MOON GAMES

Explanation: The Moon's measured diameter is around 3,476 kilometers (2,160 miles). But apparent angular size, or the angle covered by an object, can also be important to Moon enthusiasts. Angular size depends on distance, the farther away an object is, the smaller an angle it covers. Since the Moon is 400,000 kilometers away, its angular size is only about 1/2 degree, a span easily covered by the tip of your finger held at arms length, or a measuring tape held in the distance by a friend. Of course the Sun is much larger than the Moon, 400 times larger in fact, but today the New Moon will just cover the Sun. The total solar eclipse can be seen along a track across northern Canada, the Arctic, Siberia, and northern China. (A partial eclipse is visible from a broader region). Solar eclipses illustrate the happy coincidence that while the Sun is 400 times the diameter of the Moon, it is also 400 times farther away giving the Sun and Moon exactly the same angular size.

MÉDICOS

(tocar na imagem para aumentar)

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Decidiu a Ministra da Saúde reabrir o processo da dedicação exclusiva dos médicos do SNS para, quase de imediato, reconhecer que não existem actualmente condições, nem a médio prazo, para atingir aquele objectivo. Adianta, no entanto, que a sua intenção é começar um debate acerca do assunto com os médicos, debate esse que, segundo a ministra requer um longo período de digestão. Talvez tenha razão, ainda que com a nossa tradicional propensão para a improvisação as coisas começadas com tamanha antecedência geralmente perdem-se pelo caminho.

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Em todo o caso, a questão da invocada falta de médicos implica outros sintomas de debilidade reflexos, a pedir diagnóstico e terapêutica conveniente para além desta adiada intenção de separar actividades médicas entre SNS e privadas, se essa separação se justificar.

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Observando o gráfico das vagas abertas nas faculdades de medicina nos últimos 31 anos (publicado no Público de ontem) é impressionante a quebra forçada observada entre 1977 (ano em que foram admitidos 1000 candidatos) até 2003 (ano em que o número de admitidos foi sensivelmente idêntico ao de 26 anos atrás) passando por um perído de 15 anos onde o número médio de admissões caiu para cerca metade do milhar admitido em 1977. Entre 1984 e 1987 o número de admissões situou-se abaixo de 300, observando-se o mínimo de 190 vagas em 1986.

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Pergunta-se, Porquê?, e só pode haver uma resposta: por pressão dos interesses corporativos. Porque não é admissível que o Ministério da Saúde, entidade que dispõe de todos os dados que permitia prever com a maior precisão a evolução da pirâmide etária dos médicos, e das subpirâmides das diferentes especialidades, não tenho feito as contas ou as tenha errado.

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Subjacente a este desencontro entre as decisões políticas e as necessidades reais do país, com as consequências negativas que agora estão a emergir, está um factor, a quase gratuitidade do ensino, que também influenciou muitas outras opções académicas com efeitos opostos: a de ter o Estado suportado (e continuar a suportar) a formação de milhares de jovens com licenciaturas em áreas saturadas ou desfasadas dos interesses dos empregadores.

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Sendo um curso inevitavelmente dispendioso para o financiador (o Estado) e quase gratuito para os formandos, a concorrência de faculdades privadas de medicina encontra-se fortemente bloqueada e o sector continua sujeito ao monopólio do ensino público que, como a experiência demonstra, obedece mais aos interesses corporativos que aos interesses do país; por outro lado, ao sector privado da saúde convém esta disponibilidade do Estado lhe fornecer competências sem requerer da sua parte qualquer investimento na sua formação básica e de especialização.

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Em conclusão: Enquanto o financiamento do ensino superior público não for reequacionado, abolindo-se o princípio da sua tendencial gratuitidade, continuarão a existir os enormes desfasamentos que se vêm observando entre a oferta e a procura de formações nos diferentes ramos do ensino superior.

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Acrescente-se que se tem observado uma evolução muito semelhante na formação de enfermeiros, recorrendo-se a profissionais estrangeiros (nomeadamente espanhóis), para algum tempo depois se constatar que estão os enfermeiros em greve por falta de abertura de vagas nos hospitais.

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Se se aceita, e não se vê razão nenhuma para não aceitar, a convivência de um sector privado da saúde com o SNS, o Estado e o sector privado devem assumir responsabilidades proporcionais na formação dos técnicos de cuidados de saúde.

ACONTECE NA AMÉRICA - 2

Unhappy America
Jul 24th 2008 From The Economist print edition

If America can learn from its problems, instead of blaming others, it will come back stronger
NATIONS, like people, occasionally get the blues; and right now the United States, normally the world’s most self-confident place, is glum. Eight out of ten Americans think their country is heading in the wrong direction. The hapless George Bush is partly to blame for this: his approval ratings are now sub-Nixonian. But many are concerned not so much about a failed president as about a flailing nation.
One source of angst is the sorry state of American capitalism (see article). The “Washington consensus” told the world that open markets and deregulation would solve its problems. Yet American house prices are falling faster than during the Depression, petrol is more expensive than in the 1970s, banks are collapsing, the euro is kicking sand in the dollar’s face, credit is scarce, recession and inflation both threaten the economy, consumer confidence is an oxymoron and Belgians have just bought Budweiser, “America’s beer”.
And it’s not just the downturn that has caused this discontent. Many Americans feel as if they missed the boom. Between 2002 and 2006 the incomes of 99% rose by an average of 1% a year in real terms, while those of the top 1% rose by 11% a year; three-quarters of the economic gains during Mr Bush’s presidency went to that top 1%. Economic envy, once seen as a European vice, is now rife. The rich appear in Barack Obama’s speeches not as entrepreneurial role models but as modern versions of the “malefactors of great wealth” denounced by Teddy Roosevelt a century ago: this lot, rather than building trusts, avoid taxes and ship jobs to Mexico. Globalisation is under fire: free trade is less popular in the United States than in any other developed country, and a nation built on immigrants is building a fence to keep them out. People mutter about nation-building beginning at home: why, many wonder, should American children do worse at reading than Polish ones and at maths than Lithuanians?
The dragon’s breath on your shoulder
Abroad, America has spent vast amounts of blood and treasure, to little purpose. In Iraq, finding an acceptable exit will look like success; Afghanistan is slipping. America’s claim to be a beacon of freedom in a dark world has been dimmed by Guantánamo, Abu Ghraib and the flouting of the Geneva Conventions amid the panicky “unipolar” posturing in the aftermath of September 11th.
Now the world seems very multipolar. Europeans no longer worry about American ascendancy. The French, some say, understood the Arab world rather better than the neoconservatives did. Russia, the Gulf Arabs and the rising powers of Asia scoff openly at the Washington consensus. China in particular spooks America—and may do so even more over the next few weeks of Olympic medal-gathering. Americans are discussing the rise of China and their consequent relative decline; measuring when China’s economy will be bigger and counting its missiles and submarines has become a popular pastime in Washington. A few years ago, no politician would have been seen with a book called “The Post-American World”. Mr Obama has been conspicuously reading Fareed Zakaria’s recent volume.
America has got into funks before now. In the 1950s it went into a Sputnik-driven spin about Soviet power; in the 1970s there was Watergate, Vietnam and the oil shocks; in the late 1980s Japan seemed to be buying up America. Each time, the United States rebounded, because the country is good at fixing itself. Just as American capitalism allows companies to die, and to be created, quickly, so its political system reacts fast. In Europe, political leaders emerge slowly, through party hierarchies; in America, the primaries permit inspirational unknowns to burst into the public consciousness from nowhere.
Still, countries, like people, behave dangerously when their mood turns dark. If America fails to distinguish between what it needs to change and what it needs to accept, it risks hurting not just allies and trading partners, but also itself.
The Asian scapegoat
There are certainly areas where change is needed. The credit crunch is in part the consequence of a flawed regulatory system. Lax monetary policy allowed Americans to build up debts and fuelled a housing bubble that had to burst eventually. Lessons need to be learnt from both of those mistakes; as they do from widespread concerns about the state of education and health care. Over-unionised and unaccountable, America’s school system needs the same sort of competition that makes its universities the envy of the world. American health care, which manages to be the most expensive on the planet even though it fails properly to care for the tens of millions of people, badly needs reform.
There have been plenty of mistakes abroad, too. Waging a war on terror was always going to be like pinning jelly to a wall. As for Guantánamo Bay, it is the most profoundly un-American place on the planet: rejoice when it is shut.
In such areas America is already showing its genius for reinvention. Both the Republican and Democratic presidential candidates promise to close Guantánamo. As his second term ticks down, even Mr Bush has begun to see the limits of unilateralism. Instead of just denouncing and threatening the “axis of evil” he is working more closely with allies (and non-allies) in Asia to calm down North Korea. For the first time he has just let American officials join in the negotiations with Iran about its fishy nuclear programme (see article).
That America is beginning to correct its mistakes is good; and there’s plenty more of that to be done. But one source of angst demands a change in attitude rather than a drive to restore the status quo: America’s relative decline, especially compared with Asia in general and China in particular.
The economic gap between America and a rising Asia has certainly narrowed; but worrying about it is wrong for two reasons. First, even at its present growth rate, China’s GDP will take a quarter of a century to catch up with America’s; and the internal tensions that China’s rapidly changing economy has caused may well lead it to stumble before then. Second, even if Asia’s rise continues unabated, it is wrong—and profoundly unAmerican—to regard this as a problem. Economic growth, like trade, is not a zero-sum game. The faster China and India grow, the more American goods they buy. And they are booming largely because they have adopted America’s ideas. America should regard their success as a tribute, not a threat, and celebrate in it.
Many Americans, unfortunately, are unwilling to do so. Politicians seeking a scapegoat for America’s self-made problems too often point the finger at the growing power of once-poor countries, accusing them of stealing American jobs and objecting when they try to buy American companies. But if America reacts by turning in on itself—raising trade barriers and rejecting foreign investors—it risks exacerbating the economic troubles that lie behind its current funk.
Everybody goes through bad times. Some learn from the problems they have caused themselves, and come back stronger. Some blame others, lash out and damage themselves further. America has had the wisdom to take the first course many times before. Let’s hope it does so again.

ACONTECE NA AMÉRICA

Not only we are in the middle of earnings season, but this week is very rich in terms of data releases for the troubled U.S. economy. Starting with home prices and consumer confidence yesterday, the week will close with data on real GDP growth and with the employment report.

On the U.S. housing sector front, stabilization is not yet in sight. In its
update to the April global financial stability report, the IMF stated that “a bottom for the housing market is not visible.” Inventories and vacancies are still at a record high and continue to put downward pressure on prices. Yesterday the S&P Case-Shiller index showed acceleration in the pace at which home prices are falling. The 10-City Composite posted a new record low of -16.9%, and the 20-City Composite recorded a record low of -15.8%, translating into trillions of real wealth losses for the engine of the economy: the U.S. consumer. Will the controversial housing bill, recently passed in Congress, be effective in containing the housing downturn and its effects?

It is no surprise that
consumer confidence indexes are at the lowest level in almost two decades. Consumer spending most likely got a boost as a result of the tax rebates - and a break from $140+ oil and $4 gasoline is a welcome development. But is oil at the breakpoint? Should the U.S. consumer really cheer oil at $120? Wait for those winter heating bills! And is there need for more fiscal stimulus?

The financial crisis is far from over and it is rapidly moving from subprime borrowers to prime borrowers prompting banks to tighten credit across the board to both consumer and businesses. Clamping down on consumer credit will pose further strains on the U.S. consumer. Moreover, while probably only a small fraction of the
credit related losses has been disclosed, new surprises could be in the pipeline including for institutions that are less exposed to subprime paper. So far this year seven banks have failed – more than in the past four years combined and ninety banks are currently on the FDIC's undisclosed problem bank list.

Despite rallies on falling oil prices, U.S. stocks extended their decline on earnings disappointments and fresh reminders of an ailing U.S. economy and financial system. The breath of optimism that blew into markets after the Bear Stearns rescue grew stale in June, which posted the worst monthly performance (-9.4%) since the Great Depression and plunged the DJIA into bear market territory. A few days into Q3, S&P 500 followed. No surprise, the Financials sector led the share price losses for Q2 (-44.2% y/y) and Consumer Discretionary ran second (-27.9% y/y) while Energy (23.1%) led the gains - a pattern that has been in place since the beginning of the subprime crisis last summer – but lower energy prices might mean lower profits and share values. Only Financials posted negative earnings growth - but the drop was so huge (Q2 EPS growth of -94.8% y/y) it dragged the whole S&P 500 down to -24.3% y/y Q2 EPS growth. Other sectors posted positive but disappointing earnings growth.

Earnings season is only halfway through and, with financial troubles and the housing correction unlikely to let up soon, future earnings and
share prices look likely to fall further. The average bear market posts a 28-30% decline from peak to trough. So far, DJIA and S&P 500 were down 21.8% from their October 12, 2007 peak to their one-year low on July 15, 2008. Nasdaq was down 22.38% from its November 2, 2007 peak to its one-year low on March 10, 2008. Russell 2000 was down 24.7% from its Jul 13, 2007 peak to its one-year low on March 10, 2008.

On the employment front, the non-farm payroll report coming out on Friday will likely be disappointing. Some labor market indicators, such as initial jobless claims (at 406K in the week ending July 19), are lingering dangerously towards recessionary levels. August will likely be the eighth month of negative payroll growth, -75K according to consensus; the unemployment rate is expected to increase from 5.5% to 5.6%.

Real GDP growth is expected to come in at around 2%. So will this be a recession without negative real GDP growth? Most likely not. Revision to GDP growth might reveal that the anemic – and well below potential – positive growth rates that we have witnessed in Q4 2007 (0.6%) and in Q1 2008 (1%) were actually negative. Moreover, we might be in for a bad surprise when the effect of the stimulus checks wanes in the second half of the year, as a temporary stimulus does not change the structure of the economy. Also, let’s not forget that GDP growth is not the only parameter to assess whether the economy is in recession or not. NBER has shifted its criteria from successive quarters of negative GDP growth to four measures of monthly economic activity:
personal income less transfer payments in real terms, employment, industrial production, and the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes. It will take some time for the NBER to officially call recession, if we are in one. However, the fact that we could be in a recession cannot be ruled out on the basis of lack of negative growth. In the meantime, are we witnessing a temporary growth recovery before we fall back into slump?

CONTAS PARTIDÁRIAS

Miguel Frasquilho prevê no Jornal de Negócios Online que o défice das contas públicas, muito provavelmente, situar-se-á abaixo dos 3% no fim deste ano (2,8%, segundo as contas de Frasquilho), concluindo que se trata de uma jogada de mestre para as eleições do próximo ano, ainda que, segundo Frasquilho, tenha custado a depressão da economia.

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Lê-se e fica-se sem perceber as conclusões de Frasquilho ao qualificar como "maquiavélico, um início de legislatura demoníaco para permitir, agora, um final… eleitoralista", o sucesso do governo no caminho do saneamento das contas públicas confirmado pelo próprio Miguel Frasquilho.

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O que teria feito M Frasquilho se mandasse? Já se sabe que teria reduzido os impostos e estampado as contas públicas contra uma ainda maior muralha de endividamento. M Frasquilho costuma afirmar que ninguém ainda o convenceu que a uma redução dos impostos corresponderia necessariamente um crescimento do défice. Mas também nunca nos explicou como é que ele conseguiria isso, em Portugal hoje, evidentemente, fazendo assim figura de Valente Vasco.

KAROLINA

The black outlines, blocky shapes and other-worldly ambience of Icelandic artist Karolina Larusdottir's work lend it a similarity to that of Paula Rego. But where Rego's characters are fraught with sexual tension and locked into nightmares, the people in Larusdottir's enigmatic pieces seem to be stuck in a state of stolid endurance, in many cases made bearable by the intervention of sensible-looking angels with idiosyncratically-shaped wings.
http://www.metro.co.uk/metrolife/article.html?in_article_id=238392&in_page_id=249&in_a_source=

ALDRABICES E PARADOXOS

Tavares Moreira comenta no Quarta República um artigo de Jennifer Hughes, colunista do Financial Times, transcrito a seguir, que denuncia uma manobra bancária que não lembraria ao diabo. Descortinaram alguns bancos (quantos?, o relatório em que se sustenta o artigo é limitado a 16) uma forma impensável de compensar contabilisticamente as suas perdas: como a dívida por eles emitida, cotada em bolsa, tende a valer menos em consequência das debilidades dos devedores, estes tomam os valores desvalorizados em bolsa como valores efectivos a reembolsar e contabilizam como ganhos as desvalorizações entre os valores cotados em bolsa e os valores de emissão dos títulos

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Como a operação é meramente contabilística e não corresponde a uma operação efectiva de compra dos títulos, se houvesse racionalidade nos mercados financeiros, à melhor situação do devedor deveria corresponder uma valorização dos seus títulos de dívida implicando a contabilização de perdas correspondentes a essa valorização, repetindo-se a brincadeira até ao resgate da dívida. Acontece o mesmo se o banco resgata títulos desvalorizados em bolsa, pagando-os emitindo dívida mais cara, isto é, a juros mais elevados.

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Tudo ponderado, parece aproximarem-se tempos de contar com o colchão.

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Fair value can flatter to deceive on your own debt
By Jennifer Hughes http://www.ft.com/cms/s/0/12ecc014-5917-11dd-a093-000077b07658.html

Banks' accounting has never been more interesting. There are various definitions of interesting, I know, but for the financial world and for the media as a whole, it is fair to say the topic has never been more newsworthy.
That is reflected in a new report by KPMG which combs through the annual reports of 16 European banks to identify trends in the sector.
It found plenty. It won't surprise many to find the reports have got longer - by an average 17 per cent in the core financial sections. What might surprise some is that attestation periods - the time between year-end and the signing off of the accounts - fell by an average of three days.
The report is worth reading for anyone interested in banks, although because KPMG is an auditor - indeed auditor to some of the banks in the report - and therefore cautious by nature, it stops short of actually forming opinions about the quality of the reporting.
That leaves me the space to draw on the report to outline an opinion of my own; the problems with fair-valuing own debt.
According to KPMG, HSBC reported a €2bn ($3bn) gain from fair-valuing its own debt last year. Next of the banks to be surveyed - at some €800m - was Barclays.
Fair-valuing your own debt, when its value falls, not only leaves it on the balance sheet, but also results in a gain that feeds through net income. This is a recurring theme in the debate about fair value. Only last week, Merrill's second quarter earnings noted a $98m gain from a weakening in its own credit standing (although that is small beer compared with a pretax loss of $8.2bn for the division in which the gain was included). This month, Lehman Brothers filed its second quarter 10-Q which showed a $400m gain from fair-valuing its own liabilities.
I do not want to suggest banks are doing anything amiss in fair-valuing their own liabilities. In many cases the choice was made long before the credit crunch and it was done because the instrument was linked to a hedge or a derivative trade.
The basic problem is that most people find the whole notion counter-intuitive.
It is as if I were to suggest to my credit card provider that because I'm in some financial difficulty they should lower the amount I owe in order to reflect the fact I'm less likely to pay it.
For companies, the thinking goes that they can now buy the debt back at the lower price. But this rarely happens in practice. Falling debt value generally implies a company in trouble, meaning it would struggle to find the cash.
As far as my credit card provider is concerned, it might lower the amount on its books that it expects to get from me if I were in trouble, but it's not going to tell me to pay less back. On my personal books, I still owe the full amount.
So while the market (or my credit card company) has marked down the debt's value because it appears there is less chance of recouping the whole, that doesn't mean the borrower actually owes any less.
In general, fair value provides more objective numbers for investors to analyse and that is a good thing. But in the case of debt, it runs the risk of masking true liabilities and flattering profits.
The theoreticians warn that to fail to fair-value both the financial assets and the liabilities would make the balance sheet uneven. True. But there are ways to get around that.
The importance of a market-based fair-value opinion of an asset's worth is in a different class to market value for a liability the company is still obliged to pay in full, and the accounting ought to reflect that.
In theory, fair-valuing own debt sounds good. In practice, the cheap, early buyback won't happen. What does happen instead is accounts become even less intelligible to those with anything less than so-called "expert" status.

REALPOLITIK

As visitas do PM a terras de petróleo e a sua confraternização com personalidades geralmente suspeitas de actividades condenáveis ou altamente condenáveis gerou alguma controvérsia e estimulou a ironia que estas situações facilmente libertam.

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E, no entanto, a actividade de diplomacia económica desenvolvida pelo governo no sentido de apadrinhar a assinatura de contratos de aquisição de petróleo e gás e promover outros de fornecimentos de produtos e serviços portugueses deveria merecer outras abordagens dos comentadores. Por um lado, questionando a imprescimbilidade ou conveniência da intervenção do governo em matérias que são ou, segundo alguns, deveriam ser, do foro estritamente privado, e, recìprocamente, questionar a pertinência da atribuição de um sector estratégico à gestão do sector privado quando essa gestão é dependente da intervenção do governo.

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A resposta não é fácil e nem depende sequer da dimensão relativa dos contratantes. As grandes companhias petrolíferas dos EUA não solicitam a Bush que as acompanhe e lhes abra portas mas a intervenção das tropas norte-americanas no Médio Oriente tem tido, desde há muitas décadas, como objectivo fundamental impedir que as portas abertas não sejam fechadas e arrombar, se for caso disso, portas encerradas.

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Portugal não tem nem a capacidade de intervenção bélica dos EUA e é um parceiro menor no mercado internacional do crude. Aparentemente, a intervenção do governo justifica-se e o modo como o faz parece inevitável: cumprimentar uns sujeitos que, segundo consta, têm as mãos sujas.

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Valente Vasco, como sempre, tem opinião contrária: O governo não deveria interferir em matérias que exorbitem as suas funções fundamentais de garantir justiça e segurança aos cidadãos. Não diz é como se lhes garante o combustível.

O ANEL DE EINSTEIN

Explanation: What's large and blue and can wrap itself around an entire galaxy? A gravitational lens mirage. Pictured above on the left, the gravity of a normal white galaxy has gravitationally distorted the light from a much more distant blue galaxy. More normally, such light bending results in two discernable images of the distant galaxy, but here the lens alignment is so precise that the background galaxy is distorted into a nearly complete ring. Since such a lensing effect was generally predicted in some detail by Albert Einstein over 70 years ago, such rings like SDSSJ1430 are now know as Einstein Rings. SDSSJ1430 was discovered during the Sloan Lens Advanced Camera for Surveys (SLACS) campaign, an observation program that inspected lens candidates found by the Sloan Digital Sky Survey (SDSS) with the Hubble Space Telescope's ACS. Strong gravitational lenses like SDSSJ1440 are more than oddities -- their multiple properties allow astronomers to determine the mass and dark matter content of the foreground galaxy lenses. Given these determinations, SLACS data has now been used, for example, to show that dark matter fraction increases with overall galaxy mass. The inset images on the right depict, from top to bottom, a computer reconstructed image of what the background blue galaxy really looks like, just the white foreground galaxy, and just the lensed blue background galaxy.

RACISTAS

Segundo o Expresso desta semana, "dos 50 mil ciganos que vivem em Portugal, só quatro são licenciados e cerca de 35 mil recebem o rendimento social de inserção, representando 10% do número total de beneficiários. 40% da população cigana vive em condições muito precárias e 4000 vive em barracas. A Pastoral dos Ciganos diz que há 31 cidades e vilas onde os ciganos vivem em barracas. Calcula-se em 4200 o número de ciganos nómadas. Há cerca de 10 mil crianças ciganas a frequentarem a escola mas cerca de 4000 estão fora do sistema de ensino. Serão muitos os ciganos que conduzem mas poucos terão carta de condução."

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Qualquer que seja a perspectiva de observação do relacionamento das pessoas de etnia cigana com as comunidades por onde passam ou onde se sedentarizaram, é indiscutível que, salvo as excepções necessárias para confirmar a regra, sempre existiram, e continuam a existir, sentimentos de segregação racista entre ciganos e todos os outros não ciganos. Remetendo-se para guetos de preservação da sua identidade e dos seus costumes, os ciganos escolhem sistematicamente a condição de marginais às sociedades onde se fixam ou por onde deambulam. É, portanto, muito natural que a essa marginalidade por opção racista (porque outra razão pode ser?) gere uma atitude racista recíproca por parte dos que com eles se cruzam no dia a dia. Por muita simpatia que nos possa merecer a opção por uma "vida ao vento" ela não pode anular a percepção negativa que é transmitida pelas notícias frequentes de desacatos e actividades criminosas de muitos elementos da comunidade cigana.

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Se cerca de 70% da comunidade cigana é dependente de subsídio de inserção social é forçoso que essa inserção social seja atingida em tempo útil por uma parte sigificativa dos subsidiados. Em vez disso, o que sabemos é que os conflitos entre ciganos, vizinhos e as autoridades locais, em vez de observarem redução se têm acentuado.

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O cigano, como qualquer outro ser humano, responde a incentivos. Enquanto a sociedade for complacente com eles em nome de uma política de integração macia, vulgo politicamente correcta, os desacatos continuarão e os comportamentos racistas serão exacerbados. Só há uma forma de resolver a questão: contratualizar a convivência da etnia com uma associação que os represente e seja liderada por aqueles que deram toda a sua vida exemplo de uma conduta cívica normal na sociedade em que se integram; e que nenhum apoio oficial seja concedido e mantido sem a inscrição do pretendendente na associação e a responsabilização desta pela conduta do seu afiliado no atingimento de objectivos de inserção social. Em tudo o mais deve aplicar-se a lei comum sem contemplações de complexos politicamente correctos.

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A inserção social do cigano na sociedade não implica, obviamente, que ele abdique das suas tradições e costumes mas implica que ele se sujeite às leis do país. O racismo é a maior ameaça à sã convivência entre indivíduos, sociedades e nações. Só existe um meio de impedir o alastramento da sua ameaça e promover a sua extinção: fazer observar a lei sem tergiversações nem pusilanimidades.

PLANINEBULA

Explanation: How can a round star make a square nebula? This conundrum comes to light when studying planetary nebulae like IC 4406. Evidence indicates that IC 4406 is likely a hollow cylinder, with its square appearance the result of our vantage point in viewing the cylinder from the side. Were IC 4406 viewed from the top, it would likely look similar to the Ring Nebula. This representative-color picture is a composite made by combining images taken by the Hubble Space Telescope in 2001 and 2002. Hot gas flows out the ends of the cylinder, while filaments of dark dust and molecular gas lace the bounding walls. The star primarily responsible for this interstellar sculpture can be found in the planetary nebula's center. In a few million years, the only thing left visible in IC 4406 will be a fading white dwarf star.

MENDIGOS

Ouço na rádio o reitor da Universidade do Minho dizer que vai pagar os subsídios de férias * mas que receia vir a não poder pagar os subsídios de Natal. E acrescenta que as contingências a que está sujeita a sua Universidade não atingem outras universidades públicas, deduzindo eu que o reitor acusava o ministério de adoptar em matéria de afectação de recursos uma política para filhos e outra para enteados.

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A frequência com que se ouvem notícias destas sobre dificuldades financeiras que provocam o funcionamento sobressaltado das instituições que dependem quase exclusivamente das dotações do OGE há muito que deveria ter levado os políticos deste país, do governo e da oposição, a repensar o financiamento dessas instituições. No caso do ensino universitário, está mais que provado que não é possível sustentar o princípio da sua tendencial gratuitidade: é fiscalmente iníquo e gerador de irresponsabilidades tanto por parte dos discentes como dos docentes. Irresponsabilidade que não confina as suas consequências à situação degradante da imagem de uma instituição, que deveria ser prestigiada e se vê na contingência de mendigo, mas se prolonga na formação de profissionais completamente desligada das necessidades da sociedade, gerando desse modo expectativas que se transformam em desemprego.

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Mas não é inesperado que ninguém, com responsabilidades políticas, levante a questão e proponha o que já deveria estar há muito tempo em vigor: o princípio do utilizador pagador, salvo os casos de demonstrado mérito mas escassez de recursos. E não é inesperado porque seria políticamente incorrecto, e o elixir da longa vida política é formulado precisamente ao contrário.

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* A prática que se generalizou em Portugal de pagar subsídios de férias e de Natal conduz a pressões pontuais sobre as tesourarias das instituições e das empresas sem vantagens para ninguém. Além dos esforços sazonais que exige (coincidindo em muitos casos com redução de actividade e, portanto, de facturação) incentiva o consumo irracional que, frequentemente, nem se reflete no aumento de actividade produtiva do país porque se repercute no aumento das importações.

AMEIXAS

HIPÓCRITAS

Já coloquei aqui no Aliás alguns post sobre o problema do branqueamento de capitais e das actividades criminosas ligadas ao tráfico de drogas, armas, pessoas, etc., que frequentemente se encontram ligadas ao terrorismo e frequentam as mesmas rotas financeiras das evasões fiscais.

À pergunta, E se de repente acabasse a droga?, ainda não encontrei resposta que lhe calculasse as consequências.

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Um dos aspectos que caracteriza a contradição entre o discurso oficial e a prática das nações no combate ao comércio criminoso é o da emissão de papel moeda de elevado valor facial: notas de cem dólares e de quinhentos euros, para citar apenas as mais usadas. Há muito tempo já, abordei este aspecto hipócrita que consiste em emitir moeda cuja finalidade só pode ser a de facilitar o comércio subterrâneo, aquele em que os contratantes não querem deixar rasto.

Se houvesse, mas realmente não há, uma intenção clara de dificultar este comércio, tanta a Fed como o BCE teriam há muito tempo mandado recolher estas notas e permitido apenas a circulação das de pequeno valor. Numa época em que o próprio cheque entrou em desuso, só por razões inconfessáveis as autoridades monetárias mantêm a forma suspeita daquele meio de pagamento.

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Foi sem surpresa, portanto, que ontem li o artigo do Público, "500 euros, as notas que não se vêm", que refere que "para 2006, o BP estimava que as notas de 500 euros constituíssem oito por cento do dinheiro vivo em circulação do país, um valor que compara com os 33,4% do total da Zona Euro. Em Espanha o fenómeno atinge dimensões surpreendentes: 110 milhões de notas de 500, cujo valor corresponde a quase 70% do valor total da massa monetária em circulação, um recorde europeu. Este número impressionante, dizem os especialistas, está relacionado com as redes de droga e prostituição internacional que usam o território espanhol para branquear os seus capitais. O até aqui fulgurante mercado imobiliário espanhol, especialmente do Sul do país, tem servido para muitas dessas operações , sendo habitual realizarem-se vendas de casas de Verão utilizando apenas notas."

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E se houvesse apenas notas de 5, 10 e 20 euros em circulação? Abalava-se a economia porque ela sustenta-se dos negócios criminosos?

M 101

Explanation: Big, beautiful spiral galaxy M101 is one of the last entries in Charles Messier's famous catalog, but definitely not one of the least. About 170,000 light-years across, this galaxy is enormous, almost twice the size of our own Milky Way Galaxy. M101 was also one of the original spiral nebulae observed by Lord Rosse's large 19th century telescope, the Leviathan of Parsontown. Recorded at infrared wavelengths by the Spitzer Space telescope, this 21st century view shows starlight in blue hues while the galaxy's dust clouds are in red. Examining the dust features in the outer rim of the galaxy, astronomers have found that organic molecules present throughout the rest of M101 are lacking. The organic molecules tracked by Spitzer's instruments are called polycyclic aromatic hydrocarbons (PAHs). Of course, PAHs are common components of dust in the Milky Way and on planet Earth are found in soot. PAHs are likely destroyed near the outer edges of M101 by energetic radiation in intense star forming regions. Also known as the Pinwheel Galaxy, M101 lies within the boundaries of the northern constellation Ursa Major, about 25 million light-years away.

MCAINOMICS V OBAMANOMICS

A Short Primer on McCainomics Versus Obamanomics:
Top-Down or Bottom-Up
Robert Reich

McCain and Obama represent two fundamentally different economic philosophies. McCain's is top-down economics; Obama's is bottom-up. Top-down economics holds that: 1. If you give generous tax breaks to the rich, they will have greater incentive to work hard and invest. Their harder work and added investments will generate more jobs and faster economic growth, to the benefit of average working people. 2. If you give generous tax breaks to corporations, reduce their payroll costs, and impose fewer regulations on them, they will compete more successfully in global commerce. This too will result in more jobs for Americans and faster growth in the United States.3. The best way to reduce the energy costs of average Americans is to give oil companies access to more land on which to drill, lower taxes, and lower capital costs. If they get these, they'll supply more oil, which will reduce oil prices. 4. The best way to deal with the crisis in credit markets is to insure large Wall Street investment banks, as well as Fannie and Freddie, against losses. This will result in more loans at lower rates to average Americans. (Bailing them out may risk "moral hazard," in the sense that they will expect to be bailed out in the future, but that's a small price to pay for restoring liquidity.) All of these propositions are highly questionable, especially in a global economy. The rich do not necessarily invest additional post-tax earnings in the United States; they invest wherever around the world they can get the highest returns. Meanwhile, large American-based corporations are doing business all over the world; their supply chains extend to wherever they can find low labor costs combined with high output, and their sales to wherever they can find willing buyers. Oil companies, too, are operating globally and set their prices largely at the point where global supply meets global demand. Additional drilling here creates environmental risks for us but generates the same marginal benefits for consumers in China, India, and Europe as we might enjoy (most likely not for a decade or more). Credit markets are global as well, so the beneficiaries of bailouts of large investment banks and lenders are also worldwide while the potential costs (including moral hazard) fall on American taxpayers. This isn't to argue that top-down economics is completely nonsensical. America is, after all, the world's largest economy. So whatever helps the top of it will to some extent trickle down to everyone else here, and whatever hurts the top is likely to impose some burdens all the way down. But in a global economy, bottom-up economics makes more sense. Bottom-up economics holds that:1. The growth of the American economy depends largely on the productivity of its workers. They are rooted here, while global capital and large American-based global corporations are not. 2. The productivity of America workers depends mainly on their education, their health, and the infrastructure that connects them together. These public investments are therefore critical to our future prosperity.3. Global capital will come to the United States to create good jobs not because our taxes or wages or regulatory costs are low (there will always be many places around the world where taxes, wages, and regulatory costs are lower) but because the productivity of our workers is high. 4. The answer to our energy costs is found in the creativity and inventiveness of Americans in generating non-oil and non-carbon fuels and new means of energy conservation, rather than in access by global oil companies to more oil. So subsidize basic research and development in these alternatives. 5. Finally, in order to avoid a recession or worse, it's necessary to improve the financial security of average Americans who are now sinking into a quagmire of debt and foreclosure. Otherwise, there won't be adequate purchasing power to absorb all the goods and services the economy produces. (As to "moral hazard," the financial institutions that did the lending had more reason to know of the risks involved than those who did the borrowing.)Listen carefully to the economic debate in the months ahead in light of these two competing economic philosophies. And hope that the latter wins out in years to come.

INIMPUTÁVEIS

Fotografia de eléctricos na Praia das Maçãs em 1963

toque nas imagens para as aumentar

O eléctrico entre Sintra e a Praia das Maçãs era, há cinquenta anos uma pequena maravilha que funcionava.

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Há uns dez anos, a presidente da CM Sintra na altura, decidiu pôr o eléctrico de novo a funcionar e arranjou-lhe uns carris a preceito e novas carruagens. A recuperação do brinquedo levou anos, gastaram-se uns largos milhares, para se chegar à conclusão, agora que estava tudo pronto para novas viagens, que afinal o caminho para lá da Ribeira não oferecia segurança. De modo que quem quiser ir de eléctrico só pode ir à Ribeira e voltar porque da Ribeira até à Praia das Maçãs não é distância que se faça a pé.

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A viagem até à Ribeira são só 50 cêntimos, às sextas e fim-de-semana, só a partir da 1,30 h da tarde. Resultado: anda o combóiozinho para trás e para a frente sete vezes nos dias em que anda, geralmente com o condutor pouco mais que sozinho.

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Entretanto, entendeu a actual vereação da câmara dotar a empresa concessionária (municipal, evidentemente) de instalações administrativas condignas com o investimento feito na via e no material rolante. A obra está orçada em 411 825 euros. E demorada.

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Se no fim de toda esta novela não houver eléctrico novo, teremos pelo menos uma sala de exposições em edifício novo a mostrar-nos como funcionava bem o eléctrico velho.

BYRON E A ÁGUA

Manuel Alegre anunciou, naquele seu estilo declamador inconfundível, durante a campanha para as presidenciais, que dissolveria a Assembleia da República se uma lei de privatização das águas fosse aprovada pelos deputados. Lembrei-me desta citação tronitroante de Alegre quando vi Byron citado no artigo, que transcrevo, do economist desta semana acerca da ameaça da falta de água que pode vir a ser ainda mais dramática para a humanidade que o inevitável progressivo esgotamento das reservas de petróleo.

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A escassez de recursos aquíferos em muitas áreas do globo é tão antiga como a própria humanidade mas nunca a sobrevivência da humanidade esteve tão posta em causa por falta desse elemento essencial à vida como aquela que se perspectiva se a humanidade não arrepiar do caminho que conduz à redução que a condenará à míngua.

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Mas estará melhor defendida a utilização racional da utilização da água mantendo o Estado guardião e gestor dos recursos de água, como supõe Alegre, ou essa defesa é melhor conseguida fazendo intervir o mercado, como sugere o articulista do economist?

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Entre o tradicional laxismo na utilização dos recursos que caracteriza em geral a actuação do Estado e a voracidade que o mercado em roda livre incentiva, a solução mais conveniente encontrar-se-á, certamente, algures onde os recursos sejam protegidos pelo Estado e as condições da sua exploração optimizados pela concorrência. As perdas de água que hoje se observam na distribuição domiciliária em Portugal decorrem, em grande parte, do facto do próprio Estado descurar a protecção de um recurso que, para muitos, ainda não parece escasso mas é. Tal desatino, reflecte-se na factura apresentada ao consumidor, que não tem fornecedor alternativo, pode induzir menores consumos domésticos mas não remedeia os consumos das rupturas das condutas.

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A irracional utilização da água, sobretudo para fins industriais e agrícolas, decorrente da sua subsidiação, constitui uma ameaça que a intervenção de uma lógica de concorrência pode evitar.

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WATER - A soluble problem
More trading could help to alleviate water shortages
economist

SO WORLD markets are short of oil, and supplies of food are running thin. The prices of all sorts of basic commodities are soaring, and now there may also be reason for many to worry about the most fundamental of necessities—water. Some experts believe so, at least, and they are spreading doom-laden warnings of a Malthusian crisis in the world’s water supply.
Goldman Sachs, an investment bank which likes to ponder the future of the world, recently suggested that a global lack of water could prove to be a bigger threat to mankind than rising food prices or the depletion of energy resources. Sir Nicholas Stern, who reviewed the economics of climate change in a big report for the British government in 2006, is worried too. He points to some big local problems, for example in the Himalayas, where melting glaciers risk disrupting supplies of usable water in the region, just as many underground aquifers are drying up. He argues that water—at least the fresh sort—is not a renewable resource, and because it is not priced properly it has been “mined” without restraint.
Global water consumption is doubling every 20 years says Goldman Sachs. According to Sir Nicholas, in many places supplies are running short as rising consumption cannot be matched by fresh rainfall. As a result, suggests Goldman Sachs, the price of water is bound to rise: bad news for the poor and thirsty, but an opportunity for investors. The excited bank even suggests that water might be considered to be the “petroleum for the next century”.
It expects profits to be made less from selling the stuff directly, and more from investments in infrastructure and new technology. The bank estimates that America alone needs to spend around $1 trillion on new pipes and waste-water plants by 2020. It estimates that the higher-tech side of the industry—for example in desalination efforts, or ultraviolet disinfection—is now worth $425 billion dollars, globally.
There could be plenty of money to be made in supplying water. However, more efficient use of the stuff depends on pricing it properly. Mark Zeitoun, a researcher at the London School of Economics, suggests that agriculture is responsible for the greatest waste of water, largely because of government subsidies. Farmers often plant water-intensive crops which slurp up supplies precisely where they are most limited. Growing potatoes, a thirsty crop, in Israel looks to be particularly wasteful, especially given desperate shortages of water in nearby Palestinian territories. Similarly Egyptian oranges, Australian cotton and Californian rice require huge amounts of water to produce crops that could in theory be cultivated more easily and cheaply in wetter climates. But when such crops produce valuable exports and create local jobs, governments have been keen to provide subsidised water.
Local conditions and needs vary so much that talk of a global water shortage is misleading. In total there is more than enough water for all, but it is often in the wrong place and is difficult and expensive to transport. And discrepancies are likely only to get worse as the effects of climate change becomes more pronounced. That Canada and Brazil have more water than they need is of little consolation to parched Yemen and northern China. Even within individual countries distribution is unequal. Cherrapunji is one of the wettest places on earth; elsewhere in India, Gopalpura receives only a few inches of rain a year. Surprisingly though, it is Cherrapunji which suffers the water shortages. Sensible water management would go a long way to redressing the balance.
Better functioning water markets would be one way to share out water more efficiently. Once governments have defined water rights clearly, farmers, and others who use water, could be encouraged to trade, first with each other and with industrial and urban users. Allotting options that can be taken up as and when required rather than handing out permanent water rights would encourage water trading and avoid accusations of water “theft”. It may be difficult to rein in the world’s extravagance with water, but Byron had it right when he wrote: “Til taught by pain, men really know not what good water is worth.”

BOLEIA

MARTE

Explanation: What created this great cliff on Mars? Did giant waterfalls once plummet through its grooves? With a four-kilometer drop, this high cliff surrounding Echus Chasma, near an impressive impact crater, was carved by either water or lava. A leading hypothesis is that Echus Chasma, at 100-kilometers long and 10-kilometers wide, was once one of the largest water sources on Mars. If true, water once held in Echus Chasma likely ran over the Martian surface to carve the impressive Kasei Valles, which extends over 3,000 kilometers to the north. Even if initially carved by water, lava appears to have later flowed in the valley, leaving an extraordinarily smooth floor. Echus Chasma lies north of tremendous Valles Marineris, the largest canyon in the Solar System. The above image was taken by the robotic Mars Express spacecraft currently orbiting Mars.

ESTÚDIO DA PAULA REGO

Artists' studios: Paula Rego
'Once it is bare I want to fill it up again'

guardian.co.uk
Article history

I live in Hampstead and my studio is a short bus ride away in Kentish Town. I come here every day except Sunday. It used to be a wood workshop and gets marvellous daylight. There's a lot of wall space. Once it is bare I want to fill it up again.
Along with more paintings next door, this is a whole year's work. The pictures here are from a series called "Human Cargo", about women who are transported from one country to another to be sold. The mannequins are my props. I make them with my assistant, Lila, from plastic skeletons used by medical students, covered with cotton wool and stockings. I set up the scene and then try to draw it. The man is holding a flower with a dong - it could be a tongue and it could be a phallus - to try to inspire the women. That was improvised at the last moment. I also use live models. In the picture at the front, you can see Lila is sitting on the cases and also crouched at the front. At the back there's a fat, blind sister; she's part of a story based on an incident in Portugal, where a blind woman was put outside in all weathers by her jealous sister until eventually her heart gave in.
One of the walls has wardrobes full of things to dress my props and models, along with props from other pictures, huge stuffed spiders and monkeys and all sorts. One box just has wigs in it. It is like in a theatre. The case has an accordion in it that was used in another picture; everything is used in different forms at different times.
You can see stacks of records along the wall. I love listening to opera while I work. Next door I have a very long table where I draw from my head, some-times just to see ideas before I set them up. Because I am telling a story, one picture comes after the other, so it is very helpful to see them all hanging together. This room is where I make the big pictures. I'm always changing it around, making scenes and setting it up to tell different stories.

This article was first published on guardian.co.uk on Friday May 09 2008. It was last updated at 12:18 on July 22 2008.

ALDRABICES

Joe Berardo, segundo notícia da Lusa que os jornais transcrevem e as televisões recitam, anunciou que vai processar judicialmente anteriores administradores do BCP, exigindo-lhes uma indemnização de 700 milhões de euros pela prática de aldrabices que o prejudicaram.

Acontece que o BCP tem um seguro de responsabilidade civil do grupo AIG que cobre prejuízos causados aos accionistas, clientes ou colaboradores por actos realizados pelos seus executivos (incluindo os anteriores) no quadro do exercício das suas funções, esclarece o Público de ontem. Esse seguro é limitado ao capital de 50,28 milhões de euros, custa ao BCP cinco milhões de euros, e exclui situações de dolo, multas ou coimas aplicadas pelos órgãos reguladores. É notável o prémio deste seguro relativamente ao capital, que pressupõe risco com probabilidade de ocorrência elevada numa instituição que deveria conduzir-se dentro de boas práticas. Teria a AIG antecipado este processo, cobrando um prémio elevado e limitando drasticamente o capital seguro, porque era conhecedora das aldrabices que Berardo refere?

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700 milhões de euros, creio eu, é de longe o maior pedido de indemnização colocado a julgamento

de tribunais portugueses, nada habituados, portanto, a que lhe entrem pela porta dentro exigências deste calibre. A primeira ideia que nos ocorre é pensar que um imbróglio destes vai durar (se começar) mais do que o "caso furacão", que não se sabe por onde lhe anda o olho no meio de umas consideráveis toneladas de papel que já juntou. Estando Joe envolvido no "furacão", segundo rumores recentes, é bem provável que da envolvência espiral de tanta aldrabice, um dia destes resulte tomarmos conhecimento que as turbulências se mutuamente extinguiram porque foram arquivadas, como é hábito.

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Se, pelo contrário, Berardo encaixar os 700 milhões que reclama, teremos todos de reconhecer uma vez por todas que o homem é preso da fala mas não é gago.

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Berardo vai processar antigos administradores do BCP

O investidor Joe Berardo, um dos maiores accionistas do Millennium Bcp, anunciou esta sexta-feira, em entrevista à «SIC Notícias», que vai processar judicialmente ex-administradores da instituição bancária.
O processo, referiu o investidor, dará entrada nos tribunais em Setembro, exigindo à anterior administração uma compensação de 700 milhões de euros, avança a agência «Lusa».
O fundamento é a «aldrabice que (os anteriores adminitradores) andaram a fazer naquela instituição. São responsáveis por isso. Não por negligência ou fazer crédito de risco», afirmou na entrevista à «SIC Notícias».
Berardo referiu ainda que a própria entidade reguladora do mercado de capitais (CMVM) já colocou em causa a actuação da anterior administração.
Na mesma entrevista, Berardo compara o ex-presidente do Millennium Bcp Jardim Gonçalves ao ditador Salazar, pelo facto de ambos terem começado por fazer um bom trabalho mas não souberam sair pela porta grande.
Berardo é presidente do Conselho de Remunerações e Previdência Millennium bcp desde a última Assembleia Geral de accionistas, no final de Maio.
Joe Berardo é um dos maiores accionistas do BCP, com cerca de 6 por cento do capital social e nunca tinha integrado qualquer órgão social do banco.

JUROS V INFLAÇÃO

Real interest rates in the EMU: Facts and implications

Michael Arghyrou Jul 22, 2008
Economics Section, Cardiff Business School.

The European Central Bank (ECB) currently faces probably the most challenging financial and economic environment since its inauguration. Global inflation pressures compromise its institutional price-stability objective while the risk of the credit-crunch crisis spilling over to the euro-zone’s economy is real. The challenge for the ECB is to determine an interest rate policy maintaining low inflation without causing a euro-zone recession. In this respect, the ECB is not different to other major central banks, such as the Federal Reserve Bank or the Bank of England. What distinguishes it from the latter is that it pursues its objectives on behalf of different sovereign states with heterogeneous real rigidities, business-cycle stages and exposure to the credit-crunch risks. These are significantly complicating factors, as they may result in asymmetric transmission of the single monetary policy and hinder the ECB’s ability to meet objectives defined in terms of EMU aggregates. If persistent, these may then invite political pressure on the ECB and undermine confidence in its ability to deliver effective monetary management. Let us give an example to make the argument clear.
Let us assume that the EMU is divided into two groups, a low-income, fast-growing, rigid Periphery and a high-income, slow-growing, flexible Centre. To control inflation in the rigid Periphery, the ECB would implement interest rate increases at the cost of unnecessary output volatility in the Centre. Alternatively, it can opt for an interest rate policy ensuring output smoothing in the Centre at the risk of macro-imbalances in the Periphery (e.g. increasing current account deficit and high asset-price increases). Let us assume that the ECB opts for the second alternative due to the Centre having a larger economy than the Periphery, in which case its policy keeps EMU aggregates near their targeted values. Macroeconomic adjustment in the Periphery is then left to the flexibility-promoting effects of the Periphery’s structural policies; and the demand-mitigating influence of Balassa-Samuelson effects caused by higher relative inflation and real exchange rate appreciation. As long as the global economic outlook is benign and liquidity provision is abundant, inter-temporal constraints in the Periphery are not too binding and macro-adjustment can take place smoothly. Overall, in good times this policy keeps all three parties (ECB, Centre and Periphery) largely content. It also summarises, broadly speaking, developments in the euro-zone over the past decade.
This policy, however, carries a risk. This is that the Periphery will not promote structural policies actively enough; and/or its high growth rates will cause over-optimistic risk assessments, unsustainable increases in asset prices, investors’ and consumers’ exuberance and excessive internal/external borrowing. Imbalances in the Periphery may then become so pronounced in size to create bubble-like conditions, rendering its economy vulnerable to the risk of a boom-and-bust. The trigger may be a liquidity shock, such as the current credit crunch, suddenly increasing the cost of borrowing; and/or a global inflation shock, similar to the present one, prompting the ECB to increase its interest rates abruptly. If the latter does not do so, it will be compromising its price-stability objective, thus risking dissatisfaction in the Centre. If it does it may cause a strong economic downturn and dissatisfaction in the Periphery. If, finally, the ECB takes a middle-way course, it risks missing its EMU-average objectives, causing dissatisfaction in, and inviting political pressure from, both groups. Overall, in tough times heterogeneous real rigidities, differential growth rates and pronounced imbalances may cause problems to all three parties. If persistent these, as argued above, may undermine confidence in the effectiveness (or even the legitimacy) of the single monetary policy.
How close are we to the unfavourable scenario described above? The ECB has recently signalled its intention to tighten monetary policy by increasing, for the first time in a year, its key main refinancing operations interest rate by 0.25% to 4.25%. This is a clear signal that the ECB regards the risk of inflation to be a more serious threat than the risk of recession for the euro-zone’s economy. Two questions now arise. First, are higher ECB interest rates likely to lower EMU-average inflation given the present global inflation pressures? Second, are they likely to trigger a recession among the EMU’s high-growth members? A variable whose movements convey useful information relating to both questions is the real interest rate differentials (RIRDs) of individual EMU members against the union’s average. This is so because the real interest rate channel is the main channel through which monetary policy is transmitted to the euro-zone’s individual economies (see Clements et al, 2001). As such, a necessary (though not sufficient) condition for uniform transmission of the single monetary policy is that national RIRDs against the EMU average are mean-reverting and display similar persistence patterns. If the opposite is true, shifts in the ECB interest rate would pose EMU members with asymmetric monetary shocks causing differential and potentially costly inflation, output and asset prices’ responses, compromising the EMU-average price stability objective (see ECB, 2003). Furthermore, if real interest rates within the EMU are bound to converge, large RIRDs are indicative of unsustainable macroeconomic imbalances; in which case their size at any moment in time is a good proxy for the risk of recession.
In a paper recently published by the Journal of International Financial Markets, Institutions & Money, Arghyrou, Gregoriou and Kontonikas examine real interest rate convergence against the EMU average in the EU25 area for the period 1996-2005. The authors find evidence of convergence for the majority of countries, including most new EU members. Convergence, however, is found to be a gradual and non-uniform (in terms of short-run dynamics) process, subject to structural breaks falling close to important economic events most prominently (though not exclusively) the euro’s launch in 1999. Furthermore, among EMU members, convergence is rejected for Greece and Spain, for which increasingly negative RIRD-trends are observed in recent years. Interestingly, Ireland, Italy and Portugal, are found to have diverged from the EMU average during the early euro-years but have converged to the latter since 2004. Finally, among non-EMU members, convergence is rejected for Latvia, for which a negative non-converging RIRD is found, and Hungary, Poland and the United Kingdom, which present positive, non-converging RIRDs.
Arghyrou, Gregoriou and Kontonikas analyse individual RIRD movements in terms of time-varying risk-premiums and productivity gains. They conclude that for the majority of EMU countries, where convergence is upheld, the steady-state costs of losing monetary independence should in principle be not too high; and that the majority of the new EU countries are significantly closer to joining the euro than ten years ago. However, these optimistic implications come with one important caveat, namely that non-uniform speeds of convergence imply that euro-participation may result in sub-optimal short-run monetary management for individual countries. Furthermore, non-convergence for Greece and Spain implies that adopting the euro may have caused substantially asymmetric monetary shocks and macroeconomic imbalances. The experience of these countries suggests that for Latvia, Hungary, Poland and the UK, for which convergence was also rejected, adopting the euro in the foreseeable future may be significantly costlier than for the rest of the current “EMU outs”.
What are these findings’ implications in relation to the two questions earlier posed? First, convergence among the majority of EMU members suggests a common long-term effect of the ECB policy on national real interest rates. This meets a necessary (though not sufficient) condition for uniform long-run transmission of the single monetary policy, therefore it increases the probability of the ECB pursuing successfully its EMU-average price stability objective without causing large asymmetries in the output response of individual countries. From that point of view, given the relatively small (less than 20%)2 proportion of the high-growth, periphery countries (Cyprus, Greece, Ireland, Slovenia and Spain) in EMU’s total output; and assuming that (a) global inflation pressures persist in the short-run and (b) further shocks in global financial markets are avoided; it is more likely than not that in forthcoming quarters the ECB will increase its interest rate further to restore, with good chances of eventual success, euro-zone’s inflation back at its 2% objective.
If ECB nominal interest rates increase in the future, what are the chances of a recession following in the EMU high-growth economies? By having in recent years negative real interest rates, significantly out-of-sync with the EMU average, Greece and Spain appear to be more vulnerable that others to this risk: Over 1999-2007 nominal house prices increased by 187% in Spain and 75% (over 2001-2006) in Greece.3 During the same period, household borrowing increased significantly in both countries. Finally, starting from a balanced position in the mid-1990s, in 2007 the current account deficit reached the unprecedented values of 10% of GDP in Spain and 14% in Greece. These figures suggest significant macroeconomic imbalances. But having said so, crash-landing does not appear a foregone conclusion for these economies. A year since the onset of the credit crunch, economic growth (despite slowing down in recent quarters) remains strong in both countries; their house markets, despite having cooled significantly, have so far not shown signs of collapse; and their bank profitability remains healthy. Furthermore, both countries have some spare capacity for consumption smoothing, as Greece maintains a significantly lower household loans to GDP ratio compared to the EMU average (45.5% versus 60.2% in 2007)4 ; and Spain runs a public budget surplus (2.2% of GDP in 2007) providing it a significant margin for fiscal manoeuvre without violating the provisions of the Budget and Stability growth pact.
To sum-up, although Greek and Spanish authorities face country-specific risks not shared (at least to the same degree) by the rest of the EMU members, they have grounds to be optimistic that, in the absence of further global financial shocks, their economies will emerge from the current economic turbulence reasonably unharmed. If this turns to be the case, rather than causing a recession, further increases in ECB interest rates will trigger a soft- rather than a crash-landing and a reversion to a more sustainable path of equilibrium growth. Nevertheless, the risk of a significant economic downturn exists for both countries. This highlights the importance of eliminating real rigidities and promoting economic flexibility as a key mechanism of preventing fast growth causing unsustainable imbalances and increasing capacity to cope with unexpected external shocks. To ensure that the income catch-up process continues unabated, it is imperative for Greek and Spanish authorities to continue and intensify policies aiming to achieve structural reforms.
This has implications for the new EU-members aiming to join the euro in the foreseeable future. The Greek and Spanish experience suggests that for countries such as Latvia, Hungary and Poland pre-mature euro-accession is likely to cause the imbalances discussed above. The countries which have achieved real interest rate convergence are not immune to these risks either. Spain and Greece had done likewise prior to joining the euro, yet accession to the latter caused a downward RIRD structural break leading to the risks discussed above. The Greek and Spanish experience shows that pre-euro real interest rate convergence is a necessary but not sufficient condition for avoiding post-euro asymmetric monetary shocks; the latter critically depends on eliminating real rigidities and promoting economic flexibility. In the list of policy lessons to be drawn from last year’s turbulent events this certainly ranks among the ones at the top.

Footnotes:

(1)e-mail:ArghyrouM@cardiff.ac.uk Web-page: http://www.cardiff.ac.uk/carbs/econ/arghyroum/(2) Unless otherwise stated, the source of all quoted figures is Eurostat.(3) Figures taken from www.globalpropertyguide.com(4) Figure taken from the Hellenic Bank Association, www.hba.grReferencesArghyrou, M.G., Gregoriou, A., Kontonikas, A., 2008. Do real interest rates converge? Evidence from the European Union. Journal of International Financial Markets, Institutions & Money, doi: 10.1016/j.intfin.2008.05.004.
Clements B., Kontolemis, Z.G., Levy, J., 2001. Monetary policy under EMU: differences in the transmission mechanism? Working paper 01/102, International Monetary Fund.
European Central Bank, 2003. Inflation differentials in the euro area: potential causes and policy implications. European Central Bank: Frankfurt.