miércoles, agosto 27, 2014

VACACIONES SETIEMBRE 2014 / GRL

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VACACIONES SETIEMBRE 2014


Miércoles, 27 de Agosto del 2014


Queridos amigos,



Les escribo estas líneas con motivo de mi próximo viaje, el que me tendrá ausente de la oficina y de nuestras lecturas cotidianas, desde el lunes 1 hasta el 29 de Setiembre próximo.

Durante estos días no tendré acceso regular al Internet ni a mis correos.

En los últimos meses, la situación internacional se ha seguido complicando tanto social, económica, financiera y geopolíticamente, de acuerdo a lo previsto en mi carta de Mayo pasado.

Más aún, el problema geopolítico se ha agravado notablemente, con la guerra entre Israel y el movimiento terrorista Hamas, en la Franja de Gaza.

En segundo lugar, el sorpresivo éxito en el Medio Oriente del movimiento ISIS y el nuevo Califato, aprovechando el vacío dejado por la retirada de las fuerzas norteamericanas de Irak, tomando a sangre y fuego importantes áreas en el Medio Oriente y redefiniendo las fronteras geográficas impuestas por los poderes facticos después de la 2da guerra mundial, obligando a Obama y el gobierno norteamericano a intervenir nuevamente, inicialmente con un bombardeo de la zonas en guerra, poniendo así en grave peligro la precaria estabilidad del Medio Oriente. 

Y en tercer lugar, pero no por ello menos importante, la peligrosa situación de Ucrania, enfrentando a Rusia con Europa y cuyo desenlace final aun está en germinación y es imprevisible, donde algunos analistas conocedores del tema, prevén lo peor.

Por otro lado, aunque la bolsa americana ha seguido su tendencia alcista y el dólar fortaleciéndose, sin embargo ello no guarda relación alguna con el comportamiento fundamental de la economía, que no logra aun tomar la senda de un crecimiento sólido y sustentable a mediano y largo plazo, por lo que una corrección importante en cualquier momento no debería ser una sorpresa.

El crecimiento económico europeo se encuentra en franco deterioro y el Banco Central Europeo tendrá que tomar medidas importantes a corto plazo, si quiere evitar una crisis mucho más grave. La pérdida acelerada del valor del euro en las últimas semanas, contra el dólar y otras monedas importantes, es un indicador de la delicada situación de la economía de la zona euro, ahora agravada por sus propias sanciones económicas a Rusia, luego de los problemas en Ucrania y el ataque a un avión de civiles por parte de la tropas apoyadas por Rusia y que terminara con cerca de 300 vidas humanas. La estrategia y las acciones geopolíticas de Vladimir Putin, parecen haberlos colocado en un callejón sin salida.

A ello debemos agregar el fracaso del impulso monetario y fiscal a la economía en Japón, del así llamado "Abenomics" y la incertidumbre del futuro de la economía China y la falta de transparencia sobre la verdadera situación económica, entre otros.

Por otro lado, las deudas de los estados han seguido su trayectoria ascendente, mientras que al mismo tiempo las economías vienen creciendo a tasas muy cercanas a cero o negativas, o por lo menos, muy por debajo de las expectativas de los economistas y los funcionarios de los gobiernos y los bancos centrales. 

Y por si fuera poco, los bancos sistémicos se han hecho aún más grandes, no se han reformado adecuadamente y el sistema financiero internacional aun no logra fortalecerse suficientemente, por lo que muchos analistas y economistas, dudan de que este podría resistir una próxima crisis, similar o mucho peor aún que la del 2008, la que es ya inevitable. 

En verdad, lamentablemente, nada positivo podemos decir de lo sucedido en el mundo, desde mi última carta a Uds. en Mayo pasado. 

El ajuste económico y estructural a la "nueva normalidad" ("new normal") aún está pendiente desde la crisis del 2008, incrementado a un nivel exponencial cada vez mayor, por la grandes emisiones inorgánicas por parte de los bancos centrales de todo el mundo y por los mayores desequilibrios de las consecuencias involuntarias y la inherente distorsión por la ineficiente inversión de los recursos financieros provenientes de dichas políticas.

Por todo ello, la prudencia es cada vez el socio más aconsejable en las inversiones, sobretodo a corto plazo.

Con un cordial abrazo, me despido de Uds. hasta el regreso a mis actividades, Dios mediante, a inicios de Octubre próximo.
Gonzalo


8 Reasons Why A New Global Financial Crisis Could Be On The Way

Aug. 23, 2014 8:19 AM ET

By IMD Professor Arturo Bris




In the summer of 2008, the US financial sector suffered one of the most damaging events in its history. The volatile stock market, induced by the subprime market, led to the default of Lehman Brothers, and subsequently to a massive global crisis.

We are now in a post-crisis period. Yet, looking back to between 1945 and 2008, we see that the frequency of financial crises and recessions is quite high: on average, there is one crisis every 58 months (using data from the US National Bureau of Economic Research). In other words, statistically speaking we should expect the beginning of the next crisis in April 2015, which would end by March 2016. So are we in a post- or a pre-crisis period?

I do not want to be the bearer of ill tidings, but I think we should always wonder what the cause of the next crisis will be. There is no single episode of financial panic in the last 50 years that could not have been prevented. This time, let us look ahead, not react after the crisis.

The world economy is now more interconnected than ever. Financial markets are heavily regulated while capital markets are expanding in Asia, Africa and Latin America. The banking sector is going through a concentration process with fewer and fewer players left

Mexico, Indonesia, Nigeria and Turkey (the MINT countries) are coming into focus after Brazil, Russia, India, China and South Africa (the BRICS) have disappointed. Europe seems to be back in the game, with Germany leading the recovery of the continent. The US is still the world's most competitive economyaccording to the IMD World Com­petitiveness Ranking. The process of deleveraging the balance sheets of governments and com­panies is under way. Interest rat­es and government bond yields are at historical lows and stock markets have recovered to pre-crisis levels.

So what is there to worry about? There are eight possible scenarios that could cause the next crisis, none more important or likely than the others. For some, prevention is straightforward. For others, I am not sure there is much we can do. Some of them represent imminent threats. A few are more long-term, less dramatic sources of instability.


Stock market bubble


Between June 2013 and June 2014, world stock markets returned 18 per cent on average. Of course, performance was uneven, not unlike a "normal" year: the market return was 30 per cent in India, and a meager 8 per cent in China. 

However, most companies that announced results during 2014 disappointed markets, and for most large corporations, stock markets have reacted negatively to annual earnings. The reason is that, driven by excess liquidity and a lack of alternative opportunities, a lot of money has flown in to equity markets. The Yale University economist and Nobel Prize winner Robert Shiller has shown that the gap between stock prices and corporate earnings is now larger than it was in the previous pre-crisis periods: 2000 and 2007. If markets were to return to their normal earning levels, the average stock market in the world should fall by about 30 per cent.

Chinese banking system


Shadow banking (lending by anything other than a bank or outside the control of financial regulators) now represents more than 100 per cent of GDP in the US, and about 70 per cent in China. This is more of a problem in China than in the US, for two reasons. First, in China the banking sector is protected from foreign competitiononly local banks are allowed to operate independently in the country. As a result, without any threat in a huge market, the biggest banks in the world are now Chinese. They are truly too big to fail.

The second reason is that a big part of Ch­inese shadow lending goes to central government and provincial governments. Banking regulation in China is considered to be very stringent, but we know what happens when regulators become self-interested. Without a doubt, the next banking crisis will be triggered by a Chinese bank.


Energy crisis


An energy crisis now would not be caused by the scarcity of energy sourcesquite the opposite. The development of fracking techniques and growing supply of gas in the US have turned shale gas into a potent geopolitical weapon. If the US Congress were to allow energy exports, energy prices in the world would fall significantly

This would be great for companies, but would trigger geopolitical problems in Russia and West Asia. These countries rely on energy demand from western Europe and China, where energy costs are currently hurting competitiveness and where a cheaper alternative would be welcomed with open arms.


New real estate bubble


The conditions in 2005-07 that led to a real estate bubble are back: low interest rates, growing demand, and increasing real estate prices in some markets. With respect to the demand factor, in current market conditions, the only attractive investments for institutional investors are real estate and equities. As a result, prices are increasing.

The Bank for International Settlements has recently released data on real estate prices in several markets from 2013. Between the end of 2007 and the end of 2013, residential property prices increased by more than 80 per cent in Brazil, 60 per cent in China, and 15 per cent in Canada.

There are also fears of a bubble in other countries such as Switzerland and the United Arab Emirates. Like any other bubble, it will only become one once it bursts. What is different in 2014 is that now central banks have a great tool to prevent real estate bubbles: Basel III and its countercyclical capital buffer.


Corporate failures


The norm for companies is now to be BBB-rated. In the US, there are only three firms that still are AAA-rated: Johnson & Johnson, Exxon Mobil and Microsoft. There were 61 in 1982. Since interest rates are low, companies see the benefits in debt financing. But this means that firms are also more sensitive to changes in interest rates. Typically a BBB rating is associated with a probability of default of about 4 per cent in five years. Therefore, we should expect that in the next five years, about 16 companies in the S&P500 index will go bankrupt. One of them could be the new Enron.


Geopolitical crisis


From Nigeria to Ukraine, and from Syria to Venezuela, the world risk map shows too many hot areas where geopolitical events could trigger a world crisis. Why should anyone care about Uk­raine or Syria

Because fi­nancial markets tend to overreact to political events. And because, given the financial linkages among countries, negative sentiment in China will trigger a market collapse in the US and vice versa. Let us not forget the lessons of the Great War (we are now commemorating the 100-year anniversary): the butterfly effect can be deadly in politics.


Poverty crisis


Over the last few decades the world has become richer and more prosperous. While the percentage of the population in absolute poverty is today at its lowest level ever, the absolute number of poor people continues to grow. In this context income inequality is one of the social battles that we need to fight. But the problem with fighting income inequality is that the usual solutions (typically taxes) hinder the competitiveness of nations. This is one of the long-term crises that will require smart leadership to avoid inefficient solutions.


Cash crisis


There is too much money out there. It is the result of quantitative easing policies that central banks have followed. The excess liquidity in the system is concentrated among financial and non-financial firms. Citigroup has more than $487 billion in cash; Apple about $150 billion. It is paradoxical that, in some cases, banks and firms are so rich that they could buy entire countries (if one takes into account the total GDP minus government debt). 

If the corporate sector were to unload such massive financial resources (as is their moral obligation) on to society, they would create hyperinflation and hence financial crisis. But otherwise we are in a situation in which central banks print money that they will have to take out of the system later. We know how quantitative easing works, but we do not know how to exit from it.

While we can already see these eight sources of a new coming crisis, the problem is that many obvious solutions that governments can implement would be detrimental to world competitiveness and could hinder local economies. More taxes, more regulation and more protectionism all create a more hostile environment to economic growth and competitiveness.

Politicians and corporate executives should now look to diversify, to seek varied geographical presence, to be flexible, resilient and to manage risk. They should cultivate and reward talent and improve their credibility in society. To boost their nations' competitiveness and their chances of inclusive economic success, leaders need to invest internationally and make acquisitions in order to make their countries attractive to foreign capital. In order to avert the next crisis and others after that, global leaders should be making employment, sustainability and social cohesion the top priorities of their nations.


Arturo Bris is a professor of finance at IMD and directs the IMD World Competitiveness Center. He will present on the fundamentals of finance and on competitiveness at IMD's Orchestrating Winning Performance program in Singapore from November 17–22.


Measuring Inclusive Growth

Mahmoud Mohieldin

AUG 22, 2014
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Deforestation declining ecosystems


WASHINGTON, DC When the Millennium Development Goals (MDG) deadline expires next year, the world will be able to point to several important achievements since their launch in 2000. Extreme poverty has been halved during this period; an estimated 100 million slum-dwellers have gained access to safe drinking water, and millions to health care; and large numbers of girls are now receiving an education. But considerable unfinished business and significant performance discrepancies remain.

The post-2015 development agenda will continue where the MDGs left off, while adding further objectives relating to inclusion, sustainability, jobs, growth, and governance. The success of the coming Sustainable Development Goals (SDGs) will depend on how new programs are developed, implemented, and measured.

Strong economic growth enables people to improve their lives and creates space for new ideas to thrive. But such growth is often accompanied by environmental degradation, which diminishes human health and quality of life, threatens water supplies, and compromises ecosystems, impeding growth for future generations. Moreover, short-term growth that erodes natural capital is vulnerable to boom-and-bust cycles, and can cause people who live close to the poverty line to fall far below it.

Taking a longer-term view of growth and accounting for social, economic, and environmental equity must be a top priority for the post-2015 development agenda. Discussion of the SDGs is now taking into consideration the need to incorporate food, water, and energy security, together with urban planning and biodiversity. But translating prospective goals into actions at the country level will not be feasible without measurable and meaningful indicators to guide policy and measure progress.

One method of measurement is “natural capital accounting,” which assesses the value of natural resources in development planning and national accounts, just as a family would account for their home’s value – and the cost of maintaining itwhen deciding how much of their regular income to consume. A recent World Economic Forum report proposes a “dashboard” for inclusive and sustainable growth. This model brings together natural capital accounting, a human-opportunity index, a gender-gap index, measures of public investment as a percentage of GDP, a competitiveness index, indicators of shared prosperity, and disaggregated unemployment data.

A World Bank-led partnership, Wealth Accounting and the Valuation of Ecosystem Services (WAVES), shows governments how certain behavior depletes natural assets, and how natural capital accounting can help to establish more sustainable development policies. Following a campaign at the 2012 Rio+20 Summit, 70 governments, including those representing 40 middle- and low-income countries, endorsed natural capital accounting.

The method has already been put to good use around the world. Forest accounts,” for example, have revealed that Guatemala has the fastest deforestation rate in Central and South America, with most uncontrolled logging being carried by households for their cooking needs. This information has spurred the Guatemalan government to review the country’s forestry law, and to fund new strategies to control firewood use, prevent unauthorized logging, and encourage families to use alternative energy sources.
Botswana’s attempts to diversify its economy are constrained by water shortages; but “water accounts” are helping the government to identify sectors – including agriculture, mining, and tourism – that can grow with minimal water consumption.

In the Philippines, where 60% of GDP is generated by industries and associated services in the Laguna Lake region of Metro Manila, pollution and siltation has already reduced the lake’s depth by one third. Ecosystem accounts” have become instrumental in determining how better to manage this resource

These accounts are also being used to improve forest management in the Indian state of Himachal Pradesh, where forests are a vital resource for two major growth sectors, tourism and hydropower generation.

These experiences are vital in shaping the post-2015 development agenda. Incorporating sustainability forces governments and businesses to consider the environmental impact of their decisions. A UN report calls on all governments to adopt natural capital accounting so that their sustainability efforts can be consistent, accurate, and comparable over the long term. Institutionalizing sustainability in this way will make it an intrinsic part of day-to-day governance.

Only by shifting to a broader understanding of growth and development can the world address the pressing problems of inequality and sustainability. Placing that understanding at the heart of the SDGs will help to improve the health and wellbeing of all societies long into the future.


Mahmoud Mohieldin is Corporate Secretary and the President’s special envoy at the World Bank.


Editorial

Why Interest Rates Need to Stay Low

By THE EDITORIAL BOARD

AUG. 23, 2014


A sharp debate within the Federal Reserve over when to raise interest rates was publicly aired last week at the annual central bankers’ conference in Jackson Hole, Wyo. On one side is a small yet vocal minority of Fed officials who want to head off inflation by raising rates sooner rather than later. On the other is a majority that thinks a near-term rate hike would stifle growth and, with it, any chance of restoring health to the labor market. That group includes Janet Yellen, the Fed’s chairwoman, and most members of the Fed’s policy committee.



It is also unknown whether growth and hiring, if and when they fully recover, will spark inflation. For that to occur, wage increases would have to be substantial enough to push up prices, meaning annual raises in excess of 3.5 percent given present rates of inflation and productivity growth

Wage increases of that magnitude are not in the cards, and neither is any hint of worrisome inflation. Since the economic recovery began in mid-2009, hourly wages have risen by a mere 1.9 percent a year on average.



Against that backdrop, arguing in favor of a near-term rate increase is to argue for subpar wage growth and for continuing a status quo in which economic gains flow largely into profits rather than wages. Ms. Yellen and her supporters are right to rebut that stance in both word and deed.

The debate over interest rates does not stop there. Another argument in favor of near-term rate increases is that the Fed’s prolonged low-rate policy is inflating asset bubbles that could burst with harmful consequences. Unlike the inflation argument, for which there is no evidence, concern about bubbles is justified.



The Fed’s loose policies have pushed up stock, bond and real estate priceswhich is, in fact, the point of a low-rate policy. There is legitimate debate about how overvalued assets may be. But low rates, by fostering investments with borrowed money, invariably create the conditions for bubbles.



The answer, however, is not to raise rates, slowing the entire economy in order to tame the markets

The answer, laid out in recent remarks by Ms. Yellen and Stanley Fischer, the Fed vice chairman, is to use bank regulation and financial oversight to ensure that institutions and investors do not use low rates as a springboard for speculating.

That requires identifying and stopping reckless lending of the sort that has surfaced in subprime auto loans and unaffordable student loans. And it requires vigilance for signs of systemic risk in the complex activities that make institutions interdependent. Here the Fed is still too lax, as in its recent indulgence of too-big-too-fail banks that have failed to meet regulatory demands intended to reduce risks and prevent bailouts.

There is no guarantee that keeping rates low for a “considerable period,” as the Fed leadership has pledged, will propel the economy forward. But it is all but certain the economy will backslide if rates are raised too soon. That’s because the economy’s critical underpinninggood jobs at good pay — has not yet been restored, and until it is, monetary support from the Fed and fiscal support from Congress are needed. Fiscal support has been withdrawn and reversed in recent years, a misguided move that has needlessly depressed growth and represents a failure of both policy and politics. Raising rates too soon would be a policy error on a par with that debacle, a mistake that the economy can ill afford