NEWS,21.01.2013

Terrorism in Africa set to top G8 agenda

Britain will use its chairmanship of the Group of Eight richest nations to focus on the threat of terrorism following developments in Algeria and Mali, Prime Minister David Cameron said Monday.Cameron said North Africa was becoming a "magnet" for jihadists from other countries, adding that the threat there now outweighed that from Islamist hotbeds in Afghanistan and Pakistan."I will use our chairmanship of the G8 this year to make sure this issue of terrorism and how we respond to it is right at the top of the agenda where it belongs," he said in a statement to parliament on the Algeria hostage crisis.Britain took over the rotating presidency of the Group of Eight richest nations in January and it hosts the summit of G8 leaders at Lough Erne, Northern Ireland, on June 17-18.Cameron said Britain would contribute intelligence and counter-terrorism assets to an "international effort to find and dismantle the network that planned and ordered the brutal assault" on the In Amenas gas field in Algeria.It will also work closely with the Algerian government to learn lessons from the attack, in which three British nationals were confirmed killed and a further three were believed to have died.Cameron said Britain was also looking at whether to provide "transport and surveillance assets" to help the French military mission in Mali in addition to the two transport planes it has already contributed.He said that Britain could send "tens not hundreds" of troops to a new EU training mission for Mali.But Cameron also painted a picture of a "generational struggle" against the "terrorist scourge", saying that it needed both a political and security response."We must frustrate the terrorists with our security, we must beat them militarily, we must address the poisonous narrative they feed on, we must close down the ungoverned space in which they thrive, and we must deal with the grievances they use to garner support," he said."This is the work that our generation faces and we must demonstrate the same resolve and sense of purpose as previous generations have with the challenges that they faced."

Winter chill batters UK businesses

A wintry burst of weather has hit businesses and travellers across Britain for a fourth day on Monday, threatening an unprecedented "triple-dip" recession that could knock the government's economic plans further off track.Commuters fought to get to work as airlines and train operators struggled to deal with a blanket of snow and ice, while some 3 000 schools were closed, forcing parents to stay at home to look after children. Figures this week look set to show the economy shrank again in the fourth quarter of 2012. The snow-induced a loss of working days for manufacturers and builders, allied to falls in business for shops, pubs and restaurants, could now push the first quarter of 2013 into the red also.Even if the economy does turn around later, it would leave the government seeking to dispel fears of slow growth well into next year - with an election due the year after."At a time when retailers are already under pressure, bad weather which keeps people from going shopping is very bad news," said Richard Dodd from the British Retail Consortium body representing the country's major chains."That said, it would have been much worse had it happened over Christmas." Shop owners and workers on a deserted Oxford Street, central London's main shopping destination, said trade had been hit heavily since Friday.Jay Gordon, manager of a hairdresser just off the main thoroughfare said half of his customers had cancelled over the weekend, at a cost of £30-100 per head. "On Saturday, we had 15 no-shows. It's a loss of revenue," he said. Economists said that while retailers may be able to make up the lost sales as customers come back to buy later what they would have bought anyway, the impact on construction and manufacturing is harder to smooth over quickly."Assuming the fourth quarter is as substantially negative as we now fear, we will almost certainly be heading back into recession," Peter Spencer, chief economic adviser to business think tank the Ernst and Young Item Club, told Reuters."When the economy is bouncing along the bottom anyway, a bout of bad weather can easily tip it into negative territory. "OutrageThere was a familiar hum of national outrage at train stations and airports about the struggle to run normal services more than 12 hours after the last snowfall in many areas on Sunday evening. Commuter operators across southern England were operating reduced services and only six of every 10 of those were running on time. British Airways had cancelled 350 flights since Friday, largely at the request of London's Heathrow airport, which has little room to reschedule delayed flights. That reflects a shortfall in infrastructure investment over past years which has fallen behind the country's eurozone neighbours. Operators note, however, the UK has less snow than much of the rest of Europe and less on average now than it did 20 years ago. That was no consolation for 24-year-old Georgina Kourousiakli and Fay Sakellariou from Athens, who missed their flight home by minutes due to train delays on Monday morning. "They don't care about us, we told them we need somewhere to live until tomorrow and they just looked at us and said 'oh'," Georgina said. "We don't have any money to eat ... we can't call home and the internet is 10 pence per minute. "Heathrow has come under heavy criticism before for not handling inclement weather well. PainThe Conservative-led coalition government had lauded numbers for the third quarter of last year which saw Britain emerging from its second recession since the 2008 financial crisis.But that always looked at risk from the gloom amongst consumers who account for two thirds of the economy. They have seen wages fall consistently compared with inflation while also struggling to reduce debts built up in a decade of booming credit growth.A survey on Monday showed the state of most households' finances continued to worsen in January, even if the rate of decline was slightly less pronounced than a month earlier."Concern remains that consumers will be restrained in their spending over the coming months which will limit growth," said IHS Global Insight economist Howard Archer.He noted that snow had helped spur contractions in the first quarter of last year and fourth quarters of 2010 and 2011."With the bad weather looking set to continue well into this week and possibly beyond, the risk of a triple dip recession is growing by the day," he said. The Conservative-Liberal Democrat coalition's central promise after gaining power in 2010 was to eliminate Britain's underlying budget deficit by the end of a five-year term.But that target was reliant on the private sector taking up the slack for some of the harshest cuts in public sector spending since World War Two. So far this year, government borrowing is up 10% due to falling revenues.

Cash crisis affects EU farm policy reform

European Union politicians will scale back or ditch reforms to the farm subsidy system as they seek to mollify powerful farmers' lobbies who are angry at subsidy cuts forced on them by the bloc's debt crisis. With EU leaders likely to agree on a 10% reduction in farm spending from next year, governments and lawmakers want to water down plans to reform the 50-year-old common agricultural policy (CAP). The debate centres on European Commission proposals to impose new environmental requirements on farmers and share out the subsidies more fairly across the 27-country bloc. Member governments and the European Parliament must approve the plans before they become law. Critics of the Commission's reform proposals say dilution is essential to avoid damaging Europe's agricultural productivity. "The proposals would increase unemployment in rural areas and risk deepening the EU's current economic crisis," said Pekka Pesonen, head of EU farm lobby COPA-COGECA. German farm minister Ilse Aigner described the Commission's bid to boost environmental standards by forcing farmers to leave 7% of their cropland fallow as "absurd". Farmers are counting on Aigner and her colleagues to intervene on their behalf. "I believe ministers will go for a lower rate than 7%," Pesonen told Reuters. But reform advocates say farmers' fears are overblown and that they should do more to justify the billions of euros in public subsidies they receive each year. "What I hear from the parliament and member states is dilution, dilution, dilution," said EU Climate Commissioner Connie Hedegaard, who supports plans to make the CAP greener by also requiring more crop rotation and permanent grassland. "Normally farmers are rather proud people. Would it not be better, instead of being on subsidies, to be paid for doing something for the common good?" she said at a conference in Brussels this month. Talks on the European Union's long-term budget for 2014-2020, which began in November and will continue in early February, have already whittled down the total for agriculture to about €360bn ($480 billion). That compares with about €400bn in the current seven-year budget when measured in 2011 prices. While most attention has focused on the overall CAP budget and new green rules, the biggest impact on individual farmers would come from proposals to reduce the inequality in payments. Producers in Italy, Belgium and the Netherlands currently receive more than €400 in direct subsidies per hectare on average, compared with less than €150 per hectare in the EU's Baltic states. And in major beneficiary countries such as France, Italy and Spain, the most productive farms currently receive far more EU cash than the rest, thanks to a link between subsidies and 200-2002 production levels. Proposals in the reform to shift payments towards a flatter, per-hectare rate could cut up to 40 percent of the subsidies going to Europe's biggest grain and livestock producers, officials say. "The rate of direct payments in major producing areas such as the Paris Basin will be significantly reduced," said a Commission source who spoke on condition of anonymity. Larger EU governments, with the support of farm groups and MEPs, are aiming to reduce the extent and pace of redistribution proposed by the EU farm commissioner, Dacian Ciolos. On Wednesday, the European Parliament's agriculture committee - traditionally sympathetic to farming interests - will vote on amendments that would delay the introduction of flat-rate payments beyond the Commission's 2019 deadline. The committee could also delay proposals to liberalise the EU's heavily regulated sugar sector by pushing back the planned phase-out of strict production quotas from 2015 to 2020. "There's no doubt that this is a reform without friends," said Alan Matthews, professor of European agricultural policy at Trinity College Dublin. "There really isn't anyone pushing it apart from Ciolos himself, and the longer it goes on the weaker it gets." Despite the efforts of governments and lawmakers to dilute the CAP reform, however, Matthews said future trends in EU farm output will be determined by factors other than public policy. "I would say the market price environment, biofuel and energy prices and things like climate change are probably more important than what is happening in terms of CAP reform," he said.

Investors to shun tax evading firms

Growing anger at aggressive tax avoidance by big business has prompted ethical investors to consider shunning shares in companies that don't pay their fair share of tax.As governments struggle to balance massive budget deficits caused by the financial crisis, reports that big companies like Apple, Google and Vodafone pay minimal taxes in some big markets have sparked public protests in Europe and the United States. All the companies criticised say they follow the law, and some argue they owe it to investors to pay as little tax as legally possible. But politicians on both sides of the Atlantic have argued such avoidance is immoral and hauled executives into public hearings to explain their tax affairs. Tax authorities in France, Germany and Italy have even launched raids on some high-profile companies' offices. Many investors with a 'socially responsible' mandate say they have long taken account of companies' tax practices when deciding where to invest, but few if any funds have made a point of screening out companies over tax issues, according to more than a dozen industry professionals contacted by Reuters. That may be about to change. FTSE Group, which compiles the share indexes that fund managers in the UK, United States and Asia use to build investment portfolios, said it was looking into excluding companies with what it called overly aggressive tax reduction policies from its ethical index group, FTSE4Good. "Tax is one of the areas which the independent FTSE4Good Policy Committee are considering, among other criteria priorities," a spokesperson said. FTSE did not say when it would reach its decision. The FTSE4Good indexes are one of the benchmarks most commonly used by ethical funds to build their portfolios. European funds invested in socially responsible investments totalled €7 trillion at the end of 2011, according to European Sustainable Investment Forum, an ethical investment industry association. Eleven percent of the $33.3 trillion in assets under professional management in the United States is invested in funds that screen for environmental and ethical factors, according to a 2012 report from the US Forum for Sustainable and Responsible Investment. Jacky Prudhomme and Helena Vines-Fiesta, co-heads of Environmental, Social & Governance research at BNP Paribas Investment Partners, said they were working on a system for screening out companies with inappropriate tax practices. The Paris-based asset manager had €513bn in assets under management as of March 2012. "We are not at this stage in a position to assess tax strategies in a systematic manner due to lack of underlying data. However, we are starting to examine how we can do this in some sectors," Prudhomme said, but did not say which sectors. Charity ActionAid, which has campaigned against multinationals shifting profits beyond the reach of tax authorities in developing countries, said it had been working over the past nine months with fund managers who wanted advice on how to encourage companies to pay their fair share of tax. Tax policy adviser Michael Lewis said the charity planned to publish a guide for investors next month outlining how they could pressure companies on tax. This could, in time, help funds develop a framework. "It could be quite challenging" to come up with criteria, explain them and apply them consistently, said Ryan Smith, head of corporate governance at Kames Capital, which manages the Kames Ethical Equity and Kames Ethical Cautious Managed funds. Lewis said ActionAid had been approached by mainstream funds saying aggressive tax planning may point to risky practices elsewhere. Some investors also consider how far increases in net profit are due to operational improvements, which can be maintained, or to tax management. A robust tax audit could rapidly reverse that kind of profit. "We always make sure we know what taxes the firms we invest in are paying. If they are paying a low tax rate, chances are it's unsustainable," said Charles Heenan, investment director at British fund management firm Kennox. In New York, where fund manager Domini Social Investments said it was looking for ways to rank companies on the basis of their tax policies, General Counsel Adam M. Kanzer said there were difficulties. For one, it could be hard to find stocks to invest in. "Unfortunately, tax avoidance practices are so widespread it is virtually impossible to exclude companies based on this issue," he said.

NEWS,22.06.2012

Extra cash needed to bailout Spanish banks

 

Independent auditors said Spanish banks may need up to 62 billion euros in extra capital, to be filled mostly by a euro zone bailout, after Spain's medium-term borrowing costs spiralled to a euro-era record on Friday.Euro zone finance ministers met in Luxembourg to discuss how to channel up to 100 billion euros in aid to Spanish lenders weighed down by bad debts from a burst property bubble. Madrid's economy minister said a formal request would be made in days for the bailout, which was agreed two weeks ago.Many in the markets see the package as a mere prelude to a full programme for the Spanish state, which Madrid vehemently denies it will need.Spain's financial plight took centre stage a week before a European Union summit tackles long-term plans for closer fiscal and banking union in a bid to strengthen the euro's foundations, after bailouts for Greece, Ireland and Portugal failed to end a 2-1/2-year old debt crisis.To pave the way, the leaders of Germany, Italy, France and Spain will meet in Rome."We are clearly seeing additional tension and acute stress applying to both banks and sovereigns in the euro area," International Monetary Fund chief Christine Lagarde, who attended the Luxembourg meeting, told reporters."With that in mind, the IMF believes that a determined and forceful move towards complete European monetary union should be reaffirmed."Two independent audits by consultants Roland Berger and Oliver Wyman found that Spanish banks would need between 51 and 62 billion euros in extra capital to weather a serious downturn in the economy and new losses on their books.The Bank of Spain said the 100 billion euros offered to Madrid two weeks ago would give a wide margin of error. Spain's three biggest banks would not need extra capital even in a stressed scenario, it said. The government said it did not expect to shut any banks and would restructure those in trouble.In Luxembourg, the finance ministers decided Spain should initially apply to the euro zone's temporary rescue fund, the European Financial Stability Facility, with the loan taken over by the permanent bailout fund the European Stability Mechanism (ESM) once it is up and running after July 9."The financial assistance will be provided by the EFSF until the ESM becomes available, and then it will be transferred to the ESM," Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, told a news conference."We would expect the Spanish authorities to put forward a formal request for financial assistance by next Monday," he said.Such a solution should avert a problem which had scared investors: debt issued by the ESM must be paid back first in case of a Spanish default, relegating private creditors lower in the pecking order. Because the new bailout debt will originate from the EFSF it will be issued without that requirement.Earlier on Thursday, Madrid sold 2.2 billion euros in medium-term bonds, drawing strong demand almost entirely from domestic banks. Yields on 5-year paper rose to a 15-year high of 6.07%, a level regarded by analysts as unaffordable for any prolonged period."They raised 2.2 billion versus a 2 billion target, so they can raise the money," said Achilleas Georgolopoulos, a strategist at Lloyds in London."Then the (question is), are the yields threatening for the medium term? And yes, clearly they are much higher than the previous auction ... But still they can continue for a few months to fund at these levels."The finance ministers also signalled there may be some leeway for Greece, following the formation of a coalition of mainstream parties committed to the country's 130 billion euro EU/IMF bailout but determined to renegotiate some of its terms.Athens will ask lenders for two more years to hit fiscal targets and an extension to unemployment benefits as it seeks to soften the punishing terms of the bailout that saved the country from bankruptcy.Greece's euro zone partners, in particular paymaster Germany, have offered modifications but no radical re-write of the conditions attached to the lifeline agreed in March.Juncker said nothing would be decided until the troika of EU, IMF and European Central Bankers had returned to Athens for a look at the books, starting on Monday."We will have a look into the findings of the troika and then we will discuss in detail the different means and instruments which can be used," he said. "It doesn't make sense for the time being to give more precise indications on the content of the programme."

Fuel companies should justify pump prices - AA

 

Fuel companies need to tell the public why their margins are creeping higher though oil costs are dropping, the AA says.AA petrol watch spokesperson Mark Stockdale told  there is a lag between what fuel companies pay for petrol and what consumers pay at the pump."Over time margins are certainly increasing," he said."If the fuel companies are saying historically margins haven't been high enough, then they need to go to the public and explain why they think margins should be rising."Stockdale's comments follow BP's claim that the company gets bad press even though prices have fallen back under $2 for the first time in nearly a year.BP's External Affairs manager Jonty Mills told  yesterday that "there's a bit of scepticism out there and it's hard for us to get a good rap in the media"."However I think we've shown, we've dropped the price six times consecutively in the last month and a half. BP have led four of those," he said.One of BP's rivals, Gull, further cut prices for regular 91 Octane petrol to $1.959 today.But Stockdale said the rise in margin of three to four cents in the last couple of months is "too much too soon" and he does not understand what has happened over that period to justify it.Though petrol cuts have been coming "thick and fast"be paying too much at the pump."We're basing it on the margin as it was in March, and based on those numbers we think there could be a cut of about three cents per litre," he said.Stockdale thinks there should be another price cut within the next week.

NEWS, 14.06.2012.

Greeks pull cash from banks before election

 

Greeks pulled their cash out of the banks and stocked up with food ahead of a cliffhanger election on Monday (NZ time) that many citizens fear will result in the country being forced out of the euro.Bankers said up to 800 million euros ($US1 billion) were leaving major banks daily and retailers said some of the money was being used to buy pasta and canned goods in case of shortages, as fears of returning to the drachma were fanned by rumours that a radical leftist leader may win the election.The last published opinion polls showed the conservative New Democracy party, which backs the 130-billion-euro ($US160 billion) bailout that is keeping Greece afloat, running neck-and-neck with the leftist SYRIZA party, which wants to cancel the rescue deal.As the election approaches, publishing polls is now legally banned and in the ensuing information vacuum, party officials have been leaking contradictory "secret polls".Yesterday, one rumour making the rounds was that SYRIZA was leading by a wide margin."This is nonsense," one reputable Greek pollster said, on condition of anonymity. "Our polls show the picture has not changed much since the last polls were published. Parties may be leaking these numbers on purpose to boost their standing."The pollster said there was some consolidation, with voters turning to New Democracy and SYRIZA from smaller parties but the pool of undecided voters remained unusually large so close to the election and the result was impossible to predict.Both parties say they want Greece to remain in the single currency but SYRIZA has pledged to scrap the bailout agreement signed in March which has imposed some of the toughest austerity measures seen in Europe in decades.The European Union and International Monetary Fund have warned that Greece, which has only enough cash to last for a few weeks, must stick to the conditions of the bailout deal or risk seeing funds cut off.Euro or drachma dilemma New Democracy has been telling voters they must choose between the euro or the drachma, while SYRIZA promises to end the austerity measures imposed by Greece's international lenders, such as salary and pension cuts, that have driven many Greeks into poverty.Fears that Greece will collapse financially and leave the euro have slowly drained Greek banks over the last two years. Central bank figures show that deposits shrank by about 17%, or 35.4 billion euros ($US44.4 billion) in 2011 and stood at 165.9 billion euros ($US208.1 billion) at end-April.Bankers said the pace was picking up ahead of the vote, with combined daily deposit outflows from the major banks at 500-800 million euros ($US625 million to $US1 billion) over the past few days, and 10-30 million euros ($US12-36 million) at smaller banks."This includes cash withdrawals, wire transfers and investments into money market funds, German Bunds, US Treasuries and EIB bonds," said one banker, who spoke on condition of anonymity.Retailers said consumers were stocking up on non-perishable food while almost all other goods were seeing a huge drop in sales as cash-strapped Greeks have no money to spare in the country's fifth year of recession."People are terrified by the prospect of returning to the drachma and some believe it's good to fill their cupboard with food products," said Vassilis Korkidis, head of the ESEE retail federation."It's over the top, we must not panic. Filling the cupboard with food doesn't mean we will escape the crisis," he said.Supermarkets said they did not see a rise in profits as people spend less money. But sales of staples like pasta have gone up.A generation that suffered the deprivations of the Nazi occupation of Greece has traditionally raided supermarkets ahead of any impeding crisis, for fear people will go hungry. Their children have picked up the habit and are stocking up on basics."It's fear that is motivating people," said Anastassia Tzorbatzidou, mother of three, who says she has her shelves full. "When you have kids, it's better to have something."

Italy, France find common ground on crisis

 

The Italian and French leaders on Thursday found common ground on how to confront Europe's worsening debt crisis, emphasizing that budget discipline should not come at the expense of economic growth and calling for a region-wide move to boost market confidence.The leaders held their first bilateral meeting since President Francois Hollande took office last month as Italy's borrowing costs skyrocketed on concerns the country may be the next, after Spain, to need financial aid.The positions outlined by Italian Premier Mario Monti and Hollande, however, were at odds with those espoused by Chancellor Angela Merkel.Europe's crisis response `'has not been enough to protect the euro from market turbulence," Monti said. "We need to reinforce the weak points of the system" in both the real economy and finance. The two leaders agreed that focusing on growth does not mean abandoning budgetary discipline.`'But public account discipline is not enough to have growth, foster development and create jobs," Monti said.The two men also discussed launching eurobonds, jointly issued bonds that would spread debt risk that both support. Germany opposes the bonds out of concern they will lead to fiscal laxity.Monti pointedly noted that Italy and France have together contributed 40 percent of the eurozone's bailout funds to date, staking a claim for the legitimacy of their views.The need for action to boost market confidence in the euro was evident in the bond market movements on Thursday.Italy paid 5.3 percent to raise (EURO)3 billion ($3.76 billion) in three-year bonds from financial markets, up from 3.91 percent last month and the highest level since December.The high rate underscores how investors are increasingly worried Italy will be destabilized by market turmoil in Spain and might run into trouble servicing its debt as it wallows in a deep recession. Political wrangling over reforms has also raised questions over the government's ability to overhaul the economy.To boost confidence in the euro, Hollande said a solution must be forged not just between France and Italy, but with other countries ahead of a European summit on June 28."Growth is the first thing, the second is stability ... the third point is deepening euro monetary union," Hollande said.Monti's technocratic government came to power in November with broad, bipartisan support from political parties to reform the economy. However, lawmakers have in recent weeks shown signs of returning to the old Italian ways of political jockeying. Lobbies and some parties have pushed to water down some reforms.The lower house of Parliament passed a package of anti-corruption measures aimed at making Italy a more just society  something that Monti, a former EU competition commissioner, believes will help encourage more risk-taking and enterprise-building. After being bruised on labor reforms, Monti's government attached the package to three votes of confidence on the most contentions passages, all of which easily passed lower house votes. Despite the passage, there were many calls for changes when the Senate takes up the package  an indication of more political gridlock

NEWS,20.04.2012.

A five-point checklist to help you prepare for another global crisis

The IMF just downgraded growth in Europe and projects a recession of -0.3 per cent in 2012. Imagine you are minister for finance in an average developing country. You survived the 2008-2009 global crisis, presided over more than five years of respectable economic growth, a boom in commodity prices fills your treasury with cash, and your central bank does not quite know how to keep your currency from appreciating. Old problems persist — too many young people are unemployed, your industrial sector is small and aging, and plenty of public money is wasted or simply missing. But, all in all, you feel pretty good about how things are going under your watch. Suddenly, you learn that a new global crisis may be looming on the horizon. Think of another rich country defaulting on its debt, pulling other rich countries’ banks into trouble. East Asia can no longer find avid consumers in the West for its exports, so it cuts back on its own consumption of raw materials. Commodity prices begin to fall, and your politicians start to worry aloud. What do you do then? Or better, what can you do now to prepare for all that? Five key measures may help. First, secure your financing — for at least the next 24 months. The last thing you want in the middle of a storm in international finance is to default on your payments. If you do, already-nervous investors — foreign and local — will rush for the door. Not to speak of what soldiers, teachers and civil servants would do if they were unpaid. So, calculate your cash needs as if all your expenditures were untouchable, and sign today the loans you know you will need tomorrow. (With interest rates currently at rock-bottom, this is smart debt management anyway.) While you are at it, assume that a good 10 per cent of those grants that developed nations regularly give you will no longer come in. It would also be nice if public companies that manage your oil, gas or minerals could buy insurance against their prices falling too much (this is called “hedging” in financial jargon); unfortunately, if they have not done it before, it is probably too late now. Second, prioritise your investments. Decide now which project you will slow down, postpone or drop, if you were to run out of money. In a way, you are looking for projects that are not “shovel ready”, that is, those that cannot be quickly implemented. Rule of thumb: if it involves massive, never-done-before, pride-of-the-nation construction, it probably can be put on hold. Remember, cutting investment expenditures is always tricky — the interest of the politically-connected are usually affected. You don’t want to have that discussion during a crisis. Third, audit your social safety nets. There will be plenty of people in need as jobs disappear and incomes fall. Poor families will respond in ways that may hurt them, and your country, in the long run — pulling teenagers from high school is the typical example. You will then be called upon to fund temporary employment programmes, feed children in schools, and pay for direct cash transfers. Fourth, stress test your banks. Your financial system is probably small and isolated from the sub-prime sophistication of Wall Street. It is made up mostly of banks that hold the deposits of the urban middle class and handle the remittances of the Diaspora. What would happen to your banks if, all of a sudden, foreign currency became expensive and scarce? Are their loans concentrated on a few construction or trading companies that would go belly up if the commodity boom came to an end? And are banks lending to each other? To each others’ owners? Your central bank should be able to answer all these questions — it is supposed to supervise banks in real time. So it can alert you early. And, fifth, identify who will suffer when crisis strikes. Who are the winners and losers? (Yes, there are winners in this.) Will the impact be felt in a single, remote rural area where your commodities are produced or extracted, or will it be primarily an industrial affair, hurting middle classes across cities? Will the affected belong to a specific racial, religious or regional group? Whose consumption will get more expensive? And whose assets will lose most value? This kind of “political economy analysis” is invaluable because it will highlight the roadblocks in your decision-making. One final point that may not depend entirely on you as finance minister. It would help to decide who, when the time comes, will speak for the government and what the message will be. Typically, in days of turbulence, cabinets tend to become dissonant and perceptions of policy paralysis — if not incompetence — make things worse. That would be a pity. All told, it is possible — and not too difficult — to get ready, at least for the first wave of impacts from a potential new global crisis. And if the crisis never comes, so much the better.