Comments for CNE Blog

Comment on El desfase del mercado de vivienda by David Auerbach

David Auerbach — Mon, 16 Aug 2010 14:35:14 +0000

It should be noted that these so-called housing bubbles have had disastrous effects on the economies of many countries, most notably Spain, Ireland, the UK, and the United States. In some cases, we are talking about economies that generated far more wealth per capita than Puerto Rico. In Ireland the government may actually be faced with bulldozing new residential projects due to poor planning and lack of demand.
In Puerto Rico, the excess housing, which has been in many cases directed toward the higher end of the market, will be absorbed by the banks with a disastrous effect on the overall economy. Here, as in many countries, there was no regulation on this kind of development, and it was fueled by speculation which drove prices to astronomical levels that mimicked markets in New York and Florida (but which also bore no relationship whatsoever with local realities).
Interesting to note, however, despite the thousands of empty units that now grace such neighborhoods as Santurce, Miramar, Hato Rey and Condado (and which in some cases have not budged in years), it seems as if the government has plans to build yet more high-end residential developments in tandem with the San Juan Ciudad Peatonal project.
If this happens it will further hinder the island from ever emerging from economic crisis.

Comment on ¿Recesión, Depresión, o Colapso? by Mario E. Porrata

Mario E. Porrata — Tue, 27 Jul 2010 08:31:58 +0000

Estimado Sergio,
Te sugiero que estudies mi denuncia sobre la economía ficticia de Puerto Rico. La economía creció hasta 2004 a fuerza de préstamos gubernamentales. Mi estimado es que los préstamos causaron un desarrollo ficticio de alrededor de un 15-20%.
A partir de 2004 los préstamos siguieron aumentando, pero me parece que se usaban mayormente para pagar gastos del gobierno, ya que los gobernantes no se atrevían reducir el gasto gubernamental por cuestiones políticas.
En el 2005 pronostiqué que nos estrellaríamos contra una pared de concreto armado. Y sugerí en mi programa, Recta Final de Estatus (Notiuno), que hiciéramos un depresión planificada para que pudiésemos enfrentar la situación paulatinamente, y no de golpe.
Acevedo Vilá hizo todo lo contrario: Cogió más prestado y siguió gastando por encima de lo recibido. De esta forma nos embrollamos más y generamos un díficit que he estimado en unos $5.5 billones. Chocamos contra la pared.
Nuestra meta debe ser encontrar el nivel donde realmente debe estar nuestra economía y generar acciones para llevarla ahi. Ya se ha reducido en un 12% y nos falta una reducción adicional entre un 3 y un 7%.
Cuando toque fondo, entonces hablamos. Pero no debemos intentar mantener un nivel que ha sido ficticio ya que el esfuerzo se va a perder en el futuro cercano.
Saludos,
Mario E. Porrata

Comment on Lies, Damn Lies, and Statistics… by Luis

Luis — Wed, 21 Jul 2010 11:06:04 +0000

Muy importante es la determinación de precios en el momento de los análisis, de acuerdo en que la tasa de inflación es determinante en los estudios, ejemplo los precios de 2004 comparados con precios del 2010 versus unidades vendidas reales.

Comment on Uncertainty, imperfection, and hope by Marcos Polanco

Marcos Polanco — Thu, 08 Jul 2010 14:45:24 +0000

As I have not read Green’s book, my comments are constrained by your representation of the points:

Regarding imperfection, a rather modern mind/body split is assumed by the comments. Humanity could well remain in grace should it take the natural perfection of reality as a starting point…it is perfect for the mere reason that it IS.

Regarding uncertainty, I agree that the level of risk is completely out-of-control, in particular given the current risk management tools given to the general public (401k, unemployment insurance, etc.)…Shiller’s MacroMarkets work is exceedingly relevant, yet let’s not forget that we lived under the shadow of the Cold War but a few decades back, inside a cocoon secured by mutually assured destruction…given choice, I’ll take the risks we face today any day of the week.

Regarding folly and how politicians convince us to vote against our own self-interest, the real culprit is complexity…policy is *hard*, it is communicated through a narrowband journalistic system that paints issued red/blue (whether in US or PR), lobbyists and political fundraising are opaque, and robing Peter to pay Paul (particularly is the latter is not even born yet) is blindingly easy…try to fly a B-52 with an Atari joystick, and you’ll get the same results.

Comment on Midiendo la Inflación by Jose M Auger

Jose M Auger — Tue, 29 Jun 2010 19:50:15 +0000

Para medir la inflación se usa el deflactor del PIB, no el Índice de Precios al Consumidor (IPC). El deflactor del PIB mide el cambio en el precio de la totalidad de la producción. Los índices como el IPC miden cambios en una canasta de bienes. El IPC se calcula a base de una canasta de bienes que los consumidores consumen (perdón por la redundancia) en un año. Aunque es una métrica aceptable no es lo correcto. Aumentos en el IPC no consideran el efecto sustitución. Mientras que las canastas permanecen constantes a través del tiempo, el comportamiento del consumidor cambia. Si el precio de un bien aumenta, el consumidor sustituye por otro, aumentando su utilidad. En este sentido, el IPC tiende a sobreestimar los efectos de la inflación sobre el ahorro. De hecho, esto no es tan importante en el sentido de que la inflación no afecta los flujos de la mayor parte de las personas, o sea sus ingresos, de manera negativa. En términos generales, los ingresos por encima del mínimo están atados de manera explícita o implícita a la métrica real de inflación y no a una medida como el IPC o el deflactor del PIB.

El deflactor del PIB abarca todo lo que compone esta medida macroeconómica; o sea, consumo, inversión, gasto del gobierno y las exportaciones netas. El PIB es mucho más de lo que consumen los hogares. El IPC representa el consumo promedio de los hogares en el corto plazo. Pero el consumo total de la economía en el corto plazo y los ajustes de largo plazo sólo pueden ser entendidos mediante el deflactor del PIB.

Espero que este breve comentario ayude a aclarar la dimensión de la inflación y el uso del IPC.

Comment on The Bankrupt Economy by Wm. Reyes

Wm. Reyes — Mon, 10 May 2010 18:52:35 +0000

When the author writes “to make products for other people, and (3) to buy other people’s products” I think of Singapore, Japan, Taiwan, & Hong Kong. Is that so bad? What about Cuban’s who settle in PR and thrive in the same system as Puerto Ricans? Why do they thrive? Why do the Jewish people seem to thrive in the most hostile of situations? ‘The Bankrupt Economy’ does not answer these questions and indeed poses them as a rethink of social, economic, and political institutions. How about a comparison of the culture and attitudes of Puerto Ricans with that of the people of for example, Singapore, Japan, Taiwan, & Hong Kong? Would that be instructive?

Comment on Convergencias by Marcos Polanco

Marcos Polanco — Mon, 19 Apr 2010 17:57:43 +0000

The writings of Joseph Tainter, quoted here by Clay Shirky, are appropriate (http://is.gd/bzypC):

When societies fail to respond to reduced circumstances through orderly downsizing, it isn’t because they don’t want to, it’s because they can’t. In such systems, there is no way to make things a little bit simpler – the whole edifice becomes a huge, interlocking system not readily amenable to change. Tainter doesn’t regard the sudden decoherence of these societies as either a tragedy or a mistake—”[U]nder a situation of declining marginal returns collapse may be the most appropriate response”, to use his pitiless phrase.

“Consensus” entirely useless, for the simple reason that it is not actionable in any case. Those small groups you refer to, those Ice Age rodents, are the only hope for the future.

Comment on Measuring social progress by Victor M. Rodriguez

Victor M. Rodriguez — Sat, 27 Feb 2010 17:12:52 +0000

Will you be sharing the presentations that were given at the CNE 2010 conference?

How can we get them? I am especially interested in Juan Lara’s macroeconomic presentation.

Dr. Victor M. Rodriguez
Professor, Cal State, Long Beach
vrodrig5@csulb.edu

Comment on Brookings cuatro años después by Nando

Nando — Sun, 21 Feb 2010 19:58:25 +0000

Si el efecto del salario minimo para el sector privado (propietarios y empresarios) es de “supuestos” $15, para el asalariado (el obrero) el efecto es al revés. Los $7.25 de salario minimo se tornan en menos cantidad, pues todos saben que el costo de vida y los precios en Puerto Rico son mayores que en EE.UU. Añadale que los beneficios marginales de los trabajadores boricuas comparado con el obrero norteamericano es menor.
Por tanto si la crisis es mala para los empresarios, es una fatalidad para los trabajadores puertorriqueños.

Comment on The Bankrupt Economy by Pepin Medina

Pepin Medina — Fri, 12 Feb 2010 19:29:47 +0000

In reality we are deemed to collapse, the levels of contamination due to poor fiscalization, the bio terrorists silent atack of the introduced monkeys and iguanas wich destroy our means of agricultural practices. So the biotechs spreading gmo pollen all over the island. When Uncle Sam pulls the plug then we will face one of the biggest traumas. But then if our leaders stop dancing the hoola and start rethinking the equation to the extent of their short and meager brains. We might thrive until we reach the insights of a new world order based on the sharing of goods and services to all humanity. And we start a healing process of the GAIA throug organic agricultural practices and self sufficiency.