WASHINGTON | By Pablo Pardo | America is losing one of its culture icons. Born in the 50s to provide customers with both entertainment and a purchasing experience, shopping malls are no longer attractive nor exclusive. As the middle class -which used to be the malls’ main target- is leaving the suburbs due to gentrification, its members prefer to run their errands online or downtown.
WASHINGTON | By Pablo Pardo | It is twice easier getting a minimum wage job with no benefits at Wal-Mart than being admitted as an undergrad to Harvard. The comparison shows how extreme is the labor market in the US for non-educated workers, and also that, in today’s world, getting a first-class education can be easier than a third-class job.
WASHINGTON | By Pablo Pardo | Would the true IMF prediction please stand up? The Fund has just predicted a growth of 0.9 percent GDP for Spain in 2014. Three months ago, it was 0.6 percent. Seven months ago, it was 0.2 percent.
WASHINGTON | By Pablo Pardo | Seldom a book has made such a big splash in the financial markets as Michael Lewis’s Flash Boys. In just a matter of days, and partly to a superb segment in CBS’s 60 Minutes, Mr. Lewis has put something as arcane as High Frequency Trading (HFT) in the front page of American newspapers, and even to force the suspension of the IPO of one of the industry’s giants, Virtu.
ANIMAL SPIRITS IN WASHINGTON | By Pablo Pardo | Throughout the last two years, bank regulators have identified a number of increasingly exotic assets in the already-full-of-exotic assets banks’ portfolios. For instance, some institutions are accumulating massive amounts of Credit Default Swaps (CDS). At a time when debt spreads are not just falling, but crashing, what is the logic to hedge in such manner? The short answer is: stress tests.
WASHINGTON | By Pablo Pardo | Prostitution is coming out of the closet. Not by getting any official credit -it’s still an illegal activity-, but thanks to the Internet. According to a study recently released by the U.S. Urban Institute, the Web is disrupting the pimp industry, causing a supply shock followed by a demand reaction. Sex workers don’t need middlemen to find clients anymore.
WASHINGTON | By Pablo Pardo | According to the IMF, Russia and Italy have about the same nominal GDP, though, if you adjust it to its purchase parity power, the Russian economy may be 50% greater than Italian. Still, Russia has two and a half times the population of Italy, which explains why its nominal GDP per capita is half of Spain’s (even in real terms, Spaniards are 60 percent richer than Russians). So, Vladimir Putin has managed to achieve for its country a global importance that, taking its economy into account, it does not deserve.
WASHINGTON | By Pablo Pardo | Federal Reserve’s Beige Book is like a breeze of fresh air for those who think that economic analysis relies too much on data and math. The famous Book is made just by using non-systematic, non-quantitative inputs. Maybe that is not too effective to estimate until the last decimal the future evolution of the GDP deflator, but it is extremely precise to determine the current state of affairs of the economy.
WASHINGTON | By Pablo Pardo | Germany’s Foreign Affairs Minister, Frank-Walter Steinmeier, finishes his two-day visit to Washington today with at least some unintended achievement: the U.S. and Germany agree on the importance of a truly independent and democratic Ukraine. The revolution in Kiev and the menacing attitude of Russia have prompted an unexpected rapprochement between Berlin and Washington. However, a real warming up of US-German relations seems improbable.
WASHINGTON |By Pablo Pardo | The “paradox of thrift” that Keynes made famous is something as simple as this: if everybody works and saves, nobody will prosper. Nobody can endlessly produce unless someone else buys those products. This is what the IMF has demanded of Spain—more consumption. And, in order to achieve it, more credit. That means more transparent banks and less dividends, but also an ECB with a more accommodative stance in monetary policy.