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Latinoamerica: crisis y democracia

Cinco años de un fuerte crecimiento económico ha producido un lento pero firme alza en apoyo de la democracia y sus instituciones entre los latinoamericanos.

Estas encuestas realizadas en 18 paises fueron publicadas por la revista The Economist en inglés. Tratan de las actitudes en cuánto a la intervención del Estado, la democracia, los partidos y otros asuntos.

"The Latinobarómetro poll

Democracy and the downturn

Latin Americans are standing up for their rights

FIVE years of strong economic growth have prompted a slow but fairly steady rise in support for democracy and its institutions among Latin Americans, although many remain frustrated by the way their political systems work in practice. Most see themselves as politically moderate, but they retain a yearning for strong leaders and expect the state to solve their problems. These are some of the findings from the latest Latinobarómetro poll taken in 18 countries across the region and published exclusively by The Economist. Because the poll has been taken regularly since 1995, it tracks changes in attitudes in the region.


This year’s poll was taken in September and early October. It therefore reflects the sharp increase in inflation in the region in the first half of this year, but not the full effect of the financial turbulence and deteriorating economic outlook that hit some Latin American countries in recent weeks. Nevertheless, it carries some sobering lessons for the region’s politicians.

The poll underlines the fact that a small majority of respondents are convinced democrats. In 12 countries, support for democracy has risen since 2001, when the region last suffered an economic recession. But only in five countries is it higher than it was in 1996. This year democracy has received a particular boost in Paraguay, a country where authoritarian attitudes previously predominated. The shift follows the victory in a presidential election in April of Fernando Lugo, a leftish former bishop who ended more than half a century of rule by the Colorado Party. That echoes similar hopes of change aroused by newly elected leaders in the region in recent years.

Conversely, in Venezuela, support for democracy may have been boosted this year among opponents of President Hugo Chávez, after their victory in a referendum on constitutional change last December. In Colombia, President Álvaro Uribe’s success against the FARC guerrillas may be the reason for a similar democratic lift.

Uruguayans are by far the most satisfied with how their democracy works (see chart 3). Peruvians are particularly disgruntled. That is paradoxical: Peru’s economy has grown faster than that of any other of the region’s bigger countries both this year and last. Their discontent seems to reflect deep flaws in the political system. But even if slightly less than two-fifths of respondents across the region are satisfied with their democracies, that is a significant improvement on the 2001 figure.

The relative dissatisfaction owes much to the deep-rooted socioeconomic inequalities in Latin America. Across the region 70% of respondents agreed that governments favour the interests of the privileged few; around half say they would not mind a non-democratic government if it solved economic problems; a similar proportion say democracy has not reduced inequalities; and only 30% think there is equality before the law. These attitudes help to explain the popularity of Mr Chávez, an oil-rich strongman—more than a third of Venezuelan respondents say inequalities have diminished.

But most respondents are convinced that democracy is the only road to development—and 71% say they are personally happy. So why the grumbles? As democracy has come to stay in the region, “people are more conscious of their rights and their expectations are higher”, says Marta Lagos, Latinobarómetro’s director. She adds that the yearning for a strongman is more a cultural trait than a political preference—and that the same goes for a fondness for a paternalist state.

The poll shows that a large majority believe that pensions should be in state hands. In Argentina that number is 90%, which perhaps helps explain why President Cristina Fernández last month nationalised the private pension system. But at the same time 56% of respondents see a market economy as the road to development (up from 47% last year). And 32% declare themselves satisfied with privatised public services, up from 15% in 2004. Some 44% say they trust their banks, up from 29% in 2003. The church remains the most trusted institution in the region—but less so than it was. Trust in government and legislatures continues to edge up.

In six countries, including Mexico and Venezuela, crime and public safety are seen as the most important problem. In ten countries, economic concerns (unemployment, poverty and inflation) are still seen as paramount. In Brazil 19% cited health care as the biggest problem.

Despite the swing to the left in the region in recent years, most respondents to the poll consider themselves in the political centre (42% this year, up from 29% in 2003). Only 17% say they are on the left and 22% are on the right (even in Mr Chávez’s Venezuela those on the left and right are tied at 26%).

That provides hope for centre-right politicians in a round of presidential elections in the larger countries in the region in 2010-12. Those elections are likely to be held against a much less rosy economic backdrop than has prevailed for the past few years. The task facing Latin America’s politicians is to ensure that economic difficulties do not spill over into a weakening of support for democracy.

Lecciones de la crisis japonesa

"Algunas lecciones de la crisis japonesa", articulo publicado el 03-11-2008 , por José Carlos Díez. Economista jefe de InterMoney, en Expansion.com:

En 1991, la bolsa japonesa y los precios inmobiliarios se desplomaron y provocaron la peor crisis de un país desarrollado desde la Gran Depresión. El sistema bancario había financiado toda aquella locura y el desplome del valor de los colaterales provocó una quiebra sistémica, cuyo saneamiento ha costado el 15% del PIB japonés.


La principal característica de la crisis fue la inacción, tanto de los responsables de la política económica como de las empresas y de los bancos.

Cuando comenzaron a tomar medidas, el sistema financiero estaba quebrado, la economía entró en una trampa de la liquidez keynesiana, la política monetaria perdió efectividad y el policy mix de política económica fue desastroso, especialmente la política cambiaria y fiscal que acabaron neutralizando sus efectos restando efectividad a las medidas. A continuación, se va analizar las consecuencias de la crisis, que más de tres lustros después mantienen a la economía nipona al borde de la deflación.

La deflación maligna

La deflación es una patología atípica y es lógico que los economistas nos preocupemos más de proteger a las economías de la inflación que es más habitual. Pero, Japón es un ejemplo de la deflación y sus efectos deben hacer que cualquier sociedad tome las medidas que sean necesarias para protegerse de ella.

Se puede observar la debilidad del crecimiento de del PIB que ha registrado un crecimiento promedio anual de 1,3% desde 2001 hasta 2007. Destaca la debilidad del consumo privado y la inversión y la fortaleza de las exportaciones.

Cuando las familias tienen expectativas deflacionistas retrasan sus decisiones de consumo, especialmente de bienes duraderos, ya que esperan que al año siguiente podrán comprar los bienes más baratos.

La debilidad de consumo estanca las ventas de las empresas y la deflación de precios, junto a salarios nominales rígidos a la baja, hunde los márgenes empresariales, lo cual elimina cualquier incentivo a invertir en nuevos proyectos empresariales e incluso en proteger a la capacidad instalada de su depreciación.

Esto explica que la tesis de Keynes en la teoría General fuera que ante la contracción de la demanda efectiva, tenía que ser el gasto público el que compensase los efectos de deflación para evitar en una caída en picado de la acumulación de capital que hundiese el crecimiento potencial.


Por fortuna para Japón, la burbuja se concentró en el precio de los activos inmobiliarios y de las acciones pero no se contagió al resto del mundo, por lo que gracias a su elevada capacidad tecnológica la economía puede mantener el crecimiento y la acumulación de capital vía exportaciones. Eso libró a Japón de la pobreza extrema que si se produjo en la Gran Depresión.

En el gráfico 2 se puede observar cómo el sector público tardó varios años en implementar políticas fiscales expansivas y cuando lo hizo fue ineficaz, al no priorizar el gasto en infraestructuras y acompañarlo de medidas de liberalización de sus economías para aumentar el crecimiento potencial.

Conclusiones

Aunque en la actual crisis también hay deflación de activos, por fortuna hay muchas diferencias que alejan el caso japonés del escenario central, aunque el riesgo sigue existiendo. La principal es que al ser una crisis de activos, el desplome de los mercados, especialmente de las bolsas, ha hecho que la sociedad sea consciente de la gravedad de la crisis y ha favorecida la acción de los Gobiernos.

Las primeras medidas han sido apuntalar el sistema financiero y recapitalizar a los bancos más afectados, pero ahora ha llegado la hora de la política fiscal. En las últimas décadas el paradigma liberal del minimalismo público «menos estado es más» ha primado la rebaja de impuestos. A partir de ahora, la incertidumbre es máxima y la bajada de impuestos puede ser destinada por las familias al ahorro, por lo que replicaríamos la trampa de la liquidez keynesiana que ha asolado Japón.

El gasto público tiene un efecto multiplicador y acaba arras-trando al sector privado al reactivar el empleo y las rentas salariales. Lo relevante es tener presente que el Estado no puede suplantar al sector privado permanentemente y que debe priorizar el gasto en infraestructuras. El anuncio de fuertes emisiones de deuda pública mundial ha provocado un aumento de las pendientes de las curvas de tipos, lo cual nos aleja del caso japonés. Sin duda, una gran noticia.

Investment banking: Difficult times may give rise to a different model

Very interesting article publshed in Financial Times (www.ft.com), writed by Brooke Masters and entitled "Investment banking: Difficult times may give rise to a different model":

"Of all the financial services sectors, investment banking has been hit the hardest by the turmoil of the past year or so.

Not only have such venerable houses such as Bear Stearns and Lehman Brothers disappeared, but the survivors have had to find well-capitalised partners or reconstitute themselves as traditional commercial banks.

Volatile equity markets, the credit squeeze and the sharp decline in activity on Aim have made it hard for corporates of all sizes to raise money and have hit the bottom lines at bulge-bracket investment banks and smaller boutiques alike.

Many institutional investors are sitting on the sidelines and most banks are reluctant to lend.

Yet companies still need to raise money: to keep going, refinance debt, or take opportunities. That makes them even more dependent on their advisers to help them find a way through what everyone agrees are difficult times.

“In these volatile times, it is crucial to be close to the markets, so we can advise clients on how shareholders will react to corporate developments. When it comes to capital-raising, our ability to judge the market and move quickly are important,” says Naguib Kheraj, chief executive of JPMorgan Cazenove.

Very few deals are likely to get done before Christmas and some bankers think the slowdown could continue through the first few months of next year.
Investors and lenders, they say, are waiting to see first quarter 2009 results to get a sense of where earnings will go.

As a result, many corporate advisers are using this period to help clients get ready for tough scrutiny.

“Cash is still king, so advisers will be spending a lot of time over the several months helping their clients take a hard look at their balance sheets to determine the most advantageous mix of assets.

“Those who have managed their resources well will have a big advantage,” says Marisa Drew, a Credit Suisse managing director who is co-head of the European global markets solutions group and the European leveraged finance origination group.
The next year may see the return of private equity-backed deals, albeit on a far smaller scale than in pre-crunch days.

“Private equity deal volumes have fallen away, but dialogue and the search for opportunities has not,” says Simon Tilley, head of the European Financial Sponsors Group at Close Brothers. “Identifying and delivering bolt-on acquisition opportunities is a key focus for private equity sponsors and for our business.”

Some bankers believe the financial crisis will prove to be a great opportunity for the big universal banks, such as Citigroup and JP Morgan, which can talk up relationship banking, their top-tier mergers, and how they can offer acquisition advice, financing, foreign exchange and cash management all at once.

“Historically, we have supported our clients through difficult times and we expect this downturn to be no different,” says Tom King, head of Europe, Middle East and Africa Banking at Citigroup.

Companies interested in tapping the big banks for financing may find they have to offer other businesses as a sweetener. Lenders have become highly selective about which deals they will back, and institutional investors are also having to husband their cash.

“Companies need to foster and guard relationships with these organisations, as it is longer-term knowledge, shared experiences and the resultant loyalty that will have a bearing on the provision of services and financial backing – be that equity provision from fund managers, debt funding from banks or advice from investment banks,” says David Currie, head of UK investment banking at Investec.

On the other hand, difficult markets may also prove to be an opportunity for a completely different model because some companies will want independent advice that does not come with strings attached.

They are likely to turn to a wide variety of service providers, ranging from Rothschild and Lazard via boutiques such as Greenhill Partners and Fenchurch, to the corporate finance arms of the big accounting and consulting firms.

“Independence from a trading arm and balance sheet for funding will be an advantage both in terms of escaping the fallout and also reputation and reliability – and this is something that corporate finance boutiques and professional services firms alike will be able to leverage and benefit from,” says Neil Sutton, Head of UK Corporate Finance, PwC.

“We may therefore see a re-ordering of adviser brands, where independence and agility in the face of turbulence win over more traditional investment banking names or newly established boutiques.”

After the 2001 dotcom crash, some financial services industry observers predicted the emergence of a “barbell effect” in which universal banks and independent boutiques would prosper, while those in the middle were pushed out.

Independents certainly grew. According to Thomson Financial, in 2000, independent advisers advised on 19 per cent of global M&A. In 2007, the figure was 38 per cent.
But the banks in the middle prospered as well, because the whole pot got bigger and all sizes and kinds of investment banks did well. This downturn may bring about that long-expected squeeze. It may already be under way.

The last big US independent investment banks – Morgan Stanley and Goldman Sachs – are rushing to add a retail component, and retail banks such as Barclays – which picked up large parts of Lehman’s US business – and Bank of America – which is merging with Merrill Lynch – are expanding their advisory side.

It will be up to their clients to make clear which model they prefer.

Copyright The Financial Times Limited 2008

Failure to open an offshore bank account

This post is really interesting and describes the problem we faces regularly:
05 September 2008
Offshore Banking: Failure to Open a Bank Account
You decided to join the club and enjoy the benefits of offshore banking. You incorporated an offshore company as recommended by your advisor, chose a sound and reliable bank, prepared the requested documents and submitted your application, but unexpectedly the bank didn't approve it and denied to open you an account. Why would a bank that spent so much time, money and efforts to attract more customers reject some applications?

Unfortunately any bank has the right to refuse with no comments. Let's see what could be the reasons.

Generally, this might obviously happen because the bank is not interested in you as a client. You don't fit the current appetite of the bank. You are expected to become a new investor while you are looking for a current trading account for your business; or the bank is oriented to clients with a significantly bigger account turnover than you anticipate.

Another problem is that the bank may be afraid of having you as a client because you fall into the category of undesirable customers. None of the well-established banks with good international reputation would ever wish to provide service to a criminal. Every bank has its own perception of troublesome business and relevant technical procedures assisting its managers to detect potentially unreliable clients. It might happen that the country of your citizenship, residence or domicile, jurisdiction of incorporation of your company or type of your business are black-listed by that bank.

Some clients fail to provide the bank with the right image of their business in general. You may simply be inaccurate and make a typo here and there, in the telephone number or address details, and that's it, you look suspect to the bank's compliance manager. Sometimes the reason lies deeper. You overdo trying to keep your privacy. You tend to tell the bank as less as possible. The result is the bank doesn't get a sufficient picture to be sure no problems will follow you. Most banks prefer to brush aside any suspicious client rather than engage in investigation because in case of mistake they might easily get more troubles than benefits. To avoid this situation do your best to make your business reality transparent enough for the bank to make a positive decision.

All these and other issues of that type can normally be avoided should you have a quality preliminary consultation with a professional independent advisor.


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Mary Cleo of Offshore Advisor - all about business off shore
Mary is a consultant and blogger at Offshore Advisor - free online consultancy on offshore services covering asset protection, offshore banking, second citizenship and more. Contact Mary via mary@isla-offshore.com.