ARE SOFT DRINKS PRICE ELASTIC OR INELASTIC?

Last week I gave my students a question related with this point. It was interesting to see that they made two groups, ones defending price elastic and the other ones saying it is price inelastic. I also invite a colleague to join the discussion.

Let see the arguments:

Price elastic: There are close substitutes, as for example water, so a small change (increase) on the price of soft drinks will produce a change (reduction) on the demand as people will now move to water.

Price inelastic: This group thought that as all the soft drinks were included, then even though prices were increased, there were no other chances to choose from – they didn’t see water as a close substitute, so people will accept this increase producing only small reductions on the quantity demanded when prices were increased.

What both groups didn’t include in their analysis were the determinants of demand, as for example taste, fashion, income, etc

These are two different points of view, what do you think, are there other possibilities or you subscribe to one of the previous ones?

I’ll like to listen your opinion.

Till my next post!

Prof. Lic. Fernando Julio Silva, MSc.
NOVEMBER 2008

The explanation of the actual crisis by George Parr – You can’t miss it!

I think is a good idea to invest a few minutes in order to see a very clear explanation about the world economical crisis that is taking place given by a "well known specialist". I hope you enjoy it!

See you on my next post!

Prof. Lic. Fernando Julio Silva, MSc.
OCTOBER 2008

The Last Laugh - George Parr - Subprime - subtitulos
by erioluk

We shall go or we should stay… The shares dilemma

One of the most important dilemmas, in particular for new investors, is when to get in or leave the market. There are a lot of theories, but I’ll concentrate in the ones I found more interesting.

When to enter:

One position – old one – says that whenever the values are dropping, is a good time to buy; and this is true. The point is WHEN can you buy, immediately after the slowdown starts? You have to wait to see if the value keeps falling as time passes? Do I have to make a research about previous movements of this paper I’m interested on?

As you can see, is not that easy!

I recommend taking a careful look to see how that paper has been moving during the past, let’s say, 12 months to see if its actual value is close to the “roof” or to the “floor” (highest or lowest value). Is there any rumor that might affect this share? (for example takeovers, mergers, something affecting the industry – locally or around the world). It’s a “sale” that you can take advantage of? Did you check the company’s balance or any public information about it?

A second position states that is better to get in ones the paper made the turn-over, this means its value is starting to grow because then you’ll probably be able to “ride on a good wave”. Again the previous analysis has to be done in here too

When to leave:

The old one says: As far as you gain a good number you better leave it because a lot of people like you are making the same analysis. The point is: what is a good number 2, 15, 100%? The answer varies according with your investment decision. A good idea is to leave when you’ve reached the % you assigned to be obtained by this paper. But, sometimes being too ambitious can make you lose a lot…

Other ones think about leaving the paper when it starts to drop, it’s also a good point, but your looses may be higher than in the previous case if for example the company’s share experiences a big fall in a single day and then you try to guess what can happen on the following day, plus a lot of people will be doing the same than you do: SELL so the value falls even more!

As I said on the entering point, get all the information you can before making your move. Of course, a bit of luck is always welcome!

Till my next post!

Prof. Lic. Fernando Julio Silva, MSc.
SEPTEMBER 2008

Where do investors and savers go when the economy turns unstable?

A couple of weeks ago I’ve read and opinion written in my Country that explained that due to uncertainty peoples’ preference was moving into the acquisition of perdurable goods such as properties, cars, etc.

I don’t agree with this, I still think that one of the most secure points to put your money under a big storm like the actual one is the Stock Market, I believe that – and of course it depends on when you need your money back in cash – if your goal is not to lose money or its value, you have time to wait – lets talk at least about the medium term – the best point is to buy shares of well-known companies.

You can predict that those companies won’t disappear over time (in particular the ones that are dedicated to the production of goods) and that their value will be recovered over time. Their fluctuation will be according to the ones of the economy and when this one turns over so will do the shares' values.

Even in the big collapse that well-known banks are suffering right now they inform that the shareholders’ funds are safe. If this is true, only the time will give the answer…

To conclude, for me shares are still the best “captain to manage a big storm”

See you on my next post!

Prof. Lic. Fernando Julio Silva, MSc.
SEPTEMBER 2008

Economic European situation and the value of the Euro in connection with the Argentinean Currency

From ends of 2º Trim. they are observed in Europe inflationary nature problems as likewise certain possibilities to enter in recession (countries like Denmark, Spain, England, France and Germany are in at least one of these two situations).

On the other hand USA sees a similar situation: inflation and recession.

Europe sees to be in danger the previously expected growth to the prospective rate.

In the specific topic of the value Argentinean Peso - Euro we see that the changes for the past year were:

=> 4.30 $/Euro: Relationship in August 2007
=> 4.50 to 4.70 $ / Euro: Flotation range among Nov '07 and March'08
=> 5.10 $/Euro: Highest level reached in May'08
=> 4.40 to 4.50 $ / Euro: Fall until ends Julio'08
=> 4.70 to 4.36 $ / Euro: Soft slope that takes place among August '08 and the day 03/09/2008

Some international analysts speak about a value to Dec '08 of + /- 4.88 $ / Euro (this derived starting from a relationship 1.60 U$ / Euro)

I believe that it is not an easy year as to make a prediction about values to futures, on one hand the rocking price of the barrel of petrol makes that the economies ascend and lower in function of the same one.

If we observe the situation in Argentina, the thing doesn't go better, to the problem with the farmers is added the great increase of the prices that makes that the inflation level in the Country gets to a worrying point (and the lacks of coincidences between the private readings and the proportionate ones by the official organism: INDEC makes that this uncertainty in the readings is developed). The maintenance on the part of the government of the value of the dollar (which falls at international level) since tries to stay a relationship of favorable (exports / imports) exchange. The possible payment to the Club of Paris announced in these last days gives a favorable small breeze to the government for the recognition that this measure has had from certain European governments.

As they come, all these they are variable to keep in mind.

In summary, I believe that - being this nothing else that my personal opinion - the relationship Euro- Arg. Peso should not vary in excess in the next months. An appreciation of the Euro of + /- 10% is feasible and the negative reading - if it was given - I don't expect it to be bigger to 0.25%; this would give us values compared with the one from yesterday (03/Sept./2008) (4.36 $ / Euro) from 4.796 $ / Euro to 4.251 $ / Euro

See you on my next post!

Prof. Lic. Fernando Julio Silva, MSc.
SEPTEMBER 2008

The worst market crisis in 60 years - By George Soros

I've received the following article written by George Soros through the Soros Fund Management, I think is a good piece to take a look at. You may agree or disagree with him, but - I insist - it's something to spend some time on it!

See you on my next post!

Prof. Lic. Fernando Julio Silva, MSc

July 2008

ARTICLE:

"The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.

However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.

Boom-bust processes usually revolve around credit and always involve a bias or misconception. This is usually a failure to recognise a reflexive, circular connection between the willingness to lend and the value of the collateral. Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available. A bubble starts when people buy houses in the expectation that they can refinance their mortgages at a profit. The recent US housing boom is a case in point. The 60-year super-boom is a more complicated case.

Every time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy. That created a system of asymmetric incentives also known as moral hazard, which encouraged ever greater credit expansion. The system was so successful that people came to believe in what former US president Ronald Reagan called the magic of the marketplace and I call market fundamentalism. Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves. Nevertheless, market fundamentalism emerged as the dominant ideology in the 1980s, when financial markets started to become globalised and the US started to run a current account deficit.

Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced. The US current account deficit reached 6.2 per cent of gross national product in 2006. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.

The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.

Everything that could go wrong did. What started with subprime mortgages spread to all collateralised debt obligations, endangered municipal and mortgage insurance and reinsurance companies and threatened to unravel the multi-trillion-dollar credit default swap market. Investment banks' commitments to leveraged buyouts became liabilities. Market-neutral hedge funds turned out not to be market-neutral and had to be unwound. The asset-backed commercial paper market came to a standstill and the special investment vehicles set up by banks to get mortgages off their balance sheets could no longer get outside financing. The final blow came when interbank lending, which is at the heart of the financial system, was disrupted because banks had to husband their resources and could not trust their counterparties. The central banks had to inject an unprecedented amount of money and extend credit on an unprecedented range of securities to a broader range of institutions than ever before. That made the crisis more severe than any since the second world war.

Credit expansion must now be followed by a period of contraction, because some of the new credit instruments and practices are unsound and unsustainable. The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves. Until recently, investors were hoping that the US Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realise that the Fed may no longer be in a position to do so. With oil, food and other commodities firm, and the renminbi appreciating somewhat faster, the Fed also has to worry about inflation. If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an en d.

Although a recession in the developed world is now more or less inevitable, China, India and some of the oil-producing countries are in a very strong countertrend. So, the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.

The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse.

The writer is chairman of Soros Fund Management
The Financial Times Article -- Published: January 23 2008"

Who’s right? The break even idea

Economists defend their position that says that where the marginal revenue and the marginal cost cross is the optimum point of production, defending this though saying that inside the marginal cost a small level of normal profits are included because no one will decide to produce something without knowing in advance that will be earning some money (as part of the costs the “salary” of the producer will be added).

Now, lets see business people’s idea, they say that after the minimum number of units that allow you to cover the total cost is reached then you can start out talking about making profits (winning money). And this makes sense too, if my total costs are equal to $ 2,000.-, I need to find out the number of units I have to sell in order to equal (through the revenue) that previous value.

For example if I find that producing and selling 500 units of an X product I obtain $ 2,000.-, then I know that whenever I sell my unit number 501 I’ll star making profits.

It makes sense, but it's nice to see that students still argue about this point.

See you on my next post

Prof. Lic. Fernando Julio Silva, MSc
July 2008

Warren Buffett’s protectionist trade policies will benefit neither the US nor emerging economies

Paul Samuelson wrote:

Warren Buffett, the oracle from omaha, is an American icon way up there with Daniel Boone and Honest Abe Lincoln. That’s not because he is just about the richest man in the world. These days, multibillionaires are a dime a dozen. Most of them have been more lucky than smart, averaging in IQ only a bit above Henry Ford, who said, “History is bunk.”

Buffett is that rare exception who made his own fortune as a superlative investor over more than four decades. He professes Will Rogers poses: Shucks, I just spot good companies run by good people and in split seconds we go into partnership together. Sounds simple, doesn’t it? Go try.

Forget now about speculative capital gains and losses. Since 2003, Buffett has turned heretical against present-day globalisation trends. The title of his piece in Fortune magazine (26 October 2003) sums up his protest: ‘America’s Growing Trade Deficit Is Selling the Nation Out from Under Us: Here’s a Way to Fix the Problem — And We Need To Do It Now’.

Most US political protectionists, now and before, used import tariffs to confine production of automobiles in Detroit and not in Japan or Germany. Buffett doesn’t touch directly on American jobs getting outsourced abroad. He focuses his fire on (a) the uncontested fact that when emerging poor economies apply advanced US know-how to their own low-wage, educable workers, they usually generate a trend of ‘export-led growth’; (b) as academic economists have agreed, fast-growing, emerging societies are initially high savers; and (c) the fact that most advanced industrial societies tend to settle down into lower, steady-state saving rates.

From these, we can infer that Japan, China and India would pile up trade surpluses for a long time, which will be recycled into dollar-denominated assets. If Buffett is concerned by this US pathology, he might have written a different Fortune article proposing a taxing mechanism that forces Americans to save as high a fraction of their incomes as citizens of emerging countries. Maybe then free trade sans tariffs or import quotas could be Buffett’s reform scheme?

However, Buffett proposes a new system of import certificates (ICs) issued to would-be US exporters (such as GM or Ford or GE). These ICs are valuable because would-be exporters in China, et al, will need to buy them if their goods are to be allowed into the US. An auction market for ICs between foreign would-be exporters and American would-be exporters will reach theoretical equilibrium only when the US’s trade exports are equal to its trade imports. Ergo, no persistent takeover of US earning assets by dynamic foreigners will continue in the post-Buffett era. Suppose that the US electorate and a Democratic Congress do legislate Buffett’s scheme. Suppose too that we can rule out a lethal financial panic in Chinese and Indian markets attributable to the Buffett scheme. Then:

China-like places will become dependent primarily on their domestic-led growth.
With US real imports substantially aborted, per capita total income may drop. Because consumers will have lost their opportunity to benefit from cheap imports from China and India. At the same time, US trade unions will again become active. Potemkin village auto factories in Detroit and Atlanta will be definite beneficiaries of the Buffett scheme.
Math analysis shows that, depending upon how elastic or inelastic supply-demand relations for goods, US losers could overnight outweigh US winners. Or vice versa. Probably, if and when protectionism surges in 2009-2013, it will rely primarily on traditional import tariffs and quotas.
In self-defence, Buffett might argue that the present state of affairs cannot continue for long; that we’re in a fix similar to that of persons falling off the Empire State Building. They aren’t hurt yet, but the moment of judgement will arrive soon.

An op-ed column is not the place to expound equations of mathematical economics. Consider a cogent analysis of a two-country world, where each place can produce three different goods out of domestic labour, working with producible capital machines. One of those three goods will be machines producible out of labour and machines.

It turns out that in such an idealised model, a growing adverse US trade balance could go on forever while at the same time benefiting net both, the US and China or India.

Since Rome wasn’t built in a day, a scheme like Buffett’s could be introduced only gradually, thereby sparing the global economies sudden, acute financial turmoil.

(Businessworld Issue 1-7 July 2008)
http://www.businessworld.in/content/view/5085/5196

See you on my next post!

Prof. Lic. Fernando Julio Silva, MSc.

July 2008

Dialogue with the former minister of Economy Machinea: notices about the danger of a stagflation

This interesting article appeared today on "La Nación" - an Argentinean newspaper, I've translated to English and think is a good piece to be read.

I hope you like it!

See you on my next post

Prof. Lic. Fernando Julio Silva, MSc.

June 2008

ARTICLE:

Dialogue with the former minister of Economy Machinea: notices about the danger of a stagflation

He says that it is "possible, but avoidable"

Machinea left Cepal and charge of a class will be taken in the University of Alcalá, Spain

With the world growing less and the inflation ascending more, Argentina should have a fiscal wiser politics and not to promote restrictions to the exports that increase more the price of the foods, according to the general salient secretary of the Economic Commission for Latin America (Cepal), José Luis Machinea.

After being honored by the government from Chile after five years of command in Cepal, and before being made position of the class Raúl Prebisch in the University of Alcalá, Spain, Machinea said that the stagnation scenario and inflation for Argentina were "possible, but avoidable", if corrective measures were adopted.

In phone dialogue with “La Nación” from Santiago, Chile, the former minister of Economy - that will be replaced to the front of the organism by Mexican Alicia Bárcena - noticed that the countries of the region had not taken a complete advantage form the favorable cycle generated by the international increase of the price of the raw materials, that is near concluding.

Journalist: How did Latin America evolve in the last five years?

José Luis Machinea: It is better; has had a superior growth to 3 percent that didn't register from ends of the decade of the 60, and of more quality because it reduced their debt, it increased the twin surpluses and it lowered the poverty and the indigence levels; those are the lights. The shades have to do since with a region that is not taking advantage of such a favorable context completely for the high price of the raw materials, it didn't invest enough neither in infrastructure neither in innovation. Except for Brazil that invests 1 percent of G.D.P. in investigation, and Chile, 0,65 percent, the rest is below 0,5 percent.

J: And from the fiscal thing?

J.L.M.: Improved, but the public expense was pro cyclical and it ascended too much.

J: Do you expect the end of the favorable cycle of prices for the region?

J.L.M.: The conditions of medium term will continue being favorable, but the prices will turn in next months for the deceleration projected for United States, Japan and Europe that it will affect China. Also, the increase of the inflation begins to be worrying, because it overcomes 10 percent and that will generate more poverty.

J: Does this end, then, the regional supposed desacople of the financial crisis of the United States?

J.L.M.: United States weighs less, but it continues having importance. Also, the deceleration is global.

Short term

J: Does the closing of the exports influence in in the increase of foods’ prices?

J.L.M.: Yes; that was already seen in the case of the rice. The countries that restrict the exports solve their domestic problems of short term, but they increase the international problem of the prices and they give less incentives to the production to be increased in the medium term.

J: Is to grant subsidies to the poor a more reasonable road?

J.L.M.: It is a good road that countries like Mexico, Chile and Dominican Republic already took, because focalize the help and it maintains the incentives to the supply.

J: Is it possible that, in this circumstance, the richest countries reduce part of the subsidies that apply to the agriculture?

J.L.M.: It doesn't seem probable; in fact, what is happening is that they increase the subsidies for the biofuels production, what increases the world problem of the price of the foods.

J: Will they begin to increase the interest rates and the dollar in United States?

J.L.M.: The cycle of low rates finished and almost all the countries will begin to increase them. If this happens before United States makes it, there will be a widespread appreciation of currencies in front of the dollar and that will provoke a global bigger economic deceleration.

Scenarios

J: Which measures should the countries of the region take in this context of smaller growth?

J.L.M.: In Argentina or Colombia, where there is more inflation, it would be necessary to be more cautious with the fiscal politics, because it can have an acceleration of the inflation that is contagious to the wages and the rates. The contractive measures, mainly in the monetary plan, don't serve too much.

J.: Does Argentina suffer a crisis again?

J.L.M.: We had estimated an annual growth of 7 percent for the effect crawls of the 2007, but give the sensation that in the second semester of the year the economy will slow down. If the conflict [with the farmers] continues, it will have an impact in the investment and in the consumption and it could slow down the economy a lot, in a context of quick inflation. The stagflation is possible, but avoidable.

J.: How?

J.L.M.: There are two central questions to solve that exceed Argentina: the social cohesion and the adoption of a strategy of medium term. If those consents don't exist and there is a lot of fight in the society, to the countries is difficult to define their profile. And that can be the case of Argentina.

By Martin Kanenguiser
From La Nación
Argentina
http://www.lanacion.com.ar/nota.asp?nota_id=1026024

GOD WAS LOOKING FOR A NEW WING - JUAN CRUZ MIGLIORE R.I.P. - 21st JUNE, 2008

Let me move away from the topic that generally write about.

Today Saturday June 21 2008 is for me a very sad day, one of my ex. students went to talk with God.

He was a young fellow with a great potential, student of Publicity and in love with his sport: Rugby

In an unfortunate play - and trap of destiny – he suffered a blow of those that this sport has for thousands like part of its game; that is to say of contact not of another thing

Juan Cruz, such his name, was my student during his last year of his secondary school (Saint Philip’s the Apostle, of Don Torcuato), I remember him like somebody quiet, respectful, calm and with many hopes about his future.

Today he is not more physically, but he will always be in my heart, as great part of those people to which I had the chance of transmitting my small technical and life knowledge.

Dear Juan Cruz Migliore, be worth my fraternal hug at the distance, I know you will receive it.

With respect and pain

Fernando Julio Silva
21st June, 2008

Argentina: Facing a new big collapse?

Argentina is going through another crisis, there is no doubt about this. The point is that again is not "just" an economical one, we are facing a new social-economical-political problem.

On one hand, the government is imposing retentions (a way of calling taxes) over the production of soya (they switched from 11% to almost 44% from March to now). The President explained it was to have a better distribution of income from the people that had more economical power to the people with less. She explained this money was going to be used to increase the level of housing, hospital's maintenance, etc. Even though not a lot people trust on this argument.

On the other hand, we have farmers (small, medium and big size producers). The increase on retentions will affect all of them in the same percentage, but not in the same monetary proportion. For a big producer this might not be such a big difference, but for a small or medium size one is a huge change.

Another sector that appeared as directly involved is the one of the truck drivers and owners, if there is no production available to be moved, there is no work for them

Then, the whole society is affected due to the point that products became scarce, so their prices start to increase (but not salaries!)

A paradox, Argentina has always been an excellent producer of cattle and agriculture (probably its main source of income) so, why instead of improving the conditions for this sector that has an interesting percentage of the world market, governments (this is not a new condition, it was already done by previous governments in different ways - for example it was a good increase on export taxation back in the 80's when the country had a good chance to export soya to U.S.A. due to a lack of volume of local production in that country. Of course, this advantage disappear due to that increase on taxes and the opportunity was lost).

As you can see, this is a big puzzle that has to be solved.

My question is, how much will be total cost...

See you soon

Prof. Lic. Fernando Julio Silva, MSc.

June 2008

ARGENTINA: Inflation for May: 0.6%... according to the Government. Is this real?

The last value that the new index used to measure Argentinean inflation show is 0.6%, but...what did the "temperature of the local economy" say about this?

The answer is that someone is making a mistake because on the day-to-day expenditure consumers find that the increase in prices in, for example, supermarkets largely exceed this change and also that we deal with scarcity for the basic products or the non existence of the first brands.

The way of masuring the C.P.I. (Consumer Price Index) was already questioned last year due to similar problems: wrong real values, differences between what was measured in the Capital city and what was going on on the rest of the Country, etc.

A good article written by Isamel Bermudez from Clarin shows some significant numbers, for example:

• For the government the purchasing power increased during 2007
• They were significant increases on salaries (an average of 25%)
• Prices are falling, for example vegetables value dropped in 33% and clothes in 12%
• The prices of the basic products only were increased in a 5.1% (In the last five months... the increase was of only 1%)
• Level of indigence moved down to a 5.9% over the total population

If we analyze these numbers, why are Argentineans complaining about their economical situation? Masochism may be? People that are never happy and always blame governments?

Someone is not telling the truth...

See you on our next talk

Prof. Lic. Fernando Julio Silva, MSc.

June 2008

Argentine debt surge raises spectre of default

By Jude Webber in Buenos Aires
Published: June 13 2008 00:23

Argentina’s debt levels are now higher than they were when it crashed into the biggest sovereign debt default in history in 2001, and a worsening crisis of confidence in the government has brought the spectre of a new default closer, a report to be published next week says.

Despite a radical restructuring just three years ago, public debt has reached $114.7bn (€74.4bn, £59bn), or 56 per cent of gross domestic product, compared with $144.2bn, or 54 per cent of GDP, in 2001 – at a time when Argentina’s economy was much larger – according to the paper.

Martín Krause and Aldo Abram, directors of the Argentine Institutions and Markets Research Centre at Eseade business school and the report’s authors, also found that if the amount owed to bondholders who did not accept the 2005 restructuring and are suing to recover their money is included, Argentina’s overall debt rises to $170bn, or 67 per cent of GDP.

“We’re not teetering on the brink of default but if we continue down this path, with this level of [social] conflict, we could get there,” Mr Abram told the FT.

Many developed countries, including Italy and Japan, have higher ratios of debt to GDP but Argentina’s higher borrowing costs and rocky institutional record make it harder to secure credit. “The worry is not the amount, it’s that we won’t have access to credit,” Mr Abram said.

The six-month-old government of Cristina Fernández, the president, has been struggling to resolve a conflict with farmers after it imposed a sliding scale of export tariffs on key agricultural exports in March. The unrest has spread to truck drivers, who have mounted roadblocks to demand an end to the farm dispute, which has disrupted grains transportation.

Their action has caused fuel shortages and will put further pressure on inflation, which the government is widely accused of trying to conceal with doctored data.

Meanwhile, the government must this year find $14.6bn for debt servicing, plus $11.8bn next year and $10.5bn in 2010.

However, the threat of legal action by bond holdouts bars Argentina from international capital markets whilst it remains in default with the Paris Club of creditor nations, to which it owes $6.6bn.

Argentina has increasingly turned to Hugo Chávez, the Venezuelan president, who has bought $6.4bn in bonds in the past three years.

But its international financial isolation is costly – Buenos Aires has had to pay Venezuela interest rates of up to 13 per cent, yet it cancelled its low-cost International Monetary Fund debt and the Paris Club debt only costs 5.3 per cent, Mr Krause said.

By contrast Brazil, which had a far worse debt profile than Argentina in 2001, recently achieved investment grade and sold a 10-year bond at 5.3 per cent.

Copyright The Financial Times Limited 2008
http://www.ft.com/cms/s/0/79710d62-38cf-11dd-8aed-0000779fd2ac.html?nclick_check=1

I've been a long time out!

After going through some technical problems, I'm able to start publishing again.

The world had change a lot from the social & economical points of view: Inflation, recession, unemployment, poverty, oil prices, stock exchange crisis are between others, the main problems that now a days are common, more common, than before.

The dollar value depreciated in terms of the euro.
China's economy growing... may be out of control?
Oil prices breaking the U$ 100.- barrier
A big recession affecting the United States... and in an election year

I'll try to bring some light over them and, as usual, your comments are appreciated

Best regards

Fernando