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  1. #991

    Re: The Failing Economy

    Chile's GDP is smaller than Colombia (according to Wiki). And informal conversations with friends that keep an eye on Chile tell me that social unrest is hitting a peak. Bailing out a company that is half Brazilian (Latam is the merger between LAN and TAM, the latest brazilian) may not go down well with the general public right now.
    As I said before, Avianca is currently a Panamanian Holding, which they did precisely to avoid a lot of taxes in Colombia. So there is also a political component to this.
    About bailouts: Colombia issued a one time bonus to help people. About $100. So they are not looking at this pandemic from the economic point of view.
    What can I say? Hooray for Latvia. When Avianca goes down I will lose about 180,000 miles accrued with them. There goes my GF's trip to Paris!
    Face it. It's the apocalypse.

  2. #992
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    Re: The Failing Economy

    Quote Originally Posted by suliso View Post
    I guess, but even Latvia found 250 million euros for our small airline and also seemingly nothing happened. Chile is supposed to be similarly well off, isn't it?

    Before the epidemic Chile was going through a period of social unrest, driven by economic factors.


  3. #993

    Re: The Failing Economy

    As with personal history, where previous conditions might may you more vulnerable, the state of your economy prior to this pandemic will play a role in how you do:
    Debt-Ridden Argentina Can’t Stop Precious Dollars Draining Away

    Argentina is going through the consequences of defaulting NINE TIMES to international credit agencies. Added to the fact that you elected the same people that sent you on that track 5 years ago and, well....
    Paging Drop, for a more in depth explanation.
    Face it. It's the apocalypse.

  4. #994

    Re: The Failing Economy

    Argentina always defaults, doesn't it? Or at least significantly more often than any other middle income country...
    Roger forever

  5. #995

    Re: The Failing Economy

    I tried to have that conversation in Buenos Aires when I was there early this year. I stated "if you were to lend money to a person that never pays you back, wouldn't you eventually stop?"
    The response was that the IMF and the World Bank are nothing but MF's and they have really hurt Argentina always, so...
    I was able to steer the subject to how pretty Buenos Aires women are. It was a much safer talk.
    Face it. It's the apocalypse.

  6. #996

    Re: The Failing Economy

    Ponchi, I loved the comment about changing the subject in B.A.

    It made me think of a fun little story: When I was studying in Germany, I had a part-time job for about 3 months to help with expenses. By coincidence almost everyone I was working with was male and mostly in the 40-60 year-old range. This was 1974, so I couldn't help but realize that almost all of them had to have been young men or at least teenagers between 1939 and 1945. I had become great friends with the lady from whom I rented a room the whole time I was there. I asked her if it would be safe to ask these men what they did in the war. Her answer was the most resounding and definite "NEIN" in the history of negation. She told me the reasons, basically saying: "You are an American, which would almost immediately make them resent the question immensely, but also, if they were to answer your question, they wouldn't tell you the truth." She proceeded to tell me subjects that would be safe...such as how beautiful the German women were.

    GH

  7. #997
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    Re: The Failing Economy

    Quote Originally Posted by GlennHarman View Post
    When I was studying in Germany...
    Just for clarification, this was right after Glenn hand-glided around the world using nothing more than an ironing board and a bed sheet and shortly before he began a torrid love affair with Andy Gibb.
    Winston, a.k.a. Alvena Rae Risley Hiatt (1944-2019), RIP

  8. #998

    Re: The Failing Economy

    Quote Originally Posted by ponchi101 View Post
    As with personal history, where previous conditions might may you more vulnerable, the state of your economy prior to this pandemic will play a role in how you do:
    Debt-Ridden Argentina Can’t Stop Precious Dollars Draining Away

    Argentina is going through the consequences of defaulting NINE TIMES to international credit agencies. Added to the fact that you elected the same people that sent you on that track 5 years ago and, well....
    Paging Drop, for a more in depth explanation.

    Let me start by saying that the whole lockdown and COVID thing has come in handily to make people and the media look elsewhere instead of the debt/default. Another reason as to why I'm against such a strict lockdown here, but I digress...

    I'll build upon a previous post of mine:

    I want to expand on the currency issue. Argentina goes through cycles that roughly go this way since the return of democracy. A peronista, aka a demagogue, gets elected since they have been the predominant force since the 1940's. He throws an expensive party that expands welfare, govt jobs and subsidies. If the world economy does fine and the stars align (see Nestor Kirchner) they can sort of pay for the party. But this sooner or later is not the case and the economy starts to break down. When things get bad enough (after 8 years = two terms) enough people get fed up with the corruption, the peronista's attempts to obtain an unconstitutional third term, etc and vote a party different than the peronistas to power.

    Here comes phase 2. The peronistas start undermining the govt to return to power (with the help of the unions, which are led by very corrupt people intimately connected with politicians). This erosion comes easy as the new govt has to pay for the party that the peronistas threw over the better part of the last decade and to do this they have to take unpopular measures in a depressed economy and these measures affect the hardest those who have the least (that coincidentally are the base of the peronistas vote). To illustrate this, Macri is about to become the first non-peronista president to finish his term in office without being kicked out / quitting in decades.

    Phase 3 is the return of the peronista savior that is here to undo all the damage the previous president did. They generally get off to a good start and as soon as things are navigable, the demogoguery begins again restarting the cycle.

    So while this cycle goes on, the peso or currency of the time, suffers various devaluations eating at people's ability to buy, pay and most importantly to save. So to protect yourself you turn all your pesos to dollars to avoid losing your saving's worth when the devaluations come. For example, if you want to buy real estate, all the prices are in dollars. You can pay the equivalent in pesos, but the seller wants dollars. So as a saving currency the peso has no value. It's only used for day-to-day transactions.
    So after decades of these cycles, the world and the population have caught on to how things "work". The world knows the country overspends and the argentine knows that that catches up with the economy (although not few prefer to place the blame on the USA/IMF/other foreign powers instead of taking responsiblity). Therefore, the main issue assailing Argentina is not the debt. As mentioned in previous posts many countries have a large/er debts. The REAL issue is that of CREDIBILITY or TRUST. No one trusts the country -the inhabitants first and foremost- and so there is no way to finance the debt. Why did Macri suffer his run on the peso last year? Nothing special had happened; it was that lack of confidence.

    So now we have a second element (a consequence that has taken on a life of its own) that interplays with my previous post. The third element is the lack of a competitive industry that can produce and sell to the world anything in quantities that would bring in the much coveted dollars. Instead, they have always and still rely on agriculture and cattle.

    Overspending country + No Industry + No confidence (companies and citizens flock to the US dollar) = lack of USD
    Meet again we do, old foe...

  9. #999

    Re: The Failing Economy

    Dry, thanks for mentioning Andy Gibb...ah, there was a time that would have been such a dream!!! GH

  10. #1000

    Re: The Failing Economy

    Boeing cutting 12,000 jobs in the coming weeks. Their stock rose.
    Ponchi's dreams, King-for-a-day idea: you slash 10% of your workforce? You have to slash 10% of your top management. At random. With no golden parachutes possible.
    Face it. It's the apocalypse.

  11. #1001

    Re: The Failing Economy

    Did they get bail out money that was supposed to go to small businesses?
    “No matter how cynical I get, I just can't keep up.” – Lily Tomlin.




  12. #1002

    Re: The Failing Economy

    EU is proposing to distribute (grants and soft loans) 750 billion euros to constituent countries to fight consequences of Covid-19. If approved Latvian portion would be 2.9 billion, that's a lot of money for small country like ours (ca 8% of yearly GDP).
    Roger forever

  13. #1003
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    Re: The Failing Economy

    Quote Originally Posted by suliso View Post
    EU is proposing to distribute (grants and soft loans) 750 billion euros to constituent countries to fight consequences of Covid-19. If approved Latvian portion would be 2.9 billion, that's a lot of money for small country like ours (ca 8% of yearly GDP).
    Gotta finance that AirBaltic bailout


  14. #1004

    Re: The Failing Economy

    Quote Originally Posted by mmmm8 View Post
    Gotta finance that AirBaltic bailout
    That was only 250 million... But seriously I hope it's not all wasted on some stupid tourism projects or yet another concert hall/swimming pool in the countryside.
    Roger forever

  15. #1005

    Re: The Failing Economy

    Breaking precedent, White House won’t release formal economic projections this summer that would forecast extent of downturn
    The president’s aides will not publish updated economic forecasts, citing volatility in U.S. economy

    By
    Jeff Stein and
    Josh Dawsey
    May 28, 2020 at 10:05 a.m. EDT

    White House officials have decided not to release updated economic projections this summer, opting against publishing forecasts that would almost certainly codify an administration assessment that the coronavirus pandemic has led to a severe economic downturn, according to three people with knowledge of the decision.

    The White House is supposed to unveil a federal budget proposal every February and then typically provides a “mid-session review” in July or August with updated projections on economic trends such as unemployment, inflation and economic growth.

    Budget experts said they were not aware of any previous White House opting against providing forecasts in this “mid-session review” document in any other year since at least the 1970s.


    Two White House officials confirmed the decision had been made not to include the economic projections as part of the mid-session release. The officials, who spoke on the condition of anonymity to discuss internal deliberations, said that the novel coronavirus is causing extreme volatility in the U.S. economy, making it difficult to model economic trends.

    The document would be slated for publication just a few months before the November elections.

    “It gets them off the hook for having to say what the economic outlook looks like,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office who served as an economic adviser to the late senator John McCain (R-Ariz.).

    Both liberal and conservative critics said the White House should publish its economic projections in line with the precedent set by prior administrations, regardless of the uncertainty caused by the pandemic. The White House under President Barack Obama continued to release these numbers during the Great Recession, although they were unflattering.

    This year’s White House budget report is expected to include data on federal spending, along with information on enacted legislation, but not an annual federal deficit projection, the White House officials said. The officials said the White House will release the annual deficit for the year by the end of the fiscal year in October.

    A senior administration official said in a statement that it would be “foolish” to publish forecasting data when it “may mislead the public.”

    “Given the unprecedented state of play in the economy at the moment, the data is also extremely fluid and would produce a less instructive forecast," said senior administration official, who spoke on condition of anonymity to describe the White House’s decision. "Furthermore, we remain in complete accordance with the law as there is no statutory requirement to release this information, just precedent, which, when compared to our current economic situation, is dismissible.”


    The magnitude of the economic impact has grown by the week. The Treasury Department said earlier this month it plans to borrow $3 trillion from April through June to finance spending in response to the pandemic, while the monthly deficit in April soared to $738 billion.

    On Thursday, the Labor Department reported that Americans filed another 2.1 million jobless claims last week, bringing the 10-week total to more than 40 million.

    The budget review will include a brief summary of economic conditions to date. One official said White House staff are also busy with implementing the $2 trillion Cares Act aid package approved by Congress in March.

    The economic projections are jointly produced by a “troika” consisting of the director of OMB, the chair of the White House Council of Economic Advisers, and the treasury secretary.


    Since the release of the White House budget in January, the unemployment rate has skyrocketed from about 3.5 percent to close to 15 percent. President Trump has repeatedly expressed confidence in a rapid economic rebound from the virus, but mainstream economists and Wall Street forecasters have predicted unemployment could remain north of 10 percent through 2020 and into 2021.

    Budget experts say there is no reason the White House would be unable to release its own economic projections. The Congressional Budget Office, for instance, updated its economic projections in both April and May as the coronavirus rippled through the U.S. economy.

    In its 2017 mid-session budget review, the White House said it would not be providing new economic projections, but for a much different reason. It said it was not providing new forecasts because “economic developments over the past few months do not provide a basis for changing this forecast,” using the same assumptions it had in the previous budget. In other words, it was sticking with its previous projections.

    This year’s mid-session budget will not include new projections even though White House officials have acknowledged that the economy has changed markedly in the past few months.

    “There is no logistical reason they couldn’t do it,” said Bill Hoagland, senior vice president at the Bipartisan Policy Center and former Republican staff director for the Senate Budget Committee. “It seems more likely they do not want to bring attention to the high level of unemployment they’d have to project for this year, and into next year.”

    White House officials have said they are being transparent about the extent of the downturn. Kevin Hassett, a White House economist, said over the weekend that unemployment could remain north of 10 percent on Election Day in November. Larry Kudlow, director of the White House National Economic Council, said last week that “the numbers coming in are not good. In fact, they are downright bad in most cases.”

    Critics say the White House is not confronting the extent of the economic damage facing the nation. The administration has largely broken off negotiations with Congress on an additional stimulus package, although many economists say additional stimulus is necessary.

    “They’re never going to address the problems if they put these kinds of blinders on,” said Jared Bernstein, a former economic adviser to presumptive Democratic presidential nominee Joe Biden. “Managing the economy means publishing credible forecasts.”

    White House officials have defended their response to the economic downturn, citing the trillions of dollars they approved with Congress to pump into the economy.


    In a typical year, the White House budget also helps federal agencies plan their budget requests for Congress. Agencies such as the Transportation and Energy departments use the administration’s economic information to forecast projected needs for various government programs.

    “The agencies need good information on the economic outlook to plan. The economy today is not the economy six months ago,” said Claudia Sahm, who worked on the macroeconomic forecast underlying the budget as an economist in the White House Council on Economic Advisers during the Obama administration. “Without these forecasts, they cannot ask for the right amount in appropriations.”

    Russell Vought, the acting director of OMB, will appear before the Senate Budget Committee for his nomination hearing on June 3.

    https://www.washingtonpost.com/busin...c-projections/
    “No matter how cynical I get, I just can't keep up.” – Lily Tomlin.




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