12/26/2015
12/21/2015
Argentina lifts controls on the peso
On December 16th Alfonso Prat-Gay, the finance minister named by Argentina’s new centre-right president, Mauricio Macri, announced that he would lift el cepo immediately, allowing the peso to float freely. He had little choice. Exporters were hobbled by the overvalued peso. Importers could not obtain dollars, which starved factories of supplies. Instead of shoring up foreign-exchange reserves, the clamp forced the central bank to spend them to defend the official exchange rate. “The objective is to get the wheel turning again,” said Mr Prat-Gay as he announced its removal.
But it comes with a risk: an uncontrolled devaluation of the peso that could push inflation much higher. Axel Kicillof, the finance minister in Ms Fernández’s government, denounced the lifting of currency controls as “a blow to the pockets of workers.” In trading following the announcement, the peso fell by 29% to 13.9 per dollar.
The measure marks the beginning of Mr Macri’s programme to normalise the economy after a dozen years of populism under Ms Fernández and her late husband, Néstor Kirchner, who preceded her as president. The new president has inherited inflation running at around 25% a year, a fiscal deficit forecast to reach 7% of GDP by the end of the year and depleted foreign-exchange reserves. “The country was in a situation where it couldn’t continue without a resolution,” says Maximiliano Castillo, director of ACM, an economic consultancy.
The unclamping of foreign exchange will bring immediate benefits. Farmers had been hoarding grain—in sacks 60 metres (200 feet) long—in response to steep tariffs imposed by Ms Fernández’s government and in anticipation of the peso’s devaluation. On December 14th Mr Macri scrapped tariffs on agricultural products such as wheat, beef and corn and reduced from 35% to 30% the tariff on soya, Argentina’s biggest export. The lifting of currency controls will further encourage exports of hoarded grain. Grain exporters assured Mr Prat-Gay that sales will bring in $400m a day over the next few weeks.
Multinationals operating in Argentina will also get relief. In November American Airlines—which flies 27 times a week to Buenos Aires—stopped selling tickets in pesos because it was not allowed to repatriate the earnings. Coca-Cola, Clorox and Telefónica faced the same problem. That should now change. But companies’ current peso holdings will take a hit from the devaluation. Some, such as Prosegur, a Spanish security firm, have tried to protect the value of their peso holdings in recent months by buying property.
When announcing the removal of exchange controls Mr Prat-Gay would not be drawn on how far he thought the peso would depreciate. Economists guess it will fall to close to its blue-dollar rate. Since Mr Macri’s election victory on November 22nd, his finance team has been working behind the scenes to replenish dollar reserves ahead of the devaluation. The government expects to raise $15-25 billion over the next month from international banks and other sources. The central bank has also converted to dollars $3.1 billion-worth of its holdings of yuan, which it obtained in a currency swap with China. The hope is that the fresh supply of dollars will stop the peso from “overshooting” the rate of 15 per dollar.
The economic credibility of Mr Macri and his market-minded ministers will help contain the currency’s decline. If “the devaluation started to unravel more quickly than they were comfortable with then there is substantial goodwill in the market”, says Neil Shearing, chief emerging-markets economist of Capital Economics, a research firm. “Credit lines could be extended. There are ways in which they could probably start to stabilise the currency through swaps.”
But that may not be enough. On December 15th the central bank raised interest rates on short-term fixed deposits by 8 percentage points to 38%. They may have to rise further to stabilise the peso and contain inflation. To show his commitment to such containment, and to reduce upward pressure on interest rates, Mr Macri will soon have to begin cutting the enormous budget deficit. This will hurt economic growth, which is already weak. Tightening the belt may prove more painful than releasing the clamp.
From The Economist
12/20/2015
Robotic Parking Faulty Projects
MIAMI BEACH — It
seemed like the perfect night life accessory for the South Beach set — an
automated robotic parking garage where trendy clubgoers could park their
Porsches with a futuristic touch of a button.
Forget hiding
your GPS and favorite Fendi sunglasses from a valet. This garage would park
cars itself. Instead, cars were smashed, and faulty machinery fell several
stories to the ground. Sometimes vehicles were stuck for so long that garage
operators had to pay for customers’ taxis.
“It was clear
that the garage was not ready to be open to the public,” said Russell Galbut,
the managing principal at Crescent Heights, the property developer.
The garage on
Collins Avenue is one of two cutting-edge parking projects in South Florida
that ended in spectacular debacles. At Brickell House, a luxury residential
high-rise in downtown Miami, a $16 million robotic garage plagued with delays
finally closed, leaving tenants paying $28 a day to park elsewhere.
High-tech parking
is common in Europe, in the Middle East and elsewhere in Asia, where space
limitations made it a priority. But in the United States, errors were common
because drivers were unaccustomed to the technology, and some garage builders
tried to duplicate foreign successes without understanding how differences in
design can make or break a project.
Some smaller
garages work fine, but others designed to whiz automobiles away and return them
in three minutes or less are bringing back the wrong cars, trapping vehicles,
taking what feels like forever and even damaging automobiles.
The company that
built the two unsuccessful South Florida garages, Boomerang Systems, declared
bankruptcy this summer and last week announced that the company will voluntarily
liquidate its assets.
In Hoboken, N.J.,
where the country’s first robotic garage was built over a decade ago, a
Cadillac plunged six stories, and a Jeep dropped four stories a year later. One of the country’s largest automated parking
garages, in Maryland, is now closed after an employee fell to his death in an
accident that led to more than $1 million in required repairs.
“On the weekends,
it usually takes 45 minutes to an hour to get your car,” said Aldo Ferri, 36,
an Audi driver who rents an apartment at Brickell House, a building that looks
out on Biscayne Bay. “You can only have X number of cars delivered versus
requested. If the numbers go high, the system goes crazy.”
After months of
problems, the condominium association was forced to hire old-fashioned valets
to park cars for people who needed them quickly. This month, the feud with the
garage builder deteriorated further and access to the garage was blocked off.
“I’m going to
move out,” Mr. Ferri said.
The building
developer, Harvey Hernandez, and Boomerang Services did not respond to requests
for comment. According to Boomerang’s website, the company has seven robotic
parking projects. The website does not mention the Collins Avenue garage, built
for 139 cars, which has sat unused for five years.
Even with repairs,
test runs show the Collins Avenue garage takes about seven minutes to retrieve
cars. It is supposed to take three. Instead of turning around 60 cars an hour,
the garage can handle only 16, the company said.
Drivers generate
many of the delays by doing things like walking away without pushing a button
to tell the garage to park their car, which jams the system for everyone else.
Despite the
setbacks, parking industry experts say automated parking is here to stay.
“It’s unfortunate
that you’ve got projects that haven’t happened the way that they were supposed
to, because it gives the entire industry a black eye when it shouldn’t, because
automated parking is a wave of parking for the future,” said Christopher Alan,
whose company, Auto Parkit, has seven such garages and 20 more under
construction, mostly in California. “You don’t have a lot companies that are
doing this. A few do it very well.”
Mr. Alan said his
key to success was designing simpler technology, which allowed him to park 200
cars where a traditional garage can fit 100.
Another South
Florida developer, Gil Dezer, said his new high-rise in Sunny Isles, the
Porsche Design Tower, will feature an automated garage that will deliver a car
right to a resident’s door.
“Ours is an
elevator,” Mr. Dezer said. “An elevator goes up and down. We know how to use an
elevator. Elevators move people. In robotic parking, those elevators move cars.
Whether it’s now or two or three decades from now, we need to continue to
pursue it and hone that innovation.”
photo: Yeong-Ung Yang for The New York Times
Some Xmas bonus!
HOUSTON -- Talk about an early Christmas -- a Houston company has given each of its employees a $100,000 bonus.
Hilcorp Energy is doling out the six-digit gift to each of its 1,400 workers, Forbes and Fortune report. That amounts to a total company payout of more than $100 million. The bonus, which is prorated based on hire date, was given after the company met its annual goal.
The company is owned by Jeffery Hildebrand. It was founded in 1989 and is one of the largest privately-held oil and gas exploration companies in the United States. It ranked 20th in Fortune's “Best Companies” list. According to the magazine, back in 2011, the company gave each employee a choice of a $50,000 car or $35,000 in cash.
Sound like a place you want to work? Check out openings HERE.
Apple's most downloaded 2015 apps (video)
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12/13/2015
Coca Cola India and the "sin" tax
The Indian subsidiary of Coca-Cola
Co (KO.N) said on Friday it may have to close some bottling plants if the
government pushes through a proposal that will subject fizzy drinks to a 40
percent "sin" tax, as part of a broader fiscal overhaul.
The beverage maker, which operates
57 factories and bottling plants across India, said a proposal to group sugary
sodas with higher-taxed luxury cars and tobacco will hurt demand for its
drinks.
"It will lead to a sharp
decline in consumer purchase," Coca-Cola India said in a statement.
"In these circumstances, we will have no option but to consider shutting
down certain factories."
India's ruling party is trying to
push a national goods and services tax (GST) through parliament to replace a
myriad of state sales taxes and to shake-up government revenue.
Several countries are debating
so-called "sugar taxes" to tackle obesity and encourage healthier
lifestyles. While more than a fifth of India's population lives below the
official poverty line, the country is home to the third-highest population of
obese people after the United States and China, according to medical journal
The Lancet.
The chairman of Coca-Cola rival
PepsiCo Inc (PEP.N) in India said in a statement that while he supported GST,
the 40 percent rate was "high".
"Having said that, we are
confident that the government will take a balanced view of taxation with
respect to our industry," Shiv Shivakumar said.
Coca-Cola India, which employs
25,000 people, is on course to invest $5 billion by 2020 as it looks to
raise production to target a growing middle class.
The company re-entered India after
economic liberalization in the early 1990s.
edited from VOA and Reuters
Mauricio Macri takes power
Mauricio Macri promised to end
poverty, fight drug trafficking and unite Argentines as he was sworn in on
Thursday as the new president of South America’s second-largest economy.
“A new era is coming: an era of
dialogue, respect and team work,” the former mayor of the city of Buenos Aires
said during the ceremony, which was attended by most South American presidents,
including the leaders of the neighbouring countries of Brazil, Chile, Uruguay and
Paraguay.
It was the first time since the
return of democracy in 1983 that a president had missed their successor’s
inauguration. Ms Fernández’s absence from the ceremony marked the end of a
messy transition of power in which she announced a flurry of extrabudgetary
spending decrees and last-minute hirings.
In her final days in power, Ms
Fernández placed further strain on an already bulging fiscal deficit by signing
decrees that would increase government spending by almost $14bn on salaries and
energy subsidies, $10bn on the state pension system and $3bn to cover costs at
the tax agency.
She also signed decrees devolving
central government funds to provincial governments and freezing debts owed by
provinces to the federal government, widening a budget deficit expected to
exceed 7 per cent of gross domestic product in 2015 — the biggest deficit in
more than 30 years.
In addition, Ms Fernández named
ambassadors to Australia, Cuba, Malaysia and the United Arab Emirates, although
Mr Macri was quick to warn that he would revise all political designations.
Mr Macri’s election victory, which
saw the narrow defeat of the leftist Ms Fernández’s chosen successor in a
run-off vote last month, comes as other leftwing governments in the
resource-rich region suffer steep declines in popularity, notably in Brazil and
Venezuela, as the commodity boom comes to an end.
The former president of Boca
Juniors, one of the country’s best-loved football clubs, said Argentines were
“tired of useless confrontation”, referring to the fiery Ms Fernández’s
combative style that has polarised Argentine society and soured relations with
countries such as the UK and the US over her eight-year presidency.
To hearty applause on Thursday, Mr
Macri also pledged to be “implacable” against corruption among government
officials, and to provide his “complete support” for an independent judiciary,
addressing two of the strongest criticisms made against the outgoing
administration.
Mr Macri added that his government
would stop “lying and deceiving with false information” and prioritise
transparency, in a nod to his promise to overhaul the discredited state
statistics agency.
Beside his wife, Juliana Awada, Mr
Macri then drove from congress to the presidential palace, the Pink House,
accompanied by cavalry and waving at a multitude of cheering supporters
brandishing Argentina’s light blue-and-white national flag.
“Yes we can!” they yelled, as Mr
Macri thanked the crowd from the historic balcony of the presidential palace,
beside his disabled vice-president, Gabriela Michetti, who broke into song from
her wheelchair as Mr Macri began dancing in celebration.
Markets have high expectations for
Mr Macri, their preferred candidate in the election, and are now hoping for a
new era of pro-growth structural reforms that will clear the way for
much-needed investment to stimulate the flagging economy.
The economic challenges facing Mr
Macri are great, since he will inherit a widening fiscal deficit, an overvalued
currency and one of the highest rates of inflation in the world.
“The required macro adjustment poses
risks to Macri’s political capital and could erode governability if
expectations are not co-ordinated properly,” wrote Sebastian Rondeau, an
economist at Bank of America Merrill Lynch, in a note to clients on Thursday.
The only regional leader absent from
the proceedings was President Nicolás Maduro of Venezuela, after Mr Macri said
he would request that country’s suspension from the regional trade bloc,
Mercosur, although he toned down his position after Venezuela’s opposition won
back control of the legislature in elections last Sunday.
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