July 31st, 2008

Our present energy crisis has awoken Chile: as of year 2006, domestic energy production –essentially hydroelectricity - represented 24% of total domestic energy consumption, another 24% - natural gas - was supplied from Argentina, a neighboring country, and the rest – 52%- came from multiple foreign coal and oil producers. In that same year, this country consumed 27.9 million tones oil equivalent (mtoe), or less than 0.3% of world primary energy consumption which reached 10,878 mtoe[1]. One year later, natural gas flows coming from Argentina were reduced to a minimum level because of their purely domestic and self created market disruption: the government arbitrarily fixed natural gas prices too low,   thereby causing underinvestment, less supply and overconsumption (surprising?). For Chile, the real problem was not that of rising prices – besides stating the obvious that cheaper energy was better for a net importing energy country -, but one of reliability.

July 23rd , 2008

Dear Sir,

Congratulations for your article and the effort to keep vigilant on this kind of inefficient and costly business behavior from a private and also social viewpoint. The big question is what could be recommended to do now.

What if these GSE´s were already economically bankrupt? Then the issue from a public policy perspective would be who could in the short and long term horizon replace their role -if any efficiency market condition required it- in the mortgage and financial market.

June 4th, 2008

There has been an obvious loss of momentum in our economic growth, relative to our own past two decades and the rest of the emerging world. In figures, whereas in the 90’s and 2000’s Chile had an average annual growth rate of 6,37% and 4,34% respectively, the emerging and developing economies had equivalent growth rates of 3,24% and 6,34% for the same periods (IMF World Economic Outlook Database 2008 *). In other words, inverse GDP growth rates paths.

March 6th, 2008

According to 2007 BP Statistical Review, 2006 world energy consumption amounted to 10.878 million tons oil equivalent – mtoe -, of which 36% corresponded to oil, 24% to natural gas, 28% to coal , 6% to nuclear energy and 6% to hydroelectricity, excluding solar, wind and other minor energy sources. The first two sources, which tend to appear jointly and explain 60% of world energy consumption, have markets directly and explicitly influenced by the OPEC cartel and a newly born one known as Gas Exporting Countries Forum. Unsurprisingly, there is no recognizable world energy consumption cartel.

22 de febrero 2008

Estimado Señor Director,

A raíz del acuerdo entre Chile y Argentina de 1998 para precisar el recorrido del límite desde el monte Fitz Roy hasta el cerro Daudet, una distancia aproximada de 160 kms, ¿ pierde territorio nuestro país respecto del hasta ahora válido límite definido por el Laudo Arbitral de Su Majestad Británica de 1902, con todas sus imperfecciones ?

December 14th, 2007

Some useful lessons are going to be acknowledged after the present financial volatility period settles, particularly in the US. The most important one will be the divergence between the real economy and the perceived one, the dissociation between short and long term equilibrium values and Wall Street.

September 21st, 2007

After the Second Punic War (218 BC to 201 BC), Rome replaced Carthage as the most important power in Western Mediterranean. Given that Macedonia and its Greek followers were also allied to the defeated party, Eastern Mediterranean was also delivered to Rome after a brief resistance. What is noticeable is that all these events occurred 150 years before Pompey, Caesar and later Augustus came into the scene and this Roman power remained basically unchallenged from inside or outside until 235 AC with the end of the Severan dynasty.

26 de junio 2007

Recientemente se solicitó al Tribunal de la Libre Competencia la aprobación de la fusión accionaria entre Falabella y DyS, que daría origen a una entidad financiera y de retail con una valorización bursátil de US$ 16.000 millones, ventas por US$ 7.500 millones (80 por ciento en Chile) y utilidades por US$ 450 millones anuales (40 por ciento de origen financiero). Una importante razón es que se necesitaría una escala mayor para competir en el concierto latinoamericano con empresas como Walmart, que tiene una capitalización bursátil de US$ 200.000 millones, ventas por US$ 355.000 millones y utilidades por US$ 12.500 millones anuales. La otra, que a nivel doméstico la competencia del retail y del crédito de consumo no se afectaría negativamente. Ambas razones no parecen sostenerse.

May 7th, 2007

The continuing scarcity of cheap energy in the world, due mainly to an unexpected strong economic growth now going for almost 10 years, has not only ignited the search for new and more reliable sources, but also put again into the fore increasing gasoline taxes, particularly in the US. Have not you heard yet about the US$ 1 per gallon tax, whereas today it averages 42 cents per gallon, to contribute, among other things, with global warming imminent disasters?

March 22nd, 2007

Intervention in Iraq in 2003 was a difficult and hard decision, but also unavoidable. Those who decried it did not offer credible and alternative solutions to a chronic Middle Eastern case of instability, poverty and human suffering, preferring to continue with the fiction of never ending verifications under a suspicious UN veil. It had to be done, and Americans, Britons, Australians and some others stood up to the challenge, while the rest idly observed and criticized from outside.

February 16th, 2007

Looking at China and India growing at 10 per cent in annual rates in their quest for a developed status is certainly goods news, for their combined 2.500 million inhabitants and the rest of the world. Their per capita incomes, less than US$ 2.000, compared to US standards, over US$ 40.000, just reflect how important past policies were, good or bad in their respective cases, to determine present outcomes. In other words, once competitive policies and a certain efficient institutional base were put in place, a catching up exercise towards a US per capita income standard was triggered and got easily noticeable for its massiveness.

November 14th, 2006

The world will soon complete almost a decade with unprecedented growth relatively well distributed across it. But this process has been associated with an impressive wealth transfer from energy lacking areas to those that have a surplus. It so happens that an energy supply problem has been gradually evolving into a foreign policy one that will not go away easily, unless the energy cartel is broken up.

October 4th, 2006

Increasing world economic integration is a fact, as measured in goods trade and physical and human capital movements. But it tends to be deeper in surrounding countries – as it would equivalently happen at cities or neighborhoods levels -, basically because of communication and transportation costs that in essence determine efficient economic boundaries and in so doing promote a more common history within the specified area. That is the case of the European Union, and also of the American continent, perhaps the most peaceful but not necessarily until now the most successful one.

August 31st, 2006

For the last 12 months there has been an increasing pressure over the Federal Reserve to move into a more contractionary monetary policy than before. The basis for such a case has been the apparently low absolute values of the Fed Funds target rates being in place and some inflationary indexes that have been showing some restlessness. The real picture seems to be quite different.

July 11th, 2006

After having systematically missed development opportunities during the first 3 quarters of the XX century, being on the verge of a civil war and military conflicts with neighboring countries in the 1970´s and having a successful transition to democratic governments in the 1990´s, Chile is again on the right track, almost irrespective of its political and entrepreneurial leaderships.

April 25th, 2006

In Chile, as it might possibly have happened in many other countries trying to close per capita income gaps with respect to developed countries, there have been two silent but impressive changes within the last 20 years that will have deep impacts in our economy: the fall – to stay - in “risk free” real interest rates from levels close to 10 per cent to less than 3 per cent per year and a 5 year lengthening – with no end in sight - in life expectations that has occurred to its population. In other words, a dramatic improvement in costs (lower interest rate on physical and human capital) and productivity (slower depreciation in human capital) that will certainly have an upward and permanent effect in per capita incomes seldom known in our past, if public policies and the nation´s political and economic structure continue being on the right path, along competitive principles.

January 5th, 2006

Last Wednesday night we could watch, for the last time, a restrictive debate between the two remaining candidates for next January 15th presidential election in Chile. It was, in fact, the debate between a president – Mr. Piñera - and a candidate – Mrs. Bachelet -.

October 31st, 2005

Every time a new survey over corruption and transparency goes published, Chile is usually well placed, especially with respect to our Latin American neighbors. And every time this event happens, those that rejoice on the significance of it should be reminded about the other corruptive process that is not considered in those surveys: that of interest groups that silently goes on and which has, most of the times, far more destructive results.

October 19th, 2005

Almost two weeks ago, a going concern; right now, a company under bankruptcy protection. It does not make sense, if looked at from the outside, when this whole process is being triggered from a presumably undisclosed debt owed to the company by its CEO.

Oct 7th, 2005

It is alarming that world leaders are not considering the consequences of present growth  patterns of our population, and policies that could correct them. If the 20th century witnessed a massive increase in its numbers, quadrupling them from 1,5 billion people in 1900 to 6 billion in 2000, the 21st century could well be known as the one where this tremendous vitality and source of real wealth was lost.