Archive for the ‘economics’ Category
A Puerto Rican default should not surprise anyone. According to Carlos Colón de Armas, acting dean of the School of Business Administration at the University of Puerto Rico, for eight years from 2005 through 2012, government expenses exceeded revenues on average by approximately $1 billion annually. The dean told me by telephone that total commonwealth debt is now around $73 billion and in 2013 it was 101% of the island’s gross national product (GNP) up from 57% in June 2001. (Although gross domestic product is the most widely accepted measure of an economy’s size, it reflects the profits of large multinational corporations booked for tax purposes in Puerto Rico but not retained in the local economy. Therefore, GNP, a measure of what is produced by locals, is a more accurate tool to assess the economy.)
Unlike Luis Fortuño, the previous governor, current governor Alejandro García Padilla
increased expenses by almost $600 million in his first budget. While he is now cutting spending, the cuts are mostly from that increase, according to Mr. Colón de Armas. Some $500 million-$800 million in fat—from subsidies to special interests to funding for political parties—remains untouched in the $9.6 billion budget.
Fortuño lost by 12,000 votes since García Padilla (known as Agapito) promised the moon and the stars.
And there it goes: a certain default.
The WSJ reports on two contrasting economies, free-market Colombia, and command-economy Venezuela:
Venezuela Pays Price for Smuggling
President Loses Popularity Amid Protests as Cheap Goods Move Across Border to Colombian Consumers
Stifled by inefficient state-owned factories and price controls, domestic production in Venezuela has plummeted. Moreover, the massive weakening of Venezuela’s currency makes its goods cheaper in Colombia. These factors lead to frequent shortages that make life especially trying for Venezuelans along the border, where smugglers leave little behind on store shelves.
Read the whole thing, and don’t miss the money quote, “Looking around here, you can tell why socialism doesn’t work.”
This is ri·dic·u·lous:
Panama President-Elect Promises Price Controls
Let’s step away from the link for a moment, and ponder an economy with
- 8% average annual growth for the past four years
- 4.1% unemployment rate
- 4% inflation – double what it was in 2009.
The inflation part is troublesome, since according to official data, the current $335 price of the basic food basket (50 products that officials say is enough to feed a family of four for a month) has increased by 25% in the last four years. The basic food basket has outpaced the country’s inflation rate. Minimum salary is $475 to $625 a month.
So now President-elect Juan Carlos Varela, formerly top executive for Panama’s biggest liquor company, has the brilliant idea of
imposing emergency price controls on 22 basic goods, everything from rice and eggs to cuts of meat.
The AP article mentions a woman who earns $500/month who
has to pool her income with other family members to feed the five adults and three grandchildren who live in her zinc-roofed home
If you lived with four other adults, wouldn’t you expect them to pool in?
But I digress.
While campaigning Varela used to point out the price of lentils,
“You can’t be allowed to mark up basic-need items 60, 70 or 80 percent,” Varela said in a meeting with foreign journalists two weeks before the vote.
Of course, this has nothing, absolutely nothing to do with the fact that outgoing President Ricardo Martinelli is the billionaire owner of the country’s biggest supermarket chain, Super 99, and Varela may be wanting to stick Martinelli one where it hurts, so to speak:
In 2009, Varela was elected vice president on Martinelli’s ticket but they split acrimoniously two years later over Martinelli’s effort to engineer a constitutional change that would have allowed him to seek re-election.
Every time price controls are installed, shortages follow, which will avail Varela with the opportunity to blame the shortages on Martinelli.
Hugo Chavez must be smiling in his grave.
Panama elected-president pledges to normalize relations with Venezuela and Colombia
Venezuelan President Nicolas Maduro and Panamanian president-elect Juan Carlos Varela have pledged to waste no time in normalizing relations and re-launching diplomatic, economic and trade ties cut off two months ago, Venezuela’s foreign ministry announced. Varela takes office next July first
Letter to the WSJ editor:
Regarding Mary Anastasia O’Grady’s “Assault on the Chilean Miracle” (Americas, May 5): I am of German nationality and came to Chile last year, where the startup community was flourishing. I set up our company, a tech startup that optimizes recruitment processes through the automatization of internal referral systems. All was going well until the tax reforms provoked a state of shock among Chilean companies. It now seems that Chilean companies have been put on “stand by” due to the uncertainty of the tax reforms.
Many relatively new companies that have come to Chile to innovate are now struggling due to budget cuts from large, potential clients and will directly suffer because of this reform. The entire entrepreneurial ecosystem that has given the country so much international exposure is currently at stake. This will have a direct impact on the forward-thinking measures Chile has taken over the past years.
I would call it unintended consequences, but, quite frankly, I suspect the outcome is exactly what Bachelet intended.
Exports fell 16% on the year to $5.25 billion in March, led by a plunge in grain and soybean exports. Shipments of industrial products like cars also fell as sluggish growth in neighboring Brazil trimmed demand for Argentine manufactured goods. Imports decreased 4% to $5.21 billion, led by declines in consumer goods and spare parts, according to preliminary data published by the national statistics agency Indec.
The trade surplus for the first quarter shrank to $121 million, from $1.5 billion a year ago due to a drop in farm shipments and rising fuel imports. Argentina’s energy deficit—the difference between energy exports and imports—widened 19% on the year to $792 million in the quarter.
While the country expects a record soybean crop,
The Argentine economy is widely expected to tip into a recession this year as inflation of more than 30% erodes the public’s purchasing power and spurs locals and foreigners alike to pull their money out of the country. Analysts at Abeceb and Barclays expect the economy to shrink about 1.5% this year.
According to the government’s own figures, industrial production fell 6% due to declines in the automotive and petrochemicals industries.
Linked to by Israel Foreign Affairs. Thank you!
In addition to the marauding gangs armed to the teeth, the country is armed. Russia is Venezuela’s largest supplier of weapons and armored vehicles, but China and Iran are involved, too.
Read my full article at Da Tech Guy Blog
— Prof. Steve Hanke (@steve_hanke) April 23, 2014
In an upcoming article in Globe Asia Magazine, Prof. Steve Hanke of Johns Hopkins is Measuring misery around the world. Venezuela is on top:
When measured by the misery index, Venezuela holds the ignominious top spot, with an index value of 79.4. But, that index value, as of 31 December 2013, understates the level of misery because it uses the official annual inflation rate of 56.2%. In fact, I estimate that Venezuela’s annual implied inflation rate at the end of last year was 278%. That rate is almost five times higher than the official inflation rate. If the annual implied inflation rate of 278% is used to calculate Venezuela’s misery index, the index jumps from 79.4 to 301, indicating that Venezuela is in much worse shape than suggested by the official data.
Argentina’s on the #4 spot, also because of inflation.
Daniel Duquenal looks at How to admit failure in Venezuela: by threatening further and blaming others
In Venezuela, shortages are such that there’s a shortage of the plastic used for making the electronic rationing cards . The CNE (the elections commission, run by Cuban intelligence) is behind the rationing cards:
With their ID cards, and by providing the fingerprints for their index fingers and thumbs, any Venezuelan can register in the system.
Registration also requires providing a series of detailed personal information: is the person a public employee, do they belong to a communal council, do they shop at government stores, and whether or not they have participated in the government’s social programs. They also have to leave their phone number and an email, where in 45 days they will receive a message saying their caard is ready.”
Juan Cristobal Nagel wonders, Is Venezuela a middle class country? My question is, what middle-class country imposes food rationing on its citizens?
Linked to by Extrano’s Alley. Thank you!
I met Larry Kudlow at the Rainbow Room on Wednesday, November 16, 2005, at the Pajamas Media rollout party. Pajamas Media was having a momentary identity crisis, and we found out almost then that it was making its debut as OSM: Open Source Media instead.
There were a hundred people or so at the event, so I’m sure Mr. Kudlow doesn’t remember me, but here’s how it went:
Milton Friedman and Louis Rukeyser were instrumental in my transformation from a socialist to a capitalist, and I must partly thank PBS for that. As an economics/business major, I had read Friedman’s books, and they were pivotal to my change. (Years later, PBS aired Friedman’s Free to Choose series – which you can now watch on YouTube for free by courtesy of the Palmer R. Chitester Fund). While I was still in college, I started watching Louis Rukeyser’s Wall Street Week (W$W), which aired on PBS every Friday at 7:30PM. Friedman was a guest in the show.
I was a fan of the show for its entire run, from 1972 to 2002. There’s even a photo of me with my newborn son watching W$W on the day he was born.
In 2002 Rukeyser moved to CNBC, and he ended his show in 2004 due to his battle with cancer.
Larry Kudlow was a regular panelist in both shows, and, at the Pajamas party, I went over and introduced myself. Mr. Kudlow looks exactly as he does on TV, he’s shorter than I expected, and was (characteristically) very well dressed.
I started by asking him to tell Mr. Rukeyser, if he had a chance, that he was in my family’s prayers and convey our best wishes. Mr. Kudlow was most gracious, and he described how Mr. Rukeyser was the only person who would invite him to their show after Mr. Kudlow’s recovery following a scandalous and very public fall from grace due to his addictions. Mr. Kudlow also explained his conversion to Catholicism, as Catholics took him in during the time when he struggled to pry himself away from his disease. It was a remarkable conversation, and before we parted he mentioned again he’d convey my message to Mr. Rukeyser, whom he saw often.
CNBC started a show, Kudlow & Cramer, which I didn’t watch too often because I find Cramer annoying. Later on Kudkow got his own show, and I watched frequently (mostly while preparing dinner).
The Kudlow Report (and its earlier version, Kudlow and Company) was, without a doubt, the best moneypolitics show on the air. Differing, opposite, views were discussed civilly, and with clarity. It is entirely to Mr. Kudlow’s credit that he maintained such high standards on each and every broadcast.
Last night was The Kudlow Report’s last show. During his closing speech, Mr. Kudlow gave witness to his faith, movingly saying he “replaced addiction with faith.” He will continue as a CNBC contributor in other shows.
I wish Mr. Kudlow the best, and thank him for inspiring and encouraging Americans to prosper and grow.
by Fausta Rodríguez Wertz
Lefties firmly believe the deceased Hugo Chavez “improved the economy drastically and ameliorated poverty drastically” because GDP went up, and fewer people were living below the poverty line by the time he died last year.
The numbers are there: GDP did go up, and yes, fewer people were listed as living below the poverty line. Whose numbers?
The numbers came from the Venezuelan government.
The International Monetary Fund keeps a List of IMF Member Countries with Delays in Completion of Article IV Consultations or Mandatory Financial Stability Assessments Over 18 Months. As of the writing of this post, Venezuela hasn’t held an Article IV consultation with the IMF in 99 months.
Let me translate that into plain English: The Venezuelan government has not allowed its own numbers to be verified for almost a decade.
Read the rest of my article at Da Tech Guy Blog
Linked to by Babalu. Thank you!
About that GDP:
Linked by Doug Ross. Thank you!