CANADA:RECESION

Recesión en Canadá marcará el inicio de 2009
Economía - Sábado 20 de diciembre (12:40 hrs.)


El banco canadience advirtió del riesgo de una retroalimentación negativa entre el sistema financiero y la economía real
La bolsa de valores de Toronto, en junio perdido más del 40% de su capitalización


El Financiero en línea

Montreal, 20 de diciembre.- La economía canadiense termina en 2008 con la industria automovilística en la sala de cuidados intensivos, el empleo en la sala de urgencias y el mercado inmobiliario en la de observación.

Los últimos días de 2008 serán recordados por la amenaza de quiebra que pesan sobre las filiales canadienses de GM, Chrysler y Ford, la columna vertebral de la industria manufacturera de Ontario, y en gran medida de Canadá.

Otras industrias, desde la de autopartes hasta la forestal, incluidas las industrias del sector primario -petróleo y metales- afectadas por la caída de precios de las materias primas, pasarán por un período de cambios, en algunos casos estructurales.

Al contrario de lo que el gobierno y el Banco de Canadá pensaban hasta hace unas semanas, la economía canadiense no ha sido inmune a la crisis financiera estadunidense que se expandió en las economías de todo el mundo.

El Banco de Canadá, en su Revista del Sistema Financiero publicada el 11 de diciembre pasado, dice que la economía está ya en recesión y que la situación puede agravarse.

A esto se agrega que por primera vez desde hace una docena de años Canadá conocerá un pequeño déficit presupuestario en 2008 por la baja de ingresos fiscales, y quizás un fuerte déficit si Ottawa se ve obligada a estimular la economía.

Las bajas de impuestos que el gobierno conservador dio en 2007 y 2008 borraron los superávits presupuestarios dejados por las anteriores administraciones y gastaron las municiones justo cuando la economía necesita grandes inyecciones de fondos públicos, dicen economistas y partidos de la oposición.

Como a veces sucede, todo lo que podía ir mal fue mal, hasta en el sector que aseguraba el crecimiento canadiense, el petróleo, cuya caída de precios cortó los ingresos estatales y congeló cuantiosas inversiones en las arenas bituminosas en la provincia de Alberta.

En las últimas semanas se suceden de manera cotidiana los anuncios de las petroleras que posponen, recortan o revisan sus proyectos de inversiones en ese sector, y lo mismo sucede en la minería de metales, otro pilar de la economía canadiense.

El petróleo, gas natural, los metales y los minerales no metálicos fueron el sostén de las exportaciones en 2007 y en los primeros meses de 2008, hasta la caída de precios, pero ahora eso es cosa del pasado.

Y por la profunda integración comercial y de inversiones con el sureño vecino, es previsible un impacto mucho más extenso y profundo de la crisis financiera y económica estadunidense que el previsto hace pocas semanas.

El Banco de Canadá ya advirtió del riesgo de una retroalimentación negativa entre el sistema financiero y la economía real canadiense si los hogares canadienses endeudados y cada vez más expuestos al desempleo no pueden pagar sus hipotecas y sus deudas.

Ya no es descartable que Canadá conozca un agravamiento en el sector del mercado residencial, donde los analistas Jacquie McNish y Greg McArthur revelan que contrariamente a lo que se creía, en este país también hay hipotecas de alto riesgo, las "subprime".

En el presupuesto de 2006 el gobierno conservador de Stephen Harper permitió la entrada de esas hipotecas de alto riesgo sin depósito inicial, pagaderas a 40 años y en el primer semestre de 2008, según escriben McNish y McArthur en el Globe and Mail, fueron otorgadas hipotecas de ese tipo por 56 mil millones de dólares.

A mediados de 2008 y bajo la presión de los bancos canadienses preocupados por ese "desliz" hacia el riesgo en la tradición canadiense, y con la implosión de la burbuja de hipotecas subprime en Estados Unidos, el gobierno prohibió ese tipo de préstamo hipotecario de alto riesgo.

Pero el problema existe y aunque pequeño ese sector de subprime en Canadá puede ser uno de los eslabones débiles que agraven la recesión a partir de la deuda de los hogares canadienses, como alertó el Banco de Canadá.

En el sector automotriz canadiense, que en un 80 por ciento depende de la deprimida demanda estadunidense, la crisis adquiere niveles dramáticos, lo que explica que el gobierno conservador tuvo que abandonar su reticencia a ayudarlo.

A mediados de diciembre y con el concurso del gobierno de Ontario, Ottawa anunció que dará una ayuda "condicional" al sector -para conservar empleos- y proporcional a la que otorgue el gobierno estadunidense.

En este sector se manifiesta otro grave problema que afecta a los exportadores e importadores que contribuyen por alrededor del 40 por ciento del Producto Interior Bruto (PIB): la falta de crédito para exportar, importar y expedir.

Los bancos temen la morosidad y prefieren no exponerse al financiamiento de esas operaciones mediante las letras de crédito para exportar, importar y expedir.

El sector financiero canadiense sigue reticente a involucrarse en la recuperación de la economía real y prioriza su recapitalización con las bajas tasas de interés del banco central, mientras cobra caro o niega los préstamos que las empresas necesitan para financiar sus operaciones corrientes.

El desempleo aumenta rápidamente y se anticipa que en enero llegará al 7.0 por ciento, los hogares tendrán mayores dificultades en cubrir sus deudas y esto llevará a una caída de la demanda interna, que ha sido la locomotora principal de la economía real.

Como alerta el banco central canadiense, un aumento de la morosidad afectará al sector financiero doméstico y a la economía real, un proceso de retroalimentación que agravará la crisis.

Todo esto se refleja en la Bolsa de Valores de Toronto, que desde el tope alcanzado en junio ha perdido más del 40 por ciento de su capitalización, sin que todavía se vea el final de este mercado bajista.

En cuanto a la respuesta del gobierno canadiense a esta crisis, habrá que esperar hasta el 27 de enero próximo, cuando el primer ministro Harper presentará su presupuesto.

La oposición en el Parlamento canadiense, que tiene la mayoría de diputados, critica la actitud del gobierno, que -dicen- ignoró la crisis y no tiene un plan realista para enfrentarla.

El consenso entre los economistas del sector privado es que será necesario un plan de estímulos inmediato y equivalente o cercano al 2.0 por ciento del PIB, o sea de unos 24 mil millones de dólares (EU).

Los conservadores han venido apostando a que esta crisis sería breve y ligera, pero el Banco de Canadá ya alertó que puede ser larga y profunda, lo que augura un difícil panorama para el 2009. (Con información de Notimex/TPC)

GREENSPAN, BANKS NEED MORE CAPITAL

-BANKS NEED MORE CAPITAL

Dec 18th 2008

In a guest article, Alan Greenspan says banks will need much thicker
capital cushions than they had before the bust

GLOBAL financial intermediation is broken. That intricate and
interdependent system directing the world's saving into productive
capital investment was severely weakened in August 2007. The disclosure
that highly leveraged financial institutions were holding toxic
securitised American subprime mortgages shocked market participants.
For a year, banks struggled to respond to investor demands for larger
capital cushions. But the effort fell short and in the wake of the
Lehman Brothers default on September 15th 2008, the system cracked.
Banks, fearful of their own solvency, all but stopped lending. Issuance
of corporate bonds, commercial paper and a wide variety of other
financial products largely ceased. Credit-financed economic activity
was brought to a virtual standstill. The world faced a major financial
crisis.

For decades, holders of the liabilities of banks in the United States
had felt secure with the protection of a modest equity-capital cushion,
allowing banks to lend freely. As recently as the summer of 2006, with
average book capital at 10%, a federal agency noted that "more than 99%
of all insured institutions met or exceeded the requirements of the
highest regulatory capital standards."

Today, fearful investors clearly require a far larger capital cushion
to lend, unsecured, to any financial intermediary. When bank book
capital finally adjusts to current market imperatives, it may well
reach its highest levels in 75 years, at least temporarily (see chart).
It is not a stretch to infer that these heightened levels will be the
basis of a new regulatory system.

The three-month LIBOR/Overnight Index Swap (OIS) spread, a measure of
market perceptions of potential bank insolvency and thus of extra
capital needs, rose from a long-standing ten basis points in the summer
of 2007 to 90 points by that autumn. Though elevated, the LIBOR/OIS
spread appeared range-bound for about a year up to mid-September 2008.
The Lehman default, however, drove LIBOR/OIS up markedly. It reached a
riveting 364 basis points on October 10th.

The passage by Congress of the $700 billion Troubled Assets Relief
Programme (TARP) on October 3rd eased, but did not erase, the
post-Lehman surge in LIBOR/OIS. The spread apparently stalled in
mid-November and remains worryingly high.

How much extra capital, both private and sovereign, will investors
require of banks and other intermediaries to conclude that they are not
at significant risk in holding financial institutions' deposits or
debt, a precondition to solving the crisis?

The insertion, last month, of $250 billion of equity into American
banks through TARP (a two-percentage-point addition to capital-asset
ratios) halved the post-Lehman surge of the LIBOR/OIS spread. Assuming
modest further write-offs, simple linear extrapolation would suggest
that another $250 billion would bring the spread back to near its
pre-crisis norm. This arithmetic would imply that investors now require
14% capital rather than the 10% of mid-2006. Such linear calculations,
of course, can only be very rough approximations. But recent data do
suggest that, while helpful, the Treasury's $250 billion goes only
partway towards the levels required to support renewed lending.

Government credit has in effect acted as counterparty to a large
segment of the financial intermediary system. But for reasons that go
beyond the scope of this note, I strongly believe that the use of
government credit must be temporary. What, then, will be the source of
the new private capital that allows sovereign lending to be withdrawn?
Eventually, the most credible source is a partial restoration of the
$30 trillion of global stockmarket value wiped out this year, which
would enable banks to raise the needed equity. Markets are being
suppressed by a degree of fear not experienced since the early 20th
century (1907 and 1932 come to mind). Human nature being what it is, we
can count on a market reversal, hopefully, within six months to a year.

Though capital gains cannot finance physical investment, they can
replenish balance-sheets. This can best be seen in the context of the
consolidated balance-sheet of the world economy. All debt and
derivative claims are offset in global accounting consolidation, but
capital is not. This leaves the market value of the world's real
physical and intellectual assets reflected as capital. Obviously,
higher global stock prices will enlarge the pool of equity that can
facilitate the recapitalisation of financial institutions. Lower stock
prices can impede the process. A higher level of equity, of course,
makes it easier to issue debt.

Another critical price for the return of global financial stability is
that of American homes. Those prices are likely to stabilise next year
and with them the levels of home equity--the ultimate collateral for
global holdings of American mortgage-backed securities, some toxic.
Home-price stabilisation will help clarify the market value of
financial institutions' assets and therefore more closely equate the
size of their book capital with the realities of market pricing. That
should help stabilise their stock prices. The eventual partial recovery
of global equities, as fear inevitably dissipates, should do the rest.
Temporary public capital injections into banks would facilitate this
process and arguably provide far more benefit per dollar than
conventional fiscal stimulus.

Even before the market linkages among banks, other financial
institutions and non-financial businesses are fully re-established, we
will need to start unwinding the massive sovereign credit and
guarantees put in place during the crisis, now estimated at $7
trillion. The economics of such a course are fairly clear. The politics
of draining off that much credit support in a timely way is quite
another matter.

For a discussion of this article, see www.economist.com/freeexchange[1]

See this article with graphics and related items at http://www.economist.com/finance/displayStory.cfm?story_id=12813430&source=hptextfeature

Go to http://www.economist.com for more global news, views and analysis from the Economist Group.

- ABOUT ECONOMIST.COM -

Economist.com is the online version of The Economist newspaper, an independent weekly international news and business publication offering clear reporting, commentary and analysis on world politics, business, finance, science & technology, culture, society and the arts.
Economist.com also offers exclusive content online, including additional articles throughout the week.

- SUBSCRIBE NOW AND SAVE 25% -

Click here: http://www.economist.com/subscriptions/offer.cfm?campaign=168-XLMT

Subscribe now with 25% off and receive full access to:

* all the articles published in The Economist newspaper
* the online archive - allowing you to search and retrieve over 33,000 articles published in The Economist since 1997
* The World in - The Economist's outlook on the year
* Business encyclopedia - allows you to find a definition and explanation for any business term

- ABOUT THIS E-MAIL -

This e-mail was sent to you by the person at the e-mail address listed
above through a link found on Economist.com. We will not send you any
future messages as a result of your being the recipient of this e-mail.

- COPYRIGHT -

This e-mail message and Economist articles linked from it are copyright
(c) 2008 The Economist Newspaper Group Limited. All rights reserved.
http://www.economist.com/help/copy_general.cfm

Economist.com privacy policy: http://www.economist.com/about/privacy.cfm

The Economist, Economist.com and CFO Europe are trading names of:

The Economist Newspaper Limited
Registered in England and Wales. No.236383
VAT no: GB 340 436 876
Registered office: 25 St James's Street, London, SW1A 1HG

france:risque de deflation

Les prix à la consommation ont reculé de 0,5% au mois de novembre, principalement grâce à la chute des prix du pétrole, selon les chiffres de l'Insee.

La décélération de l'inflation s'est poursuivie au cours du mois de novembre pour s'établir à 1,6% sur un an contre 2,7% en octobre, indique ce matin l'Insee. Un recul qui ramène les prix à la consommation à leur niveau de 2007. «La forte baisse de l'indice des prix à la consommation en novembre reflète essentiellement celle des prix de l'énergie. Sur un an, le ralentissement des prix est d'autant plus important que ceux de l'énergie étaient en forte hausse en novembre 2007», souligne l'Insee. Les prix de l'énergie ont ainsi reculé de 5,5% en un mois, et la baisse des seuls produits pétroliers atteint 8,8%. Les prix des carburants sont, eux, en recul de 8,6% au mois de novembre et de 5,7% sur un an.



Les produits alimentaires en légère baisse


Les prix dans l'alimentaire baissent également de 0,2%, après une hausse de 0,5% en octobre. «Cette diminution provient essentiellement des prix des produits frais à -2,8%», indique l'Insee. La diminution des prix des légumes frais (-4,6%) et des fruits frais (-1,7%) est sensible.

A l'inverse, les prix de l'alimentation hors produits frais s'accroissent légèrement (+0,2%). Ainsi, le prix du pain et des céréales progressent de 0,2% sur un mois et de 5,2% sur un an. Le vin (+0,6%) et les viandes (0,1%) sont également en hausse.

Dans le secteur des services, l'indice des loyers augmente de 0,1% en un mois et de 2,5% sur un an. L'indice des prix des transports fléchit (-0,3%), «reflétant principalement la baisse des prix des transports aériens (-1,8% sur un mois et +7,9% sur un an). Ce recul s'explique principalement par la baisse de la surcharge «carburants».



Risque de déflation


Les consommateurs se réjouiront de cette chute des prix, pourtant elle pourrait paradoxalement avoir des effets néfastes sur l'économie. «Le ralentissement de l'inflation ne devrait aucunement relancer la croissance, analyse Nicolas Bouzou, directeur du cabinet de conseil Asteres. Le gain de pouvoir d'achat est actuellement rogné par la hausse du chômage. Ce fléchissement des prix n'est d'ailleurs au fond pas une très bonne nouvelle. En noircissant le tableau, on peut imaginer entrer en déflation si les prix continuent de diminuer aussi fortement. Les consommateurs repousseraient alors leurs actes d'achat au lendemain.» Un scénario qui rappelle le Japon des années 90 et les Etats-Unis des années 30.

Envío de artículo en ELPAIS.com. Sábado, 20 de diciembre de 2008

artículo enviado Hola gonzo (ggarcianunez1.secretworld@blogger.com)   ggarcianunez@mail.com (g) le recomienda que lea el siguiente artículo de ELPAIS.com Comentarios: BBVA calcula que el precio de la vivienda caerá un 25% hasta 2011 Hay casi un millón de casas nuevas sin vender LEER LA NOTICIA COMPLETA © El País S.L. | Prisacom S.A.

usa;bailout auto

Bush OKs $17.4B bailout of the auto industry
WASHINGTON – Citing imminent danger to the national economy, President
Bush ordered an emergency bailout of the U.S. auto industry Friday,
offering $17.4 billion in rescue loans and demanding tough concessions
from the deeply troubled carmakers and their workers.

Detroit's Big Three cheered the action and vowed to rebuild their
once-mighty industry, though they acknowledged the road would be
More.. anything but smooth as they fight their way back from the brink
of bankruptcy.

The autoworkers union complained the deal was too harsh on its
members, while Bush's fellow Republicans in Congress said it was bad
business to bail out yet another big industry.

Bush, who signed the massive $700 billion rescue for financial
institutions only this fall, said he was reluctant to approve yet
another government bailout of private business. But he said that
allowing the massive auto industry to collapse in the middle of what
is already a severe downturn "could send our suffering economy into a
deeper and longer recession."

Speaking at the White House, he also said he didn't want to "leave the
next president to confront the demise of a major American industry in
his first days of office."

President-elect Barack Obama, who takes office a month from Saturday,
praised the administration action but warned, "The auto companies must
not squander this chance to reform bad management practices and begin
the long-term restructuring that is absolutely necessary to save this
critical industry and the millions of American jobs that depend on it."

Obama will be free to reopen the arrangement from the government's
side if he chooses, and the head of the United Auto Workers said the
union would be appealing to the new president and the strongly
Democratic new Congress on that subject.

Obama was noncommittal on possible changes but said there were bound
to be "painful steps" and he would "make sure that when we see a final
restructuring package, that it's not just workers who are bearing the
brunt."

Stock prices rallied on Wall Street after Bush's announcement but
faded late in the day.

Some $13.4 billion of the money will be available this month and next
— $9.4 billion of it for General Motors Corp. and $4 billion for
Chrysler LLC, two auto giants that have said they could be facing
bankruptcy soon without government help. GM is slated to receive the
remaining $4 billion in loans after more money is released from the
financial rescue account. Ford Motor Co. says it doesn't need federal
cash now but would be badly damaged if one or both of the other two
went under.

Under terms of the loans, the government will have the option of
becoming a stockholder in the companies, much as it has with major
banks, in effect partially nationalizing the industry. Bush said the
companies' workers should agree to wage and work rules that are
competitive with foreign automakers by the end of next year.

And he called for elimination of a "jobs bank" program — negotiated by
the United Auto Workers and the companies — under which laid-off
workers can receive about 95 percent of their pay and benefits for
years. Early this month, the UAW agreed to suspend the program.

Meanwhile, Treasury Secretary Henry Paulson said Congress should
release the second $350 billion from the financial rescue fund that it
approved in October to bail out huge financial institutions. Tapping
the fund for the auto industry basically exhausts the first half of
the $700 billion total.

If the carmakers fail to prove viability by March 31, they will be
required to repay the loans, which they would find all but impossible.
A firm will be deemed viable only if it can show positive cash flow
and can fully repay the government loans.

Friday's rescue plan retains the idea of a "car czar" to make sure the
companies are keeping their promises and moving toward long-term
viability.

The short-term overseer will be Paulson. But the White House deputy
chief of staff, Joel Kaplan, said that if the Obama team wants someone
else installed to bridge the administrations, Bush is open to that.
Kaplan said there have been discussions with Obama's aides throughout
the process.

The White House package is the lifeline desperately sought by U.S.
automakers, who warned they were running out of money as the economy
fell deeper into recession, car loans became scarce and consumers
stopped shopping for their vehicles.

The carmakers have announced extended holiday shutdowns. Chrysler is
closing all 30 of its North American manufacturing plants for four
weeks because of slumping sales; Ford will shut 10 North American
assembly plants for an extra week in January, and General Motors will
temporarily close 20 factories — many for the entire month of January
— to cut vehicle production.

General Motors CEO Rick Wagoner said in Detroit that GM had much work
ahead but he was confident it could reinvent itself with the
government help and even lead an economic recovery in America.

Chrysler CEO Bob Nardelli said the initial injection of capital would
help the company get through its cash crisis and give it a push toward
eventually returning to profitability. He said Chrysler was committed
to meeting the conditions set by Bush in exchange for the money.

Still, House Republican leader John Boehner called the plan
"regrettable." He said that granting loans for automakers was never
the intention when Congress passed the $700 billion plan to rescue
financial institutions and that the new plan "has failed both
autoworkers and taxpayers."

Rep. Jeb Hensarling, R-Texas, chairman of the congressional oversight
panel for the Wall Street rescue program, said a Chapter 11 bankruptcy
reorganization, not loans rewarding decades of mismanagement, would
have been a better decision.

"Unless union contracts are renegotiated, and unless demand picks up
for domestic autos, $14 billion, $34 billion, $74 billion, even $104
billion will not solve the problem," Hensarling said.

Under terms of the loan, GM and Chrysler must provide the government
with stock warrants giving it the option to buy GM and Chrysler stock
at a specific price. In addition, the automakers would be required to
agree to limits on executive pay and eliminate some perks such as
corporate jets.

Ford President and CEO Alan Mulally said his company would not seek
the short-term financial assistance but predicted the aid would
stabilize the industry.

"The U.S. auto industry is highly interdependent, and a failure of one
of our competitors would have a ripple effect that could jeopardize
millions of jobs and further damage the already weakened U.S.
economy," Mulally said.
Less..

usa;bailout auto

Bush OKs $17.4B bailout of the auto industry
WASHINGTON – Citing imminent danger to the national economy, President
Bush ordered an emergency bailout of the U.S. auto industry Friday,
offering $17.4 billion in rescue loans and demanding tough concessions
from the deeply troubled carmakers and their workers.

Detroit's Big Three cheered the action and vowed to rebuild their
once-mighty industry, though they acknowledged the road would be
More.. anything but smooth as they fight their way back from the brink
of bankruptcy.

The autoworkers union complained the deal was too harsh on its
members, while Bush's fellow Republicans in Congress said it was bad
business to bail out yet another big industry.

Bush, who signed the massive $700 billion rescue for financial
institutions only this fall, said he was reluctant to approve yet
another government bailout of private business. But he said that
allowing the massive auto industry to collapse in the middle of what
is already a severe downturn "could send our suffering economy into a
deeper and longer recession."

Speaking at the White House, he also said he didn't want to "leave the
next president to confront the demise of a major American industry in
his first days of office."

President-elect Barack Obama, who takes office a month from Saturday,
praised the administration action but warned, "The auto companies must
not squander this chance to reform bad management practices and begin
the long-term restructuring that is absolutely necessary to save this
critical industry and the millions of American jobs that depend on it."

Obama will be free to reopen the arrangement from the government's
side if he chooses, and the head of the United Auto Workers said the
union would be appealing to the new president and the strongly
Democratic new Congress on that subject.

Obama was noncommittal on possible changes but said there were bound
to be "painful steps" and he would "make sure that when we see a final
restructuring package, that it's not just workers who are bearing the
brunt."

Stock prices rallied on Wall Street after Bush's announcement but
faded late in the day.

Some $13.4 billion of the money will be available this month and next
— $9.4 billion of it for General Motors Corp. and $4 billion for
Chrysler LLC, two auto giants that have said they could be facing
bankruptcy soon without government help. GM is slated to receive the
remaining $4 billion in loans after more money is released from the
financial rescue account. Ford Motor Co. says it doesn't need federal
cash now but would be badly damaged if one or both of the other two
went under.

Under terms of the loans, the government will have the option of
becoming a stockholder in the companies, much as it has with major
banks, in effect partially nationalizing the industry. Bush said the
companies' workers should agree to wage and work rules that are
competitive with foreign automakers by the end of next year.

And he called for elimination of a "jobs bank" program — negotiated by
the United Auto Workers and the companies — under which laid-off
workers can receive about 95 percent of their pay and benefits for
years. Early this month, the UAW agreed to suspend the program.

Meanwhile, Treasury Secretary Henry Paulson said Congress should
release the second $350 billion from the financial rescue fund that it
approved in October to bail out huge financial institutions. Tapping
the fund for the auto industry basically exhausts the first half of
the $700 billion total.

If the carmakers fail to prove viability by March 31, they will be
required to repay the loans, which they would find all but impossible.
A firm will be deemed viable only if it can show positive cash flow
and can fully repay the government loans.

Friday's rescue plan retains the idea of a "car czar" to make sure the
companies are keeping their promises and moving toward long-term
viability.

The short-term overseer will be Paulson. But the White House deputy
chief of staff, Joel Kaplan, said that if the Obama team wants someone
else installed to bridge the administrations, Bush is open to that.
Kaplan said there have been discussions with Obama's aides throughout
the process.

The White House package is the lifeline desperately sought by U.S.
automakers, who warned they were running out of money as the economy
fell deeper into recession, car loans became scarce and consumers
stopped shopping for their vehicles.

The carmakers have announced extended holiday shutdowns. Chrysler is
closing all 30 of its North American manufacturing plants for four
weeks because of slumping sales; Ford will shut 10 North American
assembly plants for an extra week in January, and General Motors will
temporarily close 20 factories — many for the entire month of January
— to cut vehicle production.

General Motors CEO Rick Wagoner said in Detroit that GM had much work
ahead but he was confident it could reinvent itself with the
government help and even lead an economic recovery in America.

Chrysler CEO Bob Nardelli said the initial injection of capital would
help the company get through its cash crisis and give it a push toward
eventually returning to profitability. He said Chrysler was committed
to meeting the conditions set by Bush in exchange for the money.

Still, House Republican leader John Boehner called the plan
"regrettable." He said that granting loans for automakers was never
the intention when Congress passed the $700 billion plan to rescue
financial institutions and that the new plan "has failed both
autoworkers and taxpayers."

Rep. Jeb Hensarling, R-Texas, chairman of the congressional oversight
panel for the Wall Street rescue program, said a Chapter 11 bankruptcy
reorganization, not loans rewarding decades of mismanagement, would
have been a better decision.

"Unless union contracts are renegotiated, and unless demand picks up
for domestic autos, $14 billion, $34 billion, $74 billion, even $104
billion will not solve the problem," Hensarling said.

Under terms of the loan, GM and Chrysler must provide the government
with stock warrants giving it the option to buy GM and Chrysler stock
at a specific price. In addition, the automakers would be required to
agree to limits on executive pay and eliminate some perks such as
corporate jets.

Ford President and CEO Alan Mulally said his company would not seek
the short-term financial assistance but predicted the aid would
stabilize the industry.

"The U.S. auto industry is highly interdependent, and a failure of one
of our competitors would have a ripple effect that could jeopardize
millions of jobs and further damage the already weakened U.S.
economy," Mulally said.
Less..

PERU:BOLSA IGBVL CAE MAS QUE DJ

Fwd: Macroperu Las Ultimas Predicciones de Roubini

December 18, 2008 12:49 PM ET | Luke Mullins | Permanent Link | Print

I spoke with the bearish—but prescient—economist Nouriel Roubini on Wednesday about what's in store for the economy, housing, and stock markets in 2009. Here's what he had to say:

What is your outlook for the length and depth of the recession?

My view is that that recession is going to continue at least through the end of 2009. It started in December 2007, so it's going to be 24 months long. It's going to be the longest we've had in the last 60 years. I expect a cumulative fall in output from the peak of 4 to 5 percent. Just to give you a sense, in the last recession, the cumulative fall in output was only 0.4 percent—this one is 10 times deeper. The unemployment rate will peak at above 9 percent sometime in 2010. And we're facing not just a U.S. recession but a global recession. There is a recession in all of the advanced economies, and now there is the beginning of a hard landing also in the emerging markets.

What are the main factors behind the recession?

Initially, it was the excesses in the U.S. housing market, but we have discovered that those excesses were not limited only to housing. The household sector was highly leveraged—subprime, prime, credit cards, auto loans, student loans. There was a releveraging of the financial system, with massive amounts of excessive leverage and risk taking. That led to the worst financial crisis since the Great Depression and, because of securitization, we spread it to the rest of the world. Also easy money from the Fed—they pushed down the federal funds rate and kept it too low for too long—and lax supervision of financial institutions played a role. So a number of different factors [triggered the crisis].

What's your outlook for housing?

Well, between 1996 and 2006, real home prices doubled. So just to go back to the previous level—without undershooting—you need a fall in real terms of 50 percent in home prices. You can achieve 40 percent of that through nominal falling home prices and 10 percent of it through inflation. That means that home prices have to fall at least 40 percent [from the peak]. And they have fallen, as of today, from their peak of 2006 by 25 percent. I expect them to fall at least another 15 percent or maybe even 20—so a cumulative fall in home prices in nominal terms of at least 40 percent, possibly 45. And the housing recession has not bottomed out. The data yesterday about housing starts and building permits suggested that it's a total disaster in housing, and there is no bottom to it. This is the worst housing recession since the Great Depression.

Do you think stocks have bottomed?

No, I don't think so. Of course, in the last few weeks we have been in another bear market rally, but bear market rallies have occurred for the last 12 months. Markets rally after shocks, and then shocks come and they fall further. But I see another downside to U.S. and global equities of at least 15 to 20 percent from current levels for three reasons. One is that the news about the economy—both in the U.S. and abroad—is going to be much worse then expected. The numbers have been just awful, and they are going to get worse. Two, there is still a lot of delusion about what earnings are going to be in 2009. And three, I think that there are going to be many more financial shocks, other large institutions going bust—highly leveraged institutions like hedge funds.

The financial shocks are not over, and the credit losses are going to mount because they are spreading from subprime to prime to credit cards to auto loans to student loans to leveraged loans to municipal bonds to industrial and commercial loans to corporate bonds. We have to take about $2 trillion of credit losses and so far nearly half of it has been recognized. So I see another wave of massive credit losses that is going to worsen the credit crunch.

Would you say then that the credit crisis is at its halfway point?

Well, we're still in the middle of it. We are still in the deepest part of this credit crunch. Look at corporate credit spreads—they are unprecedented. We are nowhere near the bottom. The credit crunch is as painful now as it has been. And so far, everything the Fed has done in its massive quantitative easing has not made much of a difference as far as corporate credit spreads.

Esta última entrevista de Roubini es bastante interesante: explica  còmo pueden desenvolverse las cosas en el año 2009. Aunque Roubini se hizo famoso por us negros pronóstiacos que `no fueron crfeìdos por nadie en el momento en que fueron formulados, en el momento actual, es un optimista desaforado. En su opiniòn, la crisisi  sòlo serà superada en Estaos Unidos al fdinalizar el 2009.Provocar`´a un descenso en la producciòn agregada que estima en cuatro puntos porcentuales , y, provocarà un aumento sdustancial de la tasa de desempleo en Estados Unidos. Como existen un rteraso, de unos 12 meses  entre la hsitoria peruana y la que ocurre  en Estados Unidos, este escenerio nos puede llevar a apensar en un recuperaciòn para el caso del Perú un arecuparacion para el 2010 y 2011.   Para establecer la fecha es importante considerar en que pueda producirse la recuperación en las cotizaciones internacio0nales. Incluso con un arecuperaciòn en Estados Unidos, dado el estado lamentable dew la inudtsria de la construcciòn en el mundos, esta recuperación prodrìa suceder el 2013 o 2014. De masiado tarde para  García; me pregunto si no será demasiado tarde para todos ?  El otro escernario de Roubini es aun mas escalofriantes : implicarìa un estancamiento que puede prolongarse por diez años màs en Estados, es claro, que eest si esta situaciòn llegara a materializarse ,  ingresariamos a una nueve edad oscura  en la que ninguan posibilidad puede desecharse.  EnSi este fuera el caso, terminaria el periodos de crecimiento : se bariair una nuevo periodo de estancamiento  que podria prolongarse hasta el 2030 en el caso peruano.  Un riempo demasisado prolongado   cuyo resultado no puedo imaginar. En cualquier caso, tampoco me intersarìa mucho. 

What is your opinion of the government's response to the credit crisis so far?

My first observation would be that even if they do everything right, the recession is going to proceed through the end of next year. I don't think that there is anything that the government can do at this point to reverse that. What they can do is to try to ensure that there is at least the beginning of an economic recovery toward the end of next year and into 2010. What needs to be done is actually many different things. The first thing is we need a huge fiscal stimulus because private demand, consumption, and spending are collapsing. So you need a huge stimulus—$500 billion to $700 billion of government spending in infrastructure, money to state and local governments, unemployment benefits. The usual range of things.

The second thing you need is to more aggressively recapitalize the financial institutions, not just banks but broker dealers, finance companies, and insurance companies. And there is only $350 billion of TARP [Treasury Asset Relief Program] money left. We are going to spend all of that, and we are going to need a TARP II because in order to cover all the losses you will need more than $1 trillion. Three, you need to reduce the debt burden of the households that are insolvent. Loan modifications are meaningless. You need debt reduction, similar to what we did during the Great Depression with the [Home Owners' Loan Corp.]—the government buying up the mortgage, reducing its face value, and converting [the loans] from variable rates to long-term fixed rates. And all of these things have to be done in a cohesive, consistent way showing that you have a plan of action because otherwise you're not signaling credibility to the market.

What advice do you have for President-elect Obama?

First of all, he has a great team. He doesn't need my advice; he has excellent people like Tim Geithner and Larry Summers—they are people that know markets, know policy, know the financial sector and the economy. The advice is essentially a combination of aggressive fiscal policy, more aggressive recapitalization of financial institutions, and plans to reduce the debt burden of the household sector, and the Fed continuing to do aggressive quantitative easing.

Are we headed for a depression?

I don't believe we are going to be in a depression—we could end up like Japan that had essentially economic stagnation for a decade with deflation. You know, the "L"-shaped recession. At this point the "U"-shaped recession could turn into an "L"-shaped recession if we don't fix the financial system, and the credit crisis becomes worse and if we don't get a massive fiscal stimulus. So, a lot depends on our policy reaction. If our policy reaction is appropriate, by 2010 there will be some recovery of growth. The only risk is that the recovery of growth could be so weak that it feels like a recession even though we are technically out of it. So there is a risk of something like a Japanese-style, multiyear economic stagnation. I would not rule it out, but it is not my benchmark scenario. I think there is a one-third probability it will end up that way, but a two-thirds probability that we will end up in a severe, two-year-long recession. And that would be by any standard the worst recession that the U.S. has experienced in the last 60 years.

---

¡

HE BAILOUT SIGNALS THE RETURN OF KARL MARX

HE BAILOUT SIGNALS THE RETURN OF KARL MARX
By Martin Masse

Marx's Proposal Number Five seems to be the leading motivation for those backing the Wall Street bailout
rightIn his Communist Manifesto, published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes power, with the aim of centralizing all instruments of production in the hands of the state.
Proposal Number Five was to bring about the "centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly."
If he were to rise from the dead today, Marx might be delighted to discover that most economists and financial commentators, including many who claim to favour the free market, agree with him.
Indeed, analysts at the Heritage and Cato Institute, and commentators in The Wall Street Journal and on this very page, have made declarations in favour of the massive "injection of liquidities" engineered by central banks in recent months, the government takeover of giant financial institutions, as well as the still stalled US$700-billion bailout package. Some of the same voices were calling for similar interventions following the burst of the dot-com bubble in 2001.
"Whatever happened to the modern followers of my free-market opponents?" Marx would likely wonder.
At first glance, anyone who understands economics can see that there is something wrong with this picture. The taxes that will need to be levied to finance this package may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is no different. It is an invisible tax that redistributes resources to debtors and those who made unwise investments.
So why throw this sound free-market analysis overboard as soon as there is some downturn in the markets?
The rationale for intervening always seems to centre on the fear of reliving the Great Depression. If we let too many institutions fail because of insolvency, we are being told, there is a risk of a general collapse of financial markets, with the subsequent drying up of credit and the catastrophic effects this would have on all sectors of production. This opinion, shared by Ben Bernanke, Henry Paulson and most of the right-wing political and financial establishments, is based on Milton Friedman's thesis that the Fed aggravated the Depression by not pumping enough money into the financial system following the market crash of 1929.
It sounds libertarian enough. The misguided policies of the Fed, a government creature, and bad government regulation are held responsible for the crisis. The need to respond to this emergency and keep markets running overrides concerns about taxing and inflating the money supply. This is supposed to contrast with the left-wing Keynesian approach, whose solutions are strangely very similar despite a different view of the causes.

But there is another approach that doesn't compromise with free-market principles and coherently explains why we constantly get into these bubble situations followed by a crash. It is centered on Marx's Proposal Number Five: government control of capital.
For decades, Austrian School economists have warned against the dire consequences of having a central banking system based on fiat money, money that is not grounded on any commodity like gold and can easily be manipulated.
In addition to its obvious disadvantages (price inflation, debasement of the currency, etc.), easy credit and artificially low interest rates send wrong signals to investors and exacerbate business cycles.
Not only is the central bank constantly creating money out of thin air, but the fractional reserve system allows financial institutions to increase credit many times over. When money creation is sustained, a financial bubble begins to feed on itself, higher prices allowing the owners of inflated titles to spend and borrow more, leading to more credit creation and to even higher prices.
As prices get distorted, malinvestments, or investments that should not have been made under normal market conditions, accumulate. Despite this, financial institutions have an incentive to join this frenzy of irresponsible lending, or else they will lose market shares to competitors. With "liquidities" in overabundance, more and more risky decisions are made to increase yields and leveraging reaches dangerous levels.

During that manic phase, everybody seems to believe that the boom will go on. Only the Austrians warn that it cannot last forever, as Friedrich Hayek and Ludwig von Mises did before the 1929 crash, and as their followers have done for the past several years.
Now, what should be done when that pyramidal scheme starts crashing to the floor, because of a series of cascading failures or concern from the central bank that inflation is getting out of control? It's obvious that credit will shrink, because everyone will want to get out of risky businesses, to call back loans and to put their money in safe places. Malinvestments have to be liquidated; prices have to come down to realistic levels; and resources stuck in unproductive uses have to be freed and moved to sectors that have real demand. Only then will capital again become available for productive investments.
Friedmanites, who have no conception of malinvestments and never raise any issue with the boom, also cannot understand why it inevitably leads to a crash.
They only see the drying up of credit and blame the Fed for not injecting massive enough amounts of liquidities to prevent it.
But central banks and governments cannot transform unprofitable investments into profitable ones. They cannot force institutions to increase lending when they are so exposed. This is why calls for throwing more money at the problem are so totally misguided. Injections of liquidities started more than a year ago and have had no effect in preventing the situation from getting worse.
Such measures can only delay the market correction and turn what should be a quick recession into a prolonged one.
Friedman — who, contrary to popular perception, was not a foe of monetary inflation, but simply wanted to keep it under better control in normal circumstances — was wrong about the Fed not intervening during the Depression. It tried repeatedly to inflate but credit still went down for various reasons. This is a key difference in interpretation between the Austrian and Chicago schools.
As Friedrich Hayek wrote in 1932, "Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. ... To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about ..."The confusion of Chicago school economics on monetary issues is so profound as to lead its adherents today to support the largest government grab of private capital in world history. By adding their voices to those on the left, these confused free-marketeers are not helping to "save capitalism", but contributing to its destruction.
Financial Post
Martin Masse is publisher of the libertarian webzine Le Québécois Libre and a former advisor to Industry minister Maxime Bernier