Archive for the ‘business’ Category

Ecuador: Hasta la vista, dollars!

Tuesday, June 2nd, 2015

Dollarization brought great benefits to the Ecuadorian people, as Steve Hanke (who 14 years ago was the chief intellectual architect of Ecuador’s switch to the dollar) points out,

Ecuadorians know that dollarization has allowed them to import a vital element of the rule of law — one that protects them from the grabbing hand of the State. That’s why recent polling results show that dollarization is embraced by 85% of the population.

Prof. Hanke also knows that going off the dollar will have dire consequences for Ecuador’s economy:

“If you go off, the fiscal deficit gets bigger, the level of debt gets bigger, inflation goes up and economic growth goes down. All the economic indicators just go south.”

So pres. Rafael Correa is attempting to de-dollarize, but not blatantly. How so?

Ecuador Mandates Bank Participation in National E-Money Initiative

Ecuador’s e-money initiative, which kicked off earlier this year after the country outlawed bitcoin, is about to see wider institutional involvement following a government directive.

The country’s banks were ordered late last month to adopt the payment system within the next year, according to a report by Pan-Am Post’s Belén Marty. The pace at which the banks are required to add support for the initiative, which is a digital representation of the US dollar – Ecuador’s official currency – depends on their size.

So it’s not even bit-coin, but it’s compulsory:

The nation’s central bank has given them 360 days to get on board, with a mandate inResolution 064-2015-M, released on May 25 in the official register.
. . .
The resolution gives a sweeping and vague definition of “macroagents” for adoption: “companies, organizations, and public or private institutions; financial institutions of the popular and cooperative system; that maintain a network of establishments available for clients and are capable of acquiring mobile money, distributing it, or converting it into varieties of money.”

Additionally, the Central Bank of Ecuador (BCE)’s crypto-currency transactions carry no privacy.

The dollar is taken out of the picture, and protection from “the grabbing hand of the State” is erased. Hasta la vista, baby!

Why the University of Alabama won over the Ivy League

Friday, May 15th, 2015

The exceptionally smart Ronald Nelson makes the right decision: read my article on Why the University of Alabama won over the Ivy League

Puerto Rico: The great debt scam

Tuesday, May 5th, 2015

Moody’s downgraded Puerto Rico’s general obligation (GO) rating to Caa1 last January, on par with Argentina, a notch (a very small notch) above Venezuela, but worse than Bangladesh.

Now the government of Puerto Rico doesn’t want to pay up.

We all know what Louis would say,

Mary O’Grady writes on Puerto Rico:

Puerto Rico’s Debt-Relief GambitThe island’s political class wants to stiff its creditors. Congress shouldn’t go along.

A group of institutional bondholders—including Franklin Advisors and Oppenheimer Funds—representing 40% of the outstanding bonds and more than 500,000 individual bondholders have offered the company a restructuring plan to avoid receivership. It includes a new, $2 billion capital commitment to modernize power-generation equipment and cut costs. If Prepa [Puerto Rico Electric Power Authority (Prepa)] can improve its operational efficiency, the group believes that its proposal can lower the electricity rate to the range of 22 cents per kilowatt-hour from the 28-cent range of recent years.

This intervention is unlikely to appeal to Puerto Rico’s political class, which uses Prepa as a populist honey pot. The company has a dismal collection record and one of the most notorious deadbeats is the government. A Nov. 15, 2014, report by FTI Capital Advisors found that the company had “over $200 million in accounts receivable from public corporations, of which approximately 70% is over 120 days old.”

Making them pay is the right thing to do; it’s just not the Puerto Rican thing to do.

What works

Friday, May 1st, 2015

Readers of this blog are familiar with my nagging asserting repeatedly that Communism doesn’t work. John Mauldin and Stephen Moore have come up with A Six-Point Plan To Restore Economic Growth And Prosperity. In brief, the 6 are:

  1. Streamline the federal bureaucracy.
  2. Simplify and flatten the income tax.
  3. Replace the payroll tax with a business transfer tax of 15%, which will give lower-income workers a big raise.
  4. Provide certainty by keeping tax rates low through a tax-limitation constitutional amendment that would require future tax increases to be passed by 60% of the Congress, in combination with a balanced-budget amendment.
  5. Roll back the regulatory state.
  6. Drill for America’s domestic energy and use the royalties on federal lands to retire the debt and/or fund needed infrastructure repair instead of raising taxes.

While these are specific to America, countries in our hemisphere would benefit from similar incentive structure measures, if their institutions would also ensure a framework of rule of law and true commitment to ending corruption.

Mauldin and Moore address the real source of economic progress: the incentive structure. Read their full article here.

Venezuela: Electricity rationing because of . . . global warming

Thursday, April 30th, 2015

The country with (allegedly) highest oil reserves is starting to ration electricity.
Venezuela to Begin Nationwide Power Rationing
Persistent heat wave causes a surge in demand for air conditioning

Shaky power supply is one of many problems facing Venezuela as the resource-rich South American country reels from an economic crisis and a cash crunch partly due to lower oil prices. Frequent blackouts in the interior of the country have stoked accusations of mismanagement and insufficient power grid investment by the government, which nationalized the electricity sector under the late leftist leader, Hugo Chávez.

But authorities in Venezuela, which relies on hydroelectric turbines for two-thirds of its power supply, say climate change is to blame.

“This is, of course, linked to global warming and the excessive industrialization of capitalism, which never stops, nor has ever stopped, for the effects that it can have on the climate, on society and on Mother Earth,” Mr. Arreaza said.

The blackouts have been going on for a couple of years, but the rationing is new.

Talking from both sides of the mouth, they ask that you get a generator, to use up more Venezuelan gasoline that the government insanely subsidizes to a consumer price of $0.002 a gallon, because, capitalism causes global warming or something,

Vice President Arreaza also made a bizarre call for the use of “autogenerated” electricity to reduce demand on the government’s plants. “Both the public sector as well as large [private] consumers should opt for autogeneration,” he said in the statement announcing the new plan. “That is to say, that they use their own equipment and plants to generate electricity, especially in peak hours, and not use the National System.”

Venezuela is probably netting less than US$20/barrel on its heavy, low-quality oil. It needs oil at $151 a barrel to balance its budget.

Another Venezuelan export, cacao, can’t generate revenues because the government cancelled export permits.

Again, Communism doesn’t work.

If it’s April, it’s Donziger at Harvard

Wednesday, April 15th, 2015

File under higher education bubble, legal education edition:
Harvard hosts racketeer . . . twice, but not Patton Boggs or Paul Barrett.

From Bratz to Tree Change

Friday, April 3rd, 2015

On this Easter weekend, while we pray about the big things, let’s be glad about the little things.

Read about A happy thing for Easter weekend

TreeChangeDolls

Would Peru go for Chavismo?

Monday, March 30th, 2015

Mary O’Grady writes about the reasons behind Peru’s recent economic success: A market model that allows for

  • a vibrant consumer class that is entrepreneurial and creative
  • openness to imports
  • structural reforms that included ending a punishing system of import tariffs and quotas
  • fiscally conservative governance.

However,

Still, the downturn in commodity prices is eating into growth and the slowdown that began last year continues. Market forecasts for GDP growth are in the 3% range for 2015. Peru’s economy is performing far better than most in the region, but lackluster is not what Peruvians have come to expect.

The obvious answer to this lethargy is more aggressive trade opening on key products like sugar and corn, more tax cutting and deregulation. But Mr. Humala’s popularity is sagging and he is unlikely to do anything bold. Meanwhile, opponents of economic freedom will turn slower growth into opportunity by linking stagnant incomes in the market economy and corruption.

As O’Grady points out, this means Peru Is Chavismo’s Next American Target
Corruption scandals give the left an opening in the 2016 presidential election.

On a seemingly unrelated topic,
The Obama administration insists on easing restrictions on Cuba’s merciless Communist dictatorship while Cuba’s dependence on Venezuelan oil goes bust. Once Cuba’s economy improves cosmetically (because you can bet those in power will not give up their acquisitiveness), the Cuban propaganda machine will use this as another tool in its propaganda arsenal against market economies.

No matter how ruinous Cuban-driven Chavismo is in real life; propaganda is the only thing Cuba’s regime is good at, and it is particularly effective in Latin America.

Face it: The fact that the article talks about Chavismo – instead of Castrocommunism – itself is a success for the Cuban propaganda machine; in reality, “The Venezuelan regime is a puppet controlled by the Cubans.”

—————————————

Related reading:
Hernando de Soto’s excellent book, The Other Path, available on Kindle for under $10, and Ian Bremmer’s The End of the Free Market: Who Wins the War Between States and Corporations?

Last call to complete a survey on political blogs

Saturday, March 7th, 2015

Doctoral candidate Juan M. Sánchez-Villar of the University of Valencia (Spain) has requested my help in completing his research on the effects reading political blogs may have on the adoption of a more participative political position.

For that, he needs that you, gentle reader, complete a survey before March 15th. The survey takes 8-12 minutes to complete.

Here is his email explaining,

Dear friends,

My name is Juan Sánchez and I am a PhD Marketing student at the University of Valencia (Spain). I am currently developing my doctoral thesis, which focuses on the existing relationship between Internet interactivity and the adoption of a more participative political position.

I would like to ask your collaboration to complete the empirical part of my thesis. In this respect, I need you to click on the link below in order to complete a brief and simple online survey.

As you will see, the questionnaire is easy to answer and can be completed in no more than 8-12 (real-time) minutes. The survey displays several statements on different elements related to blog reading and political participation.

My research has no commercial purpose whatsoever and all the collated information will remain totally anonymous. No previous relevant academic background is required and there are no right and wrong answers. What are truly important and relevant are the freely-expressed opinions on the matters raised.

Please click on the following link to participate:

BLOGS, INTERACTIVITY AND POLITICAL OPINION LEADERSHIP SURVEY

Thank you very much for your kind collaboration.

Regards,

Juan Sánchez-Villar
University of Valencia (Spain)

Thank you.

Please complete a survey on political blogs

Tuesday, March 3rd, 2015

Doctoral candidate Juan M. Sánchez-Villar of the University of Valencia (Spain) has requested my help in completing his research on the effects reading political blogs may have on the adoption of a more participative political position.

For that, he needs that you, gentle reader, complete a survey before March 15th. The survey takes 8-12 minutes to complete.

Here is his email explaining,

Dear friends,

My name is Juan Sánchez and I am a PhD Marketing student at the University of Valencia (Spain). I am currently developing my doctoral thesis, which focuses on the existing relationship between Internet interactivity and the adoption of a more participative political position.

I would like to ask your collaboration to complete the empirical part of my thesis. In this respect, I need you to click on the link below in order to complete a brief and simple online survey.

As you will see, the questionnaire is easy to answer and can be completed in no more than 8-12 (real-time) minutes. The survey displays several statements on different elements related to blog reading and political participation.

My research has no commercial purpose whatsoever and all the collated information will remain totally anonymous. No previous relevant academic background is required and there are no right and wrong answers. What are truly important and relevant are the freely-expressed opinions on the matters raised.

Please click on the following link to participate:

BLOGS, INTERACTIVITY AND POLITICAL OPINION LEADERSHIP SURVEY

Thank you very much for your kind collaboration.

Regards,

Juan Sánchez-Villar
University of Valencia (Spain)

Thank you.