MADRID | A calm breeze in the midst of so much economic shock and just-about-fine Spanish bond auctions, whose effects will probably still ripple beyond Easter with the usual euro contagion talk. Let us pause for a moment and read a list of the happiest and satisfied peoples in the world. It is a huge report, a pile of 158 pages full of charts, notes in fine print and details on…
BEIJING | The rise and fall of the entrepreneurial community in the Chinese city of Wenzhou, Zhejiang province, is an example of the consequences attached to moves such lowering the GDP growth under the 8% without coupling this measure with an strategy that ensures a sustained level of growth. Known by its entrepreneurial society, the city’s businessmen panicked when they couldn’t repay the money they borrowed in the first hand to…
LONDON | Jobless rates gave Monday a nasty reminder of an ongoing credit crisis whose effects seem to have depressed further the economies in the developed countries. The euro area (EA17) seasonally-adjusted unemployment rate was 10.8% in February 2012, compared with 10.7% a month earlier. It was 10.0% in February 2011. The EU27 unemployment rate was 10.2% in February 2012, compared with 10.1% in January. It was 9.5% in February 2011. The statistical…
Gustavo Matías, in Madrid | State or capital markets, regulations or freedom, financials or the real economy, equality or inequality, inclusiveness or mobility: these are some of the dichotomies that explain the present and future of capitalism. The debate has been lately reopened mainly in British soil, by the media big guns such as the Financial Times. However, major imbalances affect nowadays the whole of Europe or the emerging countries, where not enough…
NEW YORK | You are going to hear it more than often. It is called individual mandate: citizens required to purchase health insurance, or face a penalty. It is the Gordian knot of Obamacare, the new US Health law. And it is also the essence of both the Netherlands health system (it has been since 2006) and the Swiss (since 1994). In that regard, the US is trying to imitate…
By Luis Arroyo, in Madrid | In 2011, corporate profits in the US have been exceptionally high. According to the accounts of S&P 500 companies, or according to the national accountancy, business margins have risen more than ever before. However, the consensus on Wall Street says that they will continue to rise, so the PER rate (price per earnings) is still low: therefore, the stocks will go up like a shot. In…
NEW YORK | It could have been Hillary Clinton, one of the most well known US political figures; it could have also been Larry Summers, one of the most respected (and yes, also hated) figures in US economy; it may have even been Jeffrey Sachs, a very prestigious economist. But Obama has chosen a low profile candidate to the lead the World Bank: Jim Yong Kim, Dartmouth College president and…
NEW YORK | Respected subscribers, my inbox is on fire. Democrat’s Campaign managers Jim Messina and Jen O’Malley, Vice President Joe Biden… even Michelle Obama wrote me in the last two days. It is clear. Unofficial, but clear: Democrats campaign is on. And everybody agrees the main theme is going to be… The Economy. But there is going to be a whole of juicy political battles surrounding another subject, one…
By Luis Arroyo, in Madrid | A lengthy series of the risk premium spread (over capital or liquidity) between US Treasuries and BAA corporate bonds tells us several things: 1) that each time there has been recession (gray areas) this premium has picked up markedly; 2) the time it reached the highest point was in the last recession, up to 6%; 3) the 60-year average of this spread is 1.8%; 4) the current figure…
By Carlos Cruzado, in Madrid | Although the concept has many nuances and definitions, when we hear about tax havens we all know what that means: areas that offer very favourable fiscal treatment for citizens and businesses in order to attract foreign money, which usually also implies a lack of control about the nature of such funds. While it is true that the existence of tax havens is a longstanding problem,…