinity in New Mexico on July 16, 1945.

In a 1981 documentary called “The Day After Trinity,” Freeman Dyson, a reigning gray eminence of math and theoretical physics, as well as an ardent proponent of nuclear disarmament, described the seductive power that brought us the ability to create atomic energy out of nothing.

“I have felt it myself,” he warned. “The glitter of nuclear weapons. It is irresistible if you come to them as a scientist. To feel it’s there in your hands, to release this energy that fuels the stars, to let it do your bidding. To perform these miracles, to lift a million tons of rock into the sky. It is something that gives people an illusion of illimitable power, and it is, in some ways, responsible for all our troubles — this, what you might call technical arrogance, that overcomes people when they see what they can do with their minds.”

The Wall Street geeks, the quantitative analysts (“quants”) and masters of “algo trading” probably felt the same irresistible lure of “illimitable power” when they discovered “evolutionary algorithms” that allowed them to create vast empires of wealth by deriving the dependence structures of portfolio credit derivatives.

What does that mean? You’ll never know. Over and over again, financial experts and wonkish talking heads endeavour to explain these mysterious, “toxic” financial instruments to us lay folk. Over and over, they ignobly fail, because we all know that no one understands credit default obligations and derivatives, except perhaps Buffett and the computers who created them.

Somehow the genius quants — the best and brightest geeks Wall Street firms could buy — fed $1 trillion in subprime mortgage debt into their supercomputers, added some derivatives, massaged the arrangements with computer algorithms and — poof! — of that imaginary wealth is locked up somewhere inside the computers, and that we humans, led by the silverback males of the financial world, Ben Bernanke and Henry Paulson, are frantically beseeching the monolith for answers.

As the current financial crisis spreads (like a computer virus) on the earth’s nervous system (the Internet), it’s worth asking if we have somehow managed to colossally outsmart ourselves using computers.

How fitting then, that almost 30 years after Freeman Dyson described the almost unspeakable urges of the nuclear geeks creating illimitable energy out of equations, his son, George Dyson, has written an essay (published at Edge.org) warning about a different strain of technical arrogance that has brought the entire planet to the brink of financial destruction. George Dyson is an historian of technology and the author of “Darwin Among the Machines,” a book that warned us a decade ago that it was only a matter of time before technology out-evolves us and takes over.

His new essay — “Economic Dis-Equilibrium: Can You Have Your House and Spend It Too?” — begins with a history of “stock,” originally a stick of hazel, willow or alder wood, inscribed with notches indicating monetary amounts and dates. When funds were transferred, the stick was split into identical halves — with one side going to the depositor and the other to the party safeguarding the money — and represented proof positive that gold had been deposited somewhere to back it up. That was good enough for 600 years, until we decided that we needed more speed and efficiency.

Making money, it seems, is all about the velocity of moving it around, so that it can exist in Hong Kong one moment and Wall Street a split second later. “The unlimited replication of information is generally a public good,” George Dyson writes. “The problem starts, as the current crisis demonstrates, when unregulated replication is applied to money itself. Highly complex computer-generated financial instruments (known as derivatives) are being produced, not from natural factors of production or other goods, but purely from other financial instruments.”

Only computers can understand and derive a correlation structure from observed collateralised debt obligation tranche spreads. Which leads us to the next question: Just how much of the world’s financial stability now lies in the “hands” of computerised trading algorithms?Here’s a frightening party trick that I learned from the futurist Ray Kurzweil. Read this excerpt and then I’ll tell you who wrote it:

“But we are suggesting neither that the human race would voluntarily turn power over to the machines nor that the machines would wilfully seize power. What we do suggest is that the human race might easily permit itself to drift into a position of such dependence on the machines that it would have no practical choice but to accept all of the machines’ decisions. ... Eventually a stage may be reached at which the decisions necessary to keep the system running will be so complex that human beings will be incapable of making them intelligently. At that stage the machines will be in effective control. People won’t be able to just turn the machines off, because they will be so dependent on them that turning them off would amount to suicide.”

Brace yourself. It comes from the Unabomber’s manifesto. Yes, Theodore Kaczinski was a homicidal psychopath, but he was also a bloodhound when it came to scenting all of the horrors technology holds in store for us. Hence his mission to kill technologists before machines commenced what he believed would be their inevitable reign of terror.

Man is a fire-stealing animal, and we can’t help building machines, even if we use them not only to outsmart ourselves but to bring us right up to the doorstep of Doom. As the financial experts all over the world use machines to unwind Gordian knots of financial arrangements so complex that only machines can make — “derive” — and trade them, we have to wonder: Are we living in a bad sci-fi movie? Is the Matrix made of credit default swaps?

When Treasury Secretary Paulson came to Congress seeking an emergency loan, Senator Jon Tester of Montana, a Democrat still living on his family homestead, asked him: “I’m a dirt farmer. Why do we have one week to determine that $700 billion has to be appropriated or this country’s financial system goes down the pipes?”

“Well, sir,” Paulson could well have responded, “the computers have demanded it.”

Richard Dooling is the author of “Rapture for the Geeks: When A.I. Outsmarts IQ.” This article first appeared in IHT

by Ted Galen Carpenter

10.10.2008

Even as U.S. officials concentrate on such troubling foreign-policy issues as the stalemated six-party talks regarding North Korea’s nuclear program, the increasing likelihood that Iran may join the ranks of nuclear powers and growing tensions in relations with Russia, a serious security problem is brewing much closer to home. Violence between drug-trafficking organizations and government authorities in Mexico has exploded in the past two years. The carnage is now so extensive that American tourists increasingly avoid Tijuana, Ciudad Juarez, Nuevo Laredo and other cities on the U.S.-Mexico border that used to be popular destinations. Worst of all, some of the chaos in Mexico is spilling over into America’s own southwestern states.

The drug trafficking problem in Mexico is not new. The country is a major source of heroin, marijuana and methamphetamine for the American market as well as the principal transit and distribution point for cocaine from South America. For years, people both inside and outside Mexico have worried that the country might descend into the maelstrom of corruption and violence that plagued the chief drug supplier in the western hemisphere, Colombia, from the early 1980s to the early years of this century. There are growing signs that the “Colombianization” of Mexico is now becoming a reality.

If Mexico goes down the same path that Colombia did, the consequences to the United States will be much more severe. Colombia is relatively far away, but Mexico shares a border with the United States and is closely linked to this country economically through the North American Free Trade Agreement. There is simply no way for Americans to regard the alarming trends in our next-door neighbor with indifference.

Washington has pressed Mexican governments for years to be more proactive against the drug-trafficking gangs. Since President Felipe Calderon took office in 2006, U.S. officials have gotten their wish. Calderon has even given the military a lead role in combating the traffickers, a step that previous presidents had declined to take. The principal outcome of his strategy, however, has been an even greater level of violence, with military personnel increasingly being targets. The military also has now been exposed to the temptation of financial corruption that has compromised Mexico’s police forces so thoroughly.

Even supposed victories in Mexico’s drug war prove to be mixed blessings at best. As Stratfor, a risk-assessment consulting organization, notes

inter-cartel violence tends to swing upward after U.S. or Mexican authorities manage to weaken or disrupt a given organization. At any point, if rival groups sense an organization might not be able to defend its turf, they will swoop in to battle not only the incumbent group, but also each other for control.

The turf battles have been ferocious. In 2005, slightly more than one thousand three hundred people perished in drug-related violence. By 2007, the yearly total had soared to 2,673. And it continues to get worse. By mid-August 2008, the carnage for that year already exceeded the number of fatalities in all of 2007. The State Department warned American travelers in May 2008 that battles between drug-trafficking gangs (and between those gangs and Mexican military and police) in portions of northern Mexico were so severe that they constituted “small unit combat operations.” Those battles included the use of machine guns and rocket-propelled grenades.

In addition to the extensive violence reminiscent of Colombia in the 1980s and 1990s, another Colombian pattern also is emerging in Mexico—the diversification of the drug gangs into kidnapping and other lucrative sources of revenue. Some reports suggest that the kidnapping problem in Mexico is now more severe than it is in Colombia, and even U.S. citizens have been victims.

U.S. officials concede that the drug-related violence in Mexico does not respect borders. According to John Walters, the director of the White House’s Office of National Drug Control Policy, “The killing of rival traffickers is already spilling across the border. Witnesses are being killed. We do not think the border is a shield.” A Dallas narcotics officer reaches a similar conclusion. “We’re seeing an alarming number of incidents involving the same type of violence that’s become all too common in Mexico, right here in Dallas. We’re seeing execution-style murders, burned bodies, and outright mayhem . . . . It’s like the battles being waged in Mexico for turf have reached Dallas.”

U.S. law enforcement officials along the border are increasingly the targets of violence. A Homeland Security Committee report notes that at one time, smugglers “would drop the drugs or abandon their vehicles when confronted by U.S. law enforcement.” That is no longer the case. “In today’s climate, U.S. Border Patrol agents are fired upon from across the river and troopers and sheriff’s deputies are subject to attacks with automatic weapons while the cartels retrieve their contraband.” Some of the attacks have come from Mexicans wearing military uniforms. It is not certain whether they are smugglers with stolen uniforms or if rogue elements of the Mexican military are attacking U.S. law enforcement personnel on behalf of traffickers.

U.S. policy seems to assume that if the Mexican government can eliminate the top drug lords, their organizations will fall apart, thereby greatly reducing the flow of illegal drugs to the United States. Washington has now backed up that policy with a lucrative aid package, the Merida Initiative, to help fund law enforcement reforms and other anti-drug efforts. In the summer of 2008, Congress approved the first installment ($400 million) of what is likely to be a multi-year, multi-billion dollar program modeled after Plan Colombia, the initiative that began in 2000 for Colombia and its Andean neighbors, and which has already cost $5 billion.

The belief that neutralizing Mexican drug kingpins will achieve a lasting reduction in drug trafficking is the same assumption that U.S. officials made with respect to the crackdown on the Medellin and Cali cartels in Colombia during the 1990s. Subsequent developments proved the assumption to be erroneous. The elimination of those two cartels merely decentralized the Colombian drug trade. Instead of two large organizations controlling the trade, today some three hundred much smaller, loosely organized groups do so.

More to the point, the arrests and killings of numerous top drug lords in both Colombia and Mexico over the years have not had a meaningful impact on the quantity of drugs entering the United States. Cutting off one head of the drug-smuggling Hydra merely results in more heads taking its place. Jorge Chabat, a Mexican security and drug-policy analyst notes: “For years, the U.S. told Mexico’s government, ‘The problem is that the narcos are still powerful because you don’t dismantle the gangs.’ Now they’re doing just that . . . and the narcos are more powerful than ever.”

Mexico can still avoid going down the path to chaos, but time is growing short. Washington had better pay far more attention to the problem than it has to this point, and U.S. officials need to come up with better answers than the ineffectual and discredited policies of the past. If Washington continues to pursue a prohibitionist strategy, which creates the enormous black-market profits in drug trafficking, violence and corruption will become a dominant and permanent feature of Mexican life. The illicit drug trade has already penetrated the country’s economy and society to an alarming degree.
U.S. officials need to ask whether they want to risk a chaotic, embryonic narco-state on America’s southern border. If they don’t want to deal with the turmoil such a development would create, the new administration will have to reconsider the prohibitionist strategy and do so quickly.

Ted Galen Carpenter, vice president for defense and foreign policy studies at the Cato Institute, is the author of eight books on international issues, including Smart Power: Toward a Prudent Foreign Policy for America (2008). He is also a contributing editor to The National Interest.

Tomado de la Agencia Inter Press Service

Buenos Aires, 6 oct (IPS) - La crisis financiera de Estados Unidos puede afectar menos de lo temido a América del Sur, gracias a que diversificó su comercio en los últimos tiempos, a diferencia de México, que sí sufrirá los efectos debido a que la mayoría de las exportaciones van a su vecino del norte, estiman expertos.

Tras el fracaso del Área de Libre Comercio de las Américas (ALCA) y el añejo estancamiento de las negociaciones con la Unión Europea (UE), los países sudamericanos consolidaron en general a la fuerza sus vínculos con Asia y aumentaron dramáticamente el intercambio de bienes, que promete mantener su dinamismo al menos hasta 2010, según escenarios provisorios de los analistas.

Combustible, níquel, cobre, madera, soja y otros productos de la región seguirán fluyendo a China, India, Vietnam, Tailandia y otros países de Asia. Los precios de esos bienes sufrieron leves bajas por la crisis, pero se mantienen altos respecto de sus niveles históricos y no sufrirán un colapso, aseguran.

"México, la economía de la región más integrada con Estados Unidos, es la que más va a sufrir con una recesión en ese país, porque más de 80 por ciento de sus exportaciones van a ese destino", anticipó a IPS el brasileño Uziel Batista, del Instituto para la Integración de América latina y el Caribe (Intal).

Batista trabaja en Buenos Aires como economista especializado del área de Integración y Comercio del Intal, que es la unidad del Banco Interamericano de Desarrollo (BID) dedicada a promover el comercio y la integración regional.

"El Mercosur está en la mejor posición para enfrentar la crisis", destacó, en referencia al Mercado Común del Sur que integran Argentina, Brasil, Uruguay y Paraguay, con Venezuela en proceso de adhesión como miembro pleno y Bolivia y Chile como asociados más antiguos y privilegiados. Este bloque no sólo está sólido por sus indicadores macroeconómicos que, en general, muestran resultados fiscales equilibrados, según los expertos. "Su comercio está muy diversificado entre Estados Unidos, la UE, Asia, África, y entre los dos socios principales, Argentina y Brasil", precisó.

Para Batista, la negativa del Mercosur a avanzar en la iniciativa estadounidense del ALCA "no fue un capricho, sino una decisión acertada", y anticipó que la crisis en curso "fortalecerá la integración regional del Mercosur, de América del Sur y también la de Asia, liderada por China".

Un estudio del economista chileno Orlando Rosales, de la División de Integración y Comercio de la Comisión Económica para América Latina y el Caribe, indica que Asia, con China a la cabeza, creció "significativamente" en los últimos siete años como destino de las exportaciones latinoamericanas, a la par de que el mercado estadounidense y de la UE perdían peso.

Más precisamente, mientras el mercado asiático crece para los productos latinoamericanos y muestra aún un enorme potencial de explotación, la participación de Estados Unidos como destino de las exportaciones de la región bajó de 60 a 40 por ciento entre 2000 y 2007, y la de UE pasó de 30 a 15 por ciento.

Los subsidios que otorga Estados Unidos y la UE a su agricultura, sector de donde sale la mayor parte de las exportaciones de las economías más grandes de América del Sur, forzó a la región a buscar nuevos mercados, justo cuando crecía en forma sostenida la demanda de productos básicos y alimentos por parte de China y de sus vecinos.

Este proceso se revela hoy como un seguro frente a los sacudones que vienen de Estados Unidos y de las principales plazas financieras europeas.

"Las economías orientadas a Estados Unidos, o sea México y las naciones centroamericanas, estarán más afectadas", aseguró Rosales a IPS. Por el contrario América del Sur, "que tiene en China un mercado relevante, saldrá beneficiada", dijo el experto.

"Sin ninguna duda, la diversificación del comercio fortalece a nuestras economías", concluyó el chileno, en coincidencia plena con su colega brasileño.

Para Rosales, es difícil anticipar la profundidad que tendrá la recesión en Estados Unidos y en base a eso proyectar el eventual impacto en las diversas regiones. Alguna repercusión habrá, descuenta, pero debido a este reparto del comercio, el golpe puede ser neutralizado o no manifestarse al menos en el corto plazo.

Actualmente, a raíz de las señales que se emiten desde Wall Street, los precios de los combustibles, los productos básicos y alimentos registraron una leve caída, pero siguen siendo muy altos respecto a los registros históricos de esos bienes, afirmó.

"China crece a (un ritmo de) 10 por ciento anual y una eventual desaceleración, producto de una menor demanda estadounidense, podría hacer caer ese crecimiento a ocho por ciento, que sigue siendo muy alto. Pero nosotros nos inclinamos a creer que va a seguir en 10 por ciento este año y el próximo por lo menos", vaticinó.

Del mismo modo, Batista consideró que aun cuando la demanda de los productos de exportación latinoamericanos pueda sufrir una merma debido a esta crisis, no será drástica.

"Los chinos deben seguir comiendo", sintetizó el brasileño en alusión a que seguirá alta la demanda desde ese país. Los precios podrán declinar un poco, pero "no habrá un colapso", subrayó.

Tomado de la Agencia Inter Press Service

Río de Janeiro, 7 oct (IPS) - Por primera vez América Latina y el Caribe reunirán a sus jefes de Estado y de gobierno el 16 y el 17 de diciembre en Salvador, capital del nororiental estado brasileño de Bahía, en un nuevo intento de impulsar la integración hoy fragmentada en varios procesos subregionales.

Será una reunión "inédita", ya que antes solo estuvieron juntos los mandatarios de los 33 países de la región en encuentros convocados por entes externos, como la Unión Europea, destacó el canciller brasileño Celso Amorim, en rueda de prensa este lunes, al final de una reunión de ministros de Relaciones Exteriores, preparatoria de la cumbre.

Integración y desarrollo serán los temas centrales, pero la agenda será "amplia" para que los máximos gobernantes puedan incorporar los asuntos de mayor relevancia que les interesan, desde comercio a cooperación financiera y agrícola hasta el racismo ante las migraciones y los desastres naturales, acotó.

La cumbre será "el punto de partida de la construcción de la unidad de América Latina y el Caribe", que pasarán a "hablar con voz propia", pero "no podrá ignorar las cuatro crisis simultáneas que agobian el mundo, la financiera, la alimentaria, la energética y la ambiental", resumió el canciller de Cuba, Felipe Pérez Roque.

Ante la pregunta de por qué Brasil propuso esta iniciativa de buscar la integración regional a través de reuniones cumbres, en un momento en que la región parece dividida en variados bloques y mecanismos fracasados en el pasado, Amorim destacó que los procesos subregionales o sectoriales "revelaron las potencialidades de la integración".

La historia reciente de distintas iniciativas comprobó que "sí es posible" y "la necesidad" de una integración de toda la región, ya que "las crisis imponen soluciones integradas", aunque no sean una "respuesta única", arguyó.

El canciller brasileño mencionó dos ejemplos de cómo la integración "ayuda a enfrentar las crisis": Brasil "mitiga" la actual crisis financiera desatada en Estados Unidos con la diversificación de su comercio exterior y también por abolir el dólar en su intercambio con Argentina, que a partir de esta semana se efectúa en las monedas de ambos países.

El empuje comercial del Mercado Común del Sur (Mercosur, compuesto por Argentina, Brasil, Paraguay y Uruguay) y de los acuerdos con otros países de la región permitió a Brasil colocar en América Latina y el Caribe 26 por ciento de sus exportaciones, en una evolución contraria a la que ocurrió con Estados Unidos, que absorbía 25 por ciento del total exportado y ahora sólo recibe 15 por ciento.

"La integración redujo la vulnerabilidad" de Brasil en relación al comercio externo, destacó Amorim. También el intercambio con Argentina en monedas nacionales atenuó la dependencia del dólar.

Los procesos subregionales "ganaron densidad" y se revelaron importantes en muchos campos, incluso en el político. La Unión de Naciones Sudamericanas (Unasur) contribuyó a buscar salidas para la actual crisis de Bolivia, ejemplificó el canciller, refiriéndose a las sublevaciones en provincias ricas del este boliviano y a los temores de golpe de Estado.

Brasil priorizó a América del Sur en los últimos seis años de gobierno de Luiz Inácio Lula da Silva, pero "no en desmedro de la integración de toda América Latina y el Caribe", sostuvo Amorim.

Las regiones más integradas, como Asia y Europa, tuvieron "mejor desempeño" en el desarrollo, señaló por su parte la canciller de México, Patricia Espinosa, afirmando que su gobierno está comprometido a impulsar una unidad latinoamericana y caribeña que respete "la diversidad y la pluralidad".

"Debemos ser más ambiciosos", en comparación con los procesos de integración regional adoptados en los últimos 50 años. Es necesaria una "mayor comunicación y coordinación" entre los distintos mecanismos, actuando con "gran flexibilidad", aseveró.

El mundo hoy se compone de "grandes bloques", considerando que Estados Unidos y China deben ser considerados bloques por sí mismos, y no hay razón para que América Latina y el Caribe no formen otro, con un "producto respetable" de unos cuatro billones de dólares anuales, acotó Amorim.

El gran desafío de la cumbre de Salvador, sin embargo, será definir objetivos más precisos, ya que son muchos los intereses y las cuestiones que pueden dispersar las discusiones.

Algunas preguntas de los periodistas quedaron sin respuesta, como cuestiones de seguridad impuestas por la reactivación de la IV Flota estadounidense, cuya presencia en el océano Atlántico Sur produjo manifestaciones de preocupación de los gobiernos de Brasil, Argentina y Venezuela, y el hecho de que muchos acuerdos entre países latinoamericanos quedaron sin efecto por falta de ratificación parlamentaria.

El bloqueo comercial impuesto por Washington a Cuba, la posición del bloque regional en relación a la Organización de los Estados Americanos, la crisis de Haití, además de temas comerciales, como la Ronda de Doha de la Organización Mundial del Comercio, donde los latinoamericanos presentaron divisiones, son otras cuestiones que amenazan desdibujar el foco de la cumbre.

Should the United States continue to subsidize governments that treat it as an enemy?

Monday, October 6, 2008; A14

WITH U.S. attention fixed elsewhere, a significant part of Latin America continues to march away from the "Washington consensus" of democracy and free-market capitalism that has governed the region for a generation. The latest step came last week in Ecuador, where voters approved a new constitution that concentrates power in the hands of President Rafael Correa. Mr. Correa has adopted Venezuelan President Hugo Chávez's slogan of "socialism of the 21st century" and has largely imported Mr. Chávez's political model. The new constitution repeals a limit on presidential terms that had stood since the country returned to democracy in 1979, and it could allow Mr. Correa to stay in office until 2017. It also grants him control over the central bank and, indirectly, the judiciary and electoral authority. The president already dominates the media after seizing control of three private television networks several months ago; so heavy-handed was government propaganda ahead of the referendum that even the typically timid Organization of American States took note.

In addition to Ecuador, Mr. Chávez's satellites now include Nicaragua, Bolivia and Cuba; Honduras and Paraguay may be swinging his way. Most are moving to embrace 20th-century economic policies that the world outside Latin America almost universally recognizes as unworkable, like the state takeover of industries. Their presidents seek to monopolize power, limit the freedom of the press and independence of the courts, and paint the United States as an enemy. Several are cultivating alliances with Iran, and Mr. Chávez is steadily deepening his military relationship with Russia, which announced last month an agreement to supply Venezuela with nuclear technology.

The Bush administration has struggled for years with the question of how to respond to these developments. For the most part it has chosen to sidestep Mr. Chávez's provocations, calculating that his regime will eventually self-destruct -- a bet that looks better with each drop in the price of oil. The U.S. Treasury has sanctioned individuals in Mr. Chávez's inner circle for supporting terrorism, but the State Department refrained from designating the government as a supporter of terrorism -- a step that could cripple the Venezuelan economy. Last month, the administration moved to suspend trade privileges for Bolivia, after President Evo Morales blocked U.S. aid programs aimed at reducing coca production and expelled the U.S. ambassador. But with administration support the House renewed the same trade preferences for Ecuador last week.

Contrary to the rhetoric of their leaders, the United States retains enormous leverage in Latin countries: Thirty thousand jobs in Bolivia and 400,000 in Ecuador depend on the trade deals, while Nicaragua and Honduras profit through the Central American Free Trade Agreement. That power to punish already-impoverished countries should not be employed lightly. But neither should rulers such as Mr. Morales, Mr. Correa and Nicaragua's Daniel Ortega be allowed to dismantle democratic institutions and attack U.S. interests while benefiting from American subsidies. Sooner or later they must be forced to choose between Mr. Chávez's half-baked socialism and the democracy of the 21st century.

Un editorial de The Washington Post indica que una parte significativa de América ha abandonado el "consenso" de democracia.

EFE
Washington, Estados Unidos

Los líderes populistas de izquierda en América Latina deberán decidir "tarde o temprano" si quieren continuar con un socialismo trasnochado u optar por "la democracia del siglo XXI", según señala este lunes el diario "The Washington Post".

En un editorial titulado "Una elección para América Latina", el diario se pregunta cuál debe ser la postura del Gobierno de Estados Unidos ante los países aglutinados en torno al presidente de Venezuela, Hugo Chávez, y si debe ejercer el poderío que le da el ser todavía para ellos un importante socio comercial.

El diario indica que una parte significativa de América Latina ha abandonado el "consenso" de democracia y capitalismo de libre mercado que ha regido durante la última generación.

El último paso en esa dirección, dice "The Washington Post", se ha dado en Ecuador, donde la Constitución aprobada en un referéndum realizado el 28 de septiembre da más poderes al presidente Rafael Correa.

Además de Ecuador, apunta el editorial, varios países han entrado en la órbita del presidente Chávez: Nicaragua, Bolivia y Cuba, mientras que Honduras y Paraguay "pueden estarse inclinando" de ese lado.

La mayor parte de estos países, sostiene "The Washington Post", "dan pasos para adoptar políticas económicas del siglo XX que el mundo fuera de América Latina reconoce de manera casi universal como no válidas, tal y como la nacionalización de industrias".

Los presidentes de esas naciones, agrega, "buscan monopolizar el poder, limitar la libertad de prensa y la independencia de los tribunales, así como presentar a EE.UU. como el enemigo".

Varios de estos países "cultivan alianzas con Irán y el señor Chávez profundiza gradualmente su relación militar con Rusia, que el mes pasado anunció un acuerdo para facilitar tecnología nuclear a Venezuela", apunta.

El diario recuerda que el Gobierno del presidente George W. Bush trata de determinar desde hace años cómo responder a estos acontecimientos.

En el caso de Chávez, en general EE.UU. ha optado por hacer caso omiso de las "provocaciones" y, si el Departamento del Tesoro ha impuesto sanciones a ciertos individuos del régimen por apoyar el terrorismo, el Departamento de Estado ha evitado incluir a Venezuela en su lista de países patrocinadores del terrorismo, "algo que paralizaría su economía".

El mes pasado, recuerda el diario, el Gobierno tomó medidas para suspender beneficios comerciales a Bolivia, pero esos mismos privilegios se renovaron para Ecuador la semana pasada.

EE.UU. "mantiene una enorme capacidad de presión en América Latina", explica el editorial, que menciona como ejemplo el hecho de que 40.000 empleos en Ecuador y 30.000 en Bolivia dependen del comercio con este país.

"El poder para castigar a países ya de por sí empobrecidos no debería de usarse a la ligera", según el "Post".

Pero tampoco, sostiene, se debe permitir que líderes como el presidente boliviano, Evo Morales, o el nicaragüense, Daniel Ortega, "desmantelen instituciones democráticas y ataquen intereses de EE.UU. al tiempo que se benefician de subsidios estadounidenses".

"Antes o después, debe obligarse a (esos líderes) a elegir entre el socialismo de medio pelo del señor Chávez o la democracia del siglo XXI", concluye.

The US-Mexican border

Oct 2nd 2008 | EAGLE PASS AND NOGALES
From The Economist print edition

America is building a border barrier that is both too tight and not tight enough

FOR the past four years Steve Johnston has been dropping food, water and socks in the Sonoran desert. They are intended for illegal immigrants, who have often been walking for three or four days. Demand has never been greater. Recently Mr Johnston left 80 gallons of water beside a popular trail, and returned the next day to find all but eight gallons gone. He has encountered 40-strong groups walking in broad daylight. It is, oddly, proof that America’s growing border fence is having an effect on illegal immigration.

The reason so many immigrants are tramping through Mr Johnston’s neighbourhood can be found 12 miles to the south-west. Around Sasabe, steel cylinders have been sunk into the desert to create an imposing fence. That has blocked a popular migration route and driven people east. No More Deaths, a humanitarian group, has drawn up a map of migration routes based on how much water and food disappears. It looks like a leaf skeleton—a pattern of interlocking lines snaking north through the desert, then east to just above a checkpoint. From there, immigrants are driven to Tucson and Phoenix, whence they travel to wherever there are jobs.

By the end of this year the American government is supposed to have erected 670 miles of fencing along the 2,000-mile border with Mexico. Roughly half of the barrier is designed to stop everything bigger than a jackrabbit; the other half will let people through but stop vehicles. It is just part of a drive, stepped up in the past two years, to clamp down on illegal immigration and drug-smuggling. The Border Patrol is swelling from fewer than 6,000 officers in 1996 to more than 18,000 by next year. Unmanned watchtowers bristling with cameras and heat sensors are being developed. Finally, checks at proper border crossings are becoming more rigorous.

The fence is behind schedule and well over budget, and the network of electronic watchtowers is even further from deployment. But enough has been built, strengthened and staffed to make it clear what kind of border the next president will inherit. America is creating a barrier that is at once much too porous and rather too tight.

Until fairly recently the western half of the US-Mexican border was largely abstract. “As far as the eye can reach stretches one unbroken waste, barren, wild, and worthless,” wrote John Russell Bartlett, who surveyed the area for the American government in the 1850s. The border was marked at first by piles of stones, then by concrete obelisks. Over time the occasional barbed-wire fence went up, but the border was permeable. “You could ride your bike across it,” says Michael Gomez, who grew up five blocks from the border and is now mayor of Douglas, Arizona.

Before the early 1990s those who wanted to cross illegally generally headed for the cities of Tijuana and Juárez. They would wait until night, scale the puny fence and dash for San Diego and El Paso. It was a simple matter of outnumbering the Border Patrol. Then, beginning in 1993, taller fences began to go up in the busiest sections of California and Texas. The assumption was that physical barriers would stop crossers in the cities, and geography would stop them elsewhere.

The first assumption turned out to be correct: between 1994 and 2000 the number of apprehensions around San Diego plunged by two-thirds. The second did not. Rather than giving up, immigrants converged on the border’s thinly-policed midsection, braving sun and snakes on long hikes through the desert. In the late 1990s the number of apprehensions shot up in the 260-mile Tucson sector (see chart). So did deaths. Raquel Rubio-Goldsmith of the University of Arizona reckons 125 people died trying to cross the desert in the 1990s. Since 2000 the death toll has been more than 1,000. By contrast, fewer than 300 people died attempting to cross the Berlin Wall in its 28-year history.

As illegal immigrants began to funnel through Arizona, attitudes hardened. In 2004 the state’s voters approved a measure intended to deny public benefits to illegals. It was reminiscent of an initiative that Californians had supported in the previous decade, when their state was the central conduit for immigration. Two years later Janet Napolitano, Arizona’s Democratic governor, harried the federal government into sending National Guard troops to the border. In 2007 she signed a law stepping up penalties on businesses that knowingly employed illegal workers.

Even political moderates have become advocates for the border fence. Arizona’s senior senator is a good example. John McCain has long been an advocate for “comprehensive” immigration reform—Washington-speak for a bill that would allow some illegal immigrants to become citizens. In the past few months, though, he has insisted that the border must be sealed first. Mr McCain’s change of heart was probably necessary to get him through the Republican primaries. Yet it is also in harmony with the more strident tone of public opinion in his home state.

Opinions are more nuanced closer to Mexico. David Walker, whose family owns a ranch that spans ten miles of the Arizona-Sonora border, describes the fence as “kind of a Band-Aid”. The new pedestrian fence that edges his property has stemmed the flow of immigrants but not stopped it. By means of ladders, blow-torches and screwdrivers, immigrants are still getting through. They drop litter, which is harmful (“Cattle are dumb—they’ll eat plastic water bottles”) and break cisterns trying to get fresh water. But Mr Walker regards such things as fairly minor nuisances.

He is more concerned about the drug-traffickers who once tried to run him over. So are others. “I’m not a bit afraid of the little Mexicans coming across the border to work,” says one woman who runs a ranch near the border. “It’s the drug lords that worry me.” She is right to be worried.

New Tijuana moods

Though the drug trade and the violence that goes with it have long been features of the border, the past few years have seen both a rise in violence and a change in its nature. The decision of Felipe Calderón, Mexico’s president, to use the army against drug-trafficking gangs has led to an arms race and provoked turf wars along the border, from Tijuana to Matamoros. The city of Nogales, Sonora (across the border from Nogales, Arizona) has seen 72 murders so far this year, compared with 44 in 2007.

Despite talk of a united front, the Mexican authorities are divided over how to tackle the problem. Marco Antonio Martinez Dabdoub, the mayor of Nogales, reckons the federal government ought to be more heavy-handed. “This should be like the famous surge in Baghdad,” he says. Yet Arturo Ramirez Camacho, the head of Nogales’s police force, says that the deployment of the army has served only to provoke more violence. It has been hard to replace the 188 officers who have been sacked for corruption.

So far the surge of violence in Mexican border towns has been largely confined to the narcos and the police. One journalist in Nogales estimates that all but one of the murders so far this year have involved someone connected with the drug trade. Alvaro Navarro Gárate, who is in charge of promoting economic development for the city of Juárez, south of El Paso, says the violence has not yet deterred economic investment. Although some executives fret about being kidnapped, the lack of infrastructure is more off-putting.

The rise of organised crime has, however, changed patterns of illegal immigration. Ten years ago people-smuggling was a casual, low-margin business—a “mom-and-pop” operation, as locals call it. As crossing the border became harder, and the coyotes’ fees rose from about $500 to more than $2,000, the cartels saw a chance for profit. Many of those who traipse through western Arizona these days do so at the pleasure of the Sinaloa cartel, which also runs drugs across the border (although rarely at the same time as people). Its henchmen can be brutal and dishonest, but they are also pretty good at their jobs.

Counting fish in the sea

The fence is undoubtedly changing patterns of illegal immigration. But is it staunching the flow? The Border Patrol points to the fact that they are catching fewer people. Yet this is a very imperfect measure, rather like estimating the number of fish in the sea from those hauled up in fishermen’s nets. The figures do not count those who make it, and they double-count people who keep trying. Remittances to Mexico (see chart above) provide a better picture. These were rising until recently, largely because immigrants began to send more money through formal channels. Now they are falling, but not by much.

For more than ten years, Wayne Cornelius of the University of California at San Diego has been surveying people in high-emigration areas of Mexico. He finds that fewer than half of all would-be illegal immigrants are apprehended on any given trip, and virtually all get through eventually. Mexicans keep trying even though they know the border has become more dangerous. In an unpublished study, Mr Cornelius reports that more than 30% of Oaxacans who plan to steal across the border know somebody who has died trying.

There is a more obvious reason for the recent slowdown in illegal immigration. Construction and landscaping jobs, a common source of employment for Latino immigrants both legal and illegal, have disappeared as the housing market has collapsed. In the past year the Hispanic unemployment rate has risen from 5.4% to 8.0%. Among Hispanics aged 16 to 19 the rate is 22.8%. This deters would-be workers from crossing the border and curtails the ability of people already in America to pay for their relatives to make the trip.

Even if tougher border enforcement has slowed the movement of people, this is not quite the good news it seems. Until recently Mexicans crossed back and forth across the border as work and family demanded. Many years ago Mr Walker’s ranch employed a couple of “wetbacks” (the term was not so derogatory as it is today) who would work half a year each, returning to their families in the off-season.

These days, says Ms Rubio-Goldsmith, migration is not circular but linear. If people come they tend to stay, because the cost and difficulty of crossing the border have increased so steeply. They are more likely to bring their families: in the Sonoran desert, says Mr Johnston, about a quarter of the immigrants are women and children. As immigrants put down deep roots in America, villages in Oaxaca that once lacked young men are becoming utterly depopulated. The border fence may be deterring illegal immigration, but it is not reducing the number of illegal immigrants. It is also annoying people.

Not neighbourly

Ten years ago a group of mayors and other officials on both sides of the line formed the Texas Border Coalition. At first it promoted infrastructure projects, but it is now focused on fighting the fence, which almost everyone in South Texas opposes. They say that it is not neighbourly, that it will be a waste of money, and that it will cut Texans off from the Rio Grande, which marks the border in much of the state.

Texas’s two Republican senators are keener on the fence, but not much. Kay Bailey Hutchinson wrote an amendment to a spending bill that allowed the Department of Homeland Security greater latitude to decide where it should run. Hardliners argued that this was a way of “gutting” the more specific Secure Fence Act of 2006. The state’s other senator, John Cornyn, insists that despite voting for the Secure Fence Act, he doesn’t think it will be built.

Such coolness, which may seem strange in such a politically conservative state, is partly a product of economics. During the first half of this year almost 80% of all US-Mexican trade by value passed through Texas. The state’s border towns have benefited from NAFTA, which was signed 15 years ago. In July unemployment in the McAllen area was 7.8%, down from 25% in 1990.

Texans’ sanguine attitude is also a matter of demography. When the last census was taken, in 2000, Arizona, California and Texas were all between one-quarter and one-third Hispanic. But their border regions look utterly different. Arizona, which is currently America’s fastest-growing state, has experienced a wave of white immigrants—the Midwestern “snowbirds”—who have little experience of Latino culture. Its four border counties were 34% Hispanic in 2000. California’s two border counties, which are thick with retirees and military families, were just 28% Hispanic. Texas’s border counties, by contrast, were 85% Hispanic.

Margaret Dorsey, an anthropologist from the University of Pennsylvania who studies Texas’s Lower Rio Grande Valley, says many local families can trace their roots to the mid-18th-century Spanish land-grant programme. Border Texans often speak fluent Spanish and have family and friends on the other side of the river. Students commute from Mexico to the university in El Paso, crossing in a special line that allows them to make it to class on time. They even pay instate tuition rates.

That would be unthinkable in Arizona, where the fence is broadly popular. Yet Arizonans have plenty of gripes about the tightening border. Increasingly, the problem is less the ease of illegal immigration than the difficulty of legal migration.

Roughly three-quarters of people who cross legally from Mexico into Arizona do so in order to shop. As a result, streets close to the fence have become emporiums for things that are more expensive or harder to come by on the other side. That means handbags and children’s clothes on the American side, pharmaceuticals and beer on the Mexican side. Because most twin towns are bottom-heavy (Nogales, Arizona has just 20,000 inhabitants, compared with 190,000 in Nogales, Sonora), American towns depend a lot more on Mexican shoppers than the other way around.

Jaime Fontes, the city manager of Nogales, Arizona, reckons Mexican visitors account for roughly 65% of all retail sales in his city. As border officers become more finicky about documents and more zealous in searching vehicles, he worries trade will suffer. Local businessmen say it already has. Chang Lee, who runs a clothes shop just north of the border, explains in fluent Spanglish that Mexicans are spending “too mucho time” waiting to cross, which leaves too little time for shopping. They come running into his shop, clutching fistfuls of bills and begging him to sell them something before they have to return. He estimates that trade has fallen 20-30% in the past year.

In Douglas, the number of vehicle passengers crossing during the first half of this year averaged 321,000 a month—down from 708,000 a month in the first half of 2002. There are more pedestrians, but pedestrians do not buy as much. Manufacturing firms that have set up maquilas in Mexico are suffering too. Two years ago a group of economists calculated that delays at the Tijuana border were costing San Diego County and Baja California more than $4 billion each year.

The tortilla curtain

Over time such gripes are likely to become louder, while complaints about illegal immigration will probably become more muted. Hispanics are slowly acquiring political heft to match their large presence in America; in some states, such as California and New Mexico, they are already powerful enough to punish tough talk. Perhaps more important, Mexico is changing. The country has zoomed towards a first-world birth rate. In the late 1970s the average woman could expect to give birth to five children; now she gives birth to two. As a result, the potential supply of border-crossers will gradually drop.

Yet they will not stop coming. If the Mexican border is, in the old expression, a “tortilla curtain”, it is still floppy enough to allow people and drugs through. A truly impregnable border, of the kind that Mr McCain is demanding, would involve two layers of fencing 2,000 miles long, with a large no-man’s land in the middle and plenty of watchtowers. The fence would have to look as it does near San Diego, or as it used to in Berlin. This would involve virtually rasing several towns.

Travelling through Texas in the 1850s, Bartlett encountered plenty of immigrant workers. They found employment in the copper mines for the same reason they now toil in America’s building sites and lettuce fields:

“Labour is cheap and abundant in Mexico. At El Paso, Mexican labourers could be had for sixty-two and a half cents per day, they finding themselves; but men could doubtless be procured at even less price.”

While the wage gap between America and Mexico persists, Mexicans will continue to “find themselves” in the American labour force, fence or no fence.

Copyright © 2008 The Economist Newspaper and The Economist Group. All rights reserved.

Oct 2nd 2008
From The Economist print edition

Will America choose the old hero who favours tax cuts for business and the rich and backed George Bush’s wars? Or the young man who promises health care for all, a swift exit from Iraq and more money for the average worker? As America’s financial system buckles, this ought to be an unlosable election for the Democrats. But it isn’t

IT HAS been a time of miracles and wonders. Hillary Clinton, the “inevitable” Democratic nominee, was beaten by a man who was barely out of law school when she was trying to reform the nation’s health-care system; and that man, Barack Obama, has become the darling of the world. John McCain, a senator whose campaign was given up for dead last year, improbably surged past all his rivals to seize the Republican nomination. Voters in November will pick either a black president or a female vice-president, breaking new ground either way. And most surprising of all, at a time when the Democrats surely cannot lose, they still just might.

Only once in the past half-century has a party been awarded three consecutive terms in the White House. That was in 1988, after Ronald Reagan’s two terms, when the economy was strong and the president was still popular. Neither remotely holds true now. The economy may not quite be in recession, but it certainly feels that way. House prices are tumbling, petrol and grocery prices are painfully high and wages have stagnated for years. The September meltdown of much of Wall Street has put an unexpected focus on the candidates’ grasp of the complex world of high finance. The wars in Iraq and Afghanistan drag on. By rights, Mr McCain should be shuffling towards certain defeat. Yet the polls are still very close. The main reason is that the Democrats have picked as their standard-bearer Mr Obama, a man of great gifts but significant weaknesses.

Mr Obama writes brilliant speeches and delivers them beautifully. He attracts huge crowds, stirs their passions and moves them to tears. Yet he is no crude demagogue. He approaches policy questions with an admirable mix of intellect and pragmatism. His advisers marvel at his capacity to weigh complex arguments and pick solutions that seem both sensible and politically feasible.

He promises much. He would withdraw American troops from Iraq as fast as is practicable. He would increase the size of the army and send more troops to Afghanistan. He would close the prison at Guantánamo Bay. Domestically, he would offer Americans near-universal health care. He would raise taxes on the rich and on businesses, trim them for the great bulk of the middle class and offer numerous handouts. He would set up a cap-and-trade system for curbing carbon emissions and lavish cash on alternative energy.

To many of his fans, Mr Obama’s allure owes even more to his persona than to his policies. He is an athletic 47. Half-black, half-white and raised by a single mother, his rise from modest roots embodies the American dream. Not only does he preach racial reconciliation; his election would help achieve it. And a generation of black children would grow up with an ideal role model: a black president with a loving, intact family.

Mr Obama’s election would also help mend America’s shredded relations with the rest of the world, though probably less than his foreign fans imagine. Unlike George Bush, he soothingly espouses international co-operation. His nuanced manner reassures Europeans. His surname is African, his middle name is Arabic, he has Muslim forebears, he grew up partly in Asia and his skin colour is close to the global average. A recent poll of 22 countries by the BBC found that people in all 22 of them preferred Mr Obama to Mr McCain.

But only Americans can vote in American elections, and many have doubts about Mr Obama. He has the thinnest résumé of any nominee in living memory. Eight years ago, when he ran for a seat in the House of Representatives, his opponent, a former Black Panther, dismissed him by asking: “Just what’s he done?” Mr Obama was then a lowly state senator, and had also worked as a lawyer and a community organiser. Voters deemed this to be insufficient preparation for Congress. Mr Obama lost by 31 percentage points.

In 2004 he was elected to the United States Senate. But many Americans hesitate to hire as the country’s leader someone with no executive experience besides running the Harvard Law Review and a series of election campaigns. Others worry that he is not as nice or principled as he seems. He won that state Senate seat by having all his rivals thrown off the ballot. He cosied up to Chicago’s machine politicians. His pastor for two decades preaches “God damn America”. For all Mr Obama’s rhetoric about reaching across the partisan divide, he has never stood up to his party to accomplish anything substantial. For all his talk about uniting his country, he has become an unexpectedly divisive figure.

McCain, again

The alternative is Mr McCain. Though quick-witted on the stump, Mr McCain seems less intelligent and less eloquent than Mr Obama. His age is against him: he would be the oldest first-term president ever inaugurated, and he has had recurrent bouts of cancer. He has a volcanic temper that he struggles to control. Many people fear that he is a warmonger at worst, at best a prickly individual with neoconservative tendencies who will do little to mend fences with the world. His grasp of the details of economics and finance is shaky, to say the least.

But Mr McCain is also a brave politician, who has often tried to do the difficult not the expedient thing. He would stay the course in Iraq, arguing that a hasty withdrawal would spark chaos. He would stand up to Russia and Iran. Like his rival, he would close Guantánamo.

On the economic front, whereas Mr Obama flirts with protectionism, Mr McCain is a staunch free-trader. He endorses low taxes, though the rich get most of the breaks. In general he favours light regulation, but he now agrees with Mr Obama that Wall Street needs firmer oversight. Also like Mr Obama, he proposes a cap-and-trade system for greenhouse gases, but he would give away the permits, not auction them. His health-care plans emphasise using competition to curb costs rather than expanding coverage.

Mr McCain’s domestic platform may be beside the point, however, since Congress will be Democratic and unlikely to pass his proposals without rewriting them. On the other hand, for many moderate voters, the best argument for Mr McCain is that a Republican president and a Democratic Congress would check and balance each other. In the past, divided government has led to greater fiscal prudence, since presidents are more likely to veto the other party’s wasteful spending. Getting both parties to share the pain is also the only realistic way to tackle tough long-term problems, like the looming bankruptcy of Social Security (public pensions) and Medicare (public health care for the elderly).

If voters made up their minds according to each party’s stated policies, Mr Obama would probably be a shoo-in. But they do not. The president is both chief executive and symbolic head of state. Voters want someone who has the extraordinary talents necessary to do the job, yet who also seems ordinary and likeable. Cultural cues matter hugely. So does evidence of sound judgment and strength of character.

Mr Obama wins top marks for raw talent. He can also claim sound judgment: though no pacifist, he opposed the Iraq war from the start. Mr McCain retorts that he backed the “surge” before it was popular, when Mr Obama tried to block it.

The two men’s life stories appeal to different groups. Mr McCain is a war hero who endured years of torture in Vietnam. He has often defied his own party in pursuit of centrist policies, such as banning torture, welcoming immigrants and tackling climate change. Mr Obama is more of an enigma. His voting record is one of the most liberal in the Senate, but in his books, he tends to present two sides of each policy argument without reaching many firm conclusions. During the campaign he has tacked to the centre. Even professional observers are now thoroughly unsure what he stands for.

There is still a month to go and the economy is, to put it mildly, volatile

Mr Obama has addressed some of his weaknesses by picking Joe Biden as his running-mate. Mr Biden has been a senator for 36 years and knows a lot about foreign policy. His working-class roots appeal to some who find Mr Obama detached from their problems. But he has had less effect on the race than Mr McCain’s risky—and, some say, deeply cynical—choice of Sarah Palin, the governor of Alaska.

Unlike Mr McCain, Mrs Palin knows little about national or international politics. But as a working mother of five who grew up shooting moose for the freezer, she appeals to small-town voters who feel condescended to by Democrats. And as a born-again Christian and passionate pro-lifer, she thrills social conservatives who have never warmed to Mr McCain. But she appals a lot of independent voters, who dislike her conservative views and worry about her evident inexperience, should she ever have to step into the 72-year-old Mr McCain’s shoes. The “Palin effect” was huge at first, but it quickly started to fade.

Meanwhile, no one knows how race will affect the election. Many people, black and white, will back Mr Obama because he is black. Many will oppose him for the same reason, though few will admit as much. There is still a month to go, the presidential and vice-presidential debates still need to sink in, and the economy is, to put it mildly, volatile. After a campaign that has already lasted more than two years, it seems impossible to predict who will win. But no one can complain that Americans are not getting a clear choice.

Copyright © 2008 The Economist Newspaper and The Economist Group. All rights reserved.

02/10/2008 - 19:16
- Noticias EFE

Washington, 2 oct (EFE).- El Fondo Monetario Internacional (FMI) advirtió hoy del riesgo elevado de que EEUU se dirija sin remedio a una profunda recesión, tras haber analizado los factores que han confluido en la actual crisis financiera que vive el país.

Aunque el estudio incluido por el FMI en su último informe semestral sobre "Perspectivas Económicas Mundiales" se refiere a conclusiones extraídas de pasados episodios de crisis económicas, su contenido es una clara advertencia de que Estados Unidos se encamina a una profunda recesión en toda regla.

"Algunos aspectos de la actual situación en Estados Unidos se parecen a los anteriores episodios de tensión financiera relacionados con el sector financiero que estuvieron seguidos por recesiones", advirtió el FMI en el capítulo 4 del informe y titulado "Tensiones financieras y desaceleraciones económicas".

"Al comparar el actual episodio de tensión financiera con episodios anteriores, se observa que persiste una probabilidad importante de que se produzca una fuerte desaceleración en Estados Unidos" señaló el informe.

"La evolución de los precios de los activos, el crédito agregado y el endeudamiento neto de los hogares en Estados Unidos durante el actual episodio de tensión financiera parece coincidir con la de episodios anteriores que estuvieron seguidos por recesiones", añadió.

Subir Lall, subdirector de la división del Departamento de Investigación del FMI, explicó que el organismo internacional estudio 113 episodios de turbulencia financiera ocurridos en 17 países desarrollados durante los pasados 30 años para llegar a sus conclusiones.

Lall señaló que "no todos los episodios de tensiones financieras terminaron en ralentizaciones económicas o depresiones. De hecho, sólo se produjeron en la mitad de los episodios. Esto confirma el viejo dicho que los mercados han predicho 9 de las pasadas 5 recesiones. Los mercados son más volátiles que la economía".

Pero el FMI concluyó que, tomando como base el índice de pasados episodios, "el actual episodio de tensión financiera es uno de los más intensos en Estados Unidos y uno de los más extensos, ya que afecta a casi todos los países de la muestra".

El FMI también destacó que aunque no todas las tensiones financieras terminan en recesiones, "cuando una desaceleración o una recesión está precedida por tensiones financieras, y especialmente cuando estas tensiones se concentran en el sector bancario, por lo general esta desaceleración o recesión es considerablemente más grave que las no precedidas por tensiones financieras".

"En concreto las ralentizaciones o recesiones precedidas por tensiones relacionadas con bancos tienden a suponer pérdidas acumuladas de producción 2 a 3 veces mayores y prolongarse de 2 a 4 veces más" explicó Lall.

Lall dijo que las condiciones iniciales "son cruciales" para determinar si las tensiones bancarias serán seguidas por una recesión.

"En particular, la probabilidad de que las tensiones financieras vayan a ser seguidas por una desaceleración está relacionada con el aumento de los precios de la vivienda y el crédito agregado en el período anterior al episodio de tensión financiera" afirmó el funcionario del FMI.

"Además, aunque la mayor dependencia de la financiación por parte de las empresas no financieras está vinculada a desaceleraciones más pronunciadas después de un episodio de tensión financiera, la magnitud de los desequilibrios financieros en el sector de la vivienda es esencial a la hora de determinar si la desaceleración se convertirá en una recesión".

Pero el FMI también quiso mostrar cierto optimismo.

"Como factores compensatorios que podrían proporcionar cierto margen de resistencia se puede mencionar la situación relativamente sólida de los balances de las empresas al comienzo de la crisis y la política de distensión monetaria contundente de la Reserva Federal", dijo el organismo.

"En la zona del euro, los balances relativamente sólidos de los hogares ofrecen cierta protección frente a una desaceleración pronunciada, a pesar de los apreciables aumentos de precios de los activos y los coeficientes de crédito registrados antes de la actual turbulencia financiera" añadió.

Published by The New York Times, US

Washington — The Senate strongly endorsed the $700 billion economic bailout plan on Wednesday, leaving backers optimistic that the easy approval, coupled with an array of popular additions, would lead to House acceptance by Friday and end the legislative uncertainty that has rocked the markets.

In stark contrast to the House rejection of the plan on Monday, a bipartisan coalition of senators — including both presidential candidates — showed no hesitation in backing a proposal that had drawn public scorn, though the outpouring eased somewhat after a market plunge followed the House defeat.

The Senate margin was 74 to 25 in favor of the White House initiative to buy troubled securities in an effort to avoid an economic catastrophe.

Only Senator Edward M. Kennedy, who is being treated for brain cancer, did not vote.

The two Senate leaders, Senators Harry Reid, Democrat of Nevada and the majority leader, and Mitch McConnell of Kentucky, the Republican leader, strongly urged their colleagues to approve the plan despite the political risk given public resentment.

“Supporting this legislation is the only way to make the best of a crisis and return our country to a path of economic stability, prosperity and growth,” said Mr. Reid, who asked that senators vote formally from their desks.

The presence in the Senate of both presidential candidates in the final weeks of the campaign also gave weight to the moment. The political tension was clear as Senator Barack Obama walked to the Republican side of the aisle to greet Senator John McCain, who offered a chilly look and a brief return handshake.

Mr. McCain did not make remarks on the legislation. Mr. Obama, in his speech, said the bailout plan was regrettable but necessary and he referred to the stock market drop after the House vote. “While that decline was devastating, the consequences of the credit crisis that caused it will be even worse if we do not act now,” he said.

President Bush issued a statement applauding the Senate for its vote in favor of a bill he called “essential to the financial security of every American.” He urged the House to follow suit.

In the House, officials of both parties said they were increasingly confident that politically enticing provisions bootstrapped to the original bill — including $150 billion in tax breaks for individuals and businesses — would win over at least the dozen or so votes needed to reverse Monday’s outcome and send the measure to President Bush.

The stock market reflected nervous jitters over a vote that was to occur after it closed but that could affect the future of many Wall Street workers. The Dow Jones industrial average was off almost 220 points during the day, but recovered to close down just 19.6 points, or 0.2 percent, at 10,831.07.

Besides the tax breaks, senators also made a change that had drawn widespread support in recent days — a temporary increase in the amount of bank deposits covered by the Federal Deposit Insurance Corporation, to $250,000 from $100,000. And the entire package was attached to legislation requiring insurers to treat mental health conditions more like general health problems, a long-sought goal of many lawmakers who demanded such parity.

As the shape of the new bill became more clear Wednesday, some House Republicans and Democrats indicated that the changes were enough to get them to take another look at the measure and perhaps change their minds — even though the new items being added would substantially increase the burden on taxpayers.

Representative John Yarmuth, a Kentucky Democrat who on Monday voted no, said he found the new proposal more acceptable, as did Representative Jim Ramstad, a retiring Republican from Minnesota who voted in opposition as well.

“The inclusion of parity, tax extenders and the F.D.I.C. increases has caused me to reconsider my position,” Mr. Ramstad said. “All three additions have greatly improved the bill.”

Leaders of both parties in the House, who spent much of Wednesday on the phone taking the temperature of lawmakers not scheduled to return until Thursday, said they were identifying other potential converts as well, and were finding a more receptive audience for the revised measure because of the tax package and other changes.

Some conservative House Republicans and liberal Democrats remained adamantly opposed. “The bailout legislation that the Senate is sending back to the House is a fraternal twin to the one I voted against on Monday — meet the new bill, same as the old bill,” said Representative Joe Barton, Republican of Texas.

While popular, the tax breaks, which had been the center of a bitter dispute between House and Senate Democrats, caused problems as well.

A coalition of centrist Democrats led by Representative Steny H. Hoyer of Maryland, the majority leader, had refused to back the tax benefits unless they were deficit neutral — offset by tax increases or spending cuts elsewhere. The bill now includes the Senate version of the tax plan, which adds most of the cost to the deficit over the next decade.

But the Senate leaders decided to present the House with a take-it-or-leave-it choice, and it is possible some Democrats could desert the bill over the tactic. Mr. Reid said the Senate would remain in session this week to see how House members react and whether they might attempt to change the bill, forcing another Senate review.

Mr. Hoyer said he was disappointed in the Senate’s decision on the tax breaks and worried it could cost Democratic votes. “Certainly there are people who are upset we are making the deficit worse as we are trying to stabilize the economy,” Mr. Hoyer told reporters. But in a telephone conference call among the Democratic leadership Wednesday morning, he told his colleagues he would back the measure because the economic rescue needed to take priority, according to participants.

In the end, Senate leaders decided to overcome some of the ideological and political resistance that doomed the measure in the House with the tried-and-true Congressional approach of stuffing the bill with provisions that would make it hard for many lawmakers to resist.

“All I’m trying to do is get this thing passed,” said Mr. Reid, denying he was trying to jam the House by giving members no choice but to accept the tax proposal he favored or again reject the bailout.

The multiple tax breaks, called extenders in the Capitol because they renew or extend expiring tax benefits, appeal to many lawmakers and could provide a political argument for backing a bill that has otherwise been very unpopular.

Instead of siding with a $700 billion bailout, lawmakers could now say they voted for increased protection for deposits at the neighborhood bank, income tax relief for middle-class taxpayers and aid for schools in rural areas where the federal government owns much of the land.

“This bill has been packaged with a lot of very popular things to give it even more momentum,” said Senator Jeff Sessions, a Republican from Alabama, who is an opponent.

The approximately $150 billion in new tax breaks, which offer incentives for the use of renewable energy and relieve 24 million households from an estimated $65 billion alternative-minimum tax scheduled to take effect this year, would be offset by only about $40 billion in spending cuts or tax increases elsewhere.

Moreover, the increase in federal deposit insurance will not be financed over the short term, as the insurance program now is, by assessing premiums on banks that benefit. Instead, banks will get an open-ended line of credit directly to the Treasury Department. But the Congressional Budget Office noted that federal law requires the banks to eventually make up any shortfall and any loans to be repaid, though not until at least 2010.

The changes in the bill were measurable by volume. The initial proposal from the Treasury Department ran just three pages; the latest version exceeds 450.

After receiving the proposal from Treasury Secretary Henry M. Paulson Jr. almost two weeks ago, Congress instituted a series of changes, including additional oversight, steps to limit home foreclosures and restrictions on the compensation of executives of institutions that take part in the Treasury program.

Under pressure to tighten the plan even more, Congressional and administration negotiators decided to parcel out the $700 billion in installments, starting with a first tranche of $350 billion.

And during a weekend of negotiations, they added as a final backstop a requirement that in five years the president must present Congress with a plan to make up any losses of tax funds by looking to the financial community to make up the difference.

Publicado por The Wall Street Journal, EEUU

Washington, 2 de octubre.- Los cambios de última hora fortalecieron el respaldo al plan de rescate de los mercados financieros, logrando su paso en el Senado por un amplio márgen, pero la aprobación de la Cámara de Representantes sigue siendo un objetivo complicado.

El proyecto de ley emanado del Senado, el cual fue aprobado por 74 votos a favor y 25 en contra, es el último giro en una semana llena de dramatismo para un plan que el presidente George W. Bush ha calificado como vital para restaurar el normal funcionamiento de los mercados y, por añadidura, la economía real. El lunes, la Cámara de Representantes rechazó una versión previa del plan en medio de una reacción contraria de parte de los electores. Los mercados financieros se desplomaron luego de que trascendiera el rechazo.

Asombrados por la virulenta reacción de los mercados, los legisladores reconsideraron la propuesta y le añadieron nuevos proyectos en busca de conseguir los votos necesarios para su aprobación. Uno de los mayores cambios fue la introducción de un paquete tributario de US$150.500 millones a diez años que incluye medidas para aliviar el impacto del llamado impuesto mínimo alternativo e incentivos para estimular la investigación y el desarrollo que eran codiciados por las farmacéuticas y las empresas de tecnología.

Tal cambio prácticamente garantizó la aprobación contundente del proyecto en el Senado. El caso de la Cámara de Representantes, sin embargo, es más complicado. Algunos legisladores demócratas preocupados por el déficit fiscal de EE.UU. han exigido que el plan de rescate sea financiado mediante nuevos recortes de gastos o nuevas fuentes de ingresos, para evitar un aumento del déficit fiscal.

Veinticinco estos legisladores demócratas votaron a favor del proyecto de ley el lunes y ahora podrían cambiar de parecer ante el mayor costo del proyecto. La inclusión de recortes de impuestos para las empresas también podría ahuyentar a los demócratas preocupados de que la iniciativa no hace lo suficiente para ayudar al estadounidense común y corriente, dijeron fuentes del Congreso.

Otra provisión agregada por el Senado exigiría a los empleadores y las aseguradoras de salud colocar a las enfermedades mentales en el mismo pie que las físicas, incluyendo la cobertura de hospitalizaciones y visitas médicas, además de copagos y deducibles.

(Entrevista con el Secretario Permanente del SELA )
Por Humberto Márquez, Agencia Inter Press Service

Caracas, 1 oct (IPS) - La crisis financiera que sacude a Estados Unidos repercutirá en el
resto del mundo y, por tanto, significa que "vienen tiempos difíciles para América Latina", declaró a IPS el Secretario Permanente del SELA, el mexicano José Rivera Banuet.

Los días que se avecinan "mostrarán mayores dificultades para seguir haciendo progresos, como en los últimos años, en la lucha contra la pobreza y la indigencia", dijo el responsable de este organismo multilateral que reúne a 26 estados de América Latina y el Caribe con fines de coordinación y cooperación económica.

La relación regional con la economía estadounidense "se afectará en al menos cinco dimensiones: turismo, inversiones, financiamiento, remesas (de dinero enviadas por los emigrantes) y comercio", sostuvo.

"La desaceleración económica de Estados Unidos será más aguda cuando la actual crisis financiera se traslade a la economía real (…), con los consiguientes efectos en la reducción de la demanda y en la contracción de los aspectos vinculados al financiamiento y a las inversiones", advirtió.

La inversión extranjera directa de Estados Unidos en la región alcanza a 50.000 millones de dólares anuales, mientras que las remesas de dinero que envían a sus familiares los latinoamericanos que viven en ese país de América del Norte suman 45.000 millones de dólares al año, según el organismo.

Por otra parte, Estados Unidos es el destino de bienes latinoamericanos por 375.000 millones de dólares anuales, la mitad de las exportaciones al mundo desde la región.

"El impacto para la región será evidente al contraerse todos estos componentes", señaló el número uno del SELA (Sistema Económico Latinoamericano y del Caribe).

Por ello, para Rivera Banuet "es preferible anticipar una reducción en el crecimiento económico de la región", cuyo producto interno bruto creció en los últimos cinco años a un promedio de cinco por ciento.

Organismos financieros internacionales preveían para 2009 un crecimiento de cuatro por ciento del producto interno bruto (PIB) regional, "pero un nuevo pronóstico deberá situarse en torno a tres por ciento", según Rivera Banuet. "Debemos ser realistas, es preferible anticipar esta situación a sobredimensionar los resultados favorables de los últimos años", agregó.

La región "ha logrado equilibrios macroeconómicos, con cuentas externas favorables, incremento del comercio y acumulación de reservas internacionales, pero ahora, por causas externas, entrará en un ciclo de menos dinamismo", consideró Rivera Banuet.

La crisis financiera que estalló en Estados Unidos representa un problema coyuntural, pero América Latina y el Caribe es una región que "tiene desafíos estructurales a los que debe destinar esfuerzos sustanciales, como elevar la productividad y mejorar su competitividad; en definitiva, entrar en la economía del conocimiento con mayor decisión y firmeza".

Rivera Banuet entiende que es "muy difícil prever la duración y profundidad de la actual crisis, pues sus vasos comunicantes con la economía real son difíciles de medir, y las políticas que se apliquen, sean las recomendadas por el gobierno estadounidense de George W. Bush u otras requerirán un período de observación y maduración".

Sin embargo, es seguro que la región será impactada, por ejemplo, por un menor turismo originado en Estados Unidos, al contraerse allí todo el consumo, y la reducción del crédito en ese país dejará un menor financiamiento.

Los flujos comerciales también se resentirán, apuntó, en tanto es previsible -recordó el aforismo de que la economía no es una ciencia exacta- que se mantengan las olas especulativas sobre alimentos y combustibles, aunque reduciéndose "en un futuro no lejano" como consecuencia de la desaceleración económica global.

El SELA elabora un estudio sobre los efectos de la presente crisis, que estará listo en cuestión de semanas, y lo presentará a los Estados miembros para que decidan si convocan a una reunión de consulta que examine medidas de previsión y cooperación.

"La región debe insistir en la necesidad de reformar las instituciones financieras internacionales a fin de que mejoren el seguimiento de los sistemas bancarios y de financiamiento en lo que hace a su impacto sobre el resto de la economía", según Rivera.
Por ejemplo, el Fondo Monetario Internacional "ha debido alertar con mayor insistencia y atención sobre la falta de supervisión, control y alerta por parte de los organismos de supervisión financiera dentro de Estados Unidos, que reaccionaron tarde", concluyó.

En la víspera, el presidente de Brasil, Luiz Inácio Lula da Silva, anfitrión en Manaos, en el norte de su país, de sus pares Evo Morales, de Bolivia, Rafael Correa, de Ecuador, y Hugo Chávez, de Venezuela, criticó que " las instituciones que pasaron las últimas tres décadas diciendo lo que nosotros debíamos hacer, no se lo aplicaron a sí mismas".

Latin America's economies

Keeping their fingers crossed
Oct 2nd 2008 | SÃO PAULO
From The Economist print edition

IF ANALOGIES with the Great Depression are scary for Americans, they are hardly less so for Latin Americans. Within a few years of the 1929 stockmarket crash, 16 governments in the region fell to military coups or takeovers by strongmen. In recent years the talk has mostly been of Latin America’s economic independence from its big neighbour in the north (with the exception of Mexico). But on September 29th, the day the House of Representatives in Washington balked at the bail-out, came a reminder of just how close those ties still are. While the Dow Jones dropped by nearly 7% in a day, Brazil’s Bovespa, the region’s biggest stockmarket, tumbled by more than 9%.

Even so, the fact that this financial crisis does not have “made in Latin America” stamped on it is cause for modest celebration. In the crises of 1994, 1998 and 2001 Latin America went on a binge, using foreign finance to pay for a huge rise in imports. The mood then changed, foreign money fled and panic ensued. This time many countries have had trade surpluses in recent years, and soaring commodity prices have made government finances look more than respectable (see chart).

Latin American banks also look strong. This is partly because they did not hoover up American mortgage-backed securities, but also because they are not that dependent on foreign credit. Brazil’s banks are an exception: the publicly traded small and medium-sized banks that do depend on foreign funding have had their share prices pummelled over the past week. But even in Brazil, foreign capital accounts for only about 10-20% of bank-funding needs.

Equity markets in Latin America are shallow (apart from in Brazil), which reduces the chances of one path of infection. Credit is more of a concern, particularly for exporters, who are finding foreign lines of credit much harder to acquire. This may be only a temporary blip. But if it endures, companies will turn to domestic lenders instead, leaving less credit to go around. Edmar Bacha of the Banco Itaú, who has seen many crises come and go, says a credit squeeze is now his chief concern.

A bigger future fear, though, is that a global slowdown accompanied by a decline in commodity prices will put government finances under pressure. Chile, which pours money into a big fund (currently around $20 billion) when copper prices are high, and bases its budget on a copper price far below the current spot price, is the only big country in the region where the commodity boom has not been accompanied by a government spending spree. Commodity prices have already fallen back a bit. If they fall much further some countries will be in trouble.

Heading the list of those most vulnerable are countries whose markets have been viewed for some time as badly behaved: Venezuela, Argentina and Ecuador. Venezuela, which has given up producing things that its consumers want, importing them instead on the back of its oil revenues, looks particularly exposed. The same oil revenue has allowed the number of public-sector jobs to more than double since President Hugo Chávez came to power in 1999, and is also underwriting a big new arms deal with Russia. Cutting public spending is an option, but not one which he would wish to contemplate before critical regional elections at the end of November. Even then it may not be easy to switch into austerity mode. Despite a recent increase in the arrests of “foreign imperialist plotters”, Mr Chávez would find it hard to explain away large numbers of people descending onto the streets.

If lower commodity prices lead to lower costs of staple foods, this would provide Argentinians with some relief against their country’s rampaging inflation. But for President Cristina Fernández’s government it would be a different story. It gets 10% of its revenue from export taxes. A fall in commodity prices would squeeze farmers (who already pay a 35% tax on exports) even more and might reignite their recent protests. Ms Fernández might be tempted to make up the shortfall by raiding pension funds. There is also a currency concern. The peso, which has won back trust after its crash in 2001, is backed by high soyabean prices. If these fall, it could lead to a fresh flight to dollars for those able to get them, and misery for everyone else.

For well-behaved countries, such as Mexico, Brazil, Colombia and Peru, things look better. Their governments have balanced their budgets and built up trade surpluses along with dollar reserves. In some places growth is still strong: the latest year-on-year figures show an 8.3% rise in Peru for July, and 6.1% rise in Brazil for the second quarter. Not everyone is convinced by this rosy picture. “Economists who talk about structural shifts on the eve of a cyclical downturn should all be taken outside and shot,” says Gray Newman of Morgan Stanley, a bank.

Meanwhile, Mexico’s age-old linkage to the United States’ economy is already having an effect. In August remittances from Mexicans working north of the border suffered their biggest drop on record. Hopes that Americans will keep buying heroic quantities of Mexican manufactured goods are dimming. And Mexico’s trade balance, boosted by high oil prices, is at risk. Brazil, Latin America’s biggest economy, looks better placed. But commodities account for about half its exports, leaving it, too, vulnerable to a fall in prices.

The biggest difference this time around, it seems, is that those countries that have been most hostile to global capitalism look the most exposed to its changed mood. In the 1930s, the region’s democracies suffered from a crash and a depression made thousands of miles away. Today, it is the elected monarchies ruled by economic populists who have the most to fear.

Henry Paulson is the most important man in Washington

THE Treasury was always intended to be at the heart of the American government. George Washington’s first Cabinet appointment was his treasury secretary. The Treasury building is connected to the White House by an underground tunnel.

Yet for most of the Bush years the Treasury has been a backwater. Paul O’Neill disagreed with the Bush administration about the central thrust of its economic policy—deficit-boosting tax cuts—and was first neutered and then sacked. John Snow went to the other extreme and functioned as a travelling salesman for policies cooked up in the White House. The people who mattered in Washington were the war hawks, not the money men.

The Treasury is now back at the heart of government. Hank Paulson has been the dynamo behind everything from the $168 billion stimulus package to the latest plan for a $700 billion bail-out of Wall Street. Mr Paulson may go down in history as the man who saved American capitalism or the man who mishandled the worst financial crisis since the 1930s. But he will certainly not go down as the third in a succession of empty suits.

A whiff of the old American establishment hangs about Mr Paulson; the establishment of well-bred WASPs with Ivy League educations and muscular Christian views. His six-foot-one frame is rendered more imposing by his iron self-belief. He was educated at Dartmouth, where he studied English and distinguished himself on the (American) football field, earning the nickname “the Hammer” for his relentlessness. He spent his career working for the premier investment bank on Wall Street, Goldman Sachs.

But in fact Mr Paulson is very far from being a member of the old establishment. He was brought up on a farm in Barrington Hills, Illinois. He is a devout Christian Scientist who does not drink or smoke. In calmer times, he spends his weekends back home in Illinois rather than playing golf or hobnobbing in the Hamptons.

Mr Paulson made his career at Goldman Sachs at a time when the company was transforming itself into a global meritocracy. He led the company’s drive into the Asian market (he has visited China more than 70 times). His forte at Goldman, above all, was deal-making. But he was also a hard-edged office politician. He became chairman in 1999 after helping to lead a palace coup against John Corzine.

For all its global ambitions Goldman Sachs remains at the heart of the American establishment, packing its employees off to public service after stuffing their pockets with gold. Mr Paulson’s three predecessors as CEO of Goldman, Robert Rubin, Stephen Friedman and Mr Corzine, all went on to have political careers: Mr Rubin as a highly successful treasury secretary and Mr Friedman as the director of the National Economic Council in 2002-05. Mr Corzine is now governor of New Jersey. Mr Paulson was persuaded to move to the Treasury only after prolonged wooing by a fellow Goldman Sachs executive, George Bush’s chief of staff, Josh Bolten. He brought a tightly knit group of Goldman alumni with him when he moved.

Mr Paulson is also an unusually unideological figure in today’s Washington. He is a long-standing Republican who raised money for Mr Bush in 2004. But he is more of a Rockefeller Republican than a Southern-fried conservative (by an odd coincidence he shares his nickname with that quintessential Southern conservative, Tom DeLay). Perhaps his greatest passion outside work is for the environment. He is a former chairman of the board of the Nature Conservancy, an organisation that strongly supported the Kyoto protocol. Under his leadership Goldman became the first Wall Street institution to acknowledge officially that global warming is a man-made problem; it also bought thousands of acres of Chilean forests. Mr Paulson plans to leave much of his fortune to environmental causes.

His lack of ideology has been on display in his handling of the financial crisis. The right accuses him of selling out free-market principles. The left accuses him of bailing out his old friends on Wall Street (“cash for trash”). People on both sides point to the inconsistency of throwing Lehman Brothers to the wolves while bailing out AIG.

But sticking to principles may be the last thing that the market needs at the moment. Andrew Mellon, the treasury secretary at the time of the 1929 crash and another ex-banker, was a model of consistency, preaching a policy of “liquidate, liquidate, liquidate”, to “purge the rottenness out of the system”. This helped to plunge the economy into the Great Depression. Mr Paulson’s pragmatism has given him a degree of flexibility in deciding who to save and who to allow to go under. He has also displayed the same flexibility in altering his bail-out plan in the light of the opposition it ran into on Capitol Hill: whether he has shown enough to close the deal is still unknown. Critics say he alienated Congress by initially refusing to submit to any oversight, supporters that this was only an opening bid.

Continuity please

This pragmatism will also make it easier to ensure some continuity in policymaking. The current crisis has hit at a particularly difficult moment in the political cycle. The November election will drain the Bush administration of what power it has left, but the new administration will not take over until January. The two candidates must explain what they will do to deal with this problem. John McCain would be wise to keep Mr Paulson in his job for the time being (he hardly has an embarrassment of talented replacements waiting in the wings). Barack Obama has plenty of talent to choose from, including Tim Geithner, the president of the New York Fed, who has worked closely with Mr Paulson, and Larry Summers, a former treasury secretary, who has plenty of experience of past crises. But he should consider finding some role for Mr Paulson, at least for a while.