June 30, 2006

What is most at risk is Doha’s own relevance

Sir, June 30 you quite emphatically, almost desperately, pleading, ask for any results, whatever, from the current round of negotiations of the Doha Trade. Just so you are better prepared for the case of a let-down please remember that the world will still be going round and around, in an ever more inter-related way, even if all the Doha’s set their mind against it.

Just an example, look at call centers and similar outsourcings and ask yourself what on earth did Doha, or Gats, or what have you, have to do with them. In fact the most fundamental driver for the guys of Doha to produce some concrete results might be that if they do not, they will be further left behind, and risk looking foolishly irrelevant, like all those in the USA that are currently debating immigration reforms will do, when they finally wake up to the reality that they are already living in a de-facto Commonwealth with Central America.

June 29, 2006

FIFA is too Clubalised

Sir, David Owen reports, June 29, about “Fifa fund to compensate clubs for injuries” of the players, during a World Cup, among nations, and it sure does not ring right. If a player cannot play for his country because of other commitments, so be it, but to have to insure him to compensate his club or agent sounds like Fifa is turning globalisation into clubalisation. They are even arguing excuses for why they will not cover all of the losses of the clubs. If Fifa wants to go down this route, why do they just not forget about the countries and arrange the next world cup exclusively among the clubs they find most fit.

June 28, 2006

Energetic inflation possibilities

Sir, On June 28, Martin Wolfs ends his “Why the energy revolution will continue to power ahead” with an “anybody who thinks it will be easy to reduce energy consumption is simply dreaming”. He is wrong, as an economist he should know that it is a question of prices. Next to his there is an article by Francesco Giavazzi and Charles Wyplosz titled “When facts change so should central bank intentions” that verses on the oxymoronish issue of the transparency of central banks and comes in quite handy as a reminder that changed facts are most often not too transparently discussed.

As Wolf reminds us about, the average US consumer uses ten times more primary energy than an average Chinese, which set against a large economic growth rate in China and a limited increase in energy supplies should put extraordinary pressure on energy prices, as simple as that! In these circumstances, the US Fed, and the American leaders at large, should be speaking out to their fellow citizens telling them that if they do not reign in their consumption of oil, inflation will take off, they will have to raise interest rates, and then they will have to see jobs and property values all go, as simple as that! But Wolf might still be right, since expecting a central banker to acknowledge that other forces are more powerful than his and his buddies, or a leader to lead and not follow polls, well that could really be dreaming.

So many servants and not even one maid or one butler!

Sir, Martin Wolf in his “Why the energy revolution will continue to power ahead”, June 28, makes a little side tour quoting the Danish scholar Bjorn Lomborg from the Copenhagen Consensus on “if we think for a moment of the energy we use in terms of ‛servants’, each with the same work power as a human being, each person in western Europe has access to 150 servants (and) in the US about 300”. On that Wolf comments, sort of smugly, that the energy revolution has brought about the (almost complete) disappearance of both slavery and serfdom . . . ended servitude and liberated woman from daily household drudgery.”

Well, Mr. Wolf’s home might be very well staffed, but to state that man or woman has been liberated from daily household drudgery is that sort of daring statement when most of us given a choice would gladly exchange at least 10 of those cold energetic Lomborg servants for a warm human body to help us out.

We agree fully with Mr. Wolf that slavery and serfdom is horrible, but let us not forget that serving other people is something very honorable and, if we forget that, we will soon risk be all out of jobs and twiddling our thumbs, when the machines with their Lomborg servants will be doing all the manufacture and the agriculture for us. So many countries with income per capita income over 40.000 US$ per year, and most of the households cannot afford a maid or a butler! Comes to show how this energy revolution Wolf talks about could instead be running out of steam.

Sack some in the IEA!

Sir, Martin Wolf in his “Why the energy revolution will continue to power ahead”, June 28, concludes “anybody who thinks it will be easy to reduce global energy consumption is simply dreaming” and asks “where might all this energy come from?”, and he promises to tackle this monumental upcoming crash of trains in future columns. Nonetheless, though thankful for Mr. Wolf’s efforts, we should remember that is exactly why the OECD countries set up the International Energy Agency (IEA), that intergovernmental body that describes its mission on the Web as “advancing security of energy supply, economic growth and environmental sustainability through energy policy co-operation”.

Since we so recently could read in the world press about oil heading down towards $5 and the end of the oil age, and never heard an IEA representative forcefully negating such predictions, may I advance the idea that the first thing to be done, specially in times when we preach the worth of accountability, is to publicly sack some IEA bureaucrats, as incompetent lazybones, or worse, for misrepresenting the facts. This is no joking matter as hundreds of millions of persons around the globe will suffer if IEA, and others like them, do not get their act together.

June 26, 2006

The future very last book about Harry Potter

Sir, As the books about Harry Potter have meant so much for the upcoming generation and sometimes they even represent the only books it has read, there can be no doubt that the last Potter installment can actually seal this world’s fate for a long time to come. J. K. Rowlings, or Jo as we are instructed to call her in her Web page, is someone to watch, very closely. Not that I distrust her, but we should perhaps think about censoring her (discreetly). What will be the lessons she will imprint on her young and not so young and even quite old (like me) readers’ minds with her final book? What if she goes haywire? I guess I’ll manage it, I hope, but will the young ones?

June 23, 2006

The rumors of advertising’s death might be slightly exaggerated

Sir, Maurice Saatchi, in his “The strange death of modern advertising”, June 22, points out that his sector is being reduced to help his clients built their “one-word equity” (oops 3 words), as finding them and salvaging for them their one and only descriptive word is what it is all about.

But perhaps there should be no reason for him to despair since in Encyclopedia Americana we find that “The vocabulary has grown from the 50,000 to 60,000 words in Old English to the tremendous number of entries -- 650,000 to 750,000 -- in an unabridged dictionary of today" and so, not only are there many more words out there, but there might even be a niche for Saatchi in creating some new words.

That said and never taking a recommendation lightly, much less when it comes from such a reputable source, I immediately proceeded to try to register a “likable.com”, since likable sounds a very likable word, and niche, and you have to get them before its too late and you have to settle for something inferior. Unfortunately for me “likable.com” was already taken and so now I am just left with the urge for a word. See how clients grow on trees Mr Saatchi?

June 22, 2006

What? Is it not criminal today?

FT reported on June 21 “that William Parrett, global chief executive of Deloitte (one of the big four), has called for lying to auditors to be made a criminal offence worldwide, a move he believes could help deter fraud and false accounting” and I guess many readers shared my instinctive reaction of What? Is it not criminal today? Well, then no wonder!

I believe many of us would appreciate it if FT provided us a brief, in layman terms, legal explanation of where we are now, and where Mr Parrett wants us to go.

June 21, 2006

A not too transparent recommendation from Mr Wolf

Sir, Mr Wolf in desperation of achieving some positive results from the “Ten days that could shake the World Trade Organisation”, June 21, is willing to put it all in jeopardy by asking world leaders to give their negotiators carte blanche since “they can do so confident that it will not haunt them: the results would only be implemented long after they leave office; and implementation of even the most controversial deals has often passed unnoticed”.

This is exactly the type of non-transparency that would make it impossible for WTO to live up in the long run to its global institutional purposes, and it reminds me so much of some privatizations I witnessed, when the order of the day was to postpone any major increases in tariffs a couple years, so that consumers would not be able to connect the dots.

It is also wrong of Wolf to hype the demands for results of the upcoming negotiations too much and even mentioning “potentially devastating consequences of failure”, as this could spill over into those disappointments that feed the self-realization of prophecies. Instead, we need to put forward the argument that independently of the results, WTO has a vital role to play since the world cannot afford to lose “a highly successful dispute settlement system” and it also needs a world-class coordinator to give support to whatever other negotiations, multilateral regional or bilateral, that could help the world to keep moving forward in the vital issues of trade.

It is strange that although Wolf tells us “Personally, I believe these rounds no longer make sense”, he should still feel the need of ordering us to bet our last clean shirt on them.

The public sector keeps some de-facto public debt off its balance sheet.

Sir When a country provides its citizens with public services directly and does not have the resources for the required investments, then it contracts public debt, registers it as such, and collects tariffs and taxes from the citizens to service it. But, when instead a government decides, for whatever reason, to have the private sector perform that public service on its behalf, as for instance supplying electricity, then no public debt is recorded, notwithstanding that their citizens still have to pay for it and which all results in governments being able to keep society’s long term obligation with its private public service provider off the books. Yes, someone could argue that it is not really a public debt as no one is really forced to use electricity but, come on!, that argument assume that all the society could stop using electricity. As is, every time an Argentinean turns on a light at home, he is unknowingly helping to service a public debt that though never formally accounted as such, is a very real de-facto public debt and, in his particular case, mostly a foreign one.

One of the things we should expect from any good accounting is that it allows us to make valid comparisons, in the case of the private sector between companies and, in the case of the public sector, between countries, but, in this case, how do you compare France and the UK?.

Another problem with not recording the true societal debts and therefore the true societal costs is that the government starts to loose track of its real weighted average cost of funds, something we are taught to quite handy when having to select what projects to carry out.

Today instead of investing so much effort looking for the exact worldwide convergence of the accounting standards for the private sector, we citizens might do much better looking for some better approximates for our public sectors.

June 20, 2006

Mama Mia what a mountain of debt!

Sir, Zachary Karabell and Dan Chung in their “Alive and well under a mountain of debt”, June 20, look to provide comfort to the holder’s of the American’s Consumers Debt portfolio, and they are not doing such a god job.

First they draw our attention to some figures that even though they themselves do not seem too very upset about them (American stiff upper lips?), makes it hard for an ordinary reader to refrain from letting out a Mama Mia! Against a total market value of assets of $52,000bn, which includes the value of homes, they tell us American consumers owe $11,500bn. This whooping amount is not invested in a very well diversified portfolio either, as most of the income of the debtors and the value of the assets given in guarantee depend on the state of the US economy, which, to add salt to injury, is quite a prolific public debtor itself.

To top it up, the authors find their main ray of light in that “the world is awash with labor which combined with favorable demographics in the developing world, means that inflation should trend lower and rates more likely to be 2 per cent than 6 per cent the coming years” which only implies that they expect foreigners to keep on working hard in order to reinvest their surpluses in this portfolio at bargain rates. If so, they need to be reminded that this does not repay the American consumer’s debt, this does just postpone the day of reckoning.

Finally the authors refer twice to Poor Richard, which is also quite surprising given the topic as all we can remember he said in reference to debt is that “Industry pays debts, while despair increases them.”

Al Gore’s crusade against global warning is not yet warm enough!

Sir, Al Gore’s crusade for a better environment has now an official web site http://www.climatecrisis.net/. The site includes a long list of recommendations on how citizens could help, where we find all the standards like driving less and recycling more but also requests to shift up gears and go for planting a tree and refraining from eating meat, since cows are one of the greatest methane emitters.

Unfortunately in the list we cannot find a “write to your Congressmen and ask for a tax on gas (petrol)", which by cutting that demand that consumes one of every seven barrels of oil in the world just on American roads and highways, would be the best and most concrete evidence of really wanting to help out the environment… and also the American economy at large.

As a result we have to conclude that Gore’s crusade has not yet warmed up enough.

June 19, 2006

With or without strawberries the basket might still not matter

Sir Wolfgang Munchau in “Why they take the strawberries out of the basket”, June 19, states that “the purpose of monetary policy . . . is to maintain the purchasing power of fiat money” and of course we all know he is wrong, since it is much more than that.

But when he then enters his very interesting discussion on core and headline inflation, developed to take care on timing differences and avoid knee jerk reactions, either for technical or political reasons (perhaps just another difference in timing) he also seems to ignore that the basket is just a bureaucratic product, designed to follow the cost of living for an average consumer, and as such, it might still, with or without strawberries, not be able to assure us that the fiat money is not loosing its purchase power.

When one observes how in a land with a per capita income of 42.000 US dollar per year so relative few can afford having a maid, much less a local maid, we might have the right of viewing with some more suspicion the real purchasing power of current fiat money.

Sent to FT, June 19, 2006

June 17, 2006

Does it smell a bit rotten in the Republic?

Having to read in FT, June 17, two full pagers about the electoral possibilities for the wife of a former president to become president of the United States of America, while the country is ruled by the son of another former president, should perhaps make Americans question the current state of their Republic.

Sent to FT, June 17, 2006

June 16, 2006

The ugly wart ignored

Sent to the Guardian UK, May 15, 2006, destiny unknown

The left is frequently looking to reassess its relation with Hugo Chávez of Venezuela, in an effort something similar to when the right looks to reassess their relations with George W Bush.

Surprisingly enough, in most of their analysis, we see that in Chavez's case they always ignore the most concrete and convincing piece of evidence of why they should cut all relations with this dubious military ex coup-man, who quite unauthorized is taking cover behind their ideological mantle.

Currently in Venezuela, after soon eight years of a “socialist” government, petrol is sold at less than 4 cents of dollar per liter, compared to the 160 cents per liter paid, with taxes, by consumers in Europe, 40 times more, 4.000% more. By selling the petrol at 4 cents instead for the 64 cents he could get for it for anywhere exclusive of taxes, the “Socialist” Chávez transfers effectively 60 cents of dollar per liter to those “with cars” from the resources that could directly been used in favor of those “without cars” and, to make it worse, creates simultaneously horrendous incentives against the environment.

The previous is such an absolute aberration of public policies for most people, especially in Europe, especially for the left, so it is so hard to understand how they can ignore it. Perhaps it is because sometimes a wart it is so ugly that you just have to look away… but please, do not!

June 13, 2006

Little guys will still be little guys

Sir, Moisés Naim’s well written piece …the little guy is calling the shots, June 13, reads a bit like a nostalgic reminiscence of a time when the air was cleaner and power was power but, rest assure, little has changed and the little guy will remain the little guy. Yes, faster and more importantly cheaper communications do augment the possibility for local upstarts of becoming a nuisance but the real chances of the David’s beating the Goliath are about as slim as ever.

That said what really seems to be calling the shots now, both for big and small guys alike, are just plain old time fundamentals, like the environment and the availability of energy. Naím begins his article with the example of big Shell giving in to a small Bolivia but he knows very well that in a world of 5 dollars per barrel, as actually some major pundits spoke about as late as 1999, nobody would give a jota for a small southern-hemisphere hillbilly who happened to strike it rich and who probably would misspend his fortune soon anyhow. Had only the Big one act responsible and checked his runaway consumption of oil, then Bolivia would sadly still be forgotten and perhaps Baghdad a non issue.

Finally, and since Naím pits the Vatican against Pentecostal Christians, we should not forget that in this particular case, they in fact both work for the same supreme power.

Sent to FT, June 13, 2006

June 10, 2006

The global work-force needs some global representation too

Sir, The head of IBM, Sam Palmisano in his (local) Multinationals have been superseded, June 12, makes a passionate defense of the “globally integrated enterprise” in order to diminish the dangers of that neo-protectionism that is dangerously lurking around and that could create havoc for the world economy. But all of his arguments also remind us that currently, absent of any true independent representation of Mother Earth’s long term interests the World Bank seems more a “Pieces of the World Bank, and the International Monetary Fund an association of very local central bankers. In this respect, in the frequent discussions about the need for updating the different voting rights and the Executive Boards of these institutions to current economic realities, what could be most beneficial is to find ways giving representation and voice to the real new kids in town, meaning all those workers, skilled or unskilled, legal or illegal, who nowadays represent jointly one of the largest and most vibrant economies of the world.

Sent to FT on June 10, 2006

June 09, 2006

An Ättestupa for Mr Lind

Sir, Mr Michael Lind in his “A labour shortage can be a blessing, not a curse”, June 9, sees himself in old age pampered on a chaplinesque modern times assembly line, and happily concludes that technology will take care of the current demographic imbalances. Of course, his vision, where it would seem that all the remaining young concentrates on helping the elderly, ignores that a country besides that very laudable activity, also has to think of a present and a future, and generate that kind of economic growth that will help it among other to educate their new young, defend themselves and service their debt. If going down the Michael Lind route then the applied technology will more probably be in line with going down an “ättestupa”, meaning those high and steep cliffs supposedly used by the Nordic elderly a long time ago to throw themselves from when their time to serve society had passed.

By the way, when discussing immigration with those who vigorously oppose, it is amazing how a “well if you want to take care of repaying you public debts on your own so be it” dilutes much of the certainty in their eyes.

Sent to June 9, 2006


For this letter I based myself on myself as in my Voice and Noise you can read

The practical solutions available for solving the shortage of caretakers in developed countries are the following four:

1. Increase their productivity, but unless you wish to run the risk of being dehumanized on a Charlie Chaplin Modern Times assembly line cared for by robots… there might be a limit to how much this can help.

2. Move the careneeders to another place (if there are caretakers available anywhere else), and this you should do as early as possible if at an older age you do not appreciate finding yourself in strange surroundings as much as you did when younger.

3. Import caretakers, and this you should do as early as possible if when older you do not appreciate finding yourself in the company of strangers as much as you did when younger.

4. Give incentives for having more children and grandchildren—which is not such a crazy idea when you start considering how much society is, one way or another, currently rewarding people for not having children. (Talk about externalities!)

June 08, 2006

Just a reshuffle among the “locals” in the Fund won’t do it

Sir, you and others seem to opine, June 8, something like if only the composition at the board of the International Monetary Fund better reflected economic size then for instance, like magic, China would speedily devaluate and all the current global imbalances disappear. It might not be as easy as that and by the way why would GDP and share of market trade more important than market capitalizations for assigning votes at the IMF and also, if we at it, why should we not go for a full democratic reform and use populations as the basis?

Much of the problem in these days of globalization lies in that it is mostly the “local” perspectives that are represented, making in fact the globe at large the most underrepresented constituency. In this respect, instead of just reshuffling the deck of card among the locals, more could perhaps be gained if some of the current chairs at the IMF Board were to be occupied by independent Executive Directors, who are there to think and represent exclusively the global perspective and interests, with the horizon of our grandchildren.

That the Fund’s professional staff could somehow act in the name of the world, well that is nice, and we all hope they do, but “Mother Earth” could still benefit from some additional support at the board level, and besides there is always the need of making sure that we don’t fall into the hand of even smaller and more parochial interests, as has indeed happened with many corporations that have de-facto been taken over by their management teams.

Sent to FT June 8, 2006

June 02, 2006

A Blog Is Born

I like reading The Financial Times, or FT as it is known, and I frequently write letters to the editor and some of them that have indeed been kindly published, for which I feel honored being mostly unknown outside of my country Venezuela.

But then I realized that all those letters to the editor that for reasons impossible for me to comprehend were never published, were condemned to an eternal silence not of their own fault, and so I decided to, at a marginal cost of zero, to resurrect them and keep them alive, right here.

English is not my mother language so bear with me and you’ll probably note when my letter has been published in FT by its correctness. Swedish is my mother language but I have not written anything serious in it for about 40 years and last time I tried, they just laughed their hearts out because of my outdated expressions. Polish is my father language but, unfortunately, I do not speak a word of Polish, much less write. Yes Spanish is my language, as I am from Venezuela and although I trust I write in it with great flair, I would never dream of publishing an article in Spanish without having it edited by my wife.

And so friends here is my Tea with FT blog with my old and new letters to the editor. I hope you will share them with me now and again, and then again.

Welcome, and cheers, as I believe they say over there.


PS. Just so that FT does not get too cocky and believes they are my only window to the world, I will now and again publish a letter sent to the editor of another publication.