The opposition's opening remarks by Professor Joseph E. Stiglitz

The current crisis is caused, in part, by inadequate regulation. Unless we have an adequate regulatory system—regulations and a regulatory structure that ensures their implementation—we are bound to have another crisis.
현재 위기는 부분적으로 불충분한 규제에서 비롯되었다. 만약 우리가 적당한 규제시스템-완벽한 규제와 규제구조-을 갖추지 않는다면 우리는 또다른 위기를 맞게 돼있다.

This is not the first such crisis in the financial system that we have had in recent decades. Indeed, around the world, it is more unusual for a country not to have had a financial crisis than to have had one. They have occurred in societies with “good institutions”—like those in Scandinavia—and in societies without such institutions. They have occurred in developed and in developing countries. The only countries to have been spared so far are those with strong regulatory frameworks.
이번 사건은 십여년 사이에 갖추어진 금융시스템상에서 처음 있는 위기가 아니다. 게다가 세계를 둘러보아도 위기를 겪은 나라가 겪지 않은 나라보다 많은 편이다. 스칸디나비아처럼 좋은 기관들이 있는 나라에서도 위기는 발생했다. 강력한 규제정책을 가진 나라만 이번 위기에서 벗어 날 수 있었다.

In each case, the crisis has affected not just the lenders and borrowers, but also innocent bystanders. Workers have been thrown out of jobs as the economy plummets into a downturn, a recession or depression. Governments inevitably intervene, whether there is explicit deposit insurance or not. No democratic government can sit idly by while there is such suffering. There are, to use the economists’ jargon, externalities, and whenever there are externalities, there is a need for government intervention. There is, to some extent, some government insurance. Private insurance companies take actions to prevent the insured against losses occurring—for example, fire insurance companies insist on sprinklers in commercial buildings. The government has a responsibility to protect taxpayers, workers and others in our society and to do what it can to make sure that such crises are less frequent, and when they occur, less severe.


Wall Street has asked for a massive bail-out—some $1.6 trillion so far, but most believe that this is just a down payment. The American taxpayer has bailed out Wall Street repeatedly—the S & L bailout, Mexico, Indonesia, Korea, Thailand, Argentina, Russia, Brazil and now this, the largest ever. One cannot keep asking for bigger hospitals and argue that nothing should be done to prevent hospitalisation in the first place.

Regulations (including those relating to corporate governance, incentive structures, speed limits, lending practices) are necessary to restore confidence. When, a hundred years ago, Upton Sinclair depicted graphically America’s stockyards and there was a revulsion against consuming meat, the industry turned to the government for regulation, to assure consumers that meat was safe for consumption. Regulatory reform would help restore confidence in our financial markets. We have seen how badly the banks have behaved; we have yet to reform the regulatory structure or change the regulators. Why, with the extra cushion of taxpayer money, of the kind proposed in the British bail-out, without such reforms, should we expect them to behave much better in the future than in the past?

Indeed, anyone who has seen America’s political processes at work knows that after Wall Street gets its money, it will begin fighting the regulations. It will say: Government must be careful not to overreact; we have to maintain the financial markets’ creativity. The fact of the matter is that most of that creativity was directed to circumventing regulations and regulatory arbitrage, creative accounting so no one, not even the banks, knew their financial position, and tax arbitrage. Meanwhile, the financial system didn’t create the innovations which would have addressed the real risks people face—for instance, enabling ordinary Americans to stay in their home when interest rates change—and indeed, has resisted many of the innovations which would have increased the efficiency of our economy. In some places, there has been real innovation—the Danish mortgage market (though it’s hardly new) is an excellent example, with low transactions costs and much greater security. But elsewhere in Europe, there has been resistance to adopting this model.

Markets have failed, but so too has our regulatory system. No one would suggest that because our tax system is imperfect, with evasion and avoidance, we should abandon taxation. No one is suggesting that because our markets have failed, and failed miserably, we should abandon a market-based economy. And no one should suggest that because our regulatory system is imperfect, it should be abandoned. As Paul Volcker once put it in the middle of the East Asia crisis, even a leaky umbrella can be helpful in a rainstorm. To be sure, both markets and our regulatory structures need to be improved upon.

Not only new regulations are required, but also new regulatory structures. The Fed and other regulators didn’t do everything they could have done with the regulations at their disposal. This is the not surprising consequence of appointing as regulators people who don’t believe in regulation.

A regulatory structure that worked after the Great Depression, before the invention of derivatives, is not one appropriate for the 21st century. We need to make sure that not just the voice and interest of Wall Street is heard, but so too the rest of the country, and we need to reduce the chance of regulatory capture. There was a party going on, and no one linked with Wall Street wanted to be a party pooper. As the old saw has it, the job of a good regulator is to take away the punch bowl when the party gets too raucous. But the Fed kept refilling the punch bowl, and now, we the taxpayer are asked to pay for the clean-up.

Those entrusted with looking after retirement funds, those who realise what an economic downturn can mean for workers, those without a vested interest in keeping Wall Street’s parties going have to have a large voice in a reformed regulatory system.

A good regulatory system has to take account of the asymmetries of information and other asymmetries between financial markets and government regulators. Those testing whether drugs are safe and effective may not have the creativity of those coming up with new drugs, but their tasks are different. Few would propose abandoning government oversight of drugs, simply because government salaries will be uncompetitive with those for testing the drugs in the private sector.

Part of a new regulatory system must be a financial products safety commission, to make sure that no products bought or sold by commercial banks or pension funds are “unsafe for human consumption”. Ideally, such a commission would try to encourage the kind of innovation that would protect homeowners and make our economy more efficient.

The question, more generally, is not so much too little or too much regulation, but the right regulation and a regulatory system that enforces the regulations we have. The risk we face is not that we will have too much regulation in the aftermath of the crisis but too little. After the crisis is over, the financiers who have done very well by themselves in recent years will use some of that money to distort the political process—campaign contributions have proven in the past to be high return investments.

The system we had didn’t serve the country well. Financial systems are supposed to allocate capital and manage risks. However, risks were not managed, they were created, and capital was massively misallocated. But it did serve those in the financial system well. Many of these would like the old system to continue, with as little modification as possible. To do so would be a mistake.

이코노미스트에 스티글리츠가 올린 글.

[FT]Darling plans tax hit to fund £20bn fiscal stimulus

Darling plans tax hit to fund £20bn fiscal stimulus
By Jamie Chisholm

Published: November 24 2008 15:37 | Last updated: November 24 2008 18:02

Alistair Darling said Britain faced an unprecedented global crisis as he delivered his pre-Budget report on Monday.

“These are extraordinarily challenging times for the global economy,” the chancellor of the exchequer told the House of Commons.


To jeers from the opposition benches, Mr Darling said the UK economy had entered the downturn in good health. But he accepted that the importance of the financial services sector in the UK meant the economy would be hit hard by the worldwide financial crisis.

Mr Darling downgraded the government’s 2008 forecast for growth to 0.75 per cent, while in 2009 gross domestic product would fall by between 0.75 per cent and 1.25 per cent, he said. Growth in 2010 would be between 1.5 per cent to 2 per cent.

To combat this slowdown, the government would introduce “a substantial fiscal loosening”, totalling £20bn or 1 per cent of GDP, he said.

Borrowing would rise to £78bn this year and then £118bn in 2009-10, and would only fall to the level of net investment by 2015-16. Public sector net debt would surge above the current limit of 40 per cent of national income this year, reaching 57 per cent by 2013-14.

His pre-Budget report was condemned by George Osborne, shadow chancellor, as “a huge unexploded tax bombshell, timed to go off at the time of the next economic recovery”.

The headline proposal was for a reduction in value-added tax from December 1 from 17.5 per cent to 15 per cent until the end of 2009. Mr Darling said the measure was intended “to help everyone and deliver a much need injection into the economy.”

In the short term, there would also be extra spending on infrastructure and social housing, the chancellor said, with £775m being spent this year and next on new homes and renovation projects in social housing.

To help multinational companies, he announced he would exempt foreign dividends from corporation tax. Small businesses would be able to spread over time payment of all their tax bills, including corporation tax, national insurance and VAT.

To help fund the big expansion in spending, Mr Darling said the government would find £5bn in efficiency savings in 2010-11. Public spending would be squeezed after 2011, while the growth rate after inflation would be cut from 1.9 per cent a year to 1.2 per cent a year.

He confirmed that from April 2011 he would introduce a 45 per cent rate of income tax to those earning £150,000 a year, and would cut the value of personal income tax allowance for those with incomes above £100,000.

Addressing homeowners in difficulty in the wake of the credit squeeze, Mr Darling said lenders had agreed to wait for three months before initiating repossession proceedings.

The chancellor was also at pains to give a green tinge to his statement. A raft of energy efficiency measures included providing £100m for home insulation.

He increased petrol duty to help offset the effect of the VAT cut on fuel consumption. Mr Darling said the government would also force energy companies to cut prices if their charges to consumers did not reflect the fall in wholesale prices.

The chancellor said he wanted the UK to be well-positioned to benefit from the return to growth of the world economy. He insisted, however, that the global financial crisis had originated in the US, and this had exacerbated an economic slowdown that was already under way.

영국정부는 부가가치세는 줄이는 대신 소득세율을 높히고, 과세구간도 낮추기로 했다. 경기부양을 위해 부채비율을 늘려 공공주택개선작업을 시행할 것이다. 중소기업들에게는 법인세도 면제해 주기로 했다. 과연 과거와 달라진 고든브라운이 세계 경기회복기에 영국을 떠오르는 해로 만들 것인가?

[FT]The government takes a huge gamble on investor confidence

The government takes a huge gamble on investor confidence
By Martin Wolf

Published: November 24 2008 17:47 | Last updated: November 24 2008 17:47

Stuff happens. Stuff has certainly happened to both the UK economy and the government’s fiscal position. What Alistair Darling delivered on Monday was a crisis budget. He scrapped the hallowed rules of his predecessor and boss, Gordon Brown. Profligacy has replaced prudence as the chancellor’s watchword.
어리석은 일이다. 영국경제와 정부의 재정정책에서 정말 대책없는 일이 일어났다. 알리스테어 달링이 월요일 발표한 내용은 충격적인 예산안이다. 그는 전임자이자 현재 그의 상사인 고든 브라운의 좋은 규칙들을 폐기해 버렸다. 장관의 말때문에 낭비가 성실의 자리를 차지하게 되었다.

The government is taking a huge gamble on its ability to sustain the confidence of investors in the UK. I believe it is right to do so. But nobody knows. The risk that these monstrous fiscal deficits – with public sector net borrowing of 8 per cent in 2008-09, forecast to fall to 2.9 per cent in 2013-14 – will trigger a sterling crisis and a massive sell-off of UK government debt is not a small one. The decision to raise the top rate of tax to 45 per cent, after more than two decades, however popular with the backbenches, is symbolic. If 45 per cent today, why not 50 or 60 per cent tomorrow? Expectations are no longer firmly anchored.
정부는 영국의 투자자들의 확신을 유지할 수 있는가에 대한 거대한 도박을 시작했다. 나는 그렇게 하는게 맞다고 믿는다. 그러나 아무도 모른다. 영국화폐의 위험과 영국국채 매도사태가 발생할 끔찍한 재정적자-공공부문의 순부채는 2008-9년 사이 8%였다. 2013-14년에는 2.9%로 떨어질 것이다.-의 위험은 작지 않다. 20년 뒤 까지 최고세율을 45%로 높이겠다는 정부의 결정은 초선의원들의 환영에도 불구하고 상징적이다. 만약 오늘날 45%를 허용한다면 50%,60%까지 오르지 말란 법은 없지 않나? 예상은 더이상 고정되어 있지 않는다.

What is certain is that this statement failed to admit either that the crisis has domestic roots or how far the past policies of this government explain the enormity of the current fiscal position: the UK did not have to have a huge housing boom financed, in large part, by the wholesale financial markets; and the UK did not have to go into the downturn with sizeable fiscal deficits.


Also serious, I believe, is the failure to admit that a fundamental structural change must now be under way – from soaring household borrowing, a booming housing market, a bloated financial sector and rapidly growing public spending, towards higher savings and current account surpluses. The economy has to become far better balanced in the years ahead. The UK has enjoyed the fat years. Now come the lean ones. It is unclear from the chancellor’s speech that the government recognises the scale of the structural challenge.

It is evident that its forecasts are not worth the paper they are written on. Nobody’s now are. The Treasury forecasts recovery from the third quarter of next year, as lower commodity prices, lower interest rates and the fiscal boost start to work. The economy is expected to contract at between -¾ per cent and -1¼ next year and then to grow at 1½ -2 per cent in 2010.

If so, this would be a mild recession. Anything is possible. But I do not believe it, given the scale of the shocks. The frightening possibility is that the chancellor is still understating the fiscal deficits ahead. Net borrowing for 2009-10 is already supposed to be 5.5 percentage points higher than was forecast in the Budget. It could well end up higher still.

[WSJ]Memories of the Depression Still Sear

Memories of the Depression Still Sear
As hard times return, witnesses to the 1930s recall lessons they learned

When the Great Depression hit, people came to the front porch of William Hague's home near Pittsburgh pleading for food. One well-dressed young woman asked Mr. Hague's mother if she would hire her for $2 a week. Why would she work for so little? his mother asked. "We have nothing to eat at home," she replied.

Dorothy Womble and William Hague survived the Great Depression. They share their stories of living during that time as children. (Nov. 14)
Mr. Hague, 89, was just 10 years old during the Crash of 1929. His father was a prosperous small-town lawyer and the family led a relatively privileged life during the Depression years. Yet even as Mr. Hague found success as an editor and author he says he remained careful about food and money. He monitors the news intently, on the lookout for signs of "trouble." Now that trouble has come, he says he wonders if younger generations have the mettle to survive tough times.
"We had unlimited prosperity for more than 60 years," says Mr. Hague, who lives in an independent senior residence on Manhattan's East Side. "I don't know if people are ready for hard times."
There are 11.5 million Americans who are 80 and older, according to the U.S. Census Bureau. The period from the Crash of 1929 to the start of World War II shaped their lives, affected how they raised their children, and influences their reactions to today's economic turmoil.
The memories aren't all negative. For many, President Franklin D. Roosevelt "was like a god," recalls Mr. Hague, and there was hopefulness amid the desperation. "People had confidence in the American way -- which I am not sure they have now."
Ethan Hill for The Wall Street Journal
James Dickinson
James Dickinson, 87, is Mr. Hague's friend and neighbor at the James Lenox House. Mr. Dickinson once worked on Wall Street, and for him the recent stream of economic calamities has been like watching a "horror movie," he says. "The horror is the people being pushed into unemployment," he says. "Bank managers, mutual-fund managers, hedge-fund operators, technical support people -- the horror is there are no jobs for these people."
Mr. Dickinson also grew up near Pittsburgh, but in an impoverished household where his widowed mother had to scrape by with help from relief. As a boy, he would accompany his mother as she stood on lines to get government food relief. The supplies were barely enough to live on: powdered milk, dried fruits, margarine, raisins, he recalls. Often, he found himself with men who had lost jobs in the steel mills and were devastated at being dependent on handouts.
Mr. Dickinson went on to work in Wall Street brokerage houses, he says, and retired as a manager of human resources. He says during the last five years, he annoyed his friends with repeated warnings that a day of reckoning was coming.
'This recession is like a picnic compared to what we had back then," says Dorothy Womble.
Mrs. Womble, 89, lives at a residence for low-income seniors and the disabled in New York's Harlem neighborhood. She grew up in a small house on a dirt road in Winston-Salem, N.C. People around her were so poor, she says, "They couldn't even get money to get seeds" to plant vegetables.
She can still picture the strangers who wandered through with nothing but a bundle on their backs. Her family also struggled, though her dad was able to hold onto his job on the railroads. Even so, says Mrs. Womble, no matter how little people had, they shared it with one another -- and that is one of her defining memories of the period, as much as the dire poverty. Her mother, for instance, used to share precious supplies of flour.
When FDR was elected in 1932, there was a "big jubilee" in the neighborhood, Mrs. Womble says. "It wasn't a big celebration like it was on 42nd Street" in New York this year, she says. But when people heard Roosevelt became president, "everybody came out and they were laughing and clapping their hands."
Ethan Hill for The Wall Street Journal
Gloria O'Loughlin
Her neighbor at Logan Gardens, Gloria O'Loughlin, 88, was a girl in Harlem during the Great Depression but has the same memory of people giving each other what they could. "If you were sick, they helped you. If you were hungry, they'd feed you. That was the Harlem I knew," she says.
Ms. O'Loughlin, one of the first women to drive a yellow cab in New York City, was born in Harlem and says she plans to die there. The Depression hit the neighborhood hard. While unemployment in the U.S. was about 25%, it was closer to 50% in Harlem. All over the streets, she saw men selling apples for five cents each.
At home, there was barely enough to eat. Her mother baked "Johnny Cakes," a kind of pancake made with flour and yeast and served with butter. It was a way to fill an empty stomach and stave off hunger. "You got used to eating what you got," Ms. O'Loughlin says starkly.
To survive, her family received a form of welfare that entailed standing on lines for supplies. Simply being on the line was embarrassing, and she and her sister used to argue about whose turn it was to go.
Marion Leonard, 99, was shielded from the worst of the Great Depression. Still, in 1931, she took a sailing trip around Puget Sound on a yacht belonging to her husband's uncle. From the boat, she could see hordes of unemployed men standing at the dock staring and staring at her. Ms. Leonard recalls she ran and hid in a stateroom out of embarrassment. She also witnessed great poverty as she drove across the country with her new husband in a $100 Ford.
Ms. Leonard still recalls how kind people were as she and her husband drove from town to town -- people were anxious to rent rooms for a couple of dollars, both because they needed the money and because they wanted to help. The experiences helped compel her to devote her life to social change and environmental activism.
Now, living in Vermont, she thinks only someone in Roosevelt's mold can rescue America from its slump. "I keep thinking, why doesn't someone do what Roosevelt did -- shut down and start from scratch and give everyone jobs," she says. "He put a lot of people -- young people, older people -- immediately in jobs. There were artists painting murals inside post offices and young kids out in the woods clearing away the brush."
Farmer Richard G. Hendrickson, 96, has been predicting another Great Depression for years, even decades. He warned family members and friends that America's profligate ways would bring back the hard times he had experienced in the 1930s when he watched his father almost lose the family farm.
He repeated the dire prediction so frequently, says his wife, Lillian, 90, his own children thought he was "getting old."
Mr. Hendrickson lives today on a farm in Bridgehampton, N.Y., a short walk from the one his family nearly lost. He can easily conjure up the day seven decades ago his dad faced financial ruin because of debt he had incurred on the farm. Three men in fancy "business suits and vests" descended on his family's property: The president of the local bank, the president of the lumber company, and the head of the feed company.
With his father in the room, the men sat silently in the living room for what "seemed like an eternity," Mr. Hendrickson says. Though shy, he decided to make a bold personal appeal. "If it makes any difference, I like outside work," he remembers saying. "And I think if we are given some more time, I believe we can keep our head above water and make the farm pay." He then stood up and walked out.
His father later got a loan from a bank in Springfield, Mass., he remembers, and the farm stayed with the family.
Bridgehampton, Mr. Hendrickson says, was a farming community so breadlines weren't an issue. Even so, there were signs of widespread misery. At one point, he recalls, the government set up a Civilian Conservation Corps encampment about a mile and a half from the farm. Men of varying ages lived in communal housing and were given jobs as part of Roosevelt's efforts to get the country working again. The men, who typically wore overalls, were a moving sight, and stood out in the small farming community.
Ethan Hill for The Wall Street Journal
Dorothy Womble
One Sunday, he and his first wife picked up one of the CCC workers and drove him to church. He told them he had come all the way from Michigan.
Long after the Depression, Mr. Hendrickson worked as if he were about to lose the farm. For years, he worked seven days a week, his only son, Richard H. Hendrickson, 68, says. The elder Mr. Hendrickson worked day, evening and night.
Mrs. Womble's son, Larry Womble, believes that his mom's Depression-era experiences, as well as those of his grandparents, deeply influenced the way he was brought up. Being frugal was a cardinal value, as was avoiding excess. But so was sharing with those who had even less.
"As a little boy I used to hear them in the room talking about how they were able to survive the Depression," says Mr. Womble, a Democratic state representative in Winston-Salem. "We shared whatever we had. When people didn't have rent money, we took up donations and helped them pay the rent, when someone died without a burial, we took up a collection."
His grandparents and mom would often cite a favorite proverb: "They used to say, 'Even in good times, a squirrel will hide his nuts because wintertime is coming.' "
Write to Lucette Lagnado at lucette.lagnado@wsj.com

[FT]Land leased to secure crops for South Korea

Land leased to secure crops for South Korea
한국의 식량안보를 위해 땅을 빌리다.
By Javier Blas in London
Published: November 18 2008 18:45 Last updated: November 18 2008 18:45

Daewoo Logistics of South Korea has secured farmland in Madagascar to grow food crops for Seoul, in a deal that diplomats and consultants said was the largest of its kind.
대우로지스틱스는 한국에 조달할 식량재배를 위해 마다가스카르의 농지를 확보했다. 컨설턴트와 외교관에 따르면 이번 계약은 농지임대건중 가장 규모가 크다.

The company said it had leased 1.3m hectares of farmland – about half the size of Belgium – from Madagascar’s government for 99 years. It plans to ship the maize and palm oil harvests back to South Korea. Terms of the deal were not disclosed.
회사는 130만핵타르규모의 농지-벨기에영토의 절반에 이른다-를 마다가스카르 정부로부터 99년동안 빌린다고 밝혔다. 옥수수와 야자기름을 한국으로 운송하는 계획이다. 계약조건은 공개하지 않았다.

The pursuit of foreign farm investments is a clear sign of how countries are seeking food security following this year’s crisis – which saw record prices for commodities such as wheat and rice and food riots in countries from Egypt to Haiti.
외국 농장투자건은 많은 나라들이 이번 년도에 발생한 식량위기를 보며 식량안보를 걱정하고 있다는 것을 보여준다. 식량위기로 밀이나 쌀같은 식량상품가격이 폭등하여 이집트, 아이티에서는 폭동이 일어나기도 했다.

Prices for agricultural commodities have tumbled by about half from such levels but countries remain concerned about long-term supplies.
농작물상품가격은 절반이하로 떨어졌지만 여러 나라들은 여전히 장기적인 공급에대해 걱정하고 있다.

The United Nations’ Food and Agriculture Organisation warned this year that the race by some countries to secure farmland overseas risked creating a “neo-colonial” system. Those fears could be increased by the fact that Daewoo’s farm in Madagascar represents about half the African country’s arable land, according to estimates by the US government.
유엔 식품농업 사무국은 이번 년도에 일부 국가에서 농장을 사들이면서 신제국주의가 발생할 수 있다고 경고하기도 했다. 미국정부에 따르면 대우의 마다가스카르농장 매수로 아프리카 나라에 소재한 경지들 중 절반에 대해 이러한 걱정이 늘어다고 있다 .

Shin Dong-hyun, a senior manager at Daewoo Logistics in Seoul, said the company would develop the arable land for farming over the next 15 years, using labour from South Africa, and intended to replace about half South Korea’s maize imports.
대우 로지스틱스의 관리자인 신동현씨는 남아프리카 노동력을 활용하여 향후 15년 동안 경지를 개발할 것이고, 이는 한국의 옥수수수입량 중 절반을 대체할 것이라고 말했다.

South Korea, a heavily populated but resource-poor nation, is the fourth-largest importer of maize and among the 10 largest buyers of soyabeans.
한국은 인구는 많으나 자원이 부족한 국가이다. 전세계 옥수수 수입국가 중 4위를 차지하며 10대 콩수입국가이기도 하다.

Carl Atkins, of consultants Bidwells Agribusiness, said Daewoo Logistics’ investment in Madagascar was the largest it had seen. “The project does not surprise me, as countries are looking to improve food security, but its size – it does surprise me.”
비드웰 아그리비지니스의 컨설턴트인 칼 아트킨스는 대우로지스틱스의 투자가 역대 최대건이라고 했다. "이번 계약은 그리 놀라운 것이 아니다. 여러 국가들이 식량안보에 노력하고 있기 때문이다. 하지만 계약규모는 놀라울 정도로 크다."

Concepción Calpe, a senior economist at the FAO in Rome, said the investment came after this year’s food crisis. “Countries are looking to buy or lease farmland to improve their food security,” she said.
FAO의 선임연구원인 콘텝시온 칼페는 이번 투자는 올 해 식량위기때문에 체결된 것이라고 말했다. "여러 나라들은 자신들의 식량안보를 위해 경지를 임대하거나 사려고 하고 있다."고 그녀는 말했다.

Al-Qudra Holding, an investment company based in Abu Dhabi, said in August it planned to buy 400,000 hectares of arable land in countries in Africa and Asia by the end of the first quarter of 2009.
아부다비에 위치한 투자회사인 알쿠드라 홀딩은 8월에 아프리카와 아시아에 위치한 400,000헥타르의 경지를 2009년 1분기까지 사들이겠다고 발표했다.

Meles Zenawi, prime minister of Ethiopia, said this year its government was “very eager” to provide hundreds of thousands of hectares of agricultural land to Middle Eastern countries for investment.
이디오피아의 수상인 멜레스 즈나위는 이디오피아 정부의 수십만헥타르에 달하는 경작지가 중동국가들 투자에 "매우 목말라 있다"고 말했다.
Copyright The Financial Times Limited 2008

[FT]Interest rate cut may further weaken won

Interest rate cut may further weaken won
금리인하가 원화약세로 이어질 것이다.

By Andrew Wood in Hong Kong
Published: November 6 2008 18:16 Last updated: November 6 2008 18:16

The South Korean won fell 4.9 per cent in value to Won1,330.70 to the dollar in Seoul on Thursday as foreign investors worried that the export-led economy would suffer badly during a global slowdown and sought the safety of dollars.
원화는 수출부진과 달러부족에 대한 우려로 가치가 떨어졌다.

Since the start of the year the won has depreciated by 30 per cent, making it Asia’s worst performing major currency.
원화는 연초대비 30%나 떨어졌다. 아시아 주요국 통화 중 하락세가 가장 크다.

The Bank of Korea meets on Friday and is widely expected to cut interest rates to help promote economic growth, which may weaken the won further.
한국은행은 경기부양을 위해 이자를 내렸지만 이로인해 원화의 가치는 더욱 떨어질 것이다.

The Korean currency has been exceptionally volatile in recent weeks. On October 28 it fell to Won1,467 to the dollar for the first time since early 1998. Two days later it jumped 14.2 per cent in value on news of a $30bn currency swap deal between the Bank of Korea and the US Federal Reserve. The government has intervened aggressively to support the won, draining $27.4bn, or 11 per cent, of the country’s ­foreign exchange reserves last month.
최근 원화는 변동이 심했다. 10월 28일에는 1998년 이후 처음으로 1,467원까지 떨어졌다. 이틀 후에는 정부가 달러스왑계약을 발표하자 14.2%나 올랐다. 정부는 274억달러를 시장에 풀어서 원화의 하락을 막았다.

Lee Myung-bak, the president, came to power this year saying he would ­promote business and help the economy. But the former Hyundai executive has struggled to maintain confidence in the country’s ability to withstand a worldwide recession and deliver on his promise of 7 per cent annual growth.
이명박대통령은 경제와 기업을 살리겠다는 공약으로 당선되었다. 그러나 세계경기침체로 7%성장을 이루겠다는 그의 공약은 점점 지키기 힘들어지고 있다.

Last month the government announced a $130bn package to help banks, which needed to roll over short-term, foreign-denominated debt, and a plan to spend Won5,000bn to support construction and housing.
지난 달 정부는 은행이 단기외채를 상환할 수 있도록 1300억달러를 지원하겠다고 했다. 또한 건설사에 5조원을 사용하겠다고 했다.

“Given that [savings] rates are lower than inflation, you are actually losing money on deposits in the bank,” said Hank Morris, director of corporate financial advisory services at the consultants IRC in Seoul. “The smart money people, whether they are Korean or foreigners, are converting their won and sending it overseas.
금리를 물가상승률보다 낫게 책정한다면 외국인이든 한국인이든 똑똑한 사람은 돈을 해외로 보낼 것이다.

“The government has put emphasis on building strength into the economy. That’s a good story, and it’s fortunate that we are generally in a deflationary environment, with commodity prices coming down. But it’s hard to get around the fact that Korean exports are going to be shrinking and not expanding.”
정부는 건설업을 지원하겠다고 했다. 경기침체국면에서 이는 좋은 방안이다. 그러나 해외경기침체로 수출이 어려워지는 상황을 바꾸기는 어렵다.

Foreigners were net sellers of Won282.6bn ($212m) of Korean shares on Thursday, bringing their total net liquidation this year to more than Won33,500bn, according to Korea Exchange figures.
외국인들은 목요일에 주식을2826억원이나 팔았다. 연초부터 지금까지 외국인들이 판 주식은 모두 33조 5000억원이다.

The Kospi, the main index, closed 7.6 per cent lower at 1,092.22, in spite of news that Korea’s stock exchange would launch a $395m fund to invest in domestic shares. The Kospi has lost more than 40 per cent in value so far this year.
증권거래소가 3억 9500만 달러로 국내 주식에 투자하는 펀드를 만들겠다고 발표했지만 코스피는 전날보다 7.6%하락한 1092.22포인트로 마감했다. 코스피는 연초보다 40%나 하락했다.
Copyright The Financial Times Limited 2008

[FT]China authorises ‘massive’ stimulus package

China authorises ‘massive’ stimulus package
By Geoff Dyer in Beijing
중국당국의 강력한 경기부약대책
Published: November 9 2008 19:14 Last updated: November 10 2008 02:00

China announced on Sunday a “massive infrastructure spending programme” as part of a new fiscal stimulus plan aimed at boosting the country’s rapidly slowing economy.
둔화하는 경기를 살리기 위해 강력한 경기부양책을 사용하겠다.

The State Council, China’s cabinet, authorised Rmb4,000bn ($586bn) of investment on infrastructure and social welfare over the next two years, although it did not say how much of the spending would be on new projects not already in the budget.
사회간접자본과 복지에 2년 동안 4조위안을 투자할 것이다.

The government said the spending plan reflected a decision to adopt an “active” fiscal policy to deal with the global financial crisis, while monetary policy would be “moderately active”.
이번 경기부양책은 세계 금융위기에 적극적으로 대처하겠다는 의지를 드러낸 것이다.

The announcement reflects mounting anxiety in Beijing that China’s economy is cooling much more quickly than was initially expected in the face of weaker international demand and a slowdown in the local property market.
예상보다 급격하게 나빠지고 있는 세계수요와 국내자산시장의 침체가 반영되었다.

Two recent surveys of manufacturers showed a slump in activity in October, confirming anecdotal evidence that the slowdown has accelerated in recent weeks. Some economists believe that growth, which was nearly 12 per cent last year, could fall to as low as 6 per cent next year without a substantial fiscal stimulus.
10월 생산자지수가 떨어지고, 일부 이코노미스트들은 중국이 내년도에는 6%만 성장할 것이라고 한 것도 영향을 미쳤다.

Beijing has also been under growing international pressure to take fiscal measures to boost its economy in the hope that continued strong growth can provide some counter-balance to recession in the developed world.
중국에 영향을 받는 다른 나라들의 기대도 반영되었다.

The government has already cut interest rates three times, scrapped quotas for bank lending and unveiled measures to help housebuyers and some exporters. However, economists said those measures had not been enough to overcome growing gloominess among companies and consumers.
중국은 이미 이자율을 세차례나 내렸고, 은행대출을 늘려 주택소유자와 수출업자를 도왔지만 전문가들은 세계경기침체를 이겨내기에는 부족하다고 말했다.

According to the official Xinhua news agency, the State Council decided on Friday to “map out more forceful measures to expand domestic demand”, which would include “massive” infrastructure spending.
신화통신에 따르면 중국당국은 지난 금요일 더욱 강력한 대책을 내놓겠다고 결정했고, 그것이 사회간접자본 투자이다.

The investments will focus on low-income housing, water, electricity, disaster relief and transport, with railways expected to see a big increase. Spending in the fourth quarter of this year would be boosted by Rmb120bn beyond what was planned.
투자대상은 저소득층 주택건설, 수도 및 전기시설 건설, 재난지역 복구, 철도부설 이다. 이번 4분기에만 1200억 위안을 사용할 것이다.

The government said it would introduce a long-awaited reform of value added tax which would cut costs for Chinese companies by Rmb120bn, Xinhua said.
부가가치세를 재정비하여 기업들이 내는 세액을 1200억 위안 깎을 것이다.

In China’s 2006-10 Five Year Plan, the government said it would spend Rmb5,100bn on infrastructure projects.
중국의 2006-10년 계획에는 중국정부가 5조1천억 위안을 사회간접자본투자에 사용하기로 되어있었다.
Copyright The Financial Times Limited 2008
중공업측에 호재, 중서부 개발착수-> 중산층 증가?, 부의 분배로 신소득층 유발? 파생효과를 생각해 봐야 한다.

[FT]Wall St rallies on election day

선거일 현재 주가는 오르고 있다.
Wall St rallies on election day
By Alistair Gray in New York
Published: November 4 2008 14:08 Last updated: November 4 2008 21:55
Wall Street stocks enjoyed their strongest election day rally since the New York Stock Exchange first opened for trading on presidential polling day.
The prospect of a clear winner helped lift the market to its highest level in three weeks as investors looked forward to strong political leadership to deal with the financial and economic crisis, ending months of uncertainty.
“The last time you had an election with this level of focus in the market was on the eve of World War Two,” said Doug Roberts, strategist at Channel Capital Research.
Most observers agreed that equities did not prefer one candidate over another, although futures markets continued to indicate the strong likelihood of a Barack Obama presidency.
Investors hoped that with the election out of the way authorities would be freer to take decisive action without partisan interference.
Stocks shrugged off glum economic news for a third consecutive session – data showed new factory orders fell more than expected – and all 10 sectors were firmly in positive territory.
The S&P 500 closed back above the psychologically significant 1,000-point level, up 4.1 per cent at 1,005.74.
The Dow Jones Industrial Average was up 3.3 per cent at 9,625.28 points while the Nasdaq Composite Index was up 3.1 per cent at 1,780.12 points, giving it six successive sessions of gains. The gains were comfortably the greatest of all presidential election days since 1984. In the years before then, markets had been closed on the day of the ballot.
The Chicago Board Options Exchange Volatility Index, Wall Street’s fear gauge, shed 11.2 per cent to 47.69 points.
Upbeat corporate earnings, further easing of strain in money markets, and the prospect of more policy measures to help prevent a global recession also gave a boost.
A diverse range of companies, such as MasterCard, Emerson Electric and Viacom reported better-than-expected quarterly figures. Shares in the three companies roose 18.3 per cent to $170.24, 10.1 per cent to $35.86 and 7.5 per cent to $22.65, respectively.
Energy led the gains, up 6.4 per cent as oil settled above $70 a barrel. Materials, industrials and financials followed closely behind.
Archer Daniels Midland leapt 15.3 per cent to $24.33 after the food processor comfortably beat forecasts that had been lowered after rival Bunge’s failure to meet expectations. The later rose 8.6 per cent to $45.31.
Elsewhere, CIT Group and General Electric jumped 36.1 per cent to $6.15 and 7.6 per cent to $20.77 respectively, on reports the Treasury might buy stakes in a wide range of financial companies, not only banks and insurers, under its $700bn rescue package.
In technology, Google and Yahoo edged up 5.9 per cent to $366.94 and 4.7 per cent to $13.35, respectively, on reports the companies scaled back their proposed web advertising deal to win over antitrust officials.
VMware shed 3.9 per cent to $30.56 on news that Intel was in the process of halving its stake in business software maker. The chipmaker gained 4 per cent to $16.26.
Dell rallied 5.6 per cent but fell back to stand 2.5 per cent higher at $12.93 after reports emerged that the computer group had instituted a hiring freeze and asked employees to consider taking up to five days of unpaid leave.
On the downside, Dean Foods dropped 17.6 per cent to $18.25 after the food group’s results fell short of expectations. The figures failed to drag down either peer Kraft Foods or the wider consumer staples sector, which were higher by 4.1 per cent at $30.51 and 2.3 per cent, respectively.
An interest rate cut in Australia sparked hopes of further policy measures around the world. Tueday’s rally, coupled with the muted trading of the previous session, comes after the wild volatility that characterised October.
“You may be asking yourself what exactly has changed in the last few days to stage this dramatic turn of events. Good question,” said Randy Frederick, director of trading and derivatives at Charles Schwab.
Analysts remained divided on whether the market would extend its rally.
Quincy Krosby, strategist at The Hartford, wrote in a note: “Given the oversold condition in the market, it is quite clear that we can build on this rally toward the year-end.”
Copyright The Financial Times Limited 2008

[NYT]Buy American. I Am. By WARREN E. BUFFETT

Op-Ed Contributor
Buy American. I Am.
By WARREN E. BUFFETT
Omaha
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
금융위기가 실물위기로 이어진다.(실업률 상승, 기업의 투자감소)

So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
그래서 주식을 사겠다. 주가가 계속 떨어져도 사겠다. 전부를 사모을 때까지 사겠다.

Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
공포에 사라! 단기전망을 할 수는 없다. 하지만 길게보면 오를거다. 특히 공포때문에 우량기업의 주가마저도 빠지고 있는 상황이라면 장기적 안목을 가지고 주식을 사는게 당연하다.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
역사적으로 봐도 주식을 사는게 옳다. 대공황때 주가는 바닥을 쳤지만 강력한 리더쉽을 가진 루즈벨트가 취임하고나서 30%나 올랐다. 1980년대에도 경기는 바닥이었지만 그 때 주식을 산 사람들이 이득을 얻었다. 투자자에게 나쁜 소식은 가장 좋은 친구이다.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
20세기 동안 미국은 대공황, 세계대전, 또 다른 두번의 전쟁, 냉전, 금융위기를 겪었다. 그 동안 다우지수는 66포인트에서 11,497포인트까지 올랐다.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
지난 세기동안 돈을 번 사람이 없을거라고? 천만에, 일부는 돈을 벌었다. 불행히도 남들이 살 때 사고 안좋은 소식에 판사람들은 손해를 보긴 했다.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
많은 사람들이 현금을 가지고 있다. 그래서는 안된다. 정부는 돈을 풀어서 경기를 되살리려고 하기 때문에 인플레이션이 올테고, 현금성자산의 가치는 떨어질 것이 분명하다. 주식은 현금보다 수익률이 좋을 것이다. 현명한 투자자라면 웨인 그레츠기가 말했던 것을 따라야 한다. 그는 공이 있는 곳이 아니라 공이 있을 곳에 간다고 말했다.
I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.
나는 단기전망을 할 수 없다. 하지만 나는 내 돈으로 주식을 살거고 샀다고 말할거다.
Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

오바마와 절친한 친구라는 버펫이 10월 중순경에 쓴 글이다. 그는 장기적 안목을 가지고 주식을 사야 한다고 주장한다. 장기적으로 보면 위기는 기회라는 것이다. 물론 10년 뒤에 주식은 오를 것이다. 그렇다고 해서 돈을 버는 사람이 있을지는 모르겠다. 여전히 시장은 불안하기 때문이다.

글 중간에 강력한 리더쉽을 갖춘 루즈벨트가 대통령이 되고서부터 주가가 42%나 올랐다는 내용이 있다. FT를 보면 오바마를 미국을 아우르는 카리스마를 가진 사람이라고 쓴 글을 볼 수 있다. 또한 상하원 모두 민주당이 장악하고 있는 상황에서 오바마는 행정부와 의회간 협조를 이끌어 낼 수 있는 인물이다. 오바마가 당선되면 주식을 살지 말지 고민해 볼만 하다. (어쩌면 버펫이 은근히 오바마를 지지하기 위해 이글을 쓴것 같기도 하다. 특히 NYT에 이 글을 썼다는 것도 그렇다.)

[Economist] Will we see a "Bernanke put"?

Market.view

The long and short of it

Nov 2nd 2008From Economist.com

Will we see a "Bernanke put"?

우린 버냉키 풋을 보게 될까?
THE “Greenspan put” was a term devised to describe the habit of the former Federal Reserve chairman, who would cut interest rates whenever the stockmarket seemed in crisis. The idea was that equity investors had insurance in the form of a put option, with Alan Greenspan agreeing to limit their losses.

그린스펀은 주식시장에 위기가 오면 금리를 내렸다. 그래서 주식투자자들은 그린스펀이 손해를 막아주는 풋옵션 같은 사람이라고 생각했다.

Now David Rosenberg, a well-respected economist at Merrill Lynch, thinks the current Fed chairman, Ben Bernanke, may introduce a “Bernanke put”, this time for the bond market. The topic arises because of the Fed’s recent cut in interest rates to 1%, posing the question of what the central bank can do if rates drop down to zero.

메릴린치의 로젠버그는 이제 버냉키를 버냉키풋이라고 생각한다. 하지만 이번에는 채권시장이다. 연준이 금리를 1%까지 내리면서 제로금리가 되면 이제 무얼할지가 논란거리로 떠 올랐다.

After all, interest rates cannot be cut below zero. But as Mr Bernanke pointed out in a November 2002 speech, the central bank would have other options, notably targeting short-term bond yields. “The Fed could enforce these interest-rate ceilings by committing to make unlimited purchasers of securities up to two years from maturity at prices consistent with targeted yields”, Mr Bernanke said. If necessary, the Fed could target bonds at even longer maturities.

금리는 0밑으로 떨어질 수 없다. 하지만 버냉키는 2002년 11월에 중앙은행이 또다른 방안을 쓸 수 있다고 말했다. 단기채 수익률을 조정하는 것이다. "연준은 이자상한선을 정해서 정해진 수익률에 따라 2년간 빌려줄 수 있다." 필요하다면, 장기채에도 이를 적용할 수 있다.

The idea behind such a strategy would be to keep longer-term borrowing rates low, thus encouraging companies (whose loan costs are priced in relation to Treasury-bond yields) to invest in new production. That would help stimulate the economy.

버냉키의 전략뒤에 담긴 생각은 장기대출이자율을 낮춰서 기업들이 투자하도록 촉진하는 것이다. 그렇게 되면 경기는 점차 살아날 수 있다.

For bond investors, this would be a one-way bet. They would know that yields could not rise above the targeted level, so the scope for capital losses on their bond portfolios would be limited (yields move in an inverse relationship to prices).

채권투자자에게는 이것이 one-way bet일 수 있다. 그들은 채권수익률이 상한선 이상으로 오를 수 없다는 것을 알고 있다. 따라서 그들이 투자한 채권들의 손실은 제한될 것이다. (수익률은 가격과 반대로 움직인다.)*채권은 만기상환액이 정해져있기 때문에 가격이 떨어지면 수익률이 오른다.

The tricky question is whether such an approach would conflict with another well-worn Fed strategy for reviving the economy—creating an upward-sloping yield curve. To explain, the yield curve comprises the range of interest rates at different maturities, from overnight to 30-year bonds. Traditionally, long-term rates have been higher than short-term ones because investors have to be paid more to make them willing to lock away their money. Occasionally, however, the yield becomes inverted (short-term rates are above long). That is normally seen as a sign that recession is on the way.

The basic business of banks is to borrow short and lend long. Thus an upward-sloping yield curve is good news for them. After the savings-and-loan debacle of the late 1980s and early 1990s, the Fed deliberately kept short rates low in order to generate an upward-sloping curve and boost the profits of the banking sector. The banks could do with a similar boost today, and sure enough short rates are well below 10-year yields (see chart).

If the crisis were sufficiently stark, the Fed would, of course, try to keep both short and long-term rates low; if the former were zero, the latter could be 2% or so. The obvious example is Japan, where 10-year yields are still just 1.5%.

It all makes for a tricky gamble for bond investors. Some are clearly worried that the cost of bailing out the banking sector will ultimately prove inflationary, especially as the spending-happy Democrats are set to increase their hold on Congress. That would suggest much higher bond yields in the medium term. But investors who place that bet could lose heavily if the Bernanke put swings into action.