sábado, março 16, 2013

Tsu-money alert !

Have you ever seen a wall of money, a tsu-money? 
(em português abaixo) 

Surfing the  huge wave of cross-border financial flows has been great business, provided you didn't drown.  And, in the era of free capital flows,  the "hot money" that floods in cans easily flood out even faster, leaving an economy wrecked from the contraction of credit in its wake.  

We now know that the huge capital flows shown here from a McKinsey study  were anything but "free",. The very costly invoice has arrived and, as usual, it's being paid by those who can least afford it. 

But it's really all about the (im)Balances of Payments.  Such huge financial flows  result  from, and facilitate, strongly diverging trade performance among trading partners, as the net exporters have to recycle their surplus to the net imporers.  The banking and financial system serve to recycle these trade surplus funds, intermediating the risk between the ultimate debtors and creditors.  This is one of the reasons that German banks were the most overleveraged and exposed to the risks of  net debtor countries, because Germany had the most trade surplus to recycle.  

The bank and financial intermediators  will have to take losses on the excessive risks they took in feeding the trade imbalances.  Remember that recycling of petrodollars in the 1970's was followed closely by the Latin American Debt Crisis in the 1980's.    

Diverging CAB current accounts imbalances, surplus or deficit.  are  UNSUSTAINABLE and very costly in economic and human terms.  

If Portugal had been able to finance a CAB deficit of 10% GDP for only one year instead of five years, we would certainly not be looking at unemployment rates of nearly 20%. 

Until we see the essential adjustments in  the balance of payments of BOTH the net exporters and the net importers, we can expect the crisis to continue, with enormous risks to our economies,  to our prosperity and to our peace of mind. 

The economic and social costs of unsustainable financial imbalances are a great externality which has to be priced into the various individual financial decisions.   The necessary,  and usually one-sided,  efforts of adjustment  of  financial imbalances place the burden  mostly on the weaker midget debtors, raising enormous, though hidden, risks to the system as a whole.   This is one of the stronger arguments for a "tax on financial transactions", the Tobin tax,  to ensure that the risks in the "tsu-money" are properly  priced and internalized and that adjustments are made sooner rather than later. 

So, let's introduce the the tax on financial transactions in the European Union and let's use the proceeds to fund an European Deposit Guarantee scheme, in order to rescue not the professional "smart money" surfers as has been done up to now, but the hapless retail savers and  depositors who think that  BASEL  is just a city in Switzerland. 

Mariana Abrantes de Sousa 
PPP Lusofonia 

When the smart money is dumb, at the expense of the taxpayers
Midget economies cannot guarantee Eurozone CAB adjustments 
Eurozone crisis tests the Limits of Divergence

Já alguma vez viu uma tsunami de dinheiro, um tsu-money?

Surfar a grande onda de fluxos  financeiros transfronteiriços tem sido um grande negócio, para quem não se afogou. E, na era dos fluxos de capitais livres, o "hot money" a entrar pode sair ainda mais depressa, deixando em seu rastro uma economia destruída devido à contracção de crédito .

Sabemos agora que os grandes fluxos capital  foram tudo menos "livres". A factura muito cara chegou e, como de costume, ela está sendo paga por aqueles que menos a podem aguentar.

Tem tudo a ver com as balanças de pagamentos desequilibradas. Esses enormes fluxos financeiros resultam, e facilitam,   as divergências no comércio externo entre os parceiros comerciais, como os exportadores têm de reciclar seus excedentes para os importadores líquidos. O sistema bancário e financeiro servem para reciclar esses  excedentes comerciais, intermediando o risco entre devedores e credores.  Esta é uma das razões que os bancos alemães eram os mais alavancados e expostos ao risco dos países devedores, porque a Alemanha tinha mais o superávit comercial para reciclar.

Os intermediadores  bancários e financeiros terão de assumir perdas sobre os riscos excessivos que eles tomaram em alimentar os desequilíbrios comerciais. Lembre-se que a reciclagem de petrodólares na década de 1970 foi logo seguida  pela crise da dívida na América Latina na década de 1980.

Divergencias nas BTC, balança de transacções correntes , superávites, ou défices  são INSUSTENTÁVEIS  ​​e muito caras em termos económicos e humanos.

Se Portugal tivesse sido podido financiar um défice da BTC/ PIB de 10% por apenas um ano, em vez de cinco anos,   não estaríamos  certamente a prever desemprego de quase 20%.

Até vermos os ajustes essenciais nas  balanços de pagamentos de ambos os exportadores e os importadores líquidos, podemos contar com a continuação da crise, com enormes riscos para as nossas economias, para a nossa prosperidade e para a nossa paz de espirito.

Os custos econômicos e sociais destes  ​​desequilíbrios financeiros  insustentáveis são uma grande externalidade cujo custo tem que ser incorporado nas  várias decisões financeiras individuais . Os esforços necessários e, frequentemente unilaterais, de ajustamento dos desequilíbrios financeiros colocam o fardo principalmente sobre os pequenos devedores mais frágeis, levantando enormes riscos ocultos  para o sistema como um todo. Este é um dos argumentos mais fortes para um "imposto sobre transações financeiras", a taxa Tobin, para garantir que os riscos do "tsu-money" passam a ser devidamente quantificados e internalizados e que os ajustes são feitos mais cedo e não mais tarde.

Por isso,  vamos mesmo introduzir o imposto sobre transacções financeiras na União Europeia e vamos usar os proveitos para financiar um esquema Europeu de Garantia de Depósitos, a fim de resgatar não os surfistas profissionais  do"Smart Money" como tem sido feito até agora, mas sim os aforradores e depositantes particulares que pensam que BASILEIA é apenas uma cidade na Suíça.

Mariana Abrantes de Sousa
PPP Lusofonia 

7 comentários:

PPP Lusofonia disse...

O Chipre que aprenda com a Islândia, a proteger os pequenos depositantes locais, deixando os profissionais tirar as consequências das suas decisões.

PPP Lusofonia disse...

he Regulators must be crazy.
This is no way to run a banking system.
Cyprus is being forced to "tax" 9.9% on deposits over €100.000 and 6,75% on others.
INSTEAD, Cyprus should learn from the example of Iceland. Local resident retail depositors must be protected fully, and cross-border investors (aka professional speculators), should be subordinated and take residual.
Sacrificing local retail depositors is the end of banking as we know it, Euro or no Euro.
From this distance, can´t really tell the difference between Russian investors in Cyprus and Dutch investors in Iceland. Neither are "widows and orphans", let them take the consequences of their bad investment decisions.
And impose the financial transactions tax to keep this "hot money" from flowing in and flowing out, leaving destruction in its wake. Down with tsu-moneys

PPP Lusofonia disse...

Cyprus banking plan to favour small depositors, finally.

Leaders more afraid of foreign creditors and speculative investors, rather than of local depositors and voters, is nothing new. It harks back to the days of gunboat diplomacy, of foreign creditors lending to much, often to non-representative elite, and the taking over the customs house to collect on external debts.

The recent successive and wide-ranging regulatory failures have allowed the walls of money, the TSU-MONEYs, to move from country to country, wrecking local economies and sowing desperation among local savers. The Eurozone forcing local depositors, who had no part in the problem, to take haircuts in Greece could only have serious consequences in other EU countries.

And you say the creditors are "fed up"? Pity the poor foreign investors and creditors who lent too much and drove up the risks for everyone?

Regulators are improvising in the worst way. Only Iceland was able to break the vicious cycle of protecting risk-loving foreign speculators, but it required a popular referendum to do it. Economic history will certainly judge it: Small country, big courage.

Yes to capital controls. Slamming the door on foreign speculators whose hot money raises the risks for everyone in small fragile economies is essential, and better late than never.

PPP Lusofonia disse...

You are fooling yourself if you think that the Eurozone debt crisis is about north - south, or even center-periphery.

It's a gigantic credit bubble turned crash, and it's all about foolish overextended creditors who lent too much foolish over-indebted borrowers, one domineering, the other dominated, while the (im)prudential regulators stood idly by. Here's is a biblical lesson: If you borrow too much, you are placing yourself at the mercy of the unmerciful creditors. And this is not the first era of the vengeful creditor, who will do anything to keep from taking losses on its bad loans. in the bible they had general debt forgiveness after 7 cycles of 7 years, the jubileee year.

Go back to international trade and finance theory and look at what happens when exporters sell more and more, on credit. The real cause of the problems in the Eurozone is Germany's record trade surplus which is making the whole system UNSUSTAINABLE, as it generates veritable "tsunamis of money".

Wise up and read the trade charts, not the racist grafitti.

Capital controls better late than never disse...

Previous bailouts were unfair: forcing LOCAL taxpayers to pay off cross-border investors, professional speculators as far from the defense-less "widows and orphans" as you can get.
Local depositors are not part of the problem and they must, by definition, be part of the solution. If you continue to penalize local savers, the Euro will disappear into a bottomless pit.
The Cyprus capital controls are 5-years too late, they should have prevented the incoming "tsu-money".

IMF fiscal monitor disse...

Altogether, about one-third of advanced economies—representing some 40 percent of global GDP—still face major fiscal challenges. Most of these 10 countries, including Portugal and six other members of the Eurozone have never experienced debt levels similar to the current ones, and certainly not for decades. They will need to undertake unprecedented fiscal efforts to bring their debt ratios to traditional norms, even if this is to occur only over a relatively long horizon.

Slovenia BoP problems after 7 years in the Euro disse...

Great effort, but better focused on the external accounts: Little country, big debt?
- Who funded the CAB deficit of -8% of GDP, for how many years, and who are their major external creditors?
- How much is the Gross External Debt and how fast has it been growing?
- Do they have some nasty speculative swaps too?
Good that you propose to spare Slovenia "the lecture" on too much cross-border borrowing. Perhaps "the lecture" can be reformulated and given to the external creditors who lent too much.
For reflection: If another member country can get into a Balance-of-Payments crisis after only seven (7) years in the Eurozone, is the Single Currency part o the problem or part of the solution?
Seems like the now familiar story of a little country slammed by a tsu-money.