Tuesday, 20 January 2009

Earlybird. Jan. 20, 2009

Headlines for Tue., Jan. 20:

COLOMBIA -- Irresponsible Governors, Whinny Businessmen and Bailouts: The Case of Soccer Team Tolima (Tiempo): A few readers of this blog have voiced their concern over the extent of government bailouts and their scope;
some of them have said the crisis offers an excuse for politicians to fund the most bizarre, extravagant, flamboyant and unnecessary projects. We start that list in Colombia. A whinny businessman with clout, prestige and money asks for bailout money; right after that, governors, senators, cabinet ministers, presidents rush to lend him a hand -- and taxpayers' money. That is the case of Gabriel Camargo (photo,) the Colombian poultry tycoon, former senator and political baron in the provinces of Cundinamarca and Tolima. He threatened to withdraw his football team, Deportes Tolima, from the national league because of the global crisis (!!!) Yesterday, Tolima's governor and regional politicians pledged to use money from the province's liquor company to save the team. I mean, if I own a football team, and I make lots of money selling players and all that, why the hell do my countrymen have to bail me out if publicity revenue dries up? Tolima is one of the poorest regions in Colombia and most afflicted by guerrilla- and drug trafficking-related violence -- the governor should invest in rural areas and homeless families first, not on a privately-owned football team. We will try to highlight similar cases across Latin America.

U.S. -- The Big Day Has Come:
Barack Obama, U.S. President No. 44 (??), will likely try to cheer up his disheartened countrymen, promise to fix the economy problems, overhaul the way relations with other countries are conceived, compromise more, impose less ... Obama already made history. Let's enjoy the day, because Wednesday will surely be a day full of sad announcements.

U.K. -- Banks Given More Money as RBS Posts Record Loss (Reuters): Another one bites the dust. Royal Bank of Scotland Plc., part of the winning consortium that broke ABN Amro Holding into three pieces in the largest ever banking takeover, will have to be fully nationalised by the British government. Yes, 282 years of history gone down the drain, thanks to greed and mismanagement. Yesterday, Chancellor of the Exchequer
Alistair Darling offered to exchange the government's preferred shares in the lender for ordinary stock, which may boost its stake to 70 percent from a bit less than 60 percent.

PERU -- Minister Valdivieso Quits; Former Minister Carranza to Replace Him (IncaKolaNews): No one masters the art of telling the truth better than
Otto Rock (photo, left.) I have to say that I always had a hard time writing these stories about cabinet reshuffles. First, because we never happen to know the real reasons of minister departures. We, journos, sometimes can make an educated guess and hit the nail on the head. Bingo! well, Ok, the I-was-lucky-kind of thing. It's pure speculation. Second, because there are so many names to write that you can often have typos. BS. But the IKN version of the two fat guys can't be wrong! First, because this happens all the time in Peru. Second, because we will be able to see whether Carranza is a humble guy ready to undo part of his legacy -- we could credit him with having done enough to overheat the Peruvian economy and, in the process, having done very little to help improve income redistribution.

PERU -- Minister Carranza, 'Austere Man,´ May Play Hardball with Social Cabinet (Notas Desde Lenovo): Well, if Otto is right about the two fat men, Jacqueline Fowks tell us what to expect from Mr. Carranza. ''He make some cabinet ministers shiver,´´ she says. According to Jacqueline, the government is failing to give a satisfactory reason for Valdivieso's departure. Who does know what happened?

BRAZIL -- Lula, Union Leaders Discussed Job Cuts, Interest Rates (Estado): Last night, President Lula and leaders of six union confederations discussed the recent wave of dismissals across the nation. Job reductions will take place for a few more months until the financial and operational situation of exporters and other companies find rock bottom. Lula will slowly begin to voice his support for a flexibilisation of labour rules for companies, because he is concerned over the rapid pace of job losses taking place in Brazil and the deterioration of cash reserves for most companies. He probably now understands that jobs cannot be created if capital is being destroyed. He now probably understands the meaning of being productive and the importance of adjusting output according to the intensity of economic cycles. According to daily O Globo, Lula told unions that he is considering linking a pledge to cut taxes for companies to their commitment not to fire their workers. In the meantime, unions will stage more
demonstrations and negotiations for more flexible work conditions will continue before the government decides to endorse changes in labour rules and reductions in taxes for the nation's beleaguered companies.

1 comment:

  1. A reader sent me a message saying she was unclear about my Brazil posting. Well, companies and labout unions are discussing proposals made by executives to ease labour rules. To make the labour market, dismissals and all that more flexible. In our view the pendulum is leaning towards companies -- their situation is critical and there's not much they can't do to generate cash and pay salaries. So ... in the end P. Lula will have to agree to ease rules so companies can fire more easily and a at a lower cost (as you might know, Brazil is an expensive place to fire a person.) Send me another message if you have any question, dear Gitchma.

    Take care and thanks.