Tuesday, December 30, 2014

It's Baaack: Looming Greek Elections Threaten To Re-ignite the Euro Crisis

If at first you don't succeed, try, try again......  aka third time unlucky.

The Euro crisis has all the signs of being back amongst us, and this time it may be here to stay. After two earlier false alerts - one in July around the collapse of the Portuguese Banco Espirito Santo, and another in October over the state of the Greek bailout negotiations - the announcement in early December that the Greek presidential selection process was being brought forward to the end of the month sent  markets reeling off into a complete tizzy.

In a development reminiscent of the heady days of 2012 yields on Greek 10yr bonds surged over a percentage point in the two days following the announcement, while the stock market fell by the most on a single day since 1987. 5yr CDS on Greek debt were also up sharply, and even more significantly, the yield curve inverted with 3 year debt started to move above that on ten year debt. Yield inversion on sovereign bonds is often seen as a symptom of potential default as investors demand ever more for holding short term debt.
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Monday, October 20, 2014

Does The Secular Stagnation Theory Have Any Sort of Validity?

In a number of blog-posts (Paul Krugman's Bicycling Problem, On Bubble Business Bound, The Expectations Fairy) I have examined some of the implications of the theory of secular stagnation. But I haven't up to now argued why I think the hypothesis that Japan and some parts of Europe are suffering from some kind of secular stagnation could well be a valid one.

Strangely, while I would suggest the most obviously affected countries are those mentioned above, most of the debate has centered around the US economy. Since it is not at all clear that the US economy is actually suffering from either a liquidity trap or secular stagnation at this point, this has lead many to question whether the idea might not be ill-founded. The Economist, for example, in a revue article (Fad or Fact) of Teulings and Baldwin's Vox e-book  on the topic conclude the concept "remains a baggy one", one which is "arguably too capacious for its own good".
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Monday, October 13, 2014

Eurocrisis Round Two, Blame the Germans Edition

"What strikes me, also, is the extent of intellectual confusion that remains." - Paul Krugman, Europanic 2.0

“The problem is that Germany has continued to maintain highly competitive labor costs and run huge surpluses since the bubble burst — and that in a depressed world economy, this makes Germany a significant part of the problem.” – Paul Krugman, German Surpluses: This Time Is Different

According to one fairly widespread (and recently much in vogue) theory about the Euro crisis, Germany bears a large part of the responsibility for the current mess. The view is met with a variety of responses inside the country, ranging from horror to amazement. Naturally, if the argument were simply about the way Angela Merkel has handled the crisis – no Eurobonds, no debt forgiveness, systematic fiscal austerity – then possibly some of it could be understood. But no, things go beyond that, Germany has been too successful, too competitive, and this has presented a big problem for its partners who simply haven’t been able to keep up.
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Friday, September 19, 2014

Does Abenomics Work? - The Doubts Grow

Is something in the air? Do I detect a change in consensus on the way things are going in Japan? Certainly a slew of articles have been published in the financial press over the last month questioning where the Abenomics experiment is headed for. The general conclusion seems to be that wherever it is it is certainly not the originally designated endpoint. Thus the Economist.
"It is crisis mode in the Kantei, the office of Shinzo Abe, Japan’s prime minister. A succession of awful data has pummelled his economic programme, which consists of three “arrows”: a radical monetary easing, a big fiscal stimulus and a series of structural reforms. On September 8th revised figures showed that GDP shrank by 1.8% in the second quarter, or by 7.1% on an annualised basis, even worse than the initial estimate of 1.7%."
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Tuesday, September 2, 2014

Secular Stagnation Part III - The Expectations Fairy

The classic solution to the problem posed by a demand slump when monetary policy becomes ineffective due to the operation of a liquidity trap is a credible commitment to future inflation (see for example Paul Krugman's 1998 Japan's Trap). This commitment reduces the real interest rate despite the presence of a zero bound and thus stimulates spending, and it does so through the impact of the commitment on expectations about future inflation.

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Wednesday, August 27, 2014

Secular Stagnation Part II - On Bubble Business Bound

"I now suspect that the kind of moderate economic policy regime...... that by and large lets markets work, but in which the government is ready both to rein in excesses and fight slumps – is inherently unstable."
Paul Krugman - The Instability of Moderation

"Conventional macreconomic theory leaves us in a very serious problem, because we all seem to agree that whereas you can keep the federal funds rate at a low level forever it's much harder to do extraordinary measures that go beyond that forever. But the underlying problem may be there forever. It's much more difficult to say, well we only needed deficits during the short period of the crisis if equilibrium interest rates can't be achieved given the prevailing rate of inflation."
Larry Summers - IMF 14th Annual Research Conference In Honor Of Stanley Fisher

Read more here.

The Italian Runaway Train

There has been lot's of debate in the press and in academic circles over the last week or so about whether Italy's latest contraction constitutes a triple dip recession or simply a continuation of what's been going on over many many years. This is an interesting theoretical nicety, but in fact what is happening in Italy at the moment goes a lot further than problems faced by a recession dating committee. The real issue that arises in the context of the Euro Area at the moment is a far more specific one. Will the ECB do QE? And if it does when will it push the button? And what could happen if it doesn't. Perhaps a case study of the Italian case is worth the effort here. What is likely to happen to Italian debt if there is no ECB intervention soon? Let's take a look at the dynamics.

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Monday, August 25, 2014

What Is The Risk The Euro Crisis Will Reignite?

The euro zone crisis is not back -- at least not yet.

Recent movements in global markets following concerns about Portugal’s Banco Espirito Santo really had as much to do with market nerves after a long spell of repressed volatility as it did with the state of the bank’s balance sheet. Despite the current calm, everyone knows that volatility will return one day, and no one wants to be caught on the back foot when it does arrive. So the initial response is to hit the “sell” button and then ask questions.

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Secular Stagnation Part 1 - Paul Krugman's Bicycling Problem

"What’s really happening fast is the demographic transition, with Europe very quickly turning Japanese."
Paul Krugman - For Bonds, This Time is Different

Ever since Larry Summers gave his game-changing speech at last autumn's IMF research conference the back-and-forth flow of arguments about secular stagnation has been almost non-stop (indeed Larry himself now has a webpage dedicated to the topic). First to dive into the swimming pool after the sounding of the starting pistol was Paul Krugman, with a series of blogposts and NYT articles (here, here, here, here, here, here, and here).  These were followed/accompanied by a series of commentaries (both for and against), and then finally we got to one of the potential end points of the argument, the "negative natural interest rates for ever and ever" model produced by Gauti Eggertsson and Neil Mehrotra (here) - summarised by Krugman in his memorable "Stagnation Without End, Amen" post.   A fuller bibliography of major milestones in the secular stagnation issue can be found at the foot of this post, but I'm going to eat up most of the column space here looking at just one Krugmans arguments - the one contained in Demography and the Bicycle Effect - since in many ways in goes right to the nub of the issue.

Read more......

Sunday, August 24, 2014

Spain and the IMF: Round the Bend or Out of the Woods?

"Spain has turned the corner". With this stark statement the IMF opened it's annual Article IV consultation report for 2014. Naturally the statement rankled, with this author among others, because at first sight it seems to be saying something which on closer reading of the report you find it isn't. At best it's misleading, possibly from a PR point of view intentionally so, but then Article IV reports are supposed to be more sober, measured assessments.

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Japan Inflation At A 32 Year High?

Just in case anyone was in any doubt last weeks newspaper  headlines blared it out for us loud and clear - Japanese inflation is back, and has even hit levels last seen in 1982.

In fact consumer prices in Japan rose at an annual rate of 3.4% in May according to the Bank of Japan's preferred measure, driven higher from one month to another by the growing impact of the April sales tax hike. The May surge in inflation follows a previous jump to 3.2%  in April, up from 1.3% in March. Apart from the tax hike, the delayed impact of last years yen devaluation is still being felt: electricity charges rose 11.4% year on year in May, gasoline was up 9.6%, while fresh seafood prices climbed 14.3%.

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Saturday, August 23, 2014

Will Japan Re-enter Deflation in April 2015?

Reading the most recent statements from Bank of Japan Governor Haruhiko Kuroda or Finance Minister Taro Aso you would get the impression that the days of deflation are now well and truly numbered in Japan. Martin Schulz, economist at Fujitsu Research Institute in Tokyo, goes even further. “Deflation is over in Japan,” he told Bloomberg Television First Up’s Angie Lau . Even Japan’s industrial leaders now believe inflation is here to stay: the country’s inflation rate will be 1.5 percent in the spring of 2015, and 1.7 percent in 2017, according to average forecasts in a Bank of Japan survey conducted in March this year.

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Monday, June 23, 2014

Sunday, June 22, 2014

The A-b-e Of Economics

And the world said "Let Shinzo Abe be", and all was light.

A new craze is sweeping the planet. The image I have in mind isn't exactly that of the community of central bankers all dancing the Harlem Shake in unison, but for all the economic sense it has it might as well be. In fact the craze is called "Abenomics" and it is gathering adepts in financial markets across the globe. A precursor in Japanese history has already been found for the movement, Korekiyo Takahashi, who was the country's finance minister during the key years of the 1930s depression. Even a book has been written to extol his virtues entitled “From Foot Soldier to FinanceMinister: Takahashi Korekiyo, Japan’s Keynes." Unsurprisingly it was an immediate hit with Japanese academics when it came out in 2010.

Read more about my new Japan book......

Saturday, June 21, 2014

The "Hot Labour" Phenomenon

Strong growth. Rising real estate prices. Rapid job creation. Surging immigration. This list sums up the Switzerland of 2014 down to a tee. However, it also sounds like a description of what things were like in Spain in 2007 - shortly before the country's economy fell off a cliff. What follows is a conversation between financial journalist Detlef Gürtler and economist and crisis expert Edward Hugh about possible parallels and differences between the two booms, and the role of a new phenomenon which Hugh describes as "Hot Labour".

Hugh argues that this is a new phenomenon, and on the increase as a result of central bank bubble inducing activity. While immigration is a vital tool aiding economies to manage the population ageing process, it is important that economic activities be balanced. Immigration fueling boom/bust cycles is far from innocuous, and harm a country just as much as a sudden stop in capital flows if the immigration is followed by emigration.   

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Sunday, June 8, 2014

As Good As It Gets In Latvia?

For Maurice Pialat, champion of the marginal centre.
"This raises a final question, which, while not central to the issues of this paper, is nevertheless intriguing: How can a country with a low minimum wage, weak unions, limited unemployment insurance and employment protection, have such a high natural rate [of unemployment]?"

"To summarize, the actual unemployment rate is still probably higher than, but close to the natural rate of unemployment. Latvia may well want to take measures to reduce its natural rate, but the recovery from the slump is largely complete."
Boom, Bust, Recovery Forensics of the Latvia Crisis, Olivier Blanchard, Mark Griffiths and Bertrand Gruss

Read More....

Friday, June 6, 2014

The Czech Economy That Didn't Bounce?

The Czech republic has been making the news recently. On the one hand the country has been on the receiving end of massive, devastating floods, while on the other the country's government was brought to the brink of collapse (and beyond)  by the resignation  of Prime Minister Petr Necas following the arrest of one of his most trusted aides on corruption charges. After the deluge I suppose.

Curiously both these events serve to highlight one important underlying reality - Czech voters are deeply dissatisfied and in a highly skeptical mood, since following seven quarters without growth the country's economy is evidently stuck in the doldrums. The worst part is things look highly unlikely to improve anytime soon.


Thursday, June 5, 2014

The Suitcase Mood

Suitcase mood is a Russian website with travel and tourism content. The term is also a popular expression widely used within Russian culture to describe the state of mind which grips a voyager on the brink of a journey. The mood is often associated with a ritual which involves the departing person sitting, sometimes accompanied by family or friends, in the vicinity (when not actually on top of) the packed suitcase, ostensibly to try to remember if there is anything they have forgotten to take and bid loved ones farewell. Sometimes, however,  the phrase can take on a different, and rather darker, meaning. It can be used to describe someone who is fed up with the status quo, has become footloose and decided they simply want out. "This will never change," might be the thought, "I'm leaving". In my mind's eye I even see the person having the thought seated on their suitcase adopting the posture of Rodin's thinker, turning over and over again whether they are doing the right thing, even while those around them vent their sadness in a bath of tears and alcohol. Or maybe I have just been watching too many Russian movies.

Naturally such a custom does not exist along Europe's Southern fringe, which doesn't mean it couldn't be invented since the young and educated are increasingly leaving much to the chagrin of those they leave behind.

But the "packing up and leaving" variant has now become the predominant one in another country suffering brain flight, one which has does have significant historical associations with traditional Russian culture: Ukraine. The suitcase mood is alive and well among a growing number of young Ukrainians, as journalist Vitaly Haidukevych discovered when he conducted an online survey on the subject via his facebook page,
"The suitcase mood is there. [...] Young, promising people have it. [...] Since they are young, they are leaving not for the sake of immediate earnings [...], but to grow roots for the future. [...] I assume that these people asked themselves whether it was possible to change the state of things in the country – and the answer was ‘no'. [...] Some are leaving for exactly the same reason others are reluctant to join [the anti-regime] protests – they care about themselves, their families and their future. [...] “what are those rapid movements for, you've got kids, think about them” – this is what those who've stayed think. And those who are leaving [...] do not want to wait for the tax authorities to come and take away their last pair of underpants. [...]"

Read more......

Tuesday, June 3, 2014

The Great Portuguese Hollowing Out

With every passing day Portugal has less and less economy left, while fewer and fewer people remain to try to pay down the debt.

As Portuguese President Aníbal Cavaco Silva once put it, "A country without children is a nation without a future." He was, of course, referring to his country’s ultra-low birth rate, which is just over 1.3 (Tfr) and has been below replacement level (2.1Tfr) since the early 1980s. In 2012 only just over 90,000 children were born in the country, the lowest number in more than a century – you need to go back to the nineteenth century to find numbers like the ones we have been seeing since the crisis really took hold.

But added to this longstanding, yet unaddressed, problem there is now another, just as dangerous, one. High unemployment levels and the lack of job opportunities are leading an ever increasing number of young Portuguese to emigrate. The numbers are large, possibly a million over the last decade, victims of the country’s ridiculously low growth rate – under 1% a year. And the departures are accelerating. Jose Cesario, secretary of state for emigrant communities, estimated recently that up to 240,000 people may have left since the start of 2011.

Read more....

Monday, June 2, 2014

The Shortgage of Bulgarians Inside Bulgaria

According to Angela Merkel, speaking in the German city of Mainz in mid February,  European countries struggling with the fallout of the euro-area debt crisis have much to learn from East Germany’s experience with economic overhaul following the fall of the Berlin Wall. In the main she was speaking about the need for reform, something on which we can all agree. “At the beginning of the 21st century", she said, "Germany was the sick man of Europe and that we are where we are today also has to do with reforms we carried out in the past. That’s why we can say in Europe that change can lead to good.”

But there was one tiny little detail she forgot to mention. During the post unification period East Germany's population went into melt-down mode. New York Times Columnist Nicholas Kulish put it like this:
Unemployment in the former East Germany remains double what it is in the west, and in some regions the number of women between the ages of 20 and 30 has dropped by more than 30 percent. In all, roughly 1.7 million people have left the former East Germany since the fall of the Berlin Wall, around 12 percent of the population, a continuing process even in the few years before the economic crisis began to bite.

And the population decline is about to get much worse, as a result of a demographic time bomb known by the innocuous-sounding name “the kink,” which followed the end of Communism. The birth rate collapsed in the former East Germany in those early, uncertain years so completely that the drop is comparable only to times of war, according to Reiner Klingholz, director of the Berlin Institute for Population and Development. “For a number of years East Germans just stopped having children,” Dr. Klingholz said.

The newspaper Frankfurter Allgemeine Zeitung reported recently that although 14,000 young people would earn their high school diplomas this year in Saxony, only 7,500 would do so next year. Since 1989, about 2,000 schools have closed across the former East Germany because of a scarcity of children.
Now this situation is quite serious, and needs a long term solution, but it is not as serious as what is currently happening to Latvia, or Bulgaria, or a number of the other former communist states. Unless, of course, the lesson Angela would like to draw our attention to is that East Germany managed to salvage something from what would otherwise be population wreckage by sneaking in under the shelter of another state, with a centralized system of support for pensions and health care. Somehow I doubt it, but perhaps this is what we need to think more about. The EU needs a pan European health and pension system, to distribute the burden equitably. This is the conclusion I reached during my last visit to Riga. It isn't just a Euro related issue, it is to do with having a unified labour market, with people able to move to where the jobs exist, and the pay is better. For years people complained about the absence of labour mobility in the EU. Now we have it, the flaw in the institutional infrastructure is obvious.

Read more here.

Sunday, June 1, 2014

Portugal - Please Switch The Lights Off When You Leave!

The recent decision by the Portuguese constitutional court to unwind public sector salary cuts included by the government in its austerity measures has once more given rise to speculation  the country may not meet it's 4.5% deficit target for 2012. The court  - which ruled the non-payment of the two traditional Christmas and Summer salary payments  for the years 2012 through 2014 was unconstitutional -  took the view that since the measure did not also apply to the private sector, it was discriminatory. Whatever view we may take on how the Portuguese Constitution defines "discrimination" the important detail to note is that  the decision will not apply to 2012, and will hence only have the impact of forcing the government to find additional adjustments for 2013 and 2014, or at least a new formulation which allows them to constitutionally cut public sector pay.

Nonetheless, despite the fact it will  not affect this years fiscal effort the coincidence of the timing of the court decision with the appearance of a report from the parliamentary commission responsible for monitoring the execution of this years budget only served to heighten nervousness about the possibility that, with unemployment rising more sharply than anticipated and the economic recession still accelerating, this years deficit numbers may not add up as planned.

The country is facing a deep ongoing recession with a contraction of the order of 3.5% expected  this year, and the outlook for the second half of the year is no shaping up as though it may well be tougher than the first half. In addition, with the European sovereign debt crisis threatening to cast its long shadow right across next year, it looks increasingly unlikely that the country will be able to go back to the bond markets in September 2013 as planned. So September may well be a good month to make some needed revisions to the existing IMF programme.
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Portugal is making progress in reducing its fiscal deficit, even if it may fail to precisely meet this years target. But it is not making sufficient progress in reducing external imbalances, and in achieving international competitiveness. As a result sustainable economic growth and stable job creation still seem some years away. In the meantime young educated Portuguese are increasingly upping and leaving the country in the search for a better life elsewhere. This negative dynamic needs to be broken, and Troika representatives instead of repeating the same old policy errors need to take a fresh look, and with an open mind, at the situation.

Friday, March 7, 2014

¿Adiós a la Crisis?

España – ¿Qué clase de Recuperación Económica? Introducción

Es evidente que la economía española da muchas señales de estar en mejores condiciones que hace un año. Pero ¿hacia dónde vamos? ¿Qué tipo de crecimiento económico nos espera realmente?

¿Es cierto que hemos superado la crisis…, que ha pasado lo peor…, o simplemente estamos delante de otra decepción, de otra salida en falso? Es evidente que habrá un antes y un después del año 2008, pero ¿exactamente que es lo que podemos esperar del futuro próximo? Este libro intenta ir más allá de los tópicos del tipo “estirábamos más el brazo que la manga” buscando las raíces de los problemas que caracterizan la situación actual para intentar dar una respuesta que ayude al lector a orientarse en el nuevo mundo hacia el cual estamos ineluctablemente caminando.

La economía española ha vuelto a la senda de crecimiento, por frágil que sea su trayectoria actual. El sector de exportaciones tira como nunca, el balance de comercio está registrando números positivos y el déficit en cuenta corriente ya es historia. El mercado laboral se ha estabilizado. Quizás la economía no genere muchos nuevos puestos de trabajo, y mucho menos en forma de contratos fijos, pero por lo menos el paro ya ha dejado de subir.

Además el gobierno no tiene dificultades para financiarse y la prima de riesgo ha bajado considerablemente. Las reformas son constantes y la confianza ha vuelto a los mercados y a las empresas. Entonces todo va bien, ¿o no?

Debajo de esa capa de alegría queda una realidad que no ha cambiado sustancialmente en el último año. Esa realidad se encuentra en la vida cotidiana de la gran mayoría de españoles y españolas donde se presentan las mismas dificultades como antes y donde todavía se mira el futuro con cierta aprehensión. Y no hay de olvidar que ese intento de salir adelante no es la primera vez que lo hacemos, en 2009 algunos vislumbraban unos primeros brotes verdes y de hecho en 2010 salimos de la primera y grande recesión solo para recaer en la segunda en 2011. Mientras podemos estar seguros que hemos salido de la última recesión, no podemos ser tan seguros que no hay otra, la tercera, esperándonos a la vuelta de la próxima esquina.

1/ Sin Rescate Pero Todavía En Crisis

Desde que Mario Draghi anunció su programa OMT, la crisis de la zona Euro ha ido de más a menos. Las primas de riesgo han bajado en toda la periferia, y a fecha de hoy nadie sugiere que ni la economía italiana ni la española necesiten rescates. Pero ¿esa tregua frágil que hay con los mercados durará para siempre? Al final ¿no acabaran saliendo uno o más países de la moneda común? Y España, ¿tiene que salir?

Se ha hablado mucho de que el mundo no volverá a ser nunca como aquello que hemos conocido en los primeros años de este siglo. Los países desarrollados no pueden mantener las mismas expectativas por varias razones. En primer lugar, los países emergentes están ganando terreno y generando competencia, y lo están haciendo cada día con más insistencia. Además, nuestras sociedades tienen una herencia de deuda que representa un lastre para el consumo y que costará a bajar. Y por si estos dos factores fueran poco, tenemos por delante unos cambios demográficos que serán, por no decir más, inauditos.

La confluencia de estas circunstancias ha llevado a algunos economistas a hablar de un “nuevo normal”, un listón diferente para medir nuestro progreso económico. En esta línea cabe la idea de que la palabra recuperación ya tiene otro significado, igual que la palabra recesión. Según este argumento en el futuro las expansiones serán más débiles y más cortas, mientras las recesiones serán más frecuentes y a menudo más fuertes.

Entonces se planea la pregunta sobre España - ¿Existe la posibilidad que el país vuelve a caer?

La duda parece más que razonable porque a pesar de la acumulación de señales esperanzadoras todavía queda indicadores que tozudamente resisten la tónica positiva – el paro, el precio de la vivienda, la morosidad en los bancos, el número de desahucios y sobre todo en la tendencia negativa consumo interno. La sociedad española conjunto no tiene la sensación de estar ante un nuevo renacimiento, sus instituciones más bien desprenden un aire de estancamiento y de decadencia, hasta el punto que incluso el número de habitantes del país está bajando. Porque este ambiente de crisis resiste tanto?

2/ ¿Es Verdad Que Hay Que Bajar Los Salarios un Diez Por ciento?

Raras veces una propuesta ha unido todos los componentes de la sociedad española en contra y con una sola voz, pero la propuesta del ultimo informo del fondo monetario sobre el país lo ha conseguido. La idea de que España tenía que hacer una esfuerza más para lograr la generación de empleo a través de una reducción sistemática de salarios ha generado una rechazo colectivo, a la vez que generar un alud de críticas sobre la institución multilateral. Debe ser que ha tocado un punto muy sensible. ¿Pero porque? Y ¿porque El Fundo ha empeñado en hacer una propuesta tan controvertida da si era evidente que la medida era de tan poca monta? Para entender esta verdadera rompecabezas hay que remontar un poco en la historia de la crisis que afecta a España.

3/ ¿Si Los Bancos Están Bien Capitalizados, Porque No Hay Crédito? A pesar de un sinfín de reformas el sistema financiero todavía no dispone de toda esa excelente salud que muchos han siempre revindicado. El sistema parece bien capitalizado de momento, pero la morosidad sigue creciendo y el crédito o bien no fluye, o cuando fluye resulta caro. Entonces,¿ que hay que hacer para que la economía disfrute de un sistema financiero que funcione como Dios manda?

4/ ¿Que Puedo Esperar cobrar en concepto de Pensión?

Otra cosa que no ha quedado claro es el futuro del sistema de pensiones. La sociedad española envejece cada vez más. La tasa de dependencia de las personas con más de 65 años crecerá de forma dramática durante las próximas dos décadas. Antes se veía la inmigración como una forma de sostener el sistema, pero como muchos de estos inmigrantes ya van marchando en busca de trabajo y el número de personas cotizando está muy por debajo del nivel de antes de la crisis, el equilibrio del sistema de pensiones está en peligro. Se ha hecho una reforma del sistema y otra está en preparación, pero ¿qué seguridad tenemos sobre el nivel de pensión que cobraremos?

5/ Mariano Rajoy Puede Bajar Impuestos en 2015

6/ ¿La Deflación Es Un Problema?

7/ ¿Sociedades Sin Crecimiento?

Los ecologistas siempre han soñado en un futuro donde el crecimiento será cero o, mejor todavía, negativo. Ahora parece que ese sueño está a punto de hacerse realidad, pero no de la forma ideada. Lo que era un ideal podría acabar imponiéndose por la fuerza. Después de varias décadas de natalidad muy baja las fuerzas laborales en la mayoría de los países desarrollados han empezado a bajar. Curiosamente, en los países del sur de Europa el punto de inflexión ha coincidido con la llegada de la crisis. En parte esto no es una pura casualidad porque de hecho el crecimiento natural de la población ha estado estancado desde hace años pero la realidad subyacente fue mitigada debido a la llegada de inmigrantes. Ahora, con la falta de oportunidad no solo ha vuelto negativo el saldo de inmigrantes sinó que además una parte de los jóvenes de este país está marchando, poniendo en duda en un caso extremo como es Portugal la sostenibilidad del país en un futuro no muy lejano.

La situación de España no es tan dramática, pero no deja de ser preocupante. Desde 2011 la velocidad de salida de jóvenes está creciendo de forma notable y en 2012 la población del país ha empezado a bajar.

Entonces estas sociedades se enfrentan a un doble dificultad, porque la falta de crecimiento a corto plazo hace que el mercado laboral se estanque, cosa que provoca la salida de capital humano la cual cosa a su vez hace que la tasa potencial de crecimiento a medio plazo se reduzca generando una suerte de circulo vicioso.

El futuro es siempre imprevisible, pero parece lógico que la bajada de números de personas en edades de trabajar se trasladará en algún momento en reducciones en el número de personas trabajando. Según la velocidad de esta bajada, la tasa de crecimiento se puede convertir incluso en negativa.

Japón nos da un ejemplo en este sentido, porque el número de personas en edades de trabajar ha empezado a bajar a partir de 1997 y a pesar del hecho de que muchos japoneses ya trabajan más allá de los setenta años la economía del país sigue experimentando problemas importantes.

La bajada de las poblaciones y la reducción en tamaño de las economías que ellos sustentan, como notaba Keynes en los años treinta del siglo pasado, no necesariamente representa un problema sin solución si se lo gestiona bien, pero si el fenómeno puede convertirse en un problema grave si no lo hacemos así.

8/ ¿Un país para viejos?

La economía española puede crecer un poco más o un poco menos, pero bajar significativamente el paro parece que va a ser una verdadera tarea herculina. Sobre todo en un entorno incapaz de dar lugar a tasas de crecimiento fuertes y donde gran parte del esfuerzo para mejorar vendrá a través de la productividad para ir recuperando competencia.

La necesidad de poner estabilidad en el sistema de pensiones hará que las personas que tengan contratos de larga duración vigentes trabajen hasta edades cada vez más altas. Este fenómeno tratado de esta manera en este momento es equivalente a echar más leña sobre un problema ya en sí mismo gordo.

El país sufre dos problemas graves al mismo tiempo, una cuantidad importante de jóvenes que salen de la escuela sin ningún tipo de titulación, y otra cantidad que salen de la universidad bien preparados pero sin perspectiva de encontrar trabajo. Entonces pasa lo siguiente: los primeros se queden e hinchan los números de parados sin futuro claro mientras que los segundos marchan provocando un mal paso al capital humano del país, dañando así el crecimiento potencial en el futuro.

De hecho, el coste de la crisis está muy mal repartido, con una proporción muy alta cayendo sobre unos jóvenes que no entienden que han hecho mal para merecer semejante suerte. Aquí, si el país quiere salvar su futuro algo importante tiene que cambiar. Si no queremos vivir en un país con unos proporciones insostenible de edades los que tenemos más años tenemos que hacer más esfuerzo para que los que tienen menos se quedan. Tenemos que repartir los sacrificios de forma diferente.

9/ España - El Nuevo Alimaña o El Nuevo Japón?

Hay un dicho que sustenta que la única cosa que no tiene solución es la muerte, e incluso eso – en un contexto económico – hay que cualificarlo, porque como el economista Joseph Schumpeter argumentaba a veces solo muriendo se puede seguir viviendo. Es decir, la renovación necesaria para mantener una economía que podía ofrecer un nivel de vida razonablemente bien a los que dependen de ella suele pasar irremediablemente por la muerte continua de algunos de sus componentes, igual que nuestros cuerpos o nuestras sociedades en agregado.

Una de las dificultades mes espinosas que ha enfrontado a la sociedad española durante esa crisis es saber cuándo dejar morir una cosa o cuando intentar recuperarlo. No es para nada que la palabra rescate se ha convertido en una de las más familiares. Esa circunstancia puede presentarse en muchos casos – en una entidad financiero, una empresa grande, un negocio o tienda familiar, o incluso una casa.

Durante los últimos seis años muchas personas han ido luchando para sostener una cosa que si habían sabido lo que saben ahora hubieren dejar morir en su momento, y no después de muchas fuerzas para salvarlo.

Entonces lo que argumenta este libro es que no hay una “solución” en el sentido de una sola cosa (devaluación interna, reforma laboral, impulsar el “business friendly”) que por sí mismo volverá las cosas a su sitio, en parte porque este sitio ya no existe pero también porque no hay una formula mágica. Si salimos adelante esto será debido al esfuerzo, la creatividad y la innovación de muchos actores.

Estamos en un mundo cambiando, y no tenemos elección – hay que adaptarnos. Que la realidad podría haber sido diferente si solo habíamos…. poco importa, lo que tenemos que hacer es trabajar con la realidad que tenemos, por duro que sea.

Lo que sí que hay son soluciones, en minúscula, y las hay en cantidad. En este último capítulo daremos unos cuantos ejemplos, y veremos unos casos de personas que están superando la crisis ya, y como lo están haciendo. No hay una receta, pero sí que hay unas líneas de trabajo, aunque todos y cada uno de ellos pasen per la vía de reconocer las cosas tal y como son.

Monday, January 20, 2014

Two Developed Countries Facing a Lost Decade

A new craze is sweeping the planet. Known by the title "Abenomics" over the last couple of years it has been steadily gathering adepts in financial markets across the globe. Despite the fact Abe's move fits comfortably within the austerity vs growth policy axis, at the heart of the new approach lies not a strategy to directly create growth per se, but rather one to try to induce inflation. For those who have not been following the Japan saga as it has developed over the last twenty odd years this whole debate may seem like a strange way of thinking about things. After all isn't inflation supposed to be a bad thing, one central banks are supposed to combat? And how can a country possibly become more ever more competitive by force-feeding itself inflation?

Of course, falling prices are not necessarily in-and-of themselves a bad thing - as any old consumer will tell you - since products get cheaper and cheaper with each passing day. So the run of the mill consumer might find life in Japan quite a pleasing and desirable thing, especially if that particular consumer happens to be retired and living on a fixed income derived from savings as indeed many contemporary Japanese actually are. Falling prices only really become a problem in a more general macroeconomic sense if they lead people to postpone consumption, and if this postponement becomes self-perpetuating in a way which leads prices to continually fall, as the combination of constant productivity increases and stagnant demand serve to produce perpetual oversupply. Falling prices also represent a nasty headache for policymakers since while prices go down the value of accumulated debt doesn't, and herein lies the rub. So additional "stimulus" which doesn't lead to increasing nominal GDP simply pushes the sovereign debt even farther along an unsustainable trajectory.

As everyone now recognizes and accepts Japan has a rapidly ageing population and an ageing and contracting workforce. This is the end result of several decades of very low fertility. The number of children in Japan fell to a new low in 2013, while the amount of people over 65 has reached a record high as the population ages and shrinks. This demographic background, which has really been obvious to demographers for years, has only lately come to be regarded as a significant factor in the "Japan problem" by economists. This neglect has most probably been due to the influence of a deep seated predisposition among adherents of neoclassical growth theory to think that population dynamics don't fundamentally influence economic performance in the long run. For many years the Japan phenomenon was simply seen as a classic example of what Richard Koo terms a “balance sheet recession” wherein the need for the private sector to deleverage from excessive indebtedness leads to a form of structural under-consumption.

Perhaps the most important thing which the whole Abenomics episode has brought to light is the urgent need to bring the existing corpus of economic theory somehow up to date with our modern realities. Despite all the talk of policies for "growth, growth, growth" a simple look at the population outlook in OECD countries and especially the potential work force numbers suggests that, at some point or another, economic growth will turn broadly negative. So the real point is there is an experiment being conducted in Japan, but the experiment isn't Abenomics (which I suspect won't work, and could end badly). No, the experiment is about learning to grow old with dignity, not as individuals, but as societies. It is about managing debt in a time of deflation, about giving opportunities to the young, even while the force of the ballot box rides with the old, and about finding ways to ease that rate of work force decline to give some additional room to allow productivity to help, which means both immigration and helping the young - at they are the ones who start families.