"How can I know what I think until I read what I write?" – Henry James

There are a few lone voices willing to utter heresy. I am an avid follower of Ilusion Monetaria, a blog by ex-Bank of Spain economist (and monetarist) Miguel Navascues here.
Dr Navascues calls a spade a spade. He exhorts Spain to break free of EMU oppression immediately. (Ambrose Evans-Pritchard)

lunes, 6 de abril de 2015

Opiniones de un experto

Interesante entrevista con Mohamed El-Erian, antiguo jefe de Pimco, despedido por un enfrentamiento con Bill Gross, "el rey de los Bonos". El-Erian es interesante porque no viene de la Academia; viene de la acrividad financiera, con la que es muy crítica.
De la entrevista, jugosa, quiero destacar tres questiones: su postura sobre la creciéndote desigualdad, su escepticismo sobre la capacidad de los bancos centrales, y como invierte su patrimonio y por qué. Las tres están relacionadas. Las finanzas se han desarrollado mucho y sus emolumentos han aumentado la desigualdad. Esta desigualdad se ha acrecentado en la crisis. Los bancos centrales están dando impulso a eso, disparando los precios de los activos, lo que además no es suficiente para un crecimiento sólido. Finalmente, él tiene su patrimonio en líquido. Sabia actitud.

1) Q. You are speaking Tuesday at an event focusing on economic inequality. Why?
A. Income inequality has risen so much that consumption as a whole is undermined. That’s because rich people have a much lower propensity to consume than poor people. But it is the rich people that have captured all the income growth for the last seven years.
A little bit of inequality is good for the system because it creates incentives. A lot of inequality actually creates negative economic effects. It has become an inequality of opportunity.
Q. What should be done?
A. The government should be using fiscal policy – taxing the rich more and supporting the sectors that are critical to equality of opportunity: like education and health.
Q. What sort of taxes on the rich?
A. I would remove loopholes that are being taken advantage of by the rich. I would tax private equity [more]. The inheritance tax should be higher.
Q. Would you raise income taxes?
A. There is this view that if you take the top marginal tax rate up two percentage points, you’ll somehow completely alter the work incentives. I don’t believe that.
Q. Capital gains were taxed at 39.9 percent in the late 1970s. Now the rate is at 15 percent. Would you change that?
A. I wouldn’t start from the presumption that you can’t touch these rates. I would start from the presumption that we need to invest in the future of our youth.
Q. How do you convince wealthy libertarians to pay more taxes?
A. There comes a stage when those who benefit from inequality realize that they better do something about it. You cannot be a good house in a challenged neighborhood.

2) Q. Why write a book on central banks?
A. This is a historic period in which central banks are the only game in town when it comes to policy. But central banks do not have the tools to deliver what the global economy needs. We need more potent reinvigorated growth models.
The West fell in love with the wrong growth models 10 years ago. It fell in love with finance as an enabler of prosperity. The whole society fell in love with leverage and credit as a way of prospering. We were entitled to accumulate debt! People bought homes they could not afford. Governments borrowed money that they could not pay back.
Regulators believed that finance was so sophisticated that you could lessen regulations on it. This romance with the wrong growth model fell apart in 2007 and 2008.
Q. Now what?
A. We are struggling to find a new growth model because the political system hasn’t stepped up to its responsibilities. Obvious things like investing in infrastructure at extremely low interest rates are not being done. The reform of corporate taxation. The reform of labor markets – retraining workers, developing apprenticeships through public-private partnerships.
Either governments and politicians and companies will step up to their economic governance responsibilities and we will turn to something sustainable or, if we don’t, then you will have low growth and financial instability.
3) Q. Where is your money? Stocks? Treasuries? Bonds?
A. It is mostly concentrated in cash. That’s not great, given that it gets eaten up by inflation. But I think most asset prices have been pushed by central banks to very elevated levels.
Q. So we’re nearing a bubble?
A. Go back to central banks. Central banks look at growth, at employment, at wages. They are too low. They don’t have the instruments they need, but they feel obliged to do something. So they artificially lift asset prices by maintaining zero interest rates and by using their balance sheet to buy assets.
Why? Because they hope that they will trigger what’s called the wealth effect. That you will open your 401k, see it has gone up in price, and you’ll spend. And that companies will see their shares are going up and they will be more willing to invest. But there is a massive gap right now between asset prices and fundamentals.

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