Monday, May 9, 2011
Wednesday, May 4, 2011
Portugal's Bailout Has Holes
By Grant de Graf
Portugal has reached a bailout deal with the EU and IMF for €78 billion. The package is a three year plan and under the guidelines, the country will have to reach a budget deficit of 5.9% of its gross domestic product this year, 4.5% in 2012, and 3% in 2013. This is a far too aggressive timeline and given the circumstances of the economic slowdown, the country is setting itself up for disaster and a potential default. I'm surprised that the IMF and the EU could agree to such terms, especially in light of the Greek tragedy, which is still unfolding and may not have reached its climax.
Secondly, according to Mr. Sócrates, the acting Prime Minister of Portugal until the elections in June 2011, the deal will not include cuts in the minimum wage or in public-sector jobs, measures Ireland and Greece were forced to take. Employees will still receive the extra 13th and 14th months of salary. I'm not running for prime minister, so its easy for me to say, but in the case of smart austerity, workers need to take cuts. We're not asking for layoffs, just simply some belt-tightening, which under the circumstances would be very gentlemanly.
The good news is that there is a plan on the table and officials are working towards a solution, which appears attainable.
Portugal has reached a bailout deal with the EU and IMF for €78 billion. The package is a three year plan and under the guidelines, the country will have to reach a budget deficit of 5.9% of its gross domestic product this year, 4.5% in 2012, and 3% in 2013. This is a far too aggressive timeline and given the circumstances of the economic slowdown, the country is setting itself up for disaster and a potential default. I'm surprised that the IMF and the EU could agree to such terms, especially in light of the Greek tragedy, which is still unfolding and may not have reached its climax.
Secondly, according to Mr. Sócrates, the acting Prime Minister of Portugal until the elections in June 2011, the deal will not include cuts in the minimum wage or in public-sector jobs, measures Ireland and Greece were forced to take. Employees will still receive the extra 13th and 14th months of salary. I'm not running for prime minister, so its easy for me to say, but in the case of smart austerity, workers need to take cuts. We're not asking for layoffs, just simply some belt-tightening, which under the circumstances would be very gentlemanly.
The good news is that there is a plan on the table and officials are working towards a solution, which appears attainable.
Tuesday, May 3, 2011
Pakistan is an Added Risk in the Political Equation
By Grant de Graf
So now Pakistan has flip-flopped from its previous stance, in which it initially commended the capture and final bullet that targeted bin Laden's capture. Even President Obama extended his appreciation towards Pakistan, for its contribution towards bin Laden's demise.
Seemingly, a few hours in politics can be a long time and very quickly, the Pakistan government began questioning, the legitimacy of U.S. entry into foreign air space without the hosting country's permission. What could well have been the makings for a celebration in diplomatic solidarity between these two countries, appears to be heading towards a political rift, a situation that has already been cooking for some time.
Pakistan must have something to gain by the hard-ball attitude. Firstly, stronger electorate support. Let's be honest. It's not like every Pakistani is hoarding a collection of American flags under a bed, to wave at the next rally. Secondly, perhaps Pakistan believes it can negotiate better terms with its current relationship with the U.S. It's a message that is being directed to the oval office. "You need us more than we need you, and if you want a relationship, then cough up a few more greens." I suppose two can play the same game, which will mean very little progress towards any final solution in Afghanistan.
Somehow I would like to appoint as diplomatic coordinator to the U.S.- Pakistan relationship committee, the lady who waves her hand like a Gestapo police officer at me everyday, instructing me to keep my Armstrong bike out of the pedestrian section of the track. She would tell both parties how to deal with any unresolved differences and exactly where they stand, in no uncertain terms.
So now Pakistan has flip-flopped from its previous stance, in which it initially commended the capture and final bullet that targeted bin Laden's capture. Even President Obama extended his appreciation towards Pakistan, for its contribution towards bin Laden's demise.
Seemingly, a few hours in politics can be a long time and very quickly, the Pakistan government began questioning, the legitimacy of U.S. entry into foreign air space without the hosting country's permission. What could well have been the makings for a celebration in diplomatic solidarity between these two countries, appears to be heading towards a political rift, a situation that has already been cooking for some time.
Pakistan must have something to gain by the hard-ball attitude. Firstly, stronger electorate support. Let's be honest. It's not like every Pakistani is hoarding a collection of American flags under a bed, to wave at the next rally. Secondly, perhaps Pakistan believes it can negotiate better terms with its current relationship with the U.S. It's a message that is being directed to the oval office. "You need us more than we need you, and if you want a relationship, then cough up a few more greens." I suppose two can play the same game, which will mean very little progress towards any final solution in Afghanistan.
Somehow I would like to appoint as diplomatic coordinator to the U.S.- Pakistan relationship committee, the lady who waves her hand like a Gestapo police officer at me everyday, instructing me to keep my Armstrong bike out of the pedestrian section of the track. She would tell both parties how to deal with any unresolved differences and exactly where they stand, in no uncertain terms.
Monday, May 2, 2011
Economic Perspectives: Bin Laden, ISM Index, EU Central Banks, Syria, Israel and P.A.
By Grant de Graf
Osama bin Laden is dead, after a U.S. military operation in Pakistan located his hideout and killed all inhabitants. The impact of his death is likely to be broad-reaching. Firstly, the assistance which Pakistani officials afforded U.S. operatives in the initiative, is likely to tentatively repair, the strained relationship that exists between the two countries. Secondly, U.S. officials are on high alert, as world wide reprisals are expected from al Qaeda.
The U.S. manufacturing sector posted its 21th consecutive month of expansion in April, according to the closely followed ISM index. The index dipped to 60.4% last month from 61.2% in March, the Institute for Supply Management said Monday. Any reading over 50 indicates that more manufacturers are expanding instead of shrinking. Economists had forecast the index to dip to 59.7%. The dollar's weakness will continue to act as a stimulus to the economy, and if this trend continues (barring the market's reaction to bin Laden's demise) a devalued dollar may well move trade accounts in the U.S. and China towards equilibrium. Thank you Adam Smith. Thank you invisible hand.
The European Central Bank has opted to increase interest rates in line with the respective increase in inflation, while the Bank of England has chosen to maintain interest rates at current levels. This reflects a divergence in the two central banks approach to deal with inflation. Most certainly the EU decision to increase interest rates, may further constrain economic growth to a level that is already anemic. Additionally, the strengthening of the Euro, which is a result of higher interest rates, may further limit the EU's level of competitiveness as an exporter of goods to global markets.
Syria battles to contain national protests calling for changes towards a democratic government. This Middle Eastern country is a major strategic partner to Iran, who sees Syria as a geographically suitable conduit for expending its export of arms to Hezbollah in Lebanon, and a launch pad for insurgents into Iraq.
Israel expresses concern over the opening of the Gaza-Egyptian border, which Israel contests will become a funnel for arms export to Hamas, in Gaza. Additionally, Israel has frozen $88 million of payments that it was scheduled to be made to the Palestinian Authority, as a result of the a new power sharing agreement between Hamas and the P.A. Israel claims that the funds will be used to fund Hamas' war against Israel and has called upon the P.A. to prove otherwise.
Osama bin Laden is dead, after a U.S. military operation in Pakistan located his hideout and killed all inhabitants. The impact of his death is likely to be broad-reaching. Firstly, the assistance which Pakistani officials afforded U.S. operatives in the initiative, is likely to tentatively repair, the strained relationship that exists between the two countries. Secondly, U.S. officials are on high alert, as world wide reprisals are expected from al Qaeda.
The U.S. manufacturing sector posted its 21th consecutive month of expansion in April, according to the closely followed ISM index. The index dipped to 60.4% last month from 61.2% in March, the Institute for Supply Management said Monday. Any reading over 50 indicates that more manufacturers are expanding instead of shrinking. Economists had forecast the index to dip to 59.7%. The dollar's weakness will continue to act as a stimulus to the economy, and if this trend continues (barring the market's reaction to bin Laden's demise) a devalued dollar may well move trade accounts in the U.S. and China towards equilibrium. Thank you Adam Smith. Thank you invisible hand.
The European Central Bank has opted to increase interest rates in line with the respective increase in inflation, while the Bank of England has chosen to maintain interest rates at current levels. This reflects a divergence in the two central banks approach to deal with inflation. Most certainly the EU decision to increase interest rates, may further constrain economic growth to a level that is already anemic. Additionally, the strengthening of the Euro, which is a result of higher interest rates, may further limit the EU's level of competitiveness as an exporter of goods to global markets.
Syria battles to contain national protests calling for changes towards a democratic government. This Middle Eastern country is a major strategic partner to Iran, who sees Syria as a geographically suitable conduit for expending its export of arms to Hezbollah in Lebanon, and a launch pad for insurgents into Iraq.
Israel expresses concern over the opening of the Gaza-Egyptian border, which Israel contests will become a funnel for arms export to Hamas, in Gaza. Additionally, Israel has frozen $88 million of payments that it was scheduled to be made to the Palestinian Authority, as a result of the a new power sharing agreement between Hamas and the P.A. Israel claims that the funds will be used to fund Hamas' war against Israel and has called upon the P.A. to prove otherwise.
Friday, April 29, 2011
Thursday, April 28, 2011
Thursday, April 14, 2011
Wednesday, April 13, 2011
Monday, April 11, 2011
Sunday, April 10, 2011
Saturday, April 9, 2011
Friday, April 8, 2011
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