Sunday, July 21, 2019
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Politics, paradoxes and self-fulfilling prophesies

For many months now President Mauricio Macri has been playing with fire – restricting the electoral alternatives to the populism incarnated by his predecessor Senator Cristina Fernández de Kirchner, in order to ensure that continuity is at the very least the lesser evil, while running the calculated risk of spooking the markets (supposedly covered by the insurance policy of the biggest International Monetary Fund loan in history). This strategy somehow managed to survive all last year’s crises, but in the anniversary week of that first run on the currency its basic premises now risk collapsing all along the line, thus making the current turbulence potentially more dangerous. Throwing money at the problem becomes akin to using water against an oil fire – it should not be forgotten that the 2018 crisis began exactly a year ago last Wednesday, when then-Central Bank governor Federico Sturzenegger deployed over US$1.4 billion to defend the 20-peso mark. The massive IMF package seemed to stop the rot (just like the blindaje mega-swap of some US$40 billion in early 2001) but this becomes relative when these huge sums only serve to magnify a relatively tiny market out of all proportion, feeding fuel to the flames. Ditto for absurdly high interest rates topping 70 percent to defend the currency – in the long term these serve to liberate an economy from dependence on the dollar (at least based on the precedent of Brazil) but in the short they swell both ends of stagflation by feeding obscene financial bicycles while strangling a credit already at rock-bottom levels (18 percent of the economy as against a regional average of 45 percent). Meanwhile, we have the supreme paradox of a market-friendly government being torpedoed by the markets with international financial dailies muttering about the “brink of default.” The official explanation of this paradox is fear of a populist comeback – a fear which is fast becoming both a vicious circle and a self-fulfilling prophesy because the more these market panics at the prospect of a Fernández de Kirchner victory derail the economy, the likelier that triumph becomes. Macri could thus be forgiven were he to conclude bitterly about the markets: With friends like that, who needs enemies? And yet the government badly needs to introduce some self-criticism into its approach alongside self-pity. The market reaction is not as counterproductively irrational as it might seem. There is not only a “Cristina factor” but also a “Macri factor” – whatever the dangers of populism, Macri’s economic record in three of his four years has not been so dazzling as to inspire much confidence.

Oil steadies as political risks mingle with economic worries

West Texas Intermediate futures gained 12 cents, bringing their gain this week to 0.2 percent. A Purchasing Managers’ Index, which measures private-sector activity in the euro area, unexpectedly slid in April, and German factory numbers came in lower than forecast. FUEL FIX: Get your energy, oil, and gas news updates delivered to you each weekday Oil has climbed about 40 percent in New York this year as the Organization of Petroleum Exporting Countries and its allies cut supplies, which have been further squeezed by crises in OPEC members Venezuela and Iran, which are both subject to American sanctions. But the rally has lost steam amid fears about global economic growth, which the International Monetary Fund forecasts will this year be the weakest in a decade. “Oil bulls are in a dire need for further impetus apart from geopolitical developments that are fully priced in now,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. WTI for May delivery was 22 cents higher at $63.98 a barrel on the New York Mercantile Exchange as of 12:30 p.m. London time. The contract dropped 29 cents to $63.76 on Wednesday after U.S. data showed a gain in total stockpiles of crude and refined products. Both WTI and Brent won’t trade on Friday due to Easter holidays. Deposit placed on the Treemont, her new address will be 2501 Westerland Dr C-311, Houston, TX 77063 ... they had one available that was exactly what she wanted. The small 1 bedroom, overlooking the courtyard.“Investors are taking a wait-and-see stance ahead of events in May, including the expiry of waivers on U.S. sanctions on Iran and the OPEC meeting,” said Kei Kobashi, a senior analyst at Sumitomo Corporation Global Research Co. “It will remain difficult to make bets until May because there is so much uncertainty.” --With assistance from James Thornhill and Tsuyoshi Inajima.

5 things to know for March 8: Manafort, politics, China, fish fraud, conjoined twins

Meanwhile, it looks like Stormy Daniels' lawsuit against President Trump is over. A federal judge tossed out her suit, which sought to invalidate a $130,000 hush money agreement, because the suit "lacks subject matter jurisdiction." The latest sign: Chinese exports plunged 21% in February, compared with a year earlier. That's the weakest performance in three years, and it was a lot worse than economists had predicted. The export slump indicates "global demand is cooling," one economist says. Are we all the victims of a big fish fraud? Oceana tested more than 400 samples from markets, stores and restaurants in 24 states and Washington. Nima and Dawa Pelden are back home. After arriving back home yesterday in Bhutan, the twins' mother thanked the people of Australia: "You all gave me hope and put smile on my face while going through some terrible times. The February jobs report comes out later this morning.

Lyndon LaRouche, perennial presidential candidate, dead at 96

Lyndon LaRouche, the political extremist and conspiracy theorist who ran for president in eight consecutive national elections, died Tuesday, his political action committee confirmed. "Those who knew and loved Lyndon LaRouche know that humanity has suffered a great loss, and today we dedicate ourselves anew to bring to reality the big ideas for which history will honor him," read a statement on the website of LaRouchePAC, which noted that LaRouche died on the birthday of former President Abraham Lincoln, whom he celebrated in his writings. A native of Lynn, Massachusetts, LaRouche was a former member of the Socialist Workers Party who first ran for president in 1976 as a candidate of the U.S. Labor Party. His final run for president took place in 2004. LaRouche espoused several conspiracy theories, most notably that the International Monetary Fund was "engaged in mass murder" by spreading AIDS through its economic policies, that former Secretary of State Henry Kissinger and former Vice President Walter Mondale were Soviet "agents of influence," and that the Queen of England was involved in the international drug trade. The Anti-Defamation League of B'nai B'rith once characterized LaRouche's organization as an anti-Semitic political cult. He said he did not know who paid his bills. His views evolved throughout his life, but a central tenet of his apocalyptic platform warned of an inevitable global downward slide into crisis and called for a complete overhaul of the world's economic and financial systems. LaRouche ran his 1992 presidential campaign from prison after he was convicted in 1988 of mail fraud and conspiracy to defraud the IRS by defaulting on more than $30 million in loans from campaign supporters. He was sentenced to 15 years in prison but was released in 1994.

Global politics for a globalized economy

The emergence of such a truly global capitalism—a process that, to be sure, is far from complete—means that markets will no longer be embedded in the politics or regulatory systems of various nation-states. Of course, international economic institutions—from the International Monetary Fund and World Bank to the economic bodies of the United Nations and the World Trade Organization—already exist and have long served as platforms for member states to adopt shared rules. Far from deepening multilateral structures, he wants to dismantle them, dislodging the global market from the regulatory institutions in which it is already only weakly embedded. At both the national and international levels, Trump believes that the less regulation, the better. Because the EU has such a large market, such actions have a far-reaching impact. This has become all the more true with figures like Trump actively working against its efforts and espousing deregulation at a time when the level of global economic interconnectedness demands just the opposite. But such firms can be regulated effectively only through multilateral cooperation. The realities of today’s global economy demand that we make multilateral institutions work. Nationalists like Trump prefer strengthening the nation-state, in ways that could weaken both democracy and globalization, at least in the longer term. Climate change is a successful example of this form of localized global politics.

Reaction to political turmoil in Italy

MILAN (Reuters) - Italian President Sergio Mattarella is expected to ask a former International Monetary Fund official on Monday to head a stopgap government amidst political and constitutional turmoil, with early elections looking inevitable. Mattarella has called in Carlo Cottarelli after the anti-establishment Five Star and League parties abandoned plans to form a coalition following his veto of their choice of eurosceptic economist Paolo Savona to become economy minister. “We are seeing a decent relief rally in European markets, starting with the euro overnight, with the risk of an anti-euro finance minister in Italy being averted; but we have to see it in the context of Friday when we had a move reminiscent of 2011 in the heart of the euro zone debt crisis. We go into new elections and (League leader Matteo) Salvini could emerge as a stronger figure at the end of that. “From the macro point of view, the risks for public finances coming from the expansionary spending measures contained in the League-5 Star Movement government contract have clearly decreased, at least in the short term. “The problem both for investors and the rating agencies now is that there is likely to be: 1) an extended hiatus in power over the next few months 2) the prospect that the election campaign will become a referendum on the euro 3) the likelihood that an ever more radical government will take the reins of power after the next election. “We expect that a caretaker government would not win a confidence vote in parliament and that new elections could take place as early as October. On the one hand, a government that could have been perceived by financial markets as calling into question the participation of Italy in the European Union and its membership in the euro area has not been formed. “Now we need to understand what could be the outcome of a new vote, but what’s clear is that Europe will be at the center of the debate of the next campaign.” MARK ZANDI, CHIEF ECONOMIST AT MOODY’S ANALYTICS, in an interview with La Stampa newspaper “The latest developments add fresh uncertainty and complexity to Italy’s political situation. I expect investors to be very nervous and confused.