Cuba: the end of comunism?

1959, 1st of January: the revolutionary movement of Fidel Castro droped the Fulgencio Batista's dictatorship. With this event, Cuba started a new era. And it seems that Cuba is facing now a new big change.



Cuba's Revolution: when Fidel took the control of Cuba

But let's go back to understand why the current differences are changing so much the economic and political environment in Cuba. After the revolution, the new government nacionalized  the economic apparatus and stablished strategic relations with the Sovietic Union. But only in 1965 was born the Modern Comunist Party. In that year, the country held a total adherence to the Marxist-Leninist Communism: all the economic activities were under the government control and all the workers became public employees. And despite the fact that the Government - as usual in all the Comunist Regimes - couldn't supply all the basic goods and services to the population, it resisted over the years thanks to the population's support.
This was possible because the Government supplied many services like education and health cares for free.
But there are other reasons for all the support given to the government by the population. First, the propaganda, second the USA blockade to Cuba (The Government used it as an excuse for the shortage of many goods and services) and third the support and economic help by the Sovietic Union (because it was good for them to have an ally near to the USA).
With the fall of the Sovietic Union, Cuba lost it's principal buyer and supplier. The shortage became even worst. Since it was impossible to continue to buy the goods for the population in the international market with the so called "comunist prices" - prices with scount -, in the 90's the Government decided to reduce even more the standard of living. The population in general started to live with less goods, less income and the hunger became even more normal.
Second the Government started to authorized the private investments in the tourism, one of the strongest sectores for the economy. This decision truned into a good decision because with the increase in the number of tourists, more private companies invested in teh country in this sector, the country received more money and many jobs were created.
However the situation was still dramatic for the population that continued to move to the USA hoping to find a better life.

The brothers Fidel and Raul that are controling Cuba

In the 31st of July of 2006 due to a big disease, Raul Castro - Fidel's brother - took the control of the government and the people though that everything will still the same. They were totally wrong. Obviously the Communist Party was still the only party, and continue to rule by its own decisions without accepting any kind of opposition. But the economic activity changed a lot. Raul introduced huge economic changes, like the liberalization of the big part of the economic activity and the extinction of more than half a million jobs in the public sector with the objective of having at least 40% of workers working in the private sector by 2015. And in 2011 the population was authorized for the first time in decades to sell and buy their own properties.
Of course these big and fast changes are bringing other consequences specially for the economic agents, like the inflation, but it seems that the Government will not turn back.
The Cuban Government is making the same changes that China made some years ago: both Governments understood that it's necessary to provide a good way of living to the population to them accept the absence of liberty. With no economic development there's no future for the cuban comunist regime.
Now, we only need to wait and see when (and if) the population will realize the differences between the liberty to make their own money and have their own activity and the liberty to say what they want and to choose their own government, and the fact that both are important and essential for a good way of living.

The Legacy of Keynes

A crisis is always associated to a fall of the paradigm into force. And the current crisis isn't an exception.

Today we see many economists bringing back the theories and models of Keynes. Despite the wrong idea some people have about theories, the world is seeing now that the contribution of Keynes for the economics theory is broader that what many though was.
When Keynes in 1930 argued that the USA weren't in a simple recession and the markets couldn't solve the solution by themselves, as the people belive then, the world was shocked.
In 1936 Keynes published his most famous  work: "General Theory of Employment, Interest and Money", despite his fame and contribution to the european economy and politics were already considerable.
With many publications and an important role in the negotiations of the Treaty of Versailles, with his General Theory,  Keynes showed the weaknesses and failures of the economic theory to explain the problems that were hauting the Western Economies.
The Great Depression of 1929 with its consequences - exponential growth of the unemployment, banks and companies failures, and decrease in the industrial production, money suplly and international trade flows - changed the way as the people were seeing the world and the economy. The economists trained in the current theory weren't able to explain how the world come to that situation: the faith in the mechanisms of self-recovery of the markets were put aside as the crisis was becoming worse.
This was the perfect time for Keynes, to struggle against the current theories.
At that time the economic theory already defined the economic cycles theory. According to it, the economic growth of the capitalist economies evolved according to 4 phases:

• ascendent phase (propserity or expansion);
• inflection from the ascending to descending;
• descending phase (depression or contraction);
• inflection from the descending to ascending;

Keynes concentrated his Theory in the last phase, in order to help to recover from the crisis the Western World was suffering. Keynes created a Theoretical model to explain the insufficiency of aggregate demand, the decrease in the capacity of investment and consumption and the decrease in the confidence of the economic agents.
The Western Economies survived to the 1929 Great Depression acording to Keynes predictions. One of the ways founded to solve the Depression was the restoration of the confidence in the markets, thanks to the public intervention in the macroeconomic field, by the decrease in the interest rates and the increase in the budget deficits.
Using the explanation of the existence of equilibrium solutions below the full employment and some possible recipes for the economy becomes to prosperity, the contribution of Keynes was benefited by the New Deal policies of Roosevelt in the USA, the cycle inversion in many Western European Countries (thanks to expansionary monetary and fiscal policies) and of course the abandonment of the global standard system.
Keynes showed a new short-run macroeconomic approach, based on the management of the aggregate demand through public incentives to increase the investment and consumption.
However his theories were sometimes misunderstood. When he annouced the end of the laissez faire, he wasn't trying to predict the end of the private innitiative: the capitalism wasn't a model to shoot down, but to improve.
Many economists though that the solution was to become a planning and central management economy. For Keynes the capitalism should remain because it wasn't a wrong system: it was only imperfect in the way it was beeing applied in the real economies that time. For Keynes the markets should work with public incentives to stimulate the investment and consumption and fight the unemployment, leaving intact the private property.
Since then, according to the cycle theory, the crisis couldn't be avoided, the solution according to keynes was be already prepared to struggle and recover from this situation.
After the Western World recover from the Great Depression, the economists though that a solution for all the depressions was founded. In fact, in the next recesions suffered by the USA (1975, 1982 and 1991), the Federal Reserve used the policies proposed by Keynes: decrease in the interest rate in order to stimulate the economy, accompanied sometimes by the decrease in taxes and increase in the public expenditure. However in the Asiatic Great Crash of 1997, the affected economies didn't follow the Keyne's recipe: the policies applied were the budget austerity and the increase in the interest rate. The governments of these countries knew perfectly the Keynes policies. But they realized that untill 1997 they were following the policies issued by the International Monetary Fund and the U.S. Treasury. So, the governments selected another way to solve the crash.

After Keynes, our world faced big crisis and is now facing the biggest crisis after the Great Depression in the Keynes' time. And the current big crisis showed that it's  necessary a new approach and understand of the Keynes' theories, for a better implementation of those theories.

Voynich: the alien manuscript?

The manuscript's cover

It's a completly mistery. From the texts to the draws, no one can translate and find the meaning of these 204 pages (although it seems that 28 pages were lost). Baptized as Voynich in 1912 by the antiquarian Wilfrid Voynich, after discovered in the Jesuit college in Villa Mandragone.
Today we can admire this mysterious manuscript in the Beineck rare book and manuscript Library in the University of Yale - USA.
This manuscript doesn't have an author, a title or even a date. However in 2009 some researchers from the University of Arizone, thanks to the radiocarbon dating, put the origin of this manuscript from 1404 - 1438.




Let's start to analyse the figures:
- 113 of them represent what it's called the allien plants: no one knows or ever saw these plants - they don't exist in any place of our planet;


Some of the alien plants

- from the sheets 73 to 86 it's possible to see some bizarre draws: many women naked, maybe pregnant, in strange positions and with the feet submerge in a dark liquid: there are also many tubs connecting the groups of figures, but no one knows the meaning;

Some of the strange naked women

- we can also see 25 diagrams that seem to be a celestial map, astral charts and astrological schemes: it's possible to see the sun, the moon, some Zodiac signs and other heavenly bodies - however not all agree with that - , this section is even more strange because shows things that it's not supposed to be known in such anciente time;

Some of the celestial maps

Finally the mysterious language. There are many Hypotheses. In 1900 William Newbold argued that this manuscript should have been written by Rugegro Vacone, an english philosopher from the middle-age. Later in 1946, Leonell Strong from the University of Yale, said that this manuscript should be a ciphertext wrote in medieval english. Some years later, two experts in encryption from the american army put the Hypothesis that the text is written in a philosofic artificial language, like an ancient Esperanto, by an ancient alchemist.
Many other hypothesis were made over the years about the language: that should be written in ancient cipher hebrew, pre-Gallic, ancient Scotish or in nahuatl, the ancient aztech language. In 1978 the philologist John Stojko argued that the language is ancient ucranian and in 1987, Leo Levitor said that the text was wrote in Catarian, an eretical christian group, in their secret alphabet.
Jorge Stolfu from the Brazilian University of Campinas had another idea: according to him, a chinese delegation made a phonetic transliteration from the chinese, during it's travel in Europe. And finally one of the last hypothesis was made by Nicholas Pelling, who said that the author was the italian architect Antonio Averlino, the so called "Il Filatore".
With so many theories about the origin, the name, the author, the purpose, the language, the sense of the figures, this manuscript is becoming even and even more intesristing. After so many hipothesis, Gordon Rugg from the University of Keele and Robert Brumbough from the University of Yale, made a radical hypothesis: there's no mistery aorund the significance of anything in this manuscript because it's just a swindle.

China: the new economic superpower?

"China is a very interesting country, and in some years will overtake the USA".
We can listen  in the beginning of the movie. Is this what will really happen? Will the world now turn again to East? This movie shows that China was already a superpower some centuries ago. And, with the big crisis in the USA and all teh Western World, China is now taking part in the international comparative advantages, and becoming the new production center of the world. From politics, to economics and militar power, we can see in this movie how the world is being changed by the growth of this superpower.
But, is this just a historic consequence? Will China be the next in this continuos cycle?

Let's see the answers in teh movie, and how is China is working now and how is its role and behaviour in the regional and international context.

Capitalism: a lovely approach

Yes, there are many approaches for this thing called Capitalism. Here is the lovely approach: a love story about the capitalism.
Full of irony, Michael Moore shows to us, the deffects and the stupid decisions made in the american policy, but that can be adapetd in a different way to all the Capitalist countries. This movie shows how we are making the same mistakes almost since the beginning of the human societies, and how we still allow them to be make.
It's impressive to see the numbers of this disaster, and how much did we loose and are we loosing with this system called capitalism.
Should we need to review this capitalist paradigm? Decide yourself:

Ireland: the Power of Finance

The Celtic Tiger still exist?

The crisis we are facing these days in the world, is a crisis that started in teh financial sector. We are seeing again the importance of this sector and its strength: a crisis that started in the financial sector is afecting all the economy with many consequences in the persons, the companies and in the Governments. But the objective of this message it's not talk about this consequences.
I will talk about a country where the financial sector had one of the biggest growths and penetrations in the economy and in the country.
In 1960 Ireland was one of the poorest economies in the Western Europe. And until the beggining of the 90's the evolution was too small, as we can see in this graph:

Based on the book: "O crash de 2010" from Santiago Becerra

The irish economy presented a deficit, was poor and based in immigration until de 90's when it suffered a big transformation. In the beginning of the 90's it was more than obvious that the current economic model wasn't viable anymore.
And as we can see in this graphic, the new economic brought good consequences for the irish economic performance.

Based on the book: "O crash de 2010" from Santiago Becerra

The stunning growth of the irish economy was an unique case all over the Europe in this period. From a goner until the beginning of the 90's, Ireland achieved the second higher average GDP pc in the European Union, just behind Luxembourg. How was possible to an economy like Ireland to have such great sucess. The big changes started in 1987. The new-elected government started a new politics based on 3 big principles:
- the public expenses were drastically cut;
- the competence was promoted and encouraged in many subsectors;
- with the EU permission, the irish government reduced the tax for the companie's benefits;

And the consequences were just like how the government predicted:

• The country attracted a lot of foreign investment, specially from the USA, using the advantage of being in a geographic position between North-America and the continental Europe. From 1997 to 2006, Ireland received about 88 000 millions of dollars of foreign investment - something incredible for such small country - . The investment was mostly based to the production of products and services for exportation.
• The low level of the public expenses;
• The efficient use of the european funds;

All these conditions led to a decrease in the unemployment rate and the entry of many immigrants specially from Poland, Russia and the Baltic countries. We maybe be surprised for such great sucess and we are led to think that, specially after the year 2000, the way of life should be so great all over the country. But the country was suffering from a big problem: the illusion created by the statistical average.
The enormous agregated GDP in a small country, produces a high GDPpc but hides the extrem realities, some of them very dramatic. Like many other examples in the History, the statistical data was hiding many economic and social problems. Outside the big centersm the scenario was very different from what we immagine in a country with such high GDP: the bad infra-struture quality, the shortage of many essential goods and services. Of course this reflects how the government was spending the public income - the level of public expenditure was much lower comparing to the GDPpc level - . So, if the most part of the population don't have a level of life according to the level of GDPpc, this means only one thing: this level of income doesn't arrive to the populations' day life.
How is it possible? Thanks to the way how this income level in obtained: witth a decrease in taxes and low public expenses, together with the concentration of the activities and application of GDP almost all near to Dublin.
But, despite the unbalanced distribution of the income, the average income of the irish population increased, together with the growing indebtedness.
During this period, the population bought more and biggest houses, and sold those they had.
This mecanism was working well until 2006. The activity in the housing market started the slowndown and arrived the stagnation in the Summer of 2007.
The irish families began experiencing serious financial problems, due to the mortgage debt and the increase of the interest rates.
And across the country it's possible to see the wrong projects, where the money was applied.
Now, we can see why the Celtic Tiger is more a myth than a reality.
The irish government decreased the taxes, and together with the european funds, increased the GDP. However the population didn't take advantage of this good situation.
The popualtion's income increased because it was in a bad situation comparing with the rest of the Western Europe, and because of the households' endibtness.
The celtic tiger is more speculation than reality: the hiper consume, the excessive debt and the increase in the investment and importance of the tertiary sector, sooner brought strong structural problems for the irish economy.
In the beginning of the current crisis, Ireland was suffering the consequences of the "financial engineerings" made all these years, and of the extrem external indebtedness.
The predictness for the irish economy are not  very encouraging.

The great euro-crash of 2012

We can say that the official start of the current crisis was in 2008. But since then, the crisis is suffering of many stages and many mutations. What started as a crisis only in the financial sector, quickly spread to another sectors, arriving to the States.
2012 was a terrible year for all the world but with stongest consequences for Europe, specilaly for the eeuro-zone. We watched many news about that, and each one much more worse than the previous. But what really happened in 2012 in all our economies? And how do we became to this situation?
Here is a video that tries to explain that.