Tuesday, July 26, 2011

The US and Europe.... dancing in the dark

Both are facing serious economic problems. Both will come out of the present situation although with wounds and pain. Europe is fighting to keep its economic union with stronger economies "helping" the weaker members of the Union. Most probably the 27 will maintain their links and uniform currency. New rules and constraints will be imposed to avoid the "big spenders" to get carried away again.

The US will come out at the last minute with an agreement between the two main political parties. However the relevant point here is the size of the fiscal deficit. Undoubtedly the US will have to learn to adjust to higher constraints. Spending has to be reduced and it will be necessary to agree what to cut. Social expense does not look like the accounts to touch momentarily

Thursday, July 21, 2011

The new economic scenario

Today July 21st the European leaders will meet in Brussels to decide whether Greece second rescue package will take place and how it will be developed.
Eventually Greece and the other weaker European countries like Ireland, Portugal, Spain and Italy will have to adjust their economies to the required constraints imposed by the severe crisis scenario since the so called sub- prime portfolios crisis burst in 2007/2008.
Regardless of the mechanisms to be used to resolve the present crisis in Europe and the US budget restrictions that is keeping the US economy holding everybody´s breadth, we can be sure that the future is going to be different since most of the population the world is poorer.
Surely there are countries in Africa, Latam and Asia that have been poorer for ages. But, you one thing is to be poor and a different thing is to become poor.

In that sense I think that there will be changes in the social texture and behavior of some countries.
Avoiding to be dramatic I would recommend to read the blog of Feral,  http://ferfal.blogspot.com/2008/10/thoughts-on-urban-survival-2005.html
You will find very good recommendations in terms of safety, personal finances and survival strategies.
On the other hand, for the economic perspective I will continue to post my views, probable outcomes and recommendations on how to evaluate the situations to come and proceed accordingly on economic and financial matters

Sunday, July 17, 2011

What the hell are stress tests ?

Stress tests for financial institutions are, supposedly, the measurement of the impact that adverse economic conditions will produce in the situation of a bank or other financial institutions.

That is true but, who decides which are this supposed worse economic conditions?

This is not a trivial point. We remember that back in April 2010 a stress test was effected to European banks. Almost all of them "passed" the exam. A few months later three Iris banks required the financial support of the Government in order to avoid bankruptcy.

The test measurement was not effective.

Last week the European Central Bank conducted a new ser of tests. This time a handful of banks showed a weaker financial condition (lack of capital to support its credits)

We will see if this time the tests were done correctly.

In any event this is a rather complicated subject from a technical perspective.
We will see this in future posts from a simple and understandable point of view

Monday, July 11, 2011

The plot is thickening

Things are heating up in Europe. Fears of the fiscal unbalances and poor management are spreading around. Now Italy is in the  "bad guys group" PIGSI, Portugal, Ireland, Greece, Spain and Italy.
The USA is having its own headaches with the Federal Deficit lack of agreement.
Al in all, we feel that something is cooking, that things are going to be different pretty soon.
The detonator was the 2008 financial crisis although we know that many things in the international system were in trouble long before that.
The "perfect storm" exploded in 2008 and we are still suffering the results. This crisis will lead to major changes around the world. It is my intention to anticipate those changes and to help in the process of adaptation to the new financial, energy and social environments to come

Sunday, July 10, 2011

Crisis and opprtunity

Crisis means sometimes opportunities, but only if there is life after it.

The upcoming changes in the structure of the society will be dramatic. Poor people are rising their voices in many countries. Riots are common in many countries almost at the same time.

Many governments are showing very little creativity. The gap between the rich and the poor is growing every month according to the figures provided by each country.

During decades I have been in touch with the decision makers of several countries. The exposure has been such that I feel that I have something to say. I am not a politician, moreover my comments have no political intention whatsoever.

My only intention is to contribute to a better understanding of what is being cooked in the decision centers of this world. My perspectives will be from the economic and financial angles but  adding the human and  social implications of the measures that will be made in the coming months and years.

The US is having problems to solve its fiscal deficit. Europe is struggling with the poorly managed countries which are endangering the common currency the euro.

Apparently only China, India and a handful of other countries will be able to grow consistently.
Let me try to contribute to understand de dynamics of the near future and its threats to all of us