‘Alemanha aconselha Grécia a vender ilhas para saldar dívidas‘ in Diário Económico

"O Estado grego deve desprender-se de forma radical das suas participações em empresas e também vender terrenos, como por exemplo, as suas ilhas desabitadas", sugere Frank Schäffler, membro da comissão parlamentar de finanças, citado pelo jornal "Bild".

O liberal argumenta ainda que a chanceler Angela Merkel "não deve prometer ajudas" à Grécia.

A chanceler democrata-cristã reune-se amanhã em Berlim com o primeiro-ministro grego, Yorgos Papandreu, num encontro em que abordará a situação financeira da Grécia, entre outros assuntos.

Para o democrata-cristão Josef Schlarman, Atenas deve evitar a todo custo a falência, recorrendo, para isso, a qualquer medida que permita obter capital.

"A Grécia possui edifícios, empresas e ilhas desabitadas, que poderão ser usados para o pagamento das dívidas", afirma.

Atenas aprovou ontem um plano de choque com o qual pretende economizar aproximadamente 4,8 mil milhões de euros para sanear a economia grega, que já acumula uma dívida superior a 110% do Produto Interno Bruto (PIB) e um défice de 12,7%.

As medidas contempladas pelo Executivo grego incluem o congelamento de pensões, a redução de salários dos funcionários públicos e a subida de impostos.

http://economico.sapo.pt/noticias/alemanha-aconselha-grecia-a-vender-ilhas-para-saldar-dividas_83177.html

A UE e a Grécia: ‘É para o teu bem‘ cartoon in Público

‘Wall Street ajudou a camuflar dívida da Grécia‘ in New York Times

Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts.

As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.

Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.

The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.

It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

Athens did not pursue the latest Goldman proposal, but with Greece groaning under the weight of its debts and with its richer neighbors vowing to come to its aid, the deals over the last decade are raising questions about Wall Street’s role in the world’s latest financial drama.

As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.

In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come.

Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.

Some of the Greek deals were named after figures in Greek mythology. One of them, for instance, was called Aeolos, after the god of the winds.

The crisis in Greece poses the most significant challenge yet to Europe’s common currency, the euro, and the Continent’s goal of economic unity. The country is, in the argot of banking, too big to be allowed to fail. Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe.

A spokeswoman for the Greek finance ministry said the government had met with many banks in recent months and had not committed to any bank’s offers. All debt financings “are conducted in an effort of transparency,” she said. Goldman and JPMorgan declined to comment.

While Wall Street’s handiwork in Europe has received little attention on this side of the Atlantic, it has been sharply criticized in Greece and in magazines like Der Spiegel in Germany.

“Politicians want to pass the ball forward, and if a banker can show them a way to pass a problem to the future, they will fall for it,” said Gikas A. Hardouvelis, an economist and former government official who helped write a recent report on Greece’s accounting policies.

Wall Street did not create Europe’s debt problem. But bankers enabled Greece and others to borrow beyond their means, in deals that were perfectly legal. Few rules govern how nations can borrow the money they need for expenses like the military and health care. The market for sovereign debt — the Wall Street term for loans to governments — is as unfettered as it is vast.

“If a government wants to cheat, it can cheat,” said Garry Schinasi, a veteran of the International Monetary Fund’s capital markets surveillance unit, which monitors vulnerability in global capital markets.

Banks eagerly exploited what was, for them, a highly lucrative symbiosis with free-spending governments. While Greece did not take advantage of Goldman’s proposal in November 2009, it had paid the bank about $300 million in fees for arranging the 2001 transaction, according to several bankers familiar with the deal.

Such derivatives, which are not openly documented or disclosed, add to the uncertainty over how deep the troubles go in Greece and which other governments might have used similar off-balance sheet accounting.

The tide of fear is now washing over other economically troubled countries on the periphery of Europe, making it more expensive for Italy, Spain and Portugal to borrow.

For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin: countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments artificially reduced their deficits with derivatives.

Derivatives do not have to be sinister. The 2001 transaction involved a type of derivative known as a swap. One such instrument, called an interest-rate swap, can help companies and countries cope with swings in their borrowing costs by exchanging fixed-rate payments for floating-rate ones, or vice versa. Another kind, a currency swap, can minimize the impact of volatile foreign exchange rates.

But with the help of JPMorgan, Italy was able to do more than that. Despite persistently high deficits, a 1996 derivative helped bring Italy’s budget into line by swapping currency with JPMorgan at a favorable exchange rate, effectively putting more money in the government’s hands. In return, Italy committed to future payments that were not booked as liabilities.

“Derivatives are a very useful instrument,” said Gustavo Piga, an economics professor who wrote a report for the Council on Foreign Relations on the Italian transaction. “They just become bad if they’re used to window-dress accounts.”

In Greece, the financial wizardry went even further. In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways to raise much-needed money.

Aeolos, a legal entity created in 2001, helped Greece reduce the debt on its balance sheet that year. As part of the deal, Greece got cash upfront in return for pledging future landing fees at the country’s airports. A similar deal in 2000 called Ariadne devoured the revenue that the government collected from its national lottery. Greece, however, classified those transactions as sales, not loans, despite doubts by many critics.

These kinds of deals have been controversial within government circles for years. As far back as 2000, European finance ministers fiercely debated whether derivative deals used for creative accounting should be disclosed.

The answer was no. But in 2002, accounting disclosure was required for many entities like Aeolos and Ariadne that did not appear on nations’ balance sheets, prompting governments to restate such deals as loans rather than sales.

Still, as recently as 2008, Eurostat, the European Union’s statistics agency, reported that “in a number of instances, the observed securitization operations seem to have been purportedly designed to achieve a given accounting result, irrespective of the economic merit of the operation.”

While such accounting gimmicks may be beneficial in the short run, over time they can prove disastrous.

George Alogoskoufis, who became Greece’s finance minister in a political party shift after the Goldman deal, criticized the transaction in the Parliament in 2005. The deal, Mr. Alogoskoufis argued, would saddle the government with big payments to Goldman until 2019.

Mr. Alogoskoufis, who stepped down a year ago, said in an e-mail message last week that Goldman later agreed to reconfigure the deal “to restore its good will with the republic.” He said the new design was better for Greece than the old one.

In 2005, Goldman sold the interest rate swap to the National Bank of Greece, the country’s largest bank, according to two people briefed on the transaction.

In 2008, Goldman helped the bank put the swap into a legal entity called Titlos. But the bank retained the bonds that Titlos issued, according to Dealogic, a financial research firm, for use as collateral to borrow even more from the European Central Bank.

Edward Manchester, a senior vice president at the Moody’s credit rating agency, said the deal would ultimately be a money-loser for Greece because of its long-term payment obligations.

Referring to the Titlos swap with the government of Greece, he said: “This swap is always going to be unprofitable for the Greek government.”

http://www.nytimes.com/2010/02/14/business/global/14debt.html

Niall Ferguson: ‘uma crise grega está a chegar à América‘ in Financial Times

It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate.

There is of course a distinctive feature to the eurozone crisis. Because of the way the European Monetary Union was designed, there is in fact no mechanism for a bail-out of the Greek government by the European Union, other member states or the European Central Bank (articles 123 and 125 of the Lisbon treaty). True, Article 122 may be invoked by the European Council to assist a member state that is “seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”, but at this point nobody wants to pretend that Greece’s yawning deficit was an act of God. Nor is there a way for Greece to devalue its currency, as it would have done in the pre-EMU days of the drachma. There is not even a mechanism for Greece to leave the eurozone.

That leaves just three possibilities: one of the most excruciating fiscal squeezes in modern European history – reducing the deficit from 13 per cent to 3 per cent of gross domestic product within just three years; outright default on all or part of the Greek government’s debt; or (most likely, as signalled by German officials on Wednesday) some kind of bail-out led by Berlin. Because none of these options is very appealing, and because any decision about Greece will have implications for Portugal, Spain and possibly others, it may take much horse-trading before one can be reached.

Yet the idiosyncrasies of the eurozone should not distract us from the general nature of the fiscal crisis that is now afflicting most western economies. Call it the fractal geometry of debt: the problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes.

What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

Even according to the White House’s new budget projections, the gross federal debt in public hands will exceed 100 per cent of GDP in just two years’ time. This year, like last year, the federal deficit will be around 10 per cent of GDP. The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.

The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.

Explosions of public debt hurt economies in the following way, as numerous empirical studies have shown. By raising fears of default and/or currency depreciation ahead of actual inflation, they push up real interest rates. Higher real rates, in turn, act as drag on growth, especially when the private sector is also heavily indebted – as is the case in most western economies, not least the US.

Although the US household savings rate has risen since the Great Recession began, it has not risen enough to absorb a trillion dollars of net Treasury issuance a year. Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities.

But now the Fed is phasing out such purchases and is expected to wind up quantitative easing. Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $1,500bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months.

The Obama administration’s new budget blithely assumes real GDP growth of 3.6 per cent over the next five years, with inflation averaging 1.4 per cent. But with rising real rates, growth might well be lower. Under those circumstances, interest payments could soar as a share of federal revenue – from a tenth to a fifth to a quarter.

Last week Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted. That warning recalls Larry Summers’ killer question (posed before he returned to government): “How long can the world’s biggest borrower remain the world’s biggest power?”

On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic.

http://www.ft.com/cms/s/0/f90bca10-1679-11df-bf44-00144feab49a.html

‘Política económica de Pequim põe em risco o barco global‘ in Der Spiegel

It was just over a year ago that Huang Fajing, 55, was struggling to keep his company afloat. The president of lighter manufacturer Wenzhou Rifeng Lighters Co., Huang was forced to send his roughly 500 workers home early as a result of the global economic crisis. He himself had little to do but watch television in his luxury apartment in the eastern Chinese industrial city of Wenzhou.

Now, a year later, business is back in full swing in Wenzhou's factories, which supply the world with inexpensive goods, from buttons to electric cables to, of course, lighters. At Rifeng, workers wearing gray uniforms press tiny metal parts into the lighter shells, which are then sold to smokers in Europe, the United States and Japan.

Given Huang's slim profit margins of no more than 5 percent, Huang has carefully fine-tuned the work performed by the young men and women in his factory to eliminate unnecessary movements. But the fact that he has survived the crisis at all is largely thanks to his government -- and the decision in the summer of 2008 to once again peg the exchange rate of the yuan to the US dollar.

The Crutch

Beijing uses this policy to ensure that the country's factories can continue to export their products at ever cheaper prices. Because the value of the dollar has declined sharply, the yuan has fallen along with it, losing up to 17 percent of its value against the euro in 2009. At the same time, this artificially low exchange rate serves as a crutch that enables the Chinese government to protect many of its export businesses against failure. It is the only reason why exports declined by only 1.2 percent in November 2009, relative to the same month a year earlier, allowing China to replace Germany as the world's top export economy.

Many in the West see the rising economic power as an enormous engine of growth that is helping to lift the rest of the world out of the crisis. The government in Beijing has jump-started the domestic economy with a gigantic economic stimulus package worth four trillion yuan, or about €400 billion ($580 billion), which has led to investments in road, railway and airport construction throughout the country. Generous tax rebates to stimulate consumption, particularly of big-ticket items like cars, were also part of the package.

But China, with its enormous export economy, has in fact expanded global imbalances with its aggressive exchange rate strategy -- the same kind of imbalances that were partly responsible for the most recent financial crisis and, as a result, ought to be corrected.

China also risks triggering new, long-term trade conflicts, particularly with its neighbors. Since the beginning of the economic crisis, China has been diverting some of its exports to neighboring countries and away from Europe and the US, where sales have declined.

Series of Dumping Complaints

Some of its neighbors have already taken defensive measures. Vietnam recently devalued its currency, the dong, by 5 percent, making imports more expensive and protecting the domestic industry from a flood of Chinese goods. India has submitted a series of dumping complaints to the World Trade Organization (WTO), including one involving cheap imported paper from China. And Indonesia has sought to protect itself against cheap Chinese nails by imposing protective tariffs.

Western companies, on the other hand, are still relatively unconcerned about Beijing's exchange rate policy -- with good reason. Manufacturers that produce inexpensive shoes, electric drills or computers in China for sale in their domestic markets have no reason to complain. And many German businesses, particularly machine manufacturers, can still sell their products in the realm of the cheap yuan, because their Chinese customers are often willing to pay higher prices for German quality.

Nevertheless, there is growing opposition in Europe and the United States to a policy whereby China is trying to export its way to economic health, essentially at the expense of the rest of the world. Throughout the country, Chinese provincial officials are vying to expand local state-owned factories and build new ones. The steel industry alone has increased its capacity by about a third in the space of only two years.

Duties on Chinese Tires

As a result, the world must brace itself for a new wave of cheap Chinese-made goods. "Unfortunately, we will see a lot more dumping complaints against China in the second half of 2010," predicts Jörg Wuttke, president of the European Union Chamber of Commerce in Beijing.

In late December, the EU imposed a 64.3 percent anti-dumping tariff on Chinese metal wire used in the auto industry, and the US is likewise protecting itself by imposing new duties on cheap Chinese tires and steel pipes. Beijing threatens to retaliate by imposing symbolic tariffs on American chickens and cars.

Ironically, China, with its policy of keeping the yuan artificially undervalued will ultimately harm itself more than anyone -- not unlike a rehab patient reaching desperately for more drugs. In order to keep the yuan down, the Chinese central bank must constantly buy up dollars. As a result, the country has amassed the world's largest foreign currency reserves, worth $2.3 trillion. China invests about two-thirds of its reserves in American currency, primarily in US treasury bonds. But as the dollar continues to fall, the value of this investment declines along with it.

China, however, has so far refused to enter into a debate over their economy's chronic dependence on manipulated exchange rates. At a meeting with EU representatives in Nanjing, Chinese Premier Wen Jiabao dismissed as "unfair" a politely worded request that he reduce the value of his currency against the dollar to rein in the flood of exports. Even US President Barack Obama, during his recent visit to China, was reluctant to be appropriately forceful in addressing the politically taboo subject.

Indefinite Exploitation

The issue seems to have become an embarrassment to Beijing's leaders, particularly given their declared goal of balancing China's current accounts with other countries by the end of 2010.

This aim was the work of men like Yu Yongding, 61. A former advisor to the Chinese central bank, Yu now has an office on the 15th floor of the Academy of Social Sciences in Beijing, a respected government think tank. Having been a leading visionary for a world power, Yu now finds himself having to defend his life's work.

He celebrated his greatest triumph on July 21, 2005, when the People's Bank of China, as the Chinese central bank is officially called, slightly appreciated the yuan against the dollar, while simultaneously removing the currency's dollar peg. From then on, instead of being firmly pegged to the dollar, the yuan fluctuated within fixed parameters against a currency basket made up of several different currencies.

This led to a 22-percent increase in the yuan's value against the dollar by November 2008. Reformers like Yu, imagining that China was on the verge of liberating itself from a dependency on low-wage industry, celebrated the course correction as a symbolic beginning. They also believed that a higher-valued yuan would reduce the cost of imports to China, stimulate private consumption and enable the People's Republic to join the ranks of high-tech nations in the long term. "We cannot allow the United States to indefinitely exploit us as a low-wage country," says Yu.

The Bubble Could Burst

During the course of the global crisis, though, the reformers soon found themselves on the defensive. One of those reformers is Zhou Xiaochuan, the governor of the central bank. Zhou sets the yuan's exchange rate, practically at the instruction of the cabinet, which is intent on doing whatever it can to boost exports to achieve its goal of increasing gross domestic product by 8 percent. Initial forecasts indicate that Chinese GDP actually grew even more in 2009 -- as much as 9 percent.

But with his rigid exchange rate regime, Zhou is also fueling China's enormous economic bubble. Some of the foreign currency he is forced to continually extract from the market to bolster the yuan is subsequently re-injected into the monetary cycle in the form of increased liquidity. Low interest loans from Chinese banks are indirectly fueling widespread speculation in stocks and real estate.

Were the US to suddenly raise interest rates, the bubble could burst. Indeed, by pegging the yuan to the dollar, China ultimately makes itself dependent on US monetary policy. "No one knows how much lower the dollar will go," says economist Lin Jiang of the Sun Yat-Sen University in Guangzhou, "or if the US will suddenly end its policy of easy money."

But many of his fellow Chinese, on the contrary, see the dollar peg as a symbol of national sovereignty instead of distasteful dependence. "The more the West urges China to appreciate the yuan, the less the government will respond," says former central bank advisor Yu.

Huang, the lighter manufacturer, is pinning his hopes on the yuan remaining undervalued. "If Beijing appreciates the currency by more than 1.5 percent," he says, "I will go out of business."

http://www.spiegel.de/international/world/0,1518,671310,00.html

‘OCDE prevê que o comércio mundial se contraia 18% este ano‘ in Público

O comércio mundial vai contrair-se 18 por cento este ano e “recuperar ligeiramente” no próximo ano, indicam as últimas projecções da Organização para a Cooperação e Desenvolvimento Económico (OCDE).

No documento que analisa as principais tendências e desafios na Europa nos próximos anos, a OCDE considera que “as mais recentes projecções indicam um declínio do comércio mundial de 18 por cento em 2009, a maior queda em décadas, e uma recuperação ligeira em 2010”.

A contracção do comércio e as consequências internas em termos de combate ao comércio livre estão entre as preocupações da OCDE, que afirma que um dos principais desafios da União Europeia e dos Governos dos Estados-membros é a resistência à pressão para a adopção de medidas proteccionistas.

[A queda no comércio mundial] “está a pôr pressão em muitos países para aumentarem a protecção às empresas nacionais, o que implica que os próximos anos são um desafio à implementação de políticas de comércio global”.

Nas recomendações que os peritos da organização sedeada em Paris deixam aos Governos europeus e à Comissão Europeia, encontram-se o “aprofundamento da liberalização do comércio multilateral” e o apoio ao sucesso das negociações de Doha – através de uma “redução dos subsídios internos, que distorcem a concorrência”, e da “eliminação dos subsídios à exportação”).

http://economia.publico.clix.pt/noticia.aspx?id=1401571&idCanal=57

Cartoon: o Japão sai da recessão

Leituras: ‘A surpreendente recuperação da Ásia‘ in The Economist

Islândia: após o colapso financeiro a candidatura à UE...

‘Oferta de regresso voluntário apenas foi aceite por dois marroquinos‘ in Le Maroc Aujourd'hui

Les chiffres relatifs au plan de retour volontaire des immigrés résidant en Espagne sont très en dessous des chiffres qui avaient été annoncés par le ministre espagnol du Travail et de l’Immigration, Celestino Corbacho. «Jusqu’au mardi 24 mars, 3.926 demandes ont été présentées selon les chiffres du secrétariat d’Etat espagnol à l’Immigration. Les trois communautés étrangères les plus nombreuses ont été les Equatoriens (1.688 demandes) suivis des Colombiens (713) et les Argentins (393). Pour ce qui est des Marocains, aucun chiffre n’a été dévoilé. Cependant, selon les statistiques qui avaient été présentées il y a 2 mois par ce département, seulement 2 Marocains ont présenté leur demande. Ce chiffre ne fait que confirmer que les Marocains rejettent catégoriquement cette initiative», déclare à ALM Kamal Rahmouni, président de l’Association des travailleurs et immigrés marocains en Espagne (ATIME).
Et d’ajouter que «Beaucoup de Marocains voudraient retourner vivre dans leurs pays d’origine mais les conditions imposées par ce plan leur sont défavorables. Et pour cause, le bénéficiaire est condamné à renoncer à son permis de résidence et de travail. Il ne pourra retourner vivre en Espagne qu'après trois années après son départ. Quel Marocain accepterait cette condition? De plus ce plan ne concerne que les immigrés au chômage alors que bon nombre d’immigrés résidant en Espagne sont sans papiers», déplore M. Rahmouni. La veille, la secrétaire d’Etat espagnole à l’Immigration, Consuelo Rumi avait annoncé que 3.000 immigrés ont déposé des demandes pour bénéficier de ce plan de retour. Dans des déclarations à la Radio nationale espagnole (RNE), Mme Rumi a estimé à 7.000 le nombre des immigrés qui devraient adhérer à cette initiative durant les prochains mois. Le plan adopté en septembre 2008, prévoit de verser de l’argent en deux tranches à tout immigré au chômage souhaitant retourner dans son pays d’origine : 40% du total de l’indemnité de chômage lors de l’inscription, et 60% payés dans le pays d’origine, un mois plus tard. «Pour bénéficier d’une somme respectable, il faut que l’immigré ait cotisé pendant 8 ans. Cependant, le retour n’est pas une question lié à l’argent. En rentrant dans son pays d’origine, l’immigré sera contraint de laisser sa famille et ses enfants dans le pays d’accueil», souligne le président de l’ONG. Selon M. Rahmouni, il faut que le gouvernement marocain prenne des mesures pour favoriser le retour des immigrés. «Il n'y a pas de mesures concrètes. La mise en place d’un plan stratégique s’impose».
Pour rappel, le gouvernement espagnol avait décidé d’adopter ces mesures en raison du brusque coup d’arrêt économique subit par le pays. Le plan du gouvernement espagnol concerne des immigrés originaires des 19 pays avec lesquels l’Espagne a déjà souscrit des accords bilatéraux en matière de sécurité sociale, et d’autres pays qui ont des mécanismes de protection similaire. Parmi les pays concernés par ce plan, figurent notamment le Maroc et l’Équateur, gros pourvoyeurs d’immigrés en Espagne.

http://www.aujourdhui.ma/couverture-details67915.html
JPTF 3009/04/23

‘A overdose fatal do Ocidente‘ por Gabor Steingart in Der Spiegel

The G-20 has agreed on plans to fight the global downturn. But its approach will only lay the foundation for the next, bigger crisis. Instead of "stability, growth, jobs," the summit's real slogan should have been "debt, unemployment, inflation."

Now they're celebrating again. An "historic compromise" had been reached, German Chancellor Angela Merkel said at the conclusion of the G-20 summit in London, while US President Barack Obama spoke of a "turning point" in the fight against the global downturn. Behind the two leaders, the summit's motto could clearly be seen: "stability, growth, jobs."

When the celebrations have died down, it will be easier to look at what actually happened in London with a cool eye. The summit participants took the easy way out. Their decision to pump a further $5 trillion (€3.72 trillion) into the collapsing world economy within the foreseeable future, could indeed prove to be a historical turning point -- but a turning point downwards. In combating this crisis, the international community is in fact laying the foundation for the next crisis, which will be larger. It would probably have been more honest if the summit participants had written "debt, unemployment, inflation" on the wall. The crucial questions went unanswered because they weren't even asked. Why are we in the current situation anyway? Who or what has got us into this mess?

The search for an answer would have revealed that the failure of the markets was preceded by a failure on the part of the state. Wall Street and the banks -- the greedy players of the financial industry -- played an important, but not decisive, role. The bank manager was the dealer that distributed the hot, speculation-based money throughout the nation.

But the poppy farmer sits in the White House. And during his time in office, US President George W. Bush enormously expanded the acreage under cultivation. The chief crop on his farm was the cheap dollar, which eventually flooded the entire world, artificially bloating the banks' balance sheets, creating sham growth and causing a speculative bubble in the US real estate market. The lack of transparency in the financial markets ensured that the poison could spread all around the world.

There are -- even in the modern world -- two things that no private company can do on its own: wage war and print money. Both of those things, however, formed Bush's response to the terrorist attacks of Sept. 11, 2001. Many column inches have already been devoted to Bush's first mistake, the invasion of Baghdad. But his second error -- flooding the global economy with trillions of dollars of cheap money -- has barely been acknowledged.

No other president has ever printed money and expanded the money supply with such abandon as Bush. This new money -- and therein lies its danger -- was not backed by real value in the form of goods or services. The measure may have had the desired effect -- the world economy revived, at least initially. And US consumption kept the global economy going for years. But the growth rates generated in the process were illusionary. The US had begun to hallucinate.

The addiction to new cash injections was chronic. The US had allowed itself to sink into an abject lifestyle. It sold more and more billions in new government bonds in order to preserve the appearance of a prosperous nation. To make matters worse, private households copied the example of the state. The average American now lives from hand to mouth and has 15 credit cards. The savings rate is almost zero. At the end of the Bush era, 75 percent of global savings were flowing into the US.

The president and the head of the Federal Reserve, Alan Greenspan, knew about the problem very well. Perhaps the Americans even knew just how irresponsible their actions were -- at any rate, they did everything they could to hide them from the world. Since 2006, figures for the money supply -- in other words, the total number of dollars in circulation -- have no longer been published in the US. As a result, a statistic which is regarded by the European Central Bank as a key indicator is now treated as a state secret in the US.

Only on the basis of independent estimates can the outside world get a sense of the internal erosion of what was once the strongest currency in the world. These estimates report a steep rise in the amount of money in circulation. Since the decision to keep the figures confidential, the growth rate for the expansion of the money supply has tripled. Last year alone, the money supply increased by 17 percent. As a comparison, the money in circulation in Europe grew by a mere 5 percent during the same period.

But the change of government in Washington has not brought a return to self-restraint and solidity. On the contrary, it has led to further abandon. Barack Obama has continued the course towards greater and greater state debt -- and increased the pace. One-third of his budget is no longer covered by revenues. The only things which are currently running at full production in the US are the printing presses at the Treasury.

At the summit in London, delegates talked about everything -- except this issue. As a result, no attention was given to the fact that the crisis is being fought with the same instrument that caused it in the first place. The acreage for cheap dollars will now be extended once again. Only this time, the state is also acting as the dealer, so that it can personally take care of how the trillions are distributed.

The International Money Fund was authorized to double, and later triple, its assistance funds -- by borrowing more. The World Bank is also being authorized to increase its borrowing. All the participating countries want to help their economies through state guarantees, which, should they be made use of, would result in a huge increase in the national debt. The US is preparing a new, debt-financed economic stimulus package. Other countries will probably follow its example.

We live in truly historic times -- in that respect, German Chancellor Angela Merkel is right. The West may very well be giving itself a fatal overdose.

http://www.spiegel.de/international/world/0,1518,druck-617224,00.html
JPTF 2009/04/04

G20: ‘Divididos nos mantemos‘ in The Economist

World leaders are descending on London, just as anti-capitalist protesters prepare to unfurl their banners. Barack Obama, who remains widely popular at home and abroad, met Gordon Brown, the British prime minister, on Wednesday April 1st. Mr Obama conceded that “We're not going to agree on every point”. On the eve of the G20 summit the two men should be concerned that too little is being done to respond to the worst economic slump since the 1930s. This week the OECD, for example, concluded that global output will shrink by 2.7% in 2009, sharply down on previous estimates.

As worrying, the various leaders gathering in London are not agreed on how to sort out the economic mess. One risk is that the group, if it seeks consensus, will produce an anodyne statement that adds little or nothing to the existing efforts to respond to the global slump. A greater risk is that the summit is so badly divided, and the outcome is so feeble, that dashed expectations actually worsen confidence.

Broadly, the leaders are trying to tackle five sets of issues. The first, and perhaps least contentious, is the need to recapitalise banks and get credit flowing. All big countries with troubled banks have acted assertively on this. America, long the laggard, at last has a detailed plan that has been, mostly, well-received. Now it is a question of waiting to see whether and how the bail-outs, more lending and other initiatives will help to stimulate economies.

But no consensus exists on the need for fiscal stimulus. Just how much governments of rich countries should borrow and spend to boost their economies is disputed. America would like them to commit to stimulus packages of 2% of GDP for this year and again for 2010. But Germany and France disagree vehemently. They argue that their economies rely much more on what are known as “automatic stabilisers”—tools such as unemployment insurance payments, which increase automatically in a recession—thus they do not need as much discretionary stimulus spending as countries, such as America, where welfare payments are much less generous. Deep differences remain. On Tuesday the Japanese prime minister, Taro Aso, said that Germany’s reluctance to use public spending aggressively stemmed from its lack of understanding of the importance of fiscal mobilisation.

A failure to agree on co-ordinating fiscal plans opens the door to forms of protectionism in stimulus packages motivated by worries about stimulus benefits “leaking” abroad. Such policies could complicate the G20’s efforts to come up with ways to deal with what is already the biggest collapse in trade since the second world war. That collapse is not the result of countries imposing tariffs or devaluing currencies, as happened in the 1930s. Still, the World Bank has tracked the actions of the G20 countries in recent months and found that 17 have taken steps that retard trade, often by subtle means. Thus the leaders in London need to commit to much more than a vague promise to resist protectionism. Ideally, they will lay out a comprehensive list of measures going beyond tariffs and export subsidies—to include, for example, domestic subsidies and discriminatory procurement provisions in stimulus packages—and commit to not use them even where permitted by their existing international trade commitments. A general commitment to free trade, though welcome, would not suffice.

On financial regulation, transatlantic differences have narrowed, with America agreeing to broaden its scope to encompass institutions such as hedge funds. But open disagreement remains possible. Mr Sarkozy’s reported threat to “get up and leave” rather than endorse a G20 statement that promises too little on regulating financial markets could make it all the harder to get a deal on fiscal stimulus.

The last big issue for the G20 is what to do about the dramatic collapse in financial flows to developing and emerging economies, the largest of which are represented in the group. The least contentious part of the response is likely to be commitments to meet aid budgets and support more lending by institutions such as the World Bank and the regional development banks, possibly through greater rich-country lending to these institutions.

More fraught, though within reach, are efforts to augment the resources of the IMF and to get the fund to deploy this money rapidly, something which emerging ones are ambivalent about. Success will probably involve getting China to offer to lend the IMF a large sum of money from its massive reserves. But this is unlikely without at least a clear promise of more say in running the fund, hitherto an institution dominated by Europe and America. Reform of the fund will mean giving emerging members more vote shares. Inclusion as part of the Financial Stability Forum, a group of regulators and central bankers charged with the technicalities of financial supervision, may also make them more willing to support an expansion of the fund. But China and other large emerging economies want more than incremental reform. Aware of the complexity of negotiating far-reaching changes to vote shares at the IMF, they would like interim measures demonstrating good faith, such as a commitment to let the leadership of the fund to be decided “irrespective of nationality”. But this is something that G20 finance ministers failed to endorse at a meeting in March.

http://www.economist.com/finance/PrinterFriendly.cfm?story_id=13401931
JPTF 2009/03/02

A crise e os seus reflexos na emigração laboral na Europa in Der Spiegel, 18 de Março de 2009

With unemployment soaring, many European Union countries want the migrant workers they once attracted to go home as quickly as possible. They are sparing no expense or effort to encourage them to leave.

Chultem Choijusuren was watching television in Ulan Bator when he decided to climb aboard the globalization bandwagon. According to an ad he had seen, companies in the Czech Republic were paying young mechanics "€1,000 a month." Most people in the Mongolian steppes were already familiar with the small Eastern European country. After all, many young people from here had studied in Prague during the two countries' Socialist pasts.

Choijusuren borrowed the equivalent of €3,000 ($3,900) from local banks. Part of the money was to pay the €1,500 fee that the Mongolian employment agency was charging for securing him a job. He would also need some money to start life abroad, and the one-way train ticket from the Mongolian capital Ulan Bator to Prague, via Moscow, cost €700 ($910). His wife and eight-year-old daughter waved goodbye as the train left the station.

The Mongolian planned to stay in Europe for perhaps half a year, save a few thousand euros, and return home to open his own car repair shop.

Choijusuren is part of the army of migrants that has moved westward from developing countries in recent years, with one in three chosing Europe as their destination. After the European Union's eastward expansion in 2004, tens of thousands of Asians found jobs in Polish, Czech and Slovak factories, where they were welcomed with open arms to fill the jobs that one million Poles and hundreds of thousands of Czechs, Balts, Slovaks and Hungarians had left behind when they in turn migrated to the wealthier EU countries. Ireland, Great Britain and Sweden, unlike Germany and Austria, had immediately opened their borders to citizens of the new member states, and Spain followed suit two years later.

Construction companies and restaurants in these countries were only too pleased to employ the cheap labor from the East. More and more families hired Polish women to clean their houses or nannies with Slavic accents to put their children to bed. The migrants' wages were modest, and yet in some cases three times as high as they were at home. The newcomers sent as much of their earnings home as possible, injecting capital that helped their hometowns gain unprecedented prosperity.

Once the global economic crisis erupted those days were over. Unemployment has risen twice as fast in Great Britain and Spain as elsewhere in Europe. Now the citizens of Western European countries need the jobs themselves, and their governments are resorting to all kinds of tricks and incentives to get rid of the wiling hands they once needed so badly.

Globalization has turned 200 million people into migrant workers in the last few decades. One fifth of them are Europeans, less than one tenth are Africans and 3 percent are from Latin America. Now the trend is reversing itself, a shift that generally affects those who came from Europe's poorest regions and from emerging and developing nations. Officials at the United Nations International Labor Organization (ILO) fear that 30 million people around the globe could lose their livelihoods by the end of the year.

No More Promised Land

There is considerable temptation to cope with the crisis by taking protectionist steps. In many places, guest workers are now only perceived as competitors. In Great Britain, domestic labor union members recently prevented Italian and Portuguese mechanics working for a Sicilian company from modernizing an oil refinery. British blue-collar workers also protested against the use of Spanish and Polish workers in the construction of a power plant in Nottinghamshire. In London, the Minister of State for Borders and Immigration announced that restrictions would be necessary "to protect British jobs."

"Great Britain was the Promised Land for me," says Andrzej Wlezinski, a Pole, "but that is now over." The 40-year-old plumber plans to return to Lodz, a city in central Poland, at the end of March. He came to London, he says, immediately after the EU's eastward expansion. The British public, who had had to put up with the shoddy work of expensive local tradesmen for decades, welcomed Wlezinski and others like him with plenty of work and good pay. The then Home Secretary Charles Clarke called men like Wlezinski "jewels of our nation."

That is now history. Since last fall, Wlezinski has been constantly searching the Internet for temporary jobs. He used to earn £90 (€114 or $148) a day, but now he counts himself lucky to be making half as much -- if he can find work at all, that is. But he needs to earn £200 ($284) a week to pay for his small dark room, his subway tickets and a few hamburgers. Lodz, he says, is cheaper and a city with "less stress." If he travels home now, after five years in England, he will be carrying hardly anything of value in his two suitcases. Saving money was not an option.

Elsewhere in Europe, migrants willing to return to their native countries can qualify for substantial assistance. Spanish aid organizations, for example, pay travel costs and €450 ($590) in spending money. The country is especially eager to part ways as smoothly as possible with its more than 700,000 Romanians, the largest group of registered immigrants in the country.

The government in Madrid has even taken things a step further by advertising its "Voluntary Return Program" in ads on subway trains and buses. José Luis Rodríguez Zapatero, the Socialist prime minister, hopes that the program will help oust 100,000 of the 2.8 million non-Europeans living legally in Spain.

By last December, 240,000 of them had already filed for unemployment benefits, and that number is likely to have increased since then. If migrant workers agree not to return to Spain for three years, they are repaid their contributions to the unemployment insurance system: 40 percent upfront, and the balance upon return to their native countries.

However, the offer has not been very successful so far, with only 2,000 foreigners signing up in the first three months. Most of them were Ecuadorians who, after Moroccans, are the largest non-European immigrant group.
Those who have worked in Spain legally for an extended period of time are not permitted to take more than €12,000 ($15,600) with them when they leave. This is barely enough to open a small shop or taxi company at home. Dora Aguirre, president of Rumiñahui, an Ecuadorian association in Madrid, has given advice many of her compatriots. "Those who are leaving now," she says, "wanted to do so anyway. These are people at retirement age."

Men who have lost their construction jobs in recent months are often unable to leave. They have brought their wives and children to Spain and are usually stuck in a credit trap. They have bought cars that no one wants now, and some took out mortgages on condominiums with four or five other people. Because no one is willing to take over their share, they have to continue making their payments. "Most of them believe that this is a better place to sit out the economic crisis than Latin America," says Aguirre.

No European country has attracted as many guest workers in recent years as Spain. Since Madrid joined the EU in 1986, the economy has enjoyed consistently high growth rates, and recently was even above the average of the countries that use the euro as their currency. There was more construction in Spain than anywhere else, and there was plenty to do for the country's 5.3 million foreigners, who now make up more than 10 percent of the population.

The Rise of Xenophobia

When the Socialists came into power in 2004, they introduced an amnesty, giving papers to 700,000 illegal non-Europeans with jobs, so as to collect their contributions to the social security system. In addition, Spanish companies recruited workers in Colombia, Ecuador, Mexico, Mauritania, Poland and Bulgaria to pick fruit and vegetables, or to work in hotels, restaurants or the construction sector.

Now the labor market can no longer absorb any additional immigrants, says Labor Minister Celestino Corbacho. Tens of thousands of Spanish citizens are now applying for seasonal jobs picking olives and strawberries in Andalusian villages, thereby displacing the foreign workers. This has inevitably poisoned the climate for migrant workers.

In the Madrid region, governed by the conservative People's Party of Spain, the police force was instructed to crack down on foreigners during I.D. checks and arrest a predetermined number of foreigners without residency or work permits every week. Xenophobia is also growing in France, where President Nicolas Sarkozy, during his election campaign in 2007 had already elevated the "fight against tax and social fraud" to the status of a national responsibility. The deportation quota has been increased considerably since then.

The mood has now shifted to one of overt xenophobia in Italy, which, like Spain, only became a country of immigration in the last decade. Illegal immigrants cannot be "handled with kid gloves," Interior Minister Roberto Maroni said, and the government of Prime Minister Silvio Berlusconi promptly unveiled a new security law. It calls for a fee for residency permits and proof of a minimum level of income. Under the law, the homeless will be fingerprinted, doctors will be required to report patients without papers and citizens' patrols are to be authorized to pick up illegal immigrants. Anyone working in the country illegally will be deported, and those who refuse to leave can be sent to prison for up to four years.

The EU has long had plans to uniformly regulate immigration. But in light of the economic crisis, some governments are looking for a back door. They want to delay new rules that would allow Romanian and Bulgarian workers free access to the entire Western European labor market this year, and 11 EU countries want to hold on to existing restrictions. This, in turn, aggravates the situation in the EU's poorest countries. Authorities in Bucharest, for example, expect to see at least half of the roughly three million Romanians working abroad return home.

Aneliya, 38, and her husband Georgiy, 40, have already returned from Manta Rota, a sunny vacation spot in Portugal's southern Algarve region, to Dolno Ossenovo in southwestern Bulgaria. The construction company where the Bulgarian had worked for eight years notified workers in the summer that it expected a decline in contracts. At home, in her village in the Rila Mountains, Aneliya plans to pick tobacco for €150 ($195) a month, assuming she gets the job. Her wages will have to be enough to support the couple's two sons, 12 and 15, and of course her husband, until he can find work again. The only problem is that 300 of the village's 1,500 residents had moved to Portugal, and 200 are now back.

'My Debts Are Growing'

The struggle for the few available jobs will be relentless. A disaster is taking shape in the job market throughout Bulgaria. Investors are staying away. In December alone, 15,000 workers were laid off, mainly in the metal industry, mining and the textile sector. The government hopes to find jobs in construction projects for the unemployed workers now returning home.

Chultem Choijusuren, the Mongolian mechanic, is also packing his bags. There is no doubt that by the time he arrived in Europe, he had already missed the boat. Choijusuren is now sitting in the unheated office of the Czech-Mongolian Society in Plzen, one of 13,000 Mongolians in the country. A hanging on the wall behind him depicts Genghis Khan, and only a few meters away is a portrait of former Czech President Václav Havel. He never managed to find a job, he says, "but my debts are growing from one day to the next."

When Choijusuren stepped off the train in Prague after a weeklong journey, he was greeted by the Mongolian contact person, but with the news that "there is no more work in the Czech Republic." He found a place to stay with fellow Mongolians, rationed his savings and set out on his own in search of the €1,000 job he had expected. But his efforts were in vain. "There is nothing for me here anymore," he says.

The Czech government will pay his return ticket. It anticipates that there will be well over 30,000 unemployed foreigners in the country in the coming months. Czech authorities are deeply concerned that some of the Vietnamese, Chinese and Mongolian migrant workers could turn to crime.

Prague prefers to dispose of these victims of globalization before that happens.

http://www.spiegel.de/international/europe/0,1518,druck-614065,00.html
JPTF 2009/03/19

Mapa interactivo do ‘NRC Handelsblad‘ com os números da crise na União Europeia

O jornal holandês NRC Handelsblad tem um aqui um interessante mapa interactivo (em inglês) sobre o números da crise económica e financeira nos diversos Estados-membros da União Europeia (crescimento do PIB, dívida pública, défice orçamental, desemprego, etc.). Este recurso permite, por exemplo, aferir rapidamente a situação portuguesa face a outros países europeus num conjunto de indicadores chave.

JPTF 2009/03/04

A crise de deflação: ‘Reino Unido abaixo de zero ‘ in Financial Times, 28 de Fevereiro de 2009

Deflation is coming to the UK. In fact, it is already here. Prices have fallen 3.8 per cent since last September, according to the official retail prices index. When the February figures are published, economists are certain the annual comparison will be negative for the first time in almost half a century.

While Britain is far from alone in watching the inflation figures tumble, it is unusual internationally in the number of contracts for savers, investors, pensioners and employees that are linked to the RPI – many of which were written at a time when falling prices were inconceivable “[Negative inflation] is striking because it hasn’t happened for such a long time,” says Jonathan Loynes of Capital Economics.

Peculiarities in the RPI may make the UK’s plight look worse than it is. The index’s treatment of housing costs – assuming all owner-occupiers have standard variable rate mortgages, which have plummeted as interest rates have come down – is not followed anywhere else and has been the main factor driving it down this year.

As such, the falls in prices already experienced can be viewed as “good” deflation, says Mr Loynes, since they will raise real incomes and help foster a recovery. The danger, though, is that the experience of a falling price index will change expectations about inflation, induce greater caution among consumers and foster further liquidation of assets to repay debts.

This is a significant risk, recognised by the Bank of England and causing worries at the US Federal Reserve and the European Central Bank. All have reiterated their ambition to maintain public expectations of low but positive inflation in recent weeks.

SAVERS

In a deflationary environment, there is little question that savers get a bad deal on interest rates. Mervyn King, Bank of England governor, said as much recently when he expressed “sympathy” with those who had done the right thing and not spent too much.

In January, the British Bankers’ Association reported a sharp outflow of deposits as savers sought higher interest rates elsewhere. Meanwhile, the UK’s building societies – which are dependent on retail deposits for funds – have expressed concerns about the impact that official rates near zero are having on fund flows. Data from the Bank of England show that interest rates on instant-access deposits are now comfortably below 1 per cent and likely to fall even further.

The prospect of outright deflation has even raised questions about whether savers could end up paying for the privilege of keeping cash on deposit. “Absolutely not,” says a spokesman for the Building Societies Association. “Most contracts say that interest is payable from the building society to the customer and not the other way around.”

What tends to happen, he says, is that savings rates linked to inflation promise to pay interest at some spread above the retail price index. If an account paid interest at 2 per cent above RPI and the index registered a 1 per cent decline, the rate paid would be 1 per cent. If RPI fell by 2 per cent or more, the account would pay zero interest.

Economists point out that deflation increases the purchasing power of savings. Some of what savers stand to lose in interest may be recouped by much lower prices for key staples such as food and energy.

Interest rates near zero seemed to have little effect on savers in Japan during the deflationary 1990s. Between September 1995 and January 2001, central bank rates were 0.5 per cent. The savings rate hovered between 10 and nearly 12 per cent of income until 2000. Savings slid after September 2001, when rates were cut to 0.1 per cent, but even then there was no net outflow.

PENSIONERS

Pensioners whose income provider is secure could be some of the big winners from deflation. Helen Ball, a partner at Sackers, the London-based pensions law specialists, says that at the very least they are unlikely to lose out.

Most trust deeds, which govern the award of discretionary increases, were written long before anyone contemplated the possibility of deflation. Even trustees of schemes where the deed implies that pension payments can fall would find it difficult to trim in line with RPI. “Morally, that is very difficult to do. People are expecting an increase to fixed incomes,” she says.

Most UK schemes rise in line with inflation, she says, albeit often up to a set limit. Some trust deeds make no reference to RPI but require annual minimum uplifts, say of 3 per cent, regardless of what inflation is doing.

UK rules require that deferred pensions – the benefits of those who leave their employer before they reach retirement age – have payments adjusted to reflect the effects of inflation. A short bout of deflation is unlikely to significantly dent their incomes.

The one group of retirees who could be harmed are those who have purchased annuities that allow for cuts in the event of deflation, according to Tom McPhail, head of pensions research at Hargreaves Lansdowne.

UK social security payments for retirees are index-linked and, even if inflation is zero, there is a small guaranteed annual uplift.

Most European state pension benefits and some private sector benefits are also index-linked. In France they are adjusted for the costs of living, while in Denmark disability pensions are adjusted in line with wages growth.

In the US, private sector pensions are never uprated for inflation and, in most cases, retirees see incomes fall in real terms as price increases erode purchasing power, according to Alicia Munnell, director of the Center for Retirement Research at Boston College. Deflation could help such pensioners, she says.

INVESTORS

Investors in almost every asset class bar government bonds are likely to be worse off in a deflationary environment, according to Graham Secker, equities strategist at Morgan Stanley. “Deflation is not good news for equities markets generally,” he says. “It is a signal that the economy is very, very weak and that sales and profits are going backwards.”

However, for companies that remain profitable, there will be pressure to maintain dividends, he says. While many companies have a dividend policy of maintaining a pay-out in real terms – ensuring that rises at least keep pace with inflation – they will be under pressure not to reverse themselves in a deflationary environment.

During some of the UK’s most torrid periods of inflation in the 1980s, corporate profits rose strongly because producers could put prices up. In a deflationary environment, the reverse pressures will be in force.

Investors in corporate bonds may find themselves somewhat better off. Interest payments are generally fixed – and even when floating are at a premium to some other interest rates, providing hard cash at a time when prices are falling. However, in a deflationary environment, the companies that issued these bonds are much more likely to default and investors may not get all their principal back.

There are real risks for investors in other asset classes, too. Commercial property, often seen as a risk halfway between equities and bonds, is rapidly falling in value. In the UK, virtually all gains since 2002 have been wiped out, and values are falling in continental Europe and in the US. Those who purchased it for the rental income are feeling the pinch, too; insolvent occupiers cannot pay rents.

The one group of investors certain to do well – at least initially – are those buying government bonds, Mr Secker notes. Governments rarely default and these bonds still carry regular income payments.

WORKERS

Pay is likely to be one of the most contentious issues debated during a bout of deflation.

Alistair Hatchett of Incomes Data Services, which tracks pay claims, says employers and workers are in uncharted territory. For decades, the rule of thumb was that salaries edged out inflation by 1.5 to 2 percentage points, allowing wages to grow in real terms. But in recent years, national average earnings have been subdued and lower than inflation, he says. A number of employers in the UK have already announced pay freezes, while others are discussing pay cuts as a jobs-saving measure.

The Engineering Employers’ Federation, whose members work largely in manufacturing, says that results of its wages survey for the quarter ending in January showed the average pay rise agreed over the period was 1.8 per cent, down from 2.7 per cent in the three months to December.

In January alone, the average wage rise was 1.6 per cent, down from 1.8 per cent last December and 2.9 per cent in November. “We had to double-check the numbers a few times because the scale of the movement was so unprecedented,” says a spokesman for the federation, noting that pay deals rarely move by more than 0.1 or 0.2 per cent over rolling three-month periods. The January survey, he adds, is particularly important because that is when most pay bargains are struck in the manufacturing sector.

Indeed, in light of the current outlook for inflation, the three-year wage deals that government struck with public sector workers last year, where annual pay rises range from 2.3 to 2.6 per cent, look generous.

Several UK unions struck deals last April at 5 per cent, while others settled in September and October 2008 with pay rises of over 4 per cent. Only one of the employers involved, British Midlands, is seeking to renegotiate. “The interesting thing is that there has been very little reneging on long-term deals,” Mr Hatchett said.

http://www.ft.com/cms/s/0/ac70b0fa-050c-11de-8166-000077b07658.html
JPTF 2009/02/28

Cartoon: ‘Bancos para produtos tóxicos‘ in The Irish Times

‘Economia norte-americana perdeu 598.000 empregos em Janeiro‘ in Financial Times, 6 de Fevereiro de 2009

The US economy lost more than half a million jobs in January for the third month running, figures showed on Friday, marking the deepest cut in 34 years.

The number of jobs lost last month reached 598,000, while the unemployment rate – 4.4 per cent before the credit crisis – jumped to 7.6 per cent in January, its highest level since 1992.

Economists had expected non-farm payrolls to drop by 525,000 and the unemployment rate to rise to 7.5 per cent, up from 7.2 per cent the month before. The total number of job losses since the recession began in December 2007 has now reached 3.6m, with half of this decline occurring during the last three months, according to the Bureau of Labor Statistics.

Friday’s results raised the sense of urgency for the US government to pass a stimulus package. Christina Romer, chair of the President’s Council of Economic Advisers, said that without fiscal action the US economy could lose millions more jobs and the unemployment rate could reach double digits.

“The situation could not be more serious,” President Barack Obama said on Friday, pushing Congress to pass a proposed economic recovery package. “These numbers demand action.”

The data did little to dent risk appetite in global equity markets, however, as investors continued to focus on the US government’s plans for further intervention in the financial system. US stock futures and European markets remained in positive territory.

The dollar consolidated its gains against the yen, rising 0.6 per cent to Y91.66, and edged 0.1 per cent higher to SFr1.1718 against the Swiss franc but was little changed against the euro at $1.2796.

The yield on the two-year Treasury note was little changed at 0.9 per cent while the yield on the 10-year Treasury note was 3 basis points higher at 2.943 per cent.

”These employment numbers are dreadful, but does it matter?” said Alan Ruskin, senior analyst at RBS’s global banking and markets division. “Not for the market today. All the prior labour market indicators, notably the claims data, gave a feeling of foreboding before these numbers. The data broadly delivered.”

Few industries were spared from losses last month. The manufacturing sector lost 207,000 jobs, a 1.6 per cent drop and the biggest monthly decline since October 1982. Construction shed 111,000 jobs, the retail sector lost 45,000 and 42,000 jobs in financial services disappeared. The healthcare and private education sectors added jobs in the month.

“Another horrific report, showing job losses across the economy,” said Ian Sheperdson, chief US economist at High Frequency Economics.

A bright note was that hourly earnings rose 0.3 per cent in January and are up 3.9 per cent on the year. However, few economists expect this to last.

“With demand for labour evaporating, wage increases of this magnitude will be history very soon,” noted Joshua Shapiro, chief US economist at MFR.

Unemployment has risen by more than a full percentage point since September, when the crisis intensified with the collapse of Lehman Brothers. There was also a further rise in the number of discouraged workers no longer actively seeking employment. According to economists at RDQ Economics, adjusting for those who would like a job but are not looking, the unemployment rate is 10.8 per cent.

Earlier this week the monthly survey from ADP Employer Services, which tracks private non-farm payroll employment, showed further deterioration in the labour market. That result was better than economists expected and followed a more dire December report estimating 659,000 jobs lost after a revision.

The labour department also revealed on Thursday that the number of US workers claiming unemployment benefits for the first time surpassed 600,000 last week, reaching a new 26-year high. Initial jobless claims reached 626,000 in the week ending January 31, up from 591,000 the week before, pointing to further job losses in February.

Last month was marked by broad cuts from corporate bellwethers in the US and Europe, culminating on January 26 when companies slashed more than 76,000 jobs from their payrolls to confront the deepening economic downturn. The day was one of the most brutal yet for workers on both sides of the Atlantic.

US corporate groups such as Caterpillar, General Motors, Sprint Nextel and Home Depot led the retreat, as the domestic recession coupled with tough export markets continued to take a heavy toll on their businesses. Pfizer, the drugs group, added to the tally, saying jobs would be lost in its takeover of Wyeth.

Retailers have also been hit particularly hard this year, announcing several thousand job cuts, including 1,100 jobs at Saks and 7,000 at Macy’s. Most have also indicated that they are sharply reducing inventory levels.

Last week government figures showed that the US economy contracted by an annualised 3.8 per cent in the final quarter of 2008. It was a much smaller percentage than expected but still its worst performance since 1982.

http://www.ft.com/cms/s/0/34d6448a-f44d-11dd-8e76-0000779fd2ac.html
JPTF 2009/02/06