Source: Latin America in Movement
The Vice-President of Bolivia has opened an interesting reflection on what is happening, on everyday politics. The much-announced economic deceleration of 2014-2015 has arrived with the foreseen signs of social chaos in all of Latin America. The bad news is, as we all knew, that the prices of raw materials went through a cycle that was highly rigged by the financial sector, moving to record high levels, that later fell like a rock. The fines charged the nine banks that had criminal interventions in the financial markets added 300,000 million dollars over the past two years, for their criminal interventions between 2008 and 2012. All the theory of export led growth has landed in the rubbish bin together with the political apparatus that said that with the FTAs we would herald the exit from the stagnation of the 1980s and 1990s. The discourse according to which foreign exchange would be shielded by high levels of international reserves also went into the rubbish bin. Those of us on this side of the river knew they were wrong, but most people believed it and the media took charge of making all this into revealed truth. So now what can we do?
Prof Hoekman, in a recently published book by the CEPR, states that “The period between the mid-1980s and the mid-2000s was a major outlier on the upside. It spanned two major geo-political developments and one economic one: (i) the fall of the Berlin Wall and the re-integration of central and eastern European nations with western Europe; (ii) the re-integration of China into the global economy, following the adoption of an export-oriented growth strategy that culminated with the accession of China to the WTO; and (iii) a great expansion in the use of so-called global value chains (GVCs) by large manufacturers and retailers, involving the outsourcing of parts of the production process to firms located in different countries. “.
After 2008, he says: “Presently, trade is not a driver of growth for either industrialized or emerging economies.” (Bernard Hoekman, “Trade and growth – end of an era?” in The Global Trade Slowdown: A New Normal? Centre for Economic Policy Research (CEPR), A VoxEU.org eBook, 2015, p.5) This is a problem for everyone, the believers and the non-believers in Pan American or regional integration and for those who argued that growing exports would be the solution to the economic shutdowns of the 1980s.The bad results currently generated are not temporary because the phenomena are not temporary. The collapse of commodity prices has revealed financial manipulations in these markets that gave rise to immense price distortions between 2008 and 2012.The gold market in particular is much affected by the manipulations of prices. Interest rates are still negative in the United States but the rising expectation that they will rise has pushed prices back to their natural level, as the classics would say. Those who argued that positive terms of trade were permanent must eat their tongues with the bitter sauce of misfortune. The terms of exchange are back to negative, as always, and US interest rates have not risen yet.
The Vice-President of Bolivia has opened an interesting reflection on what is happening, on everyday politics. The much-announced economic deceleration of 2014-2015 has arrived with the foreseen signs of social chaos in all of Latin America. The bad news is, as we all knew, that the prices of raw materials went through a cycle that was highly rigged by the financial sector, moving to record high levels, that later fell like a rock. The fines charged the nine banks that had criminal interventions in the financial markets added 300,000 million dollars over the past two years, for their criminal interventions between 2008 and 2012. All the theory of export led growth has landed in the rubbish bin together with the political apparatus that said that with the FTAs we would herald the exit from the stagnation of the 1980s and 1990s. The discourse according to which foreign exchange would be shielded by high levels of international reserves also went into the rubbish bin. Those of us on this side of the river knew they were wrong, but most people believed it and the media took charge of making all this into revealed truth. So now what can we do?
Prof Hoekman, in a recently published book by the CEPR, states that “The period between the mid-1980s and the mid-2000s was a major outlier on the upside. It spanned two major geo-political developments and one economic one: (i) the fall of the Berlin Wall and the re-integration of central and eastern European nations with western Europe; (ii) the re-integration of China into the global economy, following the adoption of an export-oriented growth strategy that culminated with the accession of China to the WTO; and (iii) a great expansion in the use of so-called global value chains (GVCs) by large manufacturers and retailers, involving the outsourcing of parts of the production process to firms located in different countries. “.
After 2008, he says: “Presently, trade is not a driver of growth for either industrialized or emerging economies.” (Bernard Hoekman, “Trade and growth – end of an era?” in The Global Trade Slowdown: A New Normal? Centre for Economic Policy Research (CEPR), A VoxEU.org eBook, 2015, p.5) This is a problem for everyone, the believers and the non-believers in Pan American or regional integration and for those who argued that growing exports would be the solution to the economic shutdowns of the 1980s.The bad results currently generated are not temporary because the phenomena are not temporary. The collapse of commodity prices has revealed financial manipulations in these markets that gave rise to immense price distortions between 2008 and 2012.The gold market in particular is much affected by the manipulations of prices. Interest rates are still negative in the United States but the rising expectation that they will rise has pushed prices back to their natural level, as the classics would say. Those who argued that positive terms of trade were permanent must eat their tongues with the bitter sauce of misfortune. The terms of exchange are back to negative, as always, and US interest rates have not risen yet.
The more Hayekian countries of the region, such as Peru, Colombia, Mexico and Chile, whose common characteristic is a Pan American vision of integration and export led growth demonstrate their discomfort in this area. Students protest, there are protests against corruption in the Bachelet government, there are campesinos fighting for their right to clean water and against the development of mines in some valleys of Peru, Colombia and Mexico. In the opposite political pole, more post-neoliberal, there are protests in Ecuador against state violence, the high cost of living and the indefinite reelection of the president, one of the 16 constitutional amendments recently proposed. In Uruguay, the Association of Secondary Teachers (ADES) decided to strike on Monday, August 17, in the country of the Frente Amplio, where Pepe Mujica governed until recently. There are also public sector protests against budget austerity adjustments for 2016. In Bolivia there are very violent protests, with dynamite, associated with the economy. Venezuela has been suffering protests for over two years due to the impact of inflation and the shortages due to this.
– See more at: http://www.alainet.org/en/articulo/172093#sthash.RGXouqCB.dpuf
The Vice-President of Bolivia has opened an interesting reflection on what is happening, on everyday politics. The much-announced economic deceleration of 2014-2015 has arrived with the foreseen signs of social chaos in all of Latin America. The bad news is, as we all knew, that the prices of raw materials went through a cycle that was highly rigged by the financial sector, moving to record high levels, that later fell like a rock. The fines charged the nine banks that had criminal interventions in the financial markets added 300,000 million dollars over the past two years, for their criminal interventions between 2008 and 2012. All the theory of export led growth has landed in the rubbish bin together with the political apparatus that said that with the FTAs we would herald the exit from the stagnation of the 1980s and 1990s. The discourse according to which foreign exchange would be shielded by high levels of international reserves also went into the rubbish bin. Those of us on this side of the river knew they were wrong, but most people believed it and the media took charge of making all this into revealed truth. So now what can we do?
Prof Hoekman, in a recently published book by the CEPR, states that “The period between the mid-1980s and the mid-2000s was a major outlier on the upside. It spanned two major geo-political developments and one economic one: (i) the fall of the Berlin Wall and the re-integration of central and eastern European nations with western Europe; (ii) the re-integration of China into the global economy, following the adoption of an export-oriented growth strategy that culminated with the accession of China to the WTO; and (iii) a great expansion in the use of so-called global value chains (GVCs) by large manufacturers and retailers, involving the outsourcing of parts of the production process to firms located in different countries. “.
After 2008, he says: “Presently, trade is not a driver of growth for either industrialized or emerging economies.” (Bernard Hoekman, “Trade and growth – end of an era?” in The Global Trade Slowdown: A New Normal? Centre for Economic Policy Research (CEPR), A VoxEU.org eBook, 2015, p.5) This is a problem for everyone, the believers and the non-believers in Pan American or regional integration and for those who argued that growing exports would be the solution to the economic shutdowns of the 1980s.The bad results currently generated are not temporary because the phenomena are not temporary. The collapse of commodity prices has revealed financial manipulations in these markets that gave rise to immense price distortions between 2008 and 2012.The gold market in particular is much affected by the manipulations of prices. Interest rates are still negative in the United States but the rising expectation that they will rise has pushed prices back to their natural level, as the classics would say. Those who argued that positive terms of trade were permanent must eat their tongues with the bitter sauce of misfortune. The terms of exchange are back to negative, as always, and US interest rates have not risen yet.
The more Hayekian countries of the region, such as Peru, Colombia, Mexico and Chile, whose common characteristic is a Pan American vision of integration and export led growth demonstrate their discomfort in this area. Students protest, there are protests against corruption in the Bachelet government, there are campesinos fighting for their right to clean water and against the development of mines in some valleys of Peru, Colombia and Mexico. In the opposite political pole, more post-neoliberal, there are protests in Ecuador against state violence, the high cost of living and the indefinite reelection of the president, one of the 16 constitutional amendments recently proposed. In Uruguay, the Association of Secondary Teachers (ADES) decided to strike on Monday, August 17, in the country of the Frente Amplio, where Pepe Mujica governed until recently. There are also public sector protests against budget austerity adjustments for 2016. In Bolivia there are very violent protests, with dynamite, associated with the economy. Venezuela has been suffering protests for over two years due to the impact of inflation and the shortages due to this.
– See more at: http://www.alainet.org/en/articulo/172093#sthash.RGXouqCB.dpuf