SUCESSO, MAS POUCO

Still Scary

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But Portugal paid dearly for its success: the yield on the June 2020 bond was a whopping 6.7%. Granted, that was lower than the 7% at which ten-year bonds had traded earlier in the week (see chart 1), before reports of heavy purchases by the European Central Bank (ECB) pushed the yield down. But it is unsustainable for a country whose public debt is high and rising. Unless its borrowing costs plummet, Portugal will eventually have to seek rescue funds from its euro-zone partners and the IMF, as Greece and Ireland have already been obliged to do.

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Modest achievements are talked up. José Sócrates, the prime minister, said this week that Portugal’s 2010 budget deficit would fall “clearly below” the government’s target of 7.3% of GDP. Portugal was one of the few EU countries to cut its deficit by more than two percentage points in 2010, he said. Yet revenues booked from the transfer of Portugal Telecom’s pension funds to the state explain much of the improvement. The dilatory pace of fiscal consolidation is unlikely to assuage investors for long. The auction’s success may offer only temporary respite. Investors in the euro zone’s bond markets have seen the film before.

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Interactive guide   

EMBARAÇADA

Os dois artigos que transcrevi na íntegra aqui e aqui debruçam-se sobre a mesma realidade através de janelas opostas: No primeiro, da autoria de Barry Eichengreen, professor em Berkeley, a situação da Grécia ( e dos outros países que perjurativamente começaram no UK a ser designados por PIIGS : Portugal, Irlanda, Itália, Grécia e Espanha) é comentada como um embaraço que pode obrigar a parir uma boa solução: uma integração política mais avançada na União Europeia. A ideia está longe de ser nova e, muito provavelmente, esteve na mente de quem gizou um cortejo aparentemente ao contrário colocando o carro à frente dos bois. Ainda há dias, Krugman afirmava num artigo que coloquei no Aliás (The Making of a Euromess)

..." the only way out is forward: to make the euro work, Europe needs to move much further toward political union, so that European nations start to function more like American states."

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No outro, Rodney Jefferson comenta no portal da Bloomberg as perspectivas nada risonhas que se colocam ao futuro próximo da libra inglesa e da situação difícil em que se encontram a economia e as finanças britânicas. O Reino Unido, que não se encontra no euro, não terá grandes razões para se rir dos PIIGS uma vez que se encontra em sério risco de lhes vir a fazer companhia. Aliás, há dias transcrevi aqui um outro artigo que advertia os britânicos, por outras razões, dessa forma:

Não se riam!

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Afinal o euro não será assim tão culpado do embaraço da União Europeia quanto alguns o querem culpar.

OUTRO

GREECE NOW, NEXT UK
By Rodney Jefferson

March 1 (Bloomberg) -- While the eyes of the world focus on Greece’s debt crisis, investors in Edinburgh are busy preparing for the U.K. to be next.Turcan Connell, which caters to rich families, expects the pound to lose between 20 percent and 30 percent against the dollar once investors turn their sights on Britain as the government sells a record amount of debt. Sterling slid to a 10- month low versus the U.S. currency today.
“Alarm bells were ringing in Greece for a long time and when it happened, it happened very quickly,” Haig Bathgate, head of strategy at Turcan Connell, said at the company’s offices in the Scottish capital. “The U.K. is in a similar predicament. It could be hit very hard.”
Money managers in Edinburgh, where investment decisions have been made on behalf of insurers, pensioners and the wealthy for two centuries, are maneuvering to protect assets from the U.K. economy as it limps out of its worst recession on record.Bruce Stout, whose Murray International Trust Plc in Edinburgh has doubled over the past five years, said the chance of a plummeting pound are “better than even” and his biggest holdings are in Asia and Latin America. He called sterling a “very vulnerable currency.”U.K. fund managers at Aegon Asset Management and Scottish Widows Investment Partnership, together responsible for more than 30 billion pounds ($45 billion), said in January they are buying companies that do the bulk of their business abroad.
‘Very Dire’
“When there’s a fiscal crisis, the markets tend to punish that country very quickly,” said Bathgate, who is responsible for 560 million pounds. “I don’t think Britain is in nearly as bad a position as Greece. We’ve got a good taxation system, however the position of the economy is very dire.”The U.K.’s budget deficit is roughly the same as Greece’s, both exceeding 12 percent of economic output. Moody’s Investors Service and Standard & Poor’s said last week they may cut Greece’s credit rating as the five-month-old government struggles to curb spending and control its debt.
Concern that Greece won’t be able to cut its deficit helped send the euro 5.6 percent lower against the dollar this year. The euro today strengthened to a three-month high against the pound, trading above 90 pence.British Prime Minister Gordon Brown’s government in December increased its planned gilt sales for the financial year ending this month to a record 225.1 billion pounds from the 220 billion pounds announced in April. Moody’s Investors Service said in December the U.K. may “test the Aaa boundaries.”
Hung Parliament
Brown must call an election by June and some polls signal that no party will emerge with a clear majority.
The pound fell below $1.50 today for the first time since May last year, taking this year’s decline to 8 percent. A YouGov Plc poll published yesterday showed Brown’s Labour Party only two percentage points behind the opposition Conservatives, the narrowest margin for more than two years.
A so-called hung parliament or signs retail sales and economic growth aren’t recovering as expected might be the catalysts for the pound to accelerate declines, Bathgate said. The Office for National Statistics last week revised up the rate of economic growth for the fourth quarter to 0.3 percent from a previous estimate of 0.1 percent.
“There could be a number of triggers,” he said. “If there’s indecision about how you deal with a problem, that’s when things start to fall apart. We could be in the position where the spotlight turns to the U.K.”
UBS Report
The pound may fall below parity with the euro and drop to the lowest level against the dollar since the mid-1980s should the U.K. cut spending too quickly, Mansoor Mohi-Uddin, chief currency strategist at UBS AG, said in a Feb. 24 report.
Sterling slid to a nine-month nadir against the dollar last week, trading at $1.52. Zurich-based UBS, the world’s second- biggest currency trader, predicted it could fall “quickly back” to $1.05 or below.The pound may come under further pressure with the Bank of England resuming its quantitative-easing program, a process of injecting new money into the economy, within the next three to four months, Bathgate said. Policy maker Adam Posen said Feb. 24 the central bank may expand the 200 billion-pound asset-purchase plan should the economic recovery prove weaker than expected.
“If it comes back then we’re likely to be the only people doing that in the world at that time,” said Bathgate. “My strong view is the government is trying to create inflation and devalue the currency.”Selling Bonds
Bathgate said he sold conventional U.K. government-bond investments at the end of 2008 and only holds index-linked securities because of concern inflation may accelerate.The firm also has reduced holdings in corporate bonds because of the potential “knock-on impact” from a decline in government securities.
The yield on the benchmark 10-year gilt dropped 24 basis points to 4.03 percent last week. The yield on Greek 10-year bonds fell 6 points to 6.39 percent. German bunds, the region’s benchmark debt, declined 18 points to 3.10 percent.Turcan Connell, whose clients typically have at least 5 million pounds to invest, was founded in 1998 and oversees about 1 billion pounds in total. Bathgate is responsible for allocating money to different funds, and half is currently in stocks portfolios with 30 percent in hedge funds and other so- called alternative investments.

ACERCA DA FELICIDADE

Stiglitz, Amartya Sen: GDP A Poor Measure Of Growth

Among the possible casualties of the Great Recession are the gauges that economists have traditionally relied upon to assess societal well-being. So many jobs have disappeared so quickly and so much life savings has been surrendered that some argue the economic indicators themselves have been exposed as inadequate.
In a provocative new study, a pair of Nobel prize-winning economists, Joseph E. Stiglitz and Amartya Sen, urge the adoption of new assessment tools that incorporate a broader concern for human welfare than just economic growth. By their reckoning, much of the contemporary economic disaster owes to the misbegotten assumption that policy makers simply had to focus on nurturing growth, trusting that this would maximize prosperity for all.
“What you measure affects what you do,” Mr. Stiglitz said Tuesday as he discussed the study before a gathering of journalists in New York. “If you don’t measure the right thing, you don’t do the right thing.”
According to the report, much of the world has long been ruled by an unhealthy fixation on swelling the gross domestic product, or the quantity of goods and services the economy produces. With a singular obsession on making G.D.P. bigger, many societies — not least, the United States — failed to factor in the social costs of joblessness and the public health impacts of environmental degradation. They allowed banks to borrow and bet unfathomable amounts of money, juicing the present by mortgaging the future, thus laying the ground for the worst financial crisis since the 1930s.
The report is more critique than prescription. It elucidates in general terms why leaning exclusively on growth as an economic philosophy may yield unhappiness, and it suggests that the incomes of typical people should be weighed more heavily than the gross production of whole societies. But it sidesteps the thorny details of slapping a cost on a ton of pollution or a waylaid career, leaving a great mass of policy choices for others to resolve.
Some Americans may reflexively reject the report and its recommendations, given its provenance: it was ordered up last year by President Nicolas Sarkozy of France, whose dissatisfaction with the available tools of economic assessment prompted him to create the Commission on the Measurement of Economic Performance and Social Progress. Tuesday’s briefing was held in an ornate room at the French consulate. The official French statistics agency is already working to adopt the report’s recommendations. Mr. Sarkozy plans to bring it with him to the G-20 summit meeting in Pittsburgh this week, where the leaders of major countries will discuss a range of policy issues.
But whatever one’s views on the merits of European economy policy, and wherever one sits on the ideological spectrum, these appear fitting days to re-examine how economists measure vital signs — particularly in the United States.
By most assessments, the American economy is now growing again, perhaps even vigorously. Many experts expect a 3 percent annualized rate of expansion from July through September. As a technical matter, the recession appears to be over. Yet the unemployment rate sits at 9.7 percent and will probably climb higher and remain elevated for many months. In millions of households still grappling with joblessness and the tyranny of bills, signs of health served up by the traditional economic indicators seem disconnected from daily life.
This was precisely the sort of contradiction Mr. Sarkozy sought to unravel when he created the commission, tasking it with pursuing alternate ways of measuring economic health.
To head the panel, he picked Mr. Stiglitz, a former World Bank chief economist whose best-selling books amount to an indictment of the Washington-led model of global economic integration. Mr. Sarkozy also selected Mr. Sen, a Harvard economist and an authority on poverty.
The resulting report amounts to a treatise on the inadequacy of G.D.P. growth as an indication of overall economic health. It cites the example of increased driving, which weighs in as a positive within the framework of economic growth, as it requires greater production of gasoline and cars, yet fails to account for the hours of leisure and work time squandered in traffic jams, and the environmental costs of pollutants unleashed on the atmosphere.
During the real estate bubble that preceded the financial crisis, the focus on economic growth helped encourage overbuilding and investment in real estate. Mr. Stiglitz argues that the single-minded focus on growth gave American policy makers a false sense of assurance that their policies were virtuous, as they allowed financial institutions to direct virtually unlimited sums of money into real estate and as consumer debt levels built with unrestrained momentum.
Credit enabled spending, and spending translated into faster growth — an outcome that was intrinsically good, and never mind how long it might last or the convulsions that would accompany the end of easy money.
A growth-oriented policy encouraged homeowners to borrow as if money need never be repaid, and industry to produce products as if the real cost of pollution were zero, Mr. Stiglitz added.
“We looked to G.D.P. as a measure of how well we were doing, and that doesn’t tell us whether it’s sustainable,” he said at the briefing. “Your measure of output is grossly distorted by the failure of our accounting system. What began as a measure of market performance has increasingly become a measure of social performance, and that’s wrong.”
Instead of centering assessments on the goods and services an economy produces, policy makers would do better to focus on the material well-being of typical people by measuring income and consumption, along with the availability of health care and education, the report concludes.
Many of these prescriptions will no doubt resonate with policy makers and ordinary people.
Indeed, the difficulty comes in turning these general principles into new means of measurement. The report notes that its authors concur on the big picture, but diverge on the methodologies to be employed when it comes to factoring in the value of a better education and cleaner skies.
The old mode of measurement has taken a beating, and yet the new one, it seems, is still a work in progress.

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outros artigos correlacionados

Happiness: A Revolution in Economics

É MELHOR MUDAR DE ÓCULOS?

O Economist da semana anterior, publicava o artigo Grossly distorted pictured onde o autor convida a usar lentes diferentes para ler o crescimento económico, não através do crescimento total mas do crescimento per capita.

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Não é por mudarmos de óculos que a realidade se altera. Quanto muito, passamos a ver o que não víamos, mas também pode suceder o contrário se as lentes não forem multifocais. No caso em questão, a mudança de lentes não nos leva a ver o que era já visível a olho nu:

A questão de um crescimento demográfico superior ao crescimento económico é tema debatido há muitos anos, pelo menos desde Malthus. Neste artigo, a questão é colocada do lado contrário: Se o crescimento percentual demográfico é inferior ao crescimento percentual económico do país o crescimento percentual per capita é superior ao crescimento percentual económico total. Trata-se de uma evidência aritmética que tem muitas nuances, algumas descritas pelo autor: melhora a perspectiva dos europeus, dos japoneses e dos chineses, piora a dos Estados Unidos, do Brasil e da Índia, por exemplo.

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Esquece-se, contudo, de abordar os países de baixo crescimento económico (africanos, sobretudo) e de forte crescimento demográfico, não raras vezes contido pelas piores razões: a fome e a doença.

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Esquece-se ainda de referir o efeito que o declínio demográfico europeu terá, se não for contrariado, sobre o potencial de crescimento na Europa. A realidade social é multifacetada e qualquer abordagem limitada a uma perspectiva distorce a validade das conclusões retiradas.

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Ocorre-me, a propósito de leituras de conceitos em termos relativos e absolutos, a discussão peregrina que opôs o governo à oposição durante a discussão do OGE a propósito do crescimento da dívida pública que cresce em termos absolutos, (o que é uma lástima, segundo a oposição) e decresce relativamente ao PIB (o que é um sucesso, segundo o governo).

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Sendo o crescimento demográfico em Portugal inferior ao crescimento económico, ainda um dia destes teremos nova discussão para nos entreter: acerca do nosso fulgurante crescimento per capita. Sem que ninguém fique menos pobre nem menos rico por isso.