THE FINANCIAL CRISIS

By Felipe Argote

The neoliberal model was walking smugly around the world, dearly cherished by so-called Washington Consensus, when suddenly crashed face to face with the reality of a recession. The market fundamentalist neo-liberal Economists, who spent a year under the carpet sweeping the housing bubble, justify it saying ... nobody could have predicted this recession. That's true. Nobody can know by magic financial future if the rule is that there is no rule.

The financial crisis started from late 2007 but was hidden Deliberately Because at that time was the U.S. election campaign. The public statementto a recession was not suitable for the Claims of the Republican Party in power at that time. It was not enough that people were sick of the lies of weapons of mass destruction, soldiers and men an women soldier photographed with naked prisoners of war in Iraq, nor by the secret prisons at Guantanamo. A recession would be bad for the political claims of the heirs of George Bush and Dick Cheney so they hide it.

However it was not possible to hide the truth forever. So the bonbas of "toxic assets" in its dynamic carrying exploded the world's largest economy and as a house of cards the rest of the global economy.

But how everything started? Deregulation Let's see it. As the cornerstone of the neoliberal model, the state does not intervene and there is an efficient market, This determine the growth of a financial bubble. This is very simple. Mortgage brokers, are like insurance agents in our country. Having no limits in its handling of the financing mechanisms for achieving their potential customers, they decided to turn the financial reality with expectations of individuals to acquire housing. So, they sold for example to those who had no capacity to pay when purchasing a home of $ 150,000 a system where the buyer paid a fraction of the monthly payment for five years and the next years would have to Substantial increase based on the premise that they would increase its revenues in the coming years. This would pay their mortgage at the time stated in the contract.

Of course this increase in income did not happen in many cases and people began to lose their homes due to nonpayment. This is compounded by the fact that in Establishing these mechanisms fictitious housing prices rise as there is a demand Which does not correspond to the current supply. One can imagine that in our country those who have capacity to pay a mortgage on a house purchase of $ 60,000 bought a $ 150,000 house hopping to raise their incomes after five years. This brings up the price of those same houses as demand rises. The house price rose Because Of course this did not stop to mortgage brokers that they turned back credit opportunities for the plaintiffs to acquire their sales commission. But at the beginning of the loss of homes or to exploit of the bubble, they fell to their real price. A citizen who bought a home at $ 150.0000, and lpaid it for five years, had not paid more than $ 3,000 because we remember that payment was below its monthly average, but the house was auctioned for $ 100,000, Because as we said lowered price on the market. Then the citizen, became homeless and still owes $ 47,000 to the bank.

A clever mind will ask why banks granted loans under these conditions. Very simple. In the absence of regulation, these banks in turn sold the mortgage, or debt of the public, financial market through bonds. When asked what supports the bond, the answer is ... mortgages. And since everyone is Convinced that the mortgage is the safest assets, buys the bonds in the market without any apprehension.

Of course, the bubble exploded the house fall in value, people lose their homes and the holders of the debt, either through bonds, either through mortgage options fall into bankruptcy. This is the genesis of the financial crisis and leading to the global economy into recession now we are suffering.

Currently, the market fundamentalists like Alan Greenspan and all the advisers of the Bush administration are so upset that they failed to explain what is happening themselves, while the new Obama administration seeks to stem the collapse of the economy with Keynesian measures, putting much of Taxpayers 'money to save General Motors from collapse and all those who are tearing their hair out asking the state to be limited to public roads and building schools, those big capitalists in the past lobbies and succeeded by the neoliberal model Privatized profits but now they are asking to socialize the losses.

GLOBALIZATION: WHAT IT MEANS ?

By: Felipe Argote

Often used as a crutch to justify the progress as well as the misfortunes of mankind. Globalization is a concept which we believe has not been clearly defined. We see that some authors with economic formation goes unacceptably from been superficial to generic. Some argue that globalization begins when Christopher Columbus began the invasion of America as it is at this time to globalizes economic, political and cultural relations. Nothing more extravagant. Other writers, some without the slightest suspicion of what a classroom of econonomy studies is, describe the processes that explain the productive relations, venture to mention how interesting it is the term global village, so disturbing that sounds contradictory.

However, it is worthwhile to clarify that the most diligent analysts in the field include a number of concepts that clarify the difference between the way we produce before and after globalization and come close without reaching the heart of this global phenomenon.

Speaking of those without economic training have to Lew Rockwell, a political commentator lawless capitalism booster who defines globalization as:

"A fundamentally economic process that involves the increasing integration of individual national economies into one global market economy"[1]

Too simple.

But let´s see the etymological definition. The term globalization is an anglicized. Globalization in its definition is Anglo-Saxon globalization or global setting. There is not a term coined by a conference of experts, only a bad translation of the English. In Spanish that translated the term globalization would be mundialization in any case.

But this is not simple grammar. Here are some most authoritative definitions:According to the International Monetary Fund:

"Globalization is a growing economic interdependence of all countries, resulting from increased volume and variety of cross-border transactions in goods and services as well as international capital flows, while the widespread diffusion of technology .[2]

In contrast to the Economic Commission for Latin America (ECLA) globalization is:

"The process by which a major and growing part of the wealth and value is generated or produced through interconnected private networks of production and supply".[3]

The prospect of World Trade Organization WTO can gather Approach by Pascal Lamy, director general of this organization:

"The World Trade Report this year focuses on the importancia trade in a world in recent decades has been characterized by a growing dependence between countries. This interdependence is now called globalization is a complex and multifaceted phenomenon that involves an intense political interaction, social and economic nationally and internationally. "[4]

All you have previous redeemable elements, however in our opinion the most accurate definition would be:

"Globalization is the transnationalization of the production process"

Let me explain. Before the industrial revolution in the Middle Ages, the production process were carried out by the guilds. These were productive partnerships where participants gathered in the small workshops of production as the hierarchical level, teachers, government servants and apprentices. Based on a rigid internal organization of teachers leading the group located in craft workshops where the officers could become teachers over time, while the servants were confined trainees to remain in its low level. The interesting thing is that the manufacturing process was carried out by a single officer or teacher assistants. For example, from leather officer or teacher cut, sewed and dyed the product hit, achieving a final product scale unlike any other.

The production process leaps to blow up the industrial revolution in the mid eighteenth century with the invention of spinning by John Kay helped to delineate several threads simultaneously. After the invention of the spinning frame for Richardd Arkwright and later by Crompton combination that gave the functionality that allows for lowering production costs so far as to gowns massify sale in Europe. Finally, most importantly, the emergence of the steam engine. The industrial revolution changed the production process and invariably led to specialization. It would be very long list of theoretical systematization Adam Smith gave primarily to the specialization. The interesting thing is, to follow our example, now each of the participants in the process will specialize in what they are more efficient. The spinners, cutters, stitchers, which stained, the saddlers, each in its area definitely helped by the leap in technology of the day, bringing production levels to the point where it is considered a revolution. Since then industry takes over the head of the productive sectors over trade and agriculture.
This jump is thus a phenomenon where technology were combined with favorable conditions and ultimately result in a new production system. The favorable conditions for the development of this process provides a new economic model: liberalism.

In the late 80s and early 90s of last century unfolds a phenomenon which also combines new technologies, some who had decades of existence. Recall that the spinner rack Kay and Arkwright had been useless without convincing the political and economic conditions for the invention of Crompton entered the market, and the steam required for the social conditions imposed over the system guilds, exercised a high level of power and against those who imposed the new production process.

Not all items arrived at the same time the industrial revolution. Many inventions took decades without being given a practical use. The same is true in the new leap in the production process called globalization. The invention of the chip was made in 1958 by Jack Kilby, Nobel Laureate in Physics, who worked for Texas Instruments. Like the internet, but whose development had its genesis in 1969 called ARPANET which communicate with the universities of Stanford and UCLA, the world wide web as we know it emerged in 1989 in the CERN (Conseil Européen pour la Recherche Nucléaire), ie the European Council for Nuclear Research in Geneva, where a group of physicists led by Tim Berners-Lee created HTML. In 1990 the same team built the first web client, called World Wide Web (www) and the first Web server.

The combination of these elements of technology together with warm, moist environment that resulted from the so-called Washington Consensus, a term coined by John Williamson, where systematize the actions that structure the implementation of the neoliberal model proposed by Friedrich von Hayek in his book "The Road to Serfdom" and then seconded by Milton Friedman. Before Washington Consensus many of these measures were applied haphazardly since 1982 in the countries under pressure from international financial institutions. The combination of warm, moist environments like the neoliberal model that reduces barriers and press the universal privatization, together with the existence of a leap in computer technology and robotics, determines the production process transnacionalice. It is true that there were multinationals since the late nineteenth century and were strengthened further after the Second World War, but its branches developed almost the entire production process in the countries where they would sell their production. This worked for a Keynesian economic model of import substitution orations, whose policy of high tariffs pressing for industrial enterprises were established in the place where stood the demand. By eliminating these barriers and with the leap in technology, multinationals produce the production in the area that is most convenient. The most obvious case is the computer. Its external components, hardware, can be produced in Malaysia, the chips in Taiwan, the software in the U.S. or Japan but was completed in the stores sold, depending on whether the customer wants to memory card 100 or 200 gigabytes if you want your video card, if you want Windows XP or professional, if you want output from usb or cd player. This is the fundamental element that defines globalization. The production process is fragmented and transnationalized. All the other elements are just fellow travelers.

[1] Lew Rockwell Web page. http://www.lewrockwell.com/. 2009.[2]Page of the International Monetary Fund. http://www.imf.ogr/. 2009.[3] Page of the Economic Commission for Latin America and the Caribbean CEPA. http://www.eclac.org/. 2009[4] Pascal Lamy. Director of the World Trade Organization WTO WTO website. http://www.wto.org/. 2009

PANAMA 2010 STATE BUDGET

THE PREMISES OF THE NEW BUDGET

By Felipe Argote

On September first, the minister of the presidency Demetriu Papadimitriu sent on behalf of the state general budget for fiscal 2010 proposed by the Minister of Finance Alberto Vallarino. This project, in accordance with common usage, is integrated as Bill N. 49 WHICH DELIVERS THE STATE BUDGET for fiscal 2010.

In this first article on the subject, we will confine ourselves to analyzing the fundamentals that anchor as premises and can not be divorced from monetary amounts to be received as income and therefore what will be available for outcome of this general budget.

In later articles we will present the budget analysis from various perspectives.

General State Budget for 2010 include the following premises: · a growth in Gross Domestic Product (GDP) of 3.5% · A price index rising by 3% · An unemployment level of 5% · A deficit Nonfinancial Public Sector (NFPS) of 2%.

Here are some elements of analysis of these variables: A GDP growth of 3.5% is acceptable for 2010. IT is because in January begins the period of greatest use of labor and inputs canal expansion project. Although the global economy is in crisis and that there are countries like Mexico where his tragic strategy to raise levels of dependency with the U.S. through a free trade agreement (NAFTA) has led to a contraction in gross domestic product (GDP ) exceeding double digits, in Panama instead the economy should not go beyond the slowdown, if there is a change in the direction of global recession for next year. Panama has submitted figures for average annual growth of over 6% in the last eight years with levels above 11% in 2007 and 8.5% in 2008, thus a 3.5% growth in 2010 is conservative but realistic.

On the inflation rate of 3% seems to be too optimistic. This is because last year's inflation levels were 8.7%, according to official figures, with increases in food of 15%. Being that the determinants of inflation were economic growth and immigration of people with high income levels and means, it is unlikely that this trend is reduced without changing the elements that made it soar. This should be directly proportional to the trend in GDP growth that is expected to grow 3.5% next year, it must be accompanied by a level of growth in the Consumer Price Index (CPI). Otherwise, if you expect lower levels of inflation, should be a higher GDP slowdown and rising unemployment levels.

However, the budget of 2010 to consider a level of unemployment of 5%, which would determine a decrease of 1.5% over the last year. There is an inverse relationship between inflation and unemployment. With lower unemployment levels rise due to price that if there is a level of population with greater purchasing power, then it has a higher purchasing power. This leads by default, to the increased of demand and hence a rise in prices. If you plan to reduce unemployment in times of global economic crisis, which is highly optimistic by the Ministry of Economy and Finance, is also unlikely to reduce the price index, unless new contributions in economics, to determine that this inverse relationship becomes direct.

The unemployment rate dropped significantly last year. In 2007 amounted to 7.8% of the Economically Active Population (PEA), while in 2008 dropped more than a percentage point to 6.5% of the PEA. This significant reduction was driven by the rapid growth of the Panamanian economy. While U.S. bankruptcy of Lehman Brothers, an entity born in 1850, reveal a recessionary process that had already been born in late 2007 and early 2008 as confirmed by its economists a year late, in Panamá instead, we enjoyed a growth of 8.5%. In the current year 2009 it is expected to gross domestic product growth around 3% for Panamá. In fact by 2009 there are estimates ranging from 3.5% to Deloitte forecast to -1.0% which calculates the publication Insight (¿?), Panama Economy, by 3% from the International Monetary Fund estimates and the actual Ministry of Economy and Finance, 2.5% from Standard and Poor's and CEPAL and 1.4% which calculates the British magazine The Economist.

Then MEF forecasts that underpin the new budget of 2010 presented extremely optimistic, if we see that the reduction of just over one point was supported by economic growth of above 8%. Now they want to reduce unemployment levels in one and a half points, assumming for this year 2009 the unemployment remained at 2008 levels, which is unrealistic if it is true, as it appears that the economy only grow by 3%. As the MEF consider the deficit underlying nonfinancial public sector (NFPS) shall not exceed 2.0% in 2010, according to Social Responsibility Law led by international financial organizations, in my view have the contradiction of being overly optimistic if not forestall that can not be acceptable economic growth accompanied a 3.5% decrease in inflation rates of more than five points and a reduction of one and a half of unemployment levels because these elements are contradicted by the vertex.

Such levels of growth and falling unemployment that necessarily has to cope with an increase in the price level and above, especially the growth of the economy in times of global recession can only be maintained with anti recessive or as some call them "anti-cyclical measures" that are not nothing but a state investment in economic activities with significant multiplier effect, which promotes economic growth at a time when private enterprise is not willing to invest for fear of losing their capital amid the crisis. I understand that in this direction that the new government to build the meter and make emphasis on investment over spending. These measures take us at least to be very conservative in responding to the question of whether or not it is possible to meet the 2% deficit of the nonfinancial public sector.

CENTRAL AMERICA PARLIAMENT: AN HISTORICAL STUBBORNNESS

By Felipe Argote

The integration between countries is a process nobody can stop. The removal of the old border disputes between regions is crossing step by step to a better life. In the nineteenth century, while industrialized countries established vast territories as the best way to develop a market for their products and have enough labor inputs, all together elements necessary for industrial development, Latin American countries mainly linked to agriculture This is way the countries split en small ones, because the agricultural economy does not require vast markets. So far for the new Latin American oligarchies was better to be the head of a mouse than the tail of a lion.

While in northern European countries joined by choice or by the force of weapons, in latin america the New Granada went to the Gran Colombia under the leadership of Simón Bolívar for a few years and then became the Little Colombia which missed on the way the countries of Ecuador, Venezuela and Panama, as well as the influence on Peru and Bolivia. Central America on the other hand was not part of this historic process, but was linked regionally to Mexico. Central America declared its independence on September 15, 1921 together with Mexico and stays for a year attached this country, later they integrate the Federal Republic of Central America. This republic was formed by Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Chiapas, which subsequently decided by referendum to join Mexico. Instead Panama during the colonial era was linked to the viceroyalty of Peru first and then to New Granada, always with the current South American countries. And remain so until 1093 and even we would still be part of Colombia if otherwise the chess play of the United States after the Colombian Congress rejected the Herran-Hay treaty in order to raise the annuity of $ 500,000 per year paid by Americans for the railroad route and who refused to rise it after the proposed inter-oceanic canal construction. This was 82 years after the Central American countries unite to form the Federal Republic of Central America and 66 years after its division despite the strenuous efforts of General Francisco Morazán to keep Central America united as one country.The Liberal leader held positions of Head of State in Honduras, El Salvador and Costa Rica, while Panama was connected to the leadership of Simón Bolívar in the south. Our country has achieved national identity tanned in the struggles for the recovery of our geographical waist country after a "revolution" which had as politician actors just a handful of conservatives and liberals who walked with the new flag accompanied by a couple dozen people and then not give a Panamanian, but the Colombian from Cartagena, Manuel Amador Guerrero as the first president of the new republic.

Referring to the discussion of the Central American Parliament (PARLACEN), an idea originating in the european union and not in our neighboring land bring us to the the point to ask what made that Panama joined the Central American parliament and if it is worth continuing in this direction .

This process began at the Endara´s government who not only integrates the Parlacen but changes the plates of vehicles on behalf of Panama or the province that historically accompanied by: CENTRAL AMERICA. Many motorists decided to cover this word with electrical tape. Then ran the absurd decision to remove the statue of the Indian Urracá, national hero of the struggle against the Spanish invasion, from the park that bears his name, then set up a monument to Francisco Morazán. Stupid.

What connects us to Central America? We have seen that we dont have a common history, but also our customs, which are much more similar to that of Cubans, Puerto Ricans and Dominicans, and even that of Colombians and Venezuelans to Central America. At dinner, dancing, outgoing manner of speaking, man ... identity. No wonder the Colombians and Venezuelans who have moved by thousands to our country say they feel at home. However let's put a Costa Rican, Guatemalan, or Nicaraguan in any of our neighborhoods and they will feel like they are on Proxima Centauri.

Central Americans have the same clock time, we have the time to Bogota, our economy is more often linked to the south by the Colon Free Zone to Central. Our main clients are Colombia and Venezuela. Our music is more like a Colombian vallenato than a polka or a mazurka from Nicaraguan who so pretty and colorful it is, yet it doesnt looks like our popular music. It's a stubbornness to continue with the idea of tying ourselves to something of which we are neither part. However, the isolationists, those who say we should not become part of anybody and be a feud are so extravagant in its historical perspective as those who want us to link to the force in Central America. I think we should integrate the South, where we link history, customs, identity and economy. As bad as we like the situation in Colombia is not going to be for ever, we must attach ourselves to South America, we have to joint to Mercosur and integrate step by step, without a hurry but with a strategic perspective to the South American bloc. Central America should instead link to Mexico after they failed and ill have to forget its integration with Saxon countries. We can´t attach ourselves to Central America only because it affirms geographical ties that bind us, because that is also relative. While there in Central America Jurassic animals grazed and were preyed, Panama was under water.

Panama was not linked to anyone until the arrival of Spanish invaders it was made up people scattered throughout the geography. In fact Panama was nothing more than a fishing village. The Spanish used then this region, not as a starting point for the invasion of Central America, but of the Inca empire of Peru. Since that moment we were invariably linked to the fate of South America and that is in my point of view, our historical destiny.

A LETTER TO MISTER PRESIDENT

Economists College of Panama

Re: Tax Reforms

Raúl Moreira

President

My Dear friend Raul:

Thank you very much for your request about what we the members of the college think about the bill of tax reforms proposed by the present government to the House of deputies. Here I submit my opinion, which I offer as a contribution to discussion of the topic with the propensity to be modified when faced with better arguments from colleagues at school.Article I sent you[1] which is only a contribution to discussion on reform, I am entrusting my opinion on the systematic position which I believe should be the college´s position on the topic:

1. I think we should request that both projects that includes tax reforms must be discussed together:a. The preliminary 21 "which establishes measures of fair taxation for the middle class." presented by Deputy Jose Isabel Blandon currently chairman of the Budget Committee of the Assembly.b. The project 33 "which are modified by provisions of the tax code and take other measures." Submitted by the Minister Dimitri Papadimitriu on behalf of the Cabinet Council President Richard Martinelli.

2. Agreed with eliminating the CAIR for natural persons.

3. Agreed with 20% set in the roof of the Income Tax (ISR) for individuals.

4. Agreed with that school expenses are deductible from income tax up to B / 2,000.00.

5. Also according to the income tax deduction of social security payments for up to 10% of annual gross income and are deductible currently only private insurance.

6. Also according to an adjustment in the property tax and capital gains on the sale of real estate to 5% of sale price or the cadastral value, whichever is of greater benefit to the state.

7. Agreed that steps be taken to avoid splitting of neighboring lots to avoid paying property tax.

8. According to establish a fixed 20-year exemption of all improvements to the amount of B/80, 000.00.

9. Propose to develop a lant titling plan for free of Panamanians with possessory rights as proposed in the campaign.

10. Under the tax is raised from 10% to 25% in the gambling rooms and 10% to 18% for full casinos.

11. According to increase the cigarette tax to 50%. and include alcohol beverages too.

12. According to increase the ceiling by notice B/40 business operations, to B/60, 000 and extends to the Colon Free Zone.

13. Contrary to spread payment of ITBMS fixed telephony business because it penalizes all companies including small and medium businesses

14. Contrary ITBMS include commissions for banking, financial services and real estate tax because it is a final applicant or consumer of the service, the user, and therefore cooperates with the economic slowdown.

15. Contrary to ITBMS include commissions paid by insurance and reinsurance to third persons because it goes against the final purchaser of the service which helps in raising the weight tributary to the middle class.

16. Contrary ITBMS include legal services to be provided to persons resident outside the country and which changes the historical concept of territoriality and again will fall on the middle class.

17. Contrary ITBMS include legal services that lend themselves to international trade ships registered in the merchant marine because it is recessionary in times of global crisis.

As always I appreciate your interest in making us partakers of the discussion and willing to give the college any further collaboration.

Best regards and congratulations for your good job in our college.

Mgter Philip A. Argote S.

TAX REFORM: THE NEW BILL

Two bills of tax Reform were presented before the assembly of deputies related to Panamanian law of tax reforms. The first, called preliminary N. 21, is backed by Rep. Jose Isabel Blandonfrom the Arnulfist party (conservative). This document is called "Which establishing measures of fair taxation for the middle class."In the preamble, in a simple but loquacious way the lawmaker warns against the tendency to reduce the middle class because of the increased cost of living and the former increasing of the tax burden to the population. Congressman warns of the explosive impact that this trend may have on the country unless there is evidence of social mobility but rather a contraction of middle-income population. Hence, proposed to the assembled deputies very specific measures:1. Remove CAIR (Alternative Calculation of Income Tax) for natural persons.2. Reduce to 20% the ceiling of the tax burden (ISR) currently stands at 27% for individuals.3. Representation expenses that will join the rest of the income and do not have a different percentage.4. It states that school expenses are deductible from income tax up to an amount of $2,000.00.5. Establishing the income tax deduction of social security payments for up to 10% of annual gross income. Currently only private insurance is deducted.6. Finally, ISR provides for payment of foreigners who remain part of companies whose activities are perfected, consume and have effects offshore, but their wages earned in Panama.
Subsequently the proposal was presented by Alberto Vallarino, current Minister of Finance and member of the Arnulfist (conservative) party also specified with the number 33 and whose headline reads: "Which amending provisions of the tax code and take other measures." This project was presented by Mr. Demetrius Papadimitriu Ministry of the Presidence (and very close to President Martinelly as he was his Executive Chief of Campaign) on behalf of the Cabinet Council. The preamble to this document is opposed by the top to deputy Blandon. It doesn´t refers to the tendency to contraction of the middle class, or who have suffered asphyxia by inflation and increased taxation. On the contrary focuses on the need for the state in collecting more revenue for the network, to redistribute opportunities and debt payments so that this amount will be zero within 20 years. Then the need is noted that the most vigorous of the economy contribute to the less privileged. Finally it is stated that ITBMS in Panama is very low, since it is one of the lowest in the world. After establishing a series of fiscal measures summarized as follows:1. Adjust the estate tax and capital gains on the sale of real estate to 5% of sale price or the cadastral value, whichever is of greater benefit to the state.2. Establishing higher penalties for tax fraud in relation to property tax or the rateable value.3. Provision is made to avoid splitting of neighboring lots to avoid paying property tax.4. There shall be a fixed 20-year exemption of all improvements to the amount of $80, 000.00.5. As for games of chance tax rises 10% to 25% in the gambling rooms and 10% to 18% for full casinos.6. It increases the cigarette tax to 50%.7. Increase the cap by notice of business operations from $40, 000 to $60, 000 and extends to the Colon Free Zone.8. It extends the ITBMS payment to:a. The fixed comercial telephony b. A commission for banking, financial services and real estate.c. Commissions paid by insurance and reinsurance to third parties.d. Legal services to be provided to persons resident outside the country.e. A legal services that lend themselves to international trade ships registered in the merchant navy.In this new version does not speak of CAIR that was used in the campaign to add business, nor for all the ills that afflict the middle class that supports eloquently deputy Blandon.
Only in the first three months of collecting state revenues exceeding the budgeted at a level above $16 million. Of course this is not taken into account by this project as it is only aimed at increasing state revenues. It is considered that the problem is not that the level of tax revenues from tax in Panama is only 10% of GDP, underpinned by the government document, making it one of the lowest in Latin America. This superficial analysis ignores the structure of the Panamanian economy that is based on so-called outside of the country a"tax haven", which is rooted in the failure to pay the big tax-free zone enclaves and Financial Center . Would rather to establish what percentage amount we pay to not enjoy this benefit. What we can say is currently in Panama to 70% income tax on taxpayers to have as natural persons, while only 30 percent as companies disbursed. This is inverse to 70 against 30 firms pay in the U.S. against those paid by individuals. Also, do me a favor, neither the U.S. that in recession is still the wealthiest country in the world can claim to pay its foreign debt in 20 years. If we continue on this path, we agree with the deputy Jose Isabel Blandon that ... I quote: "If we continue down this path there will come a day that Panama will be a country where social standards lead us to inevitable social confrontations."

Photo: Felipe Argote

THE BASIC FOOD BASKET STILL RAISING

By Felipe Argote

I just received the report published by the Ministry of Economy and Finance: "Food Basket" of June 2009. The report measures the so-called basic family basket. This is the price an average Panamanian family pays per month to cover their minimum food needs. To do so we have to calculate the minimum requirements for calories and protein for an average person, man, woman and child and establish a daily average level. By a process generally accepted, is estimated at 2.305 calories per person per day on average in Panama (see table 1). Then this requeriment moves to the food bought in the way the Panamanians or other countries people depending of where we are, who lives in the districts of Panama and San Miguelito shared into the following food groups: meat (15.84%), cereals (47.8%), vegetables (4.33%) legums (2.38%), fruits (1.67%), fats (10.58%), milk (5.75%), eggs (0.79%), sugars (6.89%) and miscellaneous (4.71%). Then is added what is spending for cooking gas (po B/0.37r day per person) primarily to retail prices and the conclusion is the total expenditure per person per day.
According to the population census carried out by the Comptroller General's Office has been established that the average Panamanian households consist of 3.8 members. So multiply the sum of these foods at current prices by 3.8 members and then by 7 to obtain the weekly amount. Then multiplied by the number of weeks that has the year (52 weeks) and finally divided by twelve to provide the basic family basket monthly.
Known above we see that in 2002, when it was organized last basket of food, when was considered the components of this basket using as the household survey method, to establish the food consumed by the Panamanians, the basic family basket was $187.30 monthly cost. Currently, the food basket, according to the source cited, is $268.20. This determines that seven years after Panamanians pay $80.90 more for food. This is an increase of 43%. Only early last year (see table 2) the cost was $239.05. This resulted in an increase of 28% over 2002. That same year (2008) ended with the basic basket on $237.85. This means that last year alone the cost of basic food basket increased by 15%.
Currently, according to information released from the Ministry of Economy and Finance, the basket is $268.20 resulting in an increase of 5% over last June. Of course if the analysts wants to be nice with Martinelli´s government would say that inflation has grown less than last year instead of affirming that has not changed its sign.

The Panamanians have paid an average of these first six months of the basic basket $270.37 compared with the average $247.93 the first half of last year. That's an increase of 9%. In the last month (see table 5) the basic food basket has risen by 1% on average, although some items such as meat, rose 1.5%, cereals by 4.2% and sugar by 2.3%. The increase would be higher, but as the price of the fruit dropped 2.6%, so the average went a little down. The dairy productos fell in 0.9% and eggs by 0.6% among others, according the Ministry of Economy and Finance. The current government has committed to lower the price of the basic basket of at least 10%. For this to be true they will have to lower prices by about 20% so that we actually see a reduction in the basic basket. This is so because of lowering prices by 10% would not be a decrease, but only a recovery of the levels to which prices were last year. Prices have risen last month, B/2.87 which means a 1% increase in just a month. We hope that is not expected to rise an additional 9%, then reduce the current levels of early mandate to claim fulfillment of a campaign promise.

Source: Ministry of Economy and Finance. Food basic family basket. June 2009.

WHAT ABOUT PUBLIC TRANSPORTATION

By Felipe Argote

Photo Felipe Argote

Some suffer, others have good profit and others still got a benefit for political purposes or to increase its television ratings. Public transportation is a calamity that Panamanians as phlegmatic as we are suffer everyday without seing the light at the end of the cave.The "piecework" system is undoubtedly the genesis of the desperation of bus drivers and their assistants who should cover an account, before receiving the rest of the income. So they squeeze a lot amount of people in those rolling coffins. Then they run at highs speeds in that terrible roads that they destroy even more with their weight. The drama is not limited to those who are forced by necessity to use these death traps. It turns out that while the perpetrators are also victims. These drivers of low educational level (if they did they would not be thus ruthlessly exploited by the owners of the buses), with their assistants whoose job is to defend the driver of the aggressiveness of their own customers and the thieves who otherwise would take their account of the day, are the villains who are hated but in turn are also victims of overexploitation. No schedule, no holidays, no thirteenth month and even worse... without retirement. In an age when most workers do not enjoy but at least survive on a small pension that barely reached, the older driver is driving at ages over sixty years, or abandoned by their employers when they are a danger to their assets. These drivers will be seeing collecting cans or scrap recycling after years of devoting his life to be bus drivers. The problem of public transport is thus much more complex than they would like to those who have access to a microphone and and can just say we have to eliminate them all. That is good maybe to polititians in campaing time. Transport market involve about 300,000 people including the drivers and their assistants, bus owners, cleaners, mechanics, small restaurants, arts painters and others indirect workers. Remove this source would result in a raise of additional one percent level of unemployment. Thats why in spite of how unpleasant bus drivers can be any goverment must think in macroeconomic terms and strategic, rather than go with the wave of outrage caused by the death of a young boxer who tried to build a future for himself and his family, who lost his life due to the incompetence and negligence of a driver. Neither it is time to run to a transit accident with a devastating result to show contrite in front of the television cameras. This is jus to buy time, when a goverment does not have the capacity to establish a strategy to solve the problem long, medium and short term.The metrorail will take no less than four years to implement, but the system does not support four years, users will not support four years, society will not endure four years with this system. While waiting for the subway it si necesary to replace the so called "red devils" with new buses with drivers employed by the city council. On the other hand, however vile they are the owners of buses, so they can engage in other activities and not become a social burden or swelling the ranks of common criminals, they should indemnify and hold one to one bus replacing them in the same way with new buses with drivers employed by the municipality. But the bus owners to receive their compensation must surrender the bus prior to its revised seal to prevent the delivery of scrap. Must have paid all their debts, as taxes, interest values, fines and other given charges, and of course the debts which may have for injuries and death ....This would start the process to eradicate this inhuman and antihuman system and open the doors to a new system that would give them greater peace of mind and quality of life both to users as to the hateful and then hated drivers and their assistants.

CHILDREN GO HOME

By Felipe Argote
Photo Daja Editions

Nothing binds to public opinion as when state persecutes children and teenagers as responsable of all the ills of society. Although less than 10% of crimes are committed by minors the state, with the blessing of the whole society, has decided to take most of their resources to go after children and young people through the touch of remains.Interestingly, the same sectors that makes no less than a year, when he wanted to discuss sexual health law, defend child labor, because he felt it was good because it taught them the value of work today are the strongest advocates of curfew. These children having jobs as packers in supermarkets, according to them, kept his family and studied, today strongly defended the curfew. How do they want to these children to work if the police takes them? The supermarket owners were not going to get a card for them simply because they dont have them in the payroll.
Sooner or later it has been shown not only that the measure of a curfew for children has not lowered the crime but that only applies in the tough neighborhoods and at the discretion of police officers. The crime rate can not fall if the scarce resources of the police rather than engage in prosecuting wrongdoers is used to collect the children who stay playing during the school holidays after 9:00 at night. Or the patrol car can not go on persecution of thieves because it is busy carrying to jail the couple of teenagers who lingered in the cinema watching a movie or walking in the coastal strip.The media and especially television have promoted the idea vigorously pursue children and teens to stop crime, drug trafficking and terrorism. Many contradictory witness the great show that turned the program and move it, channel 2 fabulous idea which I think has done an immeasurable contribution to reducing juvenile delinquency, by raising self-esteem of teenagers, recently demonized as being responsible for all the ills of society. The contradiction is that the same channel that promotes the curfew develops and promotes good show this grouping of students in their schools until 11:00 at night to watch the grand final. The obvious question is whether the governor was given a special pass to move it to distribute among children and adolescents by thousands packed the Balboa Theater, the American Institute (winners and winning second place), the Colegio San Judas Tadeo (champions and champions undisputed contest) and the dedicated and hard-working sentimental favorite bookmarks and Bilingual College Academy. Otherwise, and certainly was not, the police patrol must have been waiting outside of these sites by dozens, ready to pick up the children and young lawbreakers. Common sense leads us to conclude that there had not been fair, because they were enjoying a healthy activity and good for their training but we know that because we where following the contest. How many of these, more than 500 children and adolescents according to the police chief were collected during the period of the curfew also came from a healthy activity but was not televised nor had the the rating of the dancing contest?The police chief, after a question from a television reporter asking him if during the weekend curfew was later said no, that was equal to 9:00 at night, but that was more flexible weekends. I read the decree of the curfew and nowhere is talk that would apply at the discretion of the police. I find it curious to know where is this flexibility. It depends on your physical appearance? If the youth is black or white? How are they dressed? Maybe if answering a question of the officer in charge of the operation of: Where are you from? the teenager answer is: I come from the house of my sick grandmother ... then move on. Or if the answer is: I come from trafficking cocaine, from burgling, from doing a job as hitman and execute a terrorist act, then ... To jail!