Archive for the ‘economics’ Category

Venezuela: Misery and missiles

Friday, April 25th, 2014

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

Venezuela: #1 in misery index

Thursday, April 24th, 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

Video: What It’s Like to Live in Venezuela Now

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?

UPDATE:
Linked to by Extrano’s Alley. Thank you!


#ThanksLarry: In praise of Larry Kudlow

Saturday, March 29th, 2014

“We believe that free market capitalism is the best path to prosperity!”
@larry_kudlow

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.


Venezuela: The Left vs. reality

Wednesday, March 19th, 2014

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

UPDATE:
Linked to by Babalu. Thank you!

Must-read: The hidden numbers of Chávez’s legacy, by @danielragua

About that GDP:

Linked by Doug Ross. Thank you!


En español: “Libres como dioses: una reflexión libertaria sobre las comedias griegas”

Monday, March 17th, 2014

Conferencia de María Blanco, “Libres como dioses: una reflexión libertaria sobre las comedias griegas”

Puerto Rico: Growth yes, more taxes no

Tuesday, February 11th, 2014

Says Monica Showalter of IBD, and I wholeheartedly agree:
To Avoid Becoming The Next Detroit, Puerto Rico Needs Growth, Not Taxes

Too much bureaucracy, much of it for welfare, and too much rewarding failure over success drive up costs and drive out the productive. Puerto Rico’s most talented citizens are voting with their feet. The island loses about 1% of its population a year, a deadly loss compounded over the years for any economy.
To bring these people back, the governor has to fight to cut taxes and really go after the country’s entrenched special interests with a baseball bat.

The 39% corporate tax has to go.

He [governor Alejandro García Padilla] also must fight in the U.S. Congress to reinstate Puerto Rico’s special tax break that ended in 2006 so that investment will once again return.

Finally, he must also take on Big Labor’s favorite, the Jones Act, which artificially drives up shipping costs, putting local manufacturers at a disadvantage, demanding Congress at least give Puerto Rico an exception.

Read the whole thing.


Brazil: BNDES bends the rules, gives Cuba nearly $1billion

Monday, February 10th, 2014

Yes, Cuba, one of the world’s deadbeats.

Brazil Tries to Borrow Its Way to Prosperity
A five-year credit spree by state banks threatens the country’s competitiveness.

The Brazilian government’s development bank—known by its Portuguese initials BNDES—has dumped almost $700 million in subsidized credit into Cuba to finance the renovation of the Port of Mariel. On Jan. 27, Mrs. Rousseff cut a ribbon at the project and promised another $200 million in BNDES credits for a second phase of construction. On the same day the Brazilian newspaper Valor Economico reported that Cuba is now the third top destination for BNDES loans.

And that’s only one of several bad loans:

There is also the question of quality in what is a highly politicized loan portfolio. In October the Economist magazine reported “leaked documents show that Caixa’s analysts think default rates will be 30-50%.” BNDES seems to have plenty of dogs too. It reportedly lent the companies led by smooth-talking Eike Batista some $4.7 billion. His empire collapsed last year after his oil company OGX filed for bankruptcy.

That’s Dilma’s idea of fiscal responsibility.

Argentina: Chronicle of a default foretold, continued

Friday, January 31st, 2014

As Latin America’s Leaders Hail Democracy In Havana, Cuba’s Beatings Intensify, but rather than try some networking at Davos, Cristina visited with what’s left of Fidel,

while Argentina Loses $1.25 Billion of Foreign-Currency Reserves
Kirchner’s Government Tries to Head Off Recession

Argentina’s central bank has shed $1.25 billion of its dwindling foreign-currency reserves since it devalued the peso last week, even as the currency came under renewed pressure on Thursday.

he devaluation has so far failed to achieve what is believed to be its main goal: to close the confidence-busting gap between the official and black-market rates. The gap has narrowed in recent weeks.

The bigger the gap between black-market and regulated rates, the more the Argentine public fears the official exchange rate is overvalued and vulnerable to another devaluation.

Another measure aimed at deflating the black market also appears to be falling flat.

Starting Monday, Argentines were allowed to buy limited amounts of dollars for savings for the first time in about 18 months. The tax agency said it had authorized purchases of more than $137 million in dollars through Thursday afternoon.

However, Argentines opted to pay a 20% tax and withdraw $125 million from the banks instead of taking advantage of attractive interest rates and tax breaks for dollar deposits, the tax agency said. Many people still remember the 2002 crisis, when the government forcibly swapped dollar savings for devalued pesos.The Kirchner administration has borrowed more than $29 billion since 2010 from the central bank to pay its creditors, while government fuel imports and falling gold prices have also dented reserves.

If that money doesn’t stay in the banks, the central bank will likely take additional measures to stem dollar outflows. The central bank could takes losses of between $8 billion and $9 billion to individuals this year under the measure, according to estimates from BNP Paribas.

The trend has some investors and Argentines wondering if the country might struggle to pay its foreign debt and buy enough imported goods to keep its economy going.

As you can tell from the title of this post, I consider it a certainty.

Prior post: Argentina: Chronicle of a default foretold


Minimum Wage Laws Kill Jobs

Thursday, January 30th, 2014

Prof. Steve Hanke explains Minimum Wage Laws Kill Jobs

In the 21 countries with a minimum wage, the average country has an unemployment rate of 11.8%; whereas, the average unemployment rate in the seven nations without a minimum wage is about one third lower – at 7.9%.

Read the whole article.

Argentina And Venezuela: Chronicles Of Devaluations Foretold

Saturday, January 25th, 2014

Monica Showalter has an excellent article on a cautionary tale:

Argentina And Venezuela: Chronicles Of Devaluations Foretold And they inevitably lead to inflation. For 2012, Venezuela’s inflation surged to 56.1%, its central bank said. In Argentina, the rate was 28%, according to a watchdog.
These man-made disasters are due to governments spending more than they have to buy votes. In Argentina, spending rose 50% in the past decade, and in Venezuela it surged 60% in just the past year.
The numbers are so hard, and crisp and predictable, it’s astonishing anyone could be surprised by them.

Read the whole thing – the US M2 money supply is up 34% since President Obama took office.