Covid 19 shows the high price of being a "service economy"

Serious hospital deficiencies forced the government in Peru and in all Latin American countries to enact a radical quarantine, which led to a serious loss of economic activity, jobs, income, with profound recessive effects. Quarantine equal to recession; as explained in the interview to the author of this blog on Canal Cable Vision of Trujillo, broadcast on Friday  17.4.2020, (see interview here)

It is more: the desperation by the lack of income causes that many citizens are ignoring the quarantine.

Tertiary sectors, such as tourism (hotels and transportation), gastronomy, commerce, and all kinds of services, such as hairdressing salons, cinemas, shows, in which millions of Peruvians are employed, even as independent and informal, will have a greater plummet, than not it will be mitigated by the government's timid monetarist approach measures, including:

• Release of funds to be channeled to companies via commercial banks,

• Cash bonds of close to US $ 110 per family for 3.5 million vulnerable families, in addition to delivery of grocery baskets;

• Reduction of the reference  interest rate of the Central Bank,

• Facilities for companies to temporarily fire servers;

Skewed, recessive and insufficient, compared to what should be done, and that makes us waste precious time. Measures that could not be extended if the health crisis continues.

What are the ultraliberal apostles saying now that they said that tourism and services in general could support an entire nation? The opponents of all kinds of industry and infrastructure? The promoters of indiscriminate importation and the gravediggers of protection for the national industry? The fiscal austerity gurus responsible for a $ 19 billion health infrastructure gap in a single country?

We have witnessed, as Peru has not been able to solve with internal production the vital need for mechanical respirators, anti-COVID test kits; medicines, and means of sanitary protection, which are not produced in Peru. Several universities and the armed forces offered to manufacture them, demonstrating the technical feasibility of doing so, but with the obvious time constraints, input supply, and productive capacity.

The world will live in what follows, if it is to survive, a total change of political and economic paradigms, with an emphasis on producing livelihoods for the population, ending the exorbitant privileges of the speculative financial sector, and leading to an industrialization and recovery, FD style Roosevelt, as the Schiller Institute has put it for 4 decades, and recently the President of Mexico, Antonio Manuel López Obrador.

04/19/20

La hora del Crédito público en reemplazo de la “política” monetaria

English version

¿Creen ustedes que el “estímulo monetario” podrá servir de algo en medio de las tremendas carencias de sistemas sanitarios, medicinas, alimentos, energía, en sociedades atacadas por el COVID 19 y la recesión? ¿Servirá incluso para rescatar a los impresentables fondos especulativos?

No …. como lo demuestra el caso de los EEUU, que ha inundado los mercados con “emisión cuantitativa” para superar una caída de un 40% de la Bolsa, pese a  lo cual los mercados no se reponen a los niveles previos, mientras que los prestamos interbancarios y la deuda empresarial sigue desplomándose.

Eso nos lleva a revisar los axiomas “económicos” que nos han llevado a la presente crisis financiera: el culto monetarista, de Milton Friedman, incluyendo al teórico impostor de apellido Keynes; que suponen que el dinero es sinónimo de riqueza. Este axioma contractivo, íntimamente relacionado con el malthusianismo, supone que el tamaño de la población debe “adecuarse” a los recursos “disponibles”, y no al contrario. Este “becerro de oro” está inspirando las decisiones todos los gobiernos, excepto en China y Rusia, recurriendo la “mercado” para las decisiones mas gravitantes

A diferencia de esto, para cerrar su brecha sanitaria, energética, y alimentaria, el mundo necesita un sistema de crédito público, como lo hizo Estados Unidos, con el primer y segundo Banco Nacional de Alexander Hamilton (1791 hasta 1836), la emisión de los billetes “greenback” (1862 – 1865) por Lincoln y la Comisión Financiera de Reconstrucción, CFR, de F.D.Roosevelt. La idea: la emisión de moneda constituye un crédito de la sociedad al Estado, y este crédito se dirige a inversiones productivas, en especial, infraestructura. El Estado dirige el crédito.Esta politica es una de las 4 Leyes para salvar a las naciones, propuestas por el economista norteamericano LaRouche.

Hoy, el crédito publico se mal dirige exclusivamente a los bancos, a tasas bajísimas, entre 0 y 2%, y estos recargan intereses leonimos a empresas y familias, y lo dirigen a la especulación (timba) financiera.

¿Qué opinas, ciudadano? ¿Que eliges para tu pais: monetarismo o crédito público dirigido?

08/04/20

Public Credit hour to replace monetary "policy"

Do you think that the “monetary stimulus” could be of any use amid the tremendous deficiencies in health systems, medicines, food, energy, in societies attacked by COVID 19 and the recession? Will it even serve to rescue the unpresentable hedge funds?

No …. as evidenced by the case of the USA, which has flooded the markets with “quantitative issue” to overcome a 40% drop in the Stock Market, despite which the markets do not recover to previous levels, while interbank loans and corporate debt continues to plummet.

This leads us to review the “economic” axioms that have led us to the current financial crisis: the monetarist cult, by Milton Friedman, including the theoretical impostor called  Keynes; They assume that money is synonymous with wealth. This contractive axiom, closely related to Malthusianism, assumes that the size of the population must "fit" with the "available" resources, and not the other way around. This "golden calf" is inspiring decisions for all governments except China and Russia, turning to the "market" for the most serious decisions

In contrast to this, to close its health, energy and food gap, the world needs a public credit system, as the United States did, with the first and second National Banks of Alexander Hamilton (1791 to 1836), the issuance of greenback banknotes (1862 - 1865) by Lincoln and the FDRoosevelt Financial Reconstruction Commission, CFR. The idea: the issuance of currency constitutes a credit from society to the State, and this credit is directed to productive investments, especially infrastructure. The State directs the credit. This policy is one of the 4 Laws to save the nations, proposed by the North American economist LaRouche.

Today, public credit is misdirected exclusively to banks, at extremely low rates, between 0 and 2%, and these recharge leonist interests to companies and families, and digest it to financial speculation

What do you think, citizen? What do you choose for your country: monetarism or directed public credit?

04/08/20

Enfrentando la pandemia y la crisis financiera global: moratoria de la deuda

English version

¿Es este el momento para una moratoria o una condonación de la deuda latinoamericana? ¿Es la única manera de disponer de los recursos para superar la inmensa y mortal brecha de infraestructura de salud,  que en cada país puede rondar en promedio los US$ 20,000 millones, además del saneamiento y energía?

Pues es lo que están solicitando ex presidentes de la región, como Rafael Correa, Dilma Rouseff, Evo Morales, Fernando Lugo, Alvaro García Linera (ex vicepresidente), Ernesto Samper, José Luis Rodríguez Zapatero, (ver Petición aquí) entre otros, y lo ha mencionado el gobierno de Argentina, e instituciones académicas y politicas de la región, como lo difunde el sitio web del Instituto Schiller y EIR. Entretanto, Alicia Bárcena, de la CEPAL, discute en forma mas general el abandono de los patrones de política económica neoliberales. (ver también post reciente)

¿Qué tan “mala” puede er una moratoria o condonación? A largo plazo, favorece a los mismos acreedores, pues los deudores deben recuperar primero su capacidad de producir bienes físicos, y su capacidad comercial y de pago, a una escala ampliada. Moralmente, es una señal de la corresponsabilidad y el destino compartido de todos.

¿Es necesaria? ¿Alguien cree que pasando el “primer pico” de la pandemia ya estamos a salvo? ¿Será suficiente 1 mes de cuarentena?¿O cuanto?

Las decisiones para combatir la pandemia en Latinoamérica han sido costosísimas: en la ausencia de un sistema de salud viable, solo quedó declarar una cuarentena estricta, a precio de detener una buena parte de las actividades económicas. Es decir, recesión, en el contexto de una crisis financiera global, pre existente desde al menos 2007.

Para poner un ejemplo, en Perú, mas del 70% de la fuerza laboral es independiente (autoempleo) o empleado informal; muchos viven del “día a día”. Pronto llegará el momento en el cual el “mercado” será insuficiente para garantizar la salud de la ciudadanía, y deberá ser el Estado el que centralice una parte importante de las compras de alimentos e insumos vitales, y lo distribuya directamente a la población necesitada, mediante las Fuerzas Armadas, usando los mecanismos ya conocidos de los Comedores Populares, Clubes de Madre y Vasos de Leche.

Mientras que la ministra de Economía sueña despierta sobre la “buena posición fiscal del Perú”, disponiendo partidas ridículas por insuficientes, se pierde tiempo vital para la oportuna toma de decisiones.

En el campo internacional, se espera una cooperación estrecha, científica y económica, entre las potencias mas grandes: EE.UU., China, Rusia, India, la Unión Europea: ya no es posible asegurar la salud dentro de unas fronteras, necesitamos un sistema de salud mundial.

La vida es primero, siempre, la deuda, después. ¿No te parece?

01/04/20

Facing the pandemic and the global financial crisis: debt moratorium

Is this the time for a moratorium or a cancellation of Latin American debt? Is it the only way to have the resources to overcome the immense and deadly health infrastructure gap, which in each country can be around an average of US $ 20,000 million, in addition to sanitation and energy?

Well, this is what former presidents of the region are requesting, such as Rafael Correa, Dilma Rouseff, Evo Morales, Fernando Lugo, Alvaro García Linera (former vice president), Ernesto Samper, Jose Luis Rodriguez Zapatero, (see Petition here), among others, and It has been mentioned by the government of Argentina, and academic and political institutions in the region, as disclosed by the website of the Schiller Institute and EIR. Meanwhile, Alicia Bárcena, of ECLAC, discusses more generally the abandonment of neoliberal economic policy patterns. (see also recent post)

How “bad” can a moratorium or waiver be? In the long term, it favors the creditors themselves, since the debtors must first recover their capacity to produce physical goods, and their commercial and payment capacity, on an expanded scale. Morally, it is a sign of the shared responsibility and shared destiny of all.

It is necessary? Does anyone believe that by passing the "first peak" of the pandemic we are already safe? Will 1 month quarantine be enough or how long?

Decisions to combat the pandemic in Latin America have been extremely costly: in the absence of a viable health system, all that remained was to declare a strict quarantine, at the price of stopping a good part of economic activities. In other words, recession, in the context of a global financial crisis, pre-existing since at least 2007.

To give an example, in Peru, more than 70% of the labor force is independent (self-employment) or informal employee; many live on "day to day". The time will soon come when the "market" will be insufficient to guarantee the health of the citizenry, and it will be the State that centralizes an important part of the purchases of food and vital supplies, and distributes it directly to the population in need, through the Armed Forces, using the already known mechanisms of the Popular Eaters, Mother Clubs and Milk Glasses.

While the Minister of the Economy dreams about the "good fiscal position of Peru", arranging ridiculous games for insufficient, vital time is lost for timely decision-making.

In the international field, close, scientific and economic cooperation is expected between the largest powers: the US, China, Russia, India, the European Union: it is no longer possible to ensure health within borders, we need a world health system.

Life comes first, always, debt comes later. Don't you think?

01/04/20

Cambio total de paradigmas para derrotar al coronavirus

English version

Se ha señalado las dos estrategias básicas nacionales frente al COVID – 19: una de supresión, como se ha hecho en China, Corea del Sur y Rusia, y otra de contención, que aplican la mayoría de los demás paises, como una estrategia de supresión a medias.

El  Modelo Wuhan – Hebei contra el COVID – 19 implica:

·         Aislamiento social total

·         Pruebas universales por COVID - 19

·         Sistema de salud pública universal, en especial, atención de emergencias

Las consecuencias de no aplicar el modelo de supresión total del COVID serán a corto plazo dramáticas, como lo demuestran las proyecciones del experto Tomas Pueyo.(ver ilustración)

En casi todos los países de Sudamérica, sólo se ha cumplido a medias el primer paso, con la ilusión de eludir el peor escenario, que la situación no desborde a las reducidas instalaciones hospitalarias, producto de la gigantesca desinversión en salud  (ver último post)

A nivel mundial, como lo señala en una reciente  videoconferencia Helga Zepp, del Instituto Schiller, el mayor think tank humanista y desarrollista antimalthusiano del mundo, además del cierre temporal y reorganización de los mercados financieros internacionales,  requerimos globalmente:

·         35 millones de camas de hospital en el mundo

·         Incrementar en 40% el abasto de agua potable

·         Incremento de energía eléctrica en 358 gigawatts nuevos a nivel mundial

Lo cual no se puede lograr sin la cooperación economica mundial, con el agravante que estamos ante la peor crisis financiera global, que llevará a una recesión que acelerará el desplome de la salud humana.Ya Lyndon LaRouche enfocó desde 1974 la relación entre la austeridad monetarista y el surgimiento de las pandemias a nivel global, que se comprueba una vez mas.

Esto significa un cambio total de paradigmas,abandonando tanto la geopolítica como las recetas monetaristas que van a impedir financiar todo lo que se necesita a nivel mundial y dentro de cada país.

Si ponemos como caso de análisis el Perú, ¿acaso se puede superar al corto plazo el déficit de US$ 19,000 millones sólo en salud con las actuales políticas económicas? ¿Cuántas pruebas COVID 19 se están comprando? ¿Cuántos hospitales nuevos se van a construir?

Como lo acaba de señalar el ex presidente de Ecuador, Rafael Correa, las medidas de urgencia incluyen, además de las medidas sanitarias,  llevar ayuda alimentaria a la población, (tipo Comedores Populares, Vaso de Leche y Clubes de madres, pero sanitarizados); y si el presupuesto no alcanza, se puede suspender el pago de la deuda externa.

Entretanto, la cooperación internacional, incluyendo prominentemente a China y Rusia, resulta vital.

23/03/20

Total paradigm shift to defeat coronavirus

The two basic national strategies against COVID - 19 have been pointed out: one of suppression, as has been done in China, South Korea and Russia, and the other of containment, applied by most of the other countries, as a strategy of suppression. half.

The Wuhan - Hebei Model against COVID - 19 implies:

• Total social isolation

• Universal tests by COVID - 19

• Universal public health system, especially emergency care

The consequences of not applying the model of total COVID suppression will be dramatic in the short term, as shown by the projections of the expert Tomas Pueyo.(See ilustration)

In almost all the countries of South America, the first step has only been half fulfilled, with the hope of avoiding the worst scenario, that the situation does not overflow into the small hospital facilities, product of the gigantic disinvestment in health (see last post)

Globally, as pointed out in a recent video conference by Helga Zepp, of the Schiller Institute, the world's largest anti-malthusian  humanist and developmental think tank, in addition to the temporary closure and reorganization of international financial markets, we globally require:

• 35 million hospital´s beds in the world

• Increase the supply of drinking water by 40%

• Increase of electrical energy in 358 new gigawatts worldwide

This cannot be achieved without world economic cooperation, with the aggravating circumstance that we are facing the worst global financial crisis, which will lead to a recession that will accelerate the collapse of human health. Since 1974, Lyndon LaRouche has focused on the relationship between monetarist austerity and the emergence of pandemics at the global level, which is proven once again.

This means a total change of paradigms, abandoning both geopolitics and monetarist recipes that will prevent financing everything that is needed worldwide and within each country.

If we put Peru as an analysis case, can the deficit of US $ 19 billion in health be overcome in the short term only with current economic policies? How many COVID 19 tests are being purchased? How many new hospitals are to be built?

As the former President of Ecuador, Rafael Correa, has just pointed out, the emergency measures include, in addition to sanitary measures, bringing food aid to the population, (such as Comedores Populares, Vaso de Leche and Clubes de madres, but sanitized); and if the budget is not enough, the payment of the external debt can be suspended.

Meanwhile, international cooperation, prominently including China and Russia, is vital.

23/03/20