Revista miPymes en Ingles #72

CONFRONTATION VERSUS AGREEMENTS

It is too bad that when analyzing 2014 we see that it was a year of confrontations, which has fueled hatred, class differences, insults, aberrations, the strength to subdue the powerless. At least, this is what is seen looking out the window of Ecuador. It feels worth seeing these images of a country that could be focusing their energies on more positive strategies. Hatred and vendetta do not bear good fruits; they do not add or contribute to solve the deep problems of Ecuador.

We are ending 2014, some more than others, it is always the same, division and confrontation.

However, it is a matter of analyzing the objective figures, the first seven years of this century compared to the second seven years. How have we changed? What have we improved substantially? What remains to be done?

Ecuador still opt for a development strategy contrary to the opening, contrary to the clear rules and training institutions; counter to the strengthening of a free press. Review the history of mankind and see if insisting in closed economies creates prosperity. Discuss the countries of the planet that in the last 100 years have been able to leave the sub-development.

Freedom is abused up to outrageous media spots. The lack of freedom has drowned the country and, therefore, the challenge for 2015 must be committed to build bridges, to work together, to form alliances; leaving aside the passion to use reason to say HAPPY 2015!

15 YEARS OF DOLLARIZATION Dr. Pablo Lucio Paredes Director of the Institute of Economics Universidad San Francisco de Quito

Fifteen years ago most analysts in Ecuador and abroad thought the country should not dollarized, and that likely the process would fail because they would lose competitiveness, jobs will be destroyed and a thousand other reasons‌ almost everyone thought that, except Ecuadorian citizens who have massively moved their assets into dollars and also drastically changed their expectations on the very day that the change occurred (Note: it should however be noted that the country was less dollarized than intended, because most daily transactions are still made in sucres, the media-media population class average down probably kept almost all his financial holdings in sucres, and we should remember that arithmetically the devaluation itself increases the value of dollar deposits even without new contributions to stock). Only a group led by Joyce de Ginatta, Dora de Ampuero and Franklin Lopez strongly supported the process.

It is somewhat understandable that opposition. We must always evaluate pros and cons (at that time the pros were not processed correctly, today we must not forget cons) and it was a fairly new process. The experience of countries that had fallen on the brink of hyperinflation (and Ecuador was certainly one of them) is that they could not find collective solutions, they fell into hyperinflation and only then some managed to create institutional mechanisms so that it does not recur again (Chile, Peru, Uruguay perhaps Brazil) while others repeat their basic regular indiscipline (Argentina, Venezuela). Only Ecuador chose to import external institutions (the dollar and everything behind) to stabilize and prevent that weird philosophy of "hit bottom to get better."

Dollarization is certainly not a panacea, because the real development is based on the effort, saving, investment and productivity chain, but definitely the bad monetary management may preclude this process and to the money well managed give a solid floor (not a certainty). Therefore it is important to highlight the virtues of a system of dollarization. One, it lowers the overall risk of the economy, especially in a weak institutional environment and prone to huge imbalances (that oil deepens). Two, it lowers inflation (average 30% annually over the past decades, from 3.5% in 2003 onwards), generates greater financial depth, i.e. more deposits and loans, and extends the planning horizon. Three, it lows transaction costs. Four, it improves equity (this is very important and insufficiently discussed), for now at least everyone (rich and poor) have the same monetary umbrella. Five, it eliminates incentives to work in financial speculation and focus attention on productivity (in companies, the Financial Manager ceases to be the king of income generation, now is the area of production and marketing). Six, a strong currency is the very basis of a system of freedom and hence of development.

On the other hand, there are three major cons of dollarization. One, the seigniorage i.e. the loss of tax revenue for the difference between the value of printed money and material value, a loss that has in all respects far less importance than is given. The second, and arguably more important, is that you no longer have the money and foreign exchange instruments to deal with shocks (especially external). Finally the disappearance of the Central Bank as lender of last resort for banks, a role that is actually similar to the statement at the second point.

Personally I have no doubt that the pros exceed by far the cons.

But the weaknesses of dollarization itself is problematic, especially in an oil economy subject to strong cycles. If there is anything that weakens an economy like Ecuador, oil, and little institutionalized, is when in the growing cycle (high oil prices) significant distortions are generated as it has happened in recent years (just copied from the late 70s and early 80's): underpinned economy by high public spending (which has risen more than 10 percent of GDP), increasing

indebtedness (3 or 4 additional points of GDP each year), tax reserves for minimum shocks (less than 3 points GDP), excessive wages (the minimum wage of $ 3 an hour unrelated to the average productivity trend and also public wages for similar activities are about 50% higher than private).

When the low cycle comes (as we are perhaps already seeing, lower oil prices and a stronger dollar in the international market), then dollarization does not have the appropriate means of adjustment ... ... Then, does it puts it at risk? Surely, but not because the system is not manageable but because it has given a very fragile environment ... .the truth, the same environment, because contrary to the hope that we had, dollarization does not necessarily generate the required disciplines. And if the government of the day does not believe in the system, as is happening now, then the risk increases, and that is exactly what the new Monetary Code does. First, it sets to close willingness of the Government important resources of the economy and the financial sector such as: lace, liquidity surpluses abroad, Liquidity Fund, and then opens the door to the more serious enemy of a dollarized system as it is the possibility to issuing parallel money to finance government excesses, through the overly broad definition of electronic money managed by the Central Bank.

We must absolutely avoid re-issuing our own money because there is no doubt that it is again, the door open to inflation and continued devaluation, i.e. the worst incentives to maintain the essential elements of development that as already noted are effortless, saving, investment and productivity. If that happens, can we get the illusion that we would do it in an environment of sound monetary and fiscal institution? No, because we must be aware that we maintain our basic indiscipline in all aspects. Certainly the conflicts linked to power, interest groups and the social tensions characteristics of a developing society with strong inequalities will not disappear. But the worst way is to try to resolve them via currency manipulation because it is the most inefficient, unfair and undemocratic path. With all the problems it has, it is better to leave these conflicts in the tax area, putting intelligent rules that allow framing it. Staying in dollarization is the best (not perfect) we can do.

WHAT EMPLOYERS OWE THE WORLD?

Giovanni Ginatta, Eng. F.I.E. CEO

In a world in which, in most countries, the role of entrepreneurs are demonized, they should stop and think about the origin of this generalization. On the one hand it is certain that it is a good business within the common strategy of political advocacy, to have enemies that can be attacked. It is always profitable the conspiracy theory. Large common enemies are detected: the imperialism, banking, foreign powers, entrepreneurs and many others that become the cause of our problems. the great common enemies are detected. Attack them is to solve our problems. Overall it's a story that repeats itself not only in time but that is welcome in many countries including the so-called developed ones. The pity is that it is easier to believe in these theories than to start thinking about the true bottom of our problems of lack of development, because reality is complex and fantasy is simple to understand.

In this hostile environment to the business world, fashion or necessity has imposed on companies to establish social responsibility programs. For some, these are positive efforts that improve the business environment. For others, these are just a wash of consciousness that does not really contribute to society and are more like public relation tricks where more is spent on promoting them in the implementation of these programs. In June 2010, the Harvard Business Review published an interesting article entitled "How did Peter Drucker see Corporate Responsibility" or translated: How Peter Drucker saw the Corporative responsability?. In that article, it is mentioned that Drucker's opinion was that leaders of institutions (and referred to all, nonprofit and for-profit) should in the first instance be responsible (and accountable) on the performance of their organizations, their performance and results. They must have the facilities to concentrate, focus and respond limitedly.

However, the same Drucker says that, at the same time these institutions and their leaders must respond by society as a whole. It's confusing, isn't it? Drucker first gives a statement focused on the results of the company but then topped it with another that makes him responsible for all the rest.

How is this?

For now I leave Drucker because it comes to my mind a speech to a business association in Argentina from the current President of Uruguay, JosĂŠ Mujica, in which he warns employers in a very simple but powerful way of his speech: your responsibility to society is enforcing laws and pay taxes; I will take care of the rest (Government). This is a much more grounded concept, at least everyone pay taxes and comply with the laws of the social part (and besides) the government is responsible to those resources.

In a third style, the famous Harvard professor, Michael Porter, establishes in 2011 his theory of "Shared Value". In this proposal, Porter states that companies have an obligation to seek to be competitive but to do so, they can not think in isolation and must therefore and for this, support the economic and social development of the communities in which they operate. Porter explores the creation of value (benefits versus costs) and that this is not isolated but depends on the interconnection between the companies and the various elements of their environment. Porter does not see this value creation in CSR programs as typically present but the shared value must be immersed in the DNA of the company and as such contribute to suppliers, employees, shareholders, community, etc., grow depending on the shares of the company. One company, for example, to practice the shared value, can not see a supplier only as a SPOT purchase but he should see it as a long-term ally to which we must help strengthen as a professional and as a person.

Returning to Porter, his view was that the company does not ignore externalities. A company growing back, ignoring externalities and effects on society could not flourish in the long term.

Sooner or later the consequences would be paid. Porter said that a company could not flourish in a society in decline. In that sense, the business world itself should care what you think of them, not only thinking about fighting the demagogic politics that uses them as wind mills, but as an honest way to find out the effects is having on society which it belongs. In the first instance it has the responsibility to execute their products and services fairly and honestly, respecting their customers and secondly is required to deepen into every possible way of contributing to society from the field of business. What good will it do a company makes propaganda of its aid program to a poor little school if even they treat their customers. It makes me laugh to see CSR programs of some airlines that have neither the most delicate courtesy for their passengers. If they do not care about the basics, it is implausible that they have interest in supporting the development of society.

In short, a society that ignores the value and contribution of the business world is living a primitive fantasy. There are no progressive societies that do not support the business development and that respect and admire the role of their employers. A country, as President Mujica said, must have clear rules and enforce these requirements/laws/regulations/taxes on their business. Beyond this, the correct vision of business leaders should aim to constantly add value to the whole environment in which your company operates. When this is accomplished, employers should stop hunker down and scream loudly that they are proud of their role and contribution to the country.

OIL THREAT

Henry Kronfle Kozhaya, Eng. President of the Chamber of Industries of Guayaquil President of the National Federation of Chambers of Industry of Ecuador President of the Ecuadorian Business Committee President of the Association of Latin-American Industrial -AILA The behavior of the low world oil market, brings to the fore a number of responses that seek to mitigate a possible impact by falling oil prices, in the incomes of the general budget.

Indeed, President Correa has said that for every dollar lowering the oil prices, US$ 70 million are no received annually. The 2015 budget pro forma has estimated the revenue based on an average price of US $ 79.75 per barrel. Compared to 2014, this would mean a reduction of just over US $ 6 per barrel.

The President himself said at the time, that if the international oil price comes to "critical levels", it would opt to reduce investment, without affecting those social programs and infrastructure construction already started. However, whatever the measures are to mitigate the effects of a fall in oil, it will require more than just specific decisions.

The first thing to do is to reduce oil-dependent economy feature. This applies to design policies to generate a range of exports based in different products. The government itself has been relentless critic of that office; and has proposed changing the productive matrix and the energy matrix, to overcome what in the National Plan for Good Living is called as the "exporter extractive model".

The fundamental idea behind this proposed changes, lies in promoting import substitution industrial development on the one hand, and stimulate production with more domestic value added, on the other hand to venture into foreign markets with a diversified generated offer, produced at relatively low costs by the provision of an important infrastructure especially roads, ports and airports costs.

Is not that little has been done. It could be said that in the nearly eight years since the current government, it has made significant progress in the provision of infrastructure. But it has also become clear that this was not sufficient to achieve the development objectives, and rather it has increased oil dependency, to the point that changes in oil prices pose a threat. Then the task is not completed.

The second thing that is required to face a scenario of adverse oil prices, is to return to austerity.

While the current spending budget pro forma grows 188% between 2008 and 2015 (from US$ 7,371 million to US $ 21,275), the GDP in the reporting period increased 71.5%. This means that the source of livelihood for the expansion of the economy was the government spending. And an economy that grows solely as a result of the impact of what the government decides to spend, automatically shrinks when resources are not admitted to the same extent as before.

In the face of this threat, the government would be wrong to bet on a solution to increase taxes in order to remedy the lack of oil revenues. This possibility worries. And it is not only concerned by the extent to which the policy would be taxed wildcard due to the lack of government resources that refuses to stop spending, but because the message of fiscal instability that is sent to investors is exactly as the one it was sent to previous governments: It is easiest to raise taxes or create new ones.

Surely from day to day, the signals that government officials sent will be clearer, about what they want to do to address the oil threat. For now, just to trust in his good judgment.

Xenophobia: HYPOCRISY AGAIN

Alberto Medina Mendez Journalist. Private communications consultant (Argentina) A recent official announcement loaded with a high demagogic content proposes to quickly expel foreigners who commit crimes.

It promises to be the new icon of domestic nationalism, that many defend from different ideological ends. It's amazing that a country that has been largely populated by those who came from other nations, today have the audacity to hate those who have decided (like their own grandparents) to choose this place to build the future of their own.

It is difficult to understand so much hatred, bitterness and resentment toward those whose only sin was to born in different cities to their own. The quality of a human being, his honesty, values, do not depend in any way of the geographical area in which he has taken its first steps.

The despicable attitude that classify individuals according to their birthplace, shows a way of conceiving the world. It can and must repudiate the crime, the appropriation of the alien, the attack on freedom or life and limb. But typecast people according to their nationality, is a symptom of the growing moral degradation of society.

The most pathetic face this issue is the hypocritical standpoint of those who encourage the deportation of foreigners against unproven crimes, with abbreviated summaries without the necessary procedural safeguards.

Although it is not recognized, when they refer to "foreigners", they think only in Bolivians, Paraguayans, Uruguayans, Peruvians and Brazilians. It is that they not only reject the stranger, but that they have an additional discriminatory burden, mixing ethnic, racial issues and social prejudices, a lethal combination of impossible phobias to justify with soberness.

Their "foreigners" are not Danish, Australian, Canadian, Japanese or French. They won't admit it, but the foreigner they refer to belongs to a lower caste, a subhuman. It's what they think, but do not even have the courage of defending their true position, showing then another of their detestable sides, the intellectual dishonesty.

They are unable to defend their ideas with courage. They know that hatred is not a sustainable value and then they disguise their xenophobic vision behind elaborate arguments that they pretend to represent very cleverly.

They say that society should not afford the substantial prison costs arising from sending to prison foreign offenders, thus justifying the deportation as an ingenious solution. It is rather strange that these expenditures bothers them but that they are not equally vehemently to repudiate the structural corruption of his countrymen, to the point of supporting these indecent leaders at the polls.

Not even from the pragmatic it is reasonable to support such nonsense. If a person commits a crime he must respond for it and that means that after the trial that convicted him with sufficient evidence, it is necessary to comply with the established penalties. Banish him as a foreigner in a small procedure, it is ultimately under an inadequate process, it is wandering between two risky situations. One possibility is the anticipated unjust accusation, the other is to reward crime expelling him and avoiding then serving a sentence for his misdeeds.

The borders are only an invention of man, absolutely artificial and discretionary transiting counter to nature. Individuals live in cities, so they are not citizens. They live in delimited territories by the logic proposed by the spontaneous evolution of their communities.

The creation of nations, and its byproduct further exacerbated, the one of that jingoistic nationalism, have made him a little favor to the formation of peaceful, constructive and harmonious societies.

They have only achieved so far to promote clashes, wars, divisions and resentments.

Inconsistency is one of the keys to this issue. Some who claim to defend freedoms, are the first to claim legal differences between local natives and outsiders, supporting laws as these that are proposed. On the other hand, the supposed "liberals," those who claim to protect human rights, are those that ask protectionist standards for the national industry attacking anything that comes from outside.

It is obviously that they are too many that have a big mess of ideas. His inconsistencies are many and their arguments are arranged according to their feelings and not according to a rational and balanced view.

The inconsistency is compounded by a constant hypocrisy regarding justification of positions.

These characters are moved by passions, are mobilized by the whole visceral abominations and from an emotional look, they build certain theses only to conceal. They know that hatred can not be displayed as positive and then they try to intellectualize premises not to be so misplaced.

Xenophobia is a detestable feeling. Those who hate foreigners do not recognize them honestly and try to camouflage their vile feelings. They know about their undignified behavior, but it should be considered only as a revamped version of utter hypocrisy and inconsistency of contemporary thought.

CONTRARY TO EMPLOYMENT Mauricio Pozo Crespo, Ec. Economic Analyst An issue of national concern is the new labor law promoted by the government. The official discourse has been aimed at that same modernizes the labor system, universalizes the social security and provides stability to workers. I hate to disagree with these statements, because the bill nor modernizes, or universalizes, or generates stability to the worker. As it will be able to state, it is a law that in place of modernize or make flexible the employment structure in the country, it hardens relations employer worker incorporating criteria that ultimately affect employment rather than promote it.

Labor modernization is tied to the concept of adaptation to the reality of the national and international economy. If tomorrow there is a decline in the price of flowers or broccoli, domestic producers that export should be able to adjust their internal costs, i.e. for example, wages of workers. I do not mean to lower wages but to adjust that reality to the ability to maintain the same level of employment but under different conditions. If the famous Mandate 8 of the Constitution of Montecristi does not allow to hire by the hour as a drop in external demand forces me to lay off staff and not adjust the number of working hours. It is preferable to allow workers to labor 7 hours per day instead of 8 to not having a job. Now this actually is worse, because the bill would eliminate the hiring for definite time, which means less capacity to contract. After 3 months if I do not have concrete and safe evidence to have hired the right personnel, then I'll be forced to leave aside these workers. In conclusion, at this point of the law the hiring hardens and the result is fewer jobs.

Therefore neither modernizes nor provides more stability for workers.

The IESS (Ecuadorian Social Security) recorded an actuarial deficit accumulated over several years. This means that under current conditions, in the future the IESS would be enable to meet all the benefits that currently offers. If the fiscal finances are weakened by the excessive government spending in recent years and if for the subsequent years if the estimated fiscal deficit still needs more external debt whose main and almost sole creditor is the IESS, the future ability of the state to fulfill its obligations with the IESS, is lower. The are more and more retirees to take care and contributions fail to meet that demand. Therefore, if now more beneficiaries are incorporated, the actuarial and financial IESS problem is enlarged. As such, the statement of universality is more noise than nuts.

So much they boast of being academics that they should know that the neoclassical school tests clearly that the labor rigidity prevents improve employment levels, as well as the Keynesian school holds that a lower aggregate demand, for less private investment, also complicates to hire more workers. The law is biased and not as it should be, i.e. balanced between workers and employers.

Moreover, the labor issue in the country and the laws are aimed at workers without regard that the coverage must cover the unemployed, the underemployed, and the effects that can lead to labor policies on the economy as a whole, in competitiveness of the productive sector and in the ability of the latter to compete in international markets.

While "best" are the terms of remuneration to be fixed for workers, the lower are the chances that the employer can hire more workers and higher are domestic costs that affect the competitiveness of the productive sector. This is not to affect the remuneration of the employee, this is to set policies that consider a broader and more complete environment for the benefit of all, not just one segment.

If the policies of hiring harden, as indeed is the inability to employ a worker at indefinite period, the likely result is that the employer is obliged to dismiss workers before the end of the trial period, since the cost of firing after that time span would become excessive. If the employer has no

assurance that the contracted employee meets the requirements and demands of the company, he should dispense his services before the trial period ends.

Any employer, whether from a large or small company, may want a high turnover of staff or benefits him to pay low wages. For the employer is better to maintain an adequate working environment, with low turnover, with stability of its people and compensation that allows happy and loyal employees to the company. These basic management principles are incompatible with the hiring, indeed, it hardens the ability to employ much labor.

Monthly Average Income vs Basic Food Basket -CBF October 2011-2014 (US $)

Another sector that is being harshly hit by these policies is the unemployed and underemployed.

That person who is seeking formal job for doing work on their own or simply that continues in pursuit of an activity as a dependent, will be much harder to be hired with policies that harden the employer employee relationship.

To set oversized firing costs for workers classified in a particular category does not solve the problem. They are falling into the same problem of trying to solve the crime with more years of detention and imprisonment. If a person that qualifies under certain category of higher cost of firing, is affecting the company because the employer is forced to dispense with his services no matter what the firing costs are.

Finally, it is important to note that while the public sector hire professionals with third level education or higher, the private sector hires mostly workers and less qualified people. Therefore, that the employment figures improve due to more public employees, have less favorable social impact than it is is done by the private sector, including, clarifying that it is not the role of the public sector to recruit.

Labour Market: Employed full, underemployment and unemployment 2010-2014 (Percentages)

It corresponds to the old measurement methodology of the labor market used by INEC. Source: INEC. Prepared by: MULTIENLACE

OIL IN FREEFALL

Alberto Acosta-Burneo, Ec. Editor of Analisis Semanal From September oil prices began to fall rapidly. The causes are due to a combined effect of increased supply and weak demand led to a decline in the price of $ 100/barrel earlier this year to US $66/barrel at the end of November. This is a decrease of 34% in three months.

On the demand side, economies such as the European and Chinese have had lackluster performance and consequently lower oil consumption potential if their economies were buoyant.

But the main explanation for the drop in oil prices comes from the supply side. USA has ceased to be a major importer of oil by increasing domestic production through the extraction of shale oil. The expectation is that the US becomes at a medium term, in one of the world's largest oil producers.

ALL EYES ON THE OPEC Venezuela requested the oil producers' cartel OPEC to reduce production quotas with the expectation of raising prices again. OPEC accounts for 33% of world oil supply that in the second quarter of 2014 reached 91.3 million barrels per day.

This application is understandable considering that Venezuela, like Ecuador, requires a higher price to US $100/barrel to avoid fiscal imbalances. However, other OPEC members are happy with lower prices. For example Kuwait has fiscal surpluses at a price of US $ 72/barrel.

Thus, Saudi Arabia, the largest oil producer in OPEC with 32% of the total supply of this cartel, refused to accept a cut in production quotas. Currently, the production ceiling cartel stands at 30 million barrels per day. However, several members are producing above the permissible value reaching an excessive production set of 474,000 barrels per day.

Finally, the OPEC meeting took place on November 27th and the decision that prevailed was the position of Saudi Arabia to maintain current production levels. The market reaction was immediate.

The crude lost in one sitting around 5% of its value.

CONSPIRACY THEORIES Some analysts qualify the decision of Saudi Arabia as a deliberate measure to choke American producers of oil shale. As oil production using this technology is more expensive (it is estimated between $ 50 and $ 70 per barrel), a low price will totally stop new investments and in the medium term it would allow the supply contract again and prices return to higher levels.

Another explanation is that Saudi Arabia does not want to lose market participation particularly the Asian market with a cut in production. They are worried if a cut in OPEC production is used by countries that are not members and that are major world exporters such as Russia.

Beyond these theories, the arguing of Saudi Arabia for inaction was that markets will stabilize themselves without intervention.

TO TIGHTEN THEIR BELTS The setting changed for many oil-producing countries that have to get used again to oil price levels of about 5 years ago. The transition will be particularly difficult for those countries that used the boom in recent years to increase their level of public spending beyond sustainable levels.

For the Ecuadorian case, the option now is to aggressively seek external borrowing to try to sustain investment in the short term. However, it will also be necessary to apply certain cuts in non-priority projects. The key is to avoid abrupt withdrawal of public investment so that their effects are not transferred to the rest of the economy.

But for the medium and long term it is urgent to adopt remedial action and adjust the course of the economic management of the country. Spending and public investment must return to a sustainable path. We must return to make room for private investment through an atmosphere of trust and legal stability. And we must build again an oil stabilization fund that allows us to more easily weather the times of low prices again. That this adverse scenario becomes a chance to take the road to the country on a path of progress through productive investment, employment and wealth generation.

FINANCIAL GLOBALIZATION Abelardo Pachano, Ec. The monetary history of the twentieth century is very eventful, particularly by the profound changes that occurred in the configuration of the economic power in the world today; the main actors had to face extraordinary and unprecedented circumstances that led to tense diplomatic relations for political facts that resulted in war, whose consequences undermined the conceptual basis in which the configuration of the monetary world settled.

The century began with the term Gold Standard. Its application stated extraordinary improvement results in the welfare of many, but not of all, the communities sheltered by this system. The story of its term began in mid-nineteenth. That is, it had been tried for more than half a century and it was still useful. Fifty-eight countries came to adopt it. It was based on clear and inviolable rules. Nobody questioned or doubted it. London was the financial center of the world. The stability and certainty in the value of money, with a tangible support, promoted investment. The industrial revolution did his thing. The telegraph, the steamboat and railroad facilitated trade and communication. The world was moving. But 1914 came and suddenly everything changed without notice.

It had started the First World War and with it came unavoidable fiscal needs. The importance of direct conflict with the survival of countries leads to military spending to the first level of priority. The needs are multiplying and test the monetary system. Paradigms break hoping to recover them at the end of the conflagration. But when that happens, the damage is very large. The amounts of repairs carried to an Agreement, the Versailles, incubating the next conflict. The world fails to stabilize economic relations and therefore currency or monetary ones.

The crisis extends a decade, with its ups and recoveries, and then lead to the infeasibility of the system, the explosion of the capital market and incompetence of classical economic policy to overcome it. Another decade is lost with an economic war destabilizing exchange rates and inflation does his thing. Some countries do not leave their anxieties and World War II broke out.

Thirty years have passed. A new system births. The basic rules are held to prevent currency wars.

The fixed exchange rate is established and takes control of the new scheme, the Link Dollar-Gold. It seeks to restore the system of international relations and imposes a straitjacket to national monetary and exchange rate policies. Again the world has a flowering stage which lasts a quarter century and reaches the beginning of the seventies. The typewriter, the use of oil in the shipping industry, newspapers and books cover industrial and political changes. The first minicomputers and the tip of a technological iceberg appear that will transform the world soon. Suddenly another war, Vietnam carried USA by tax incurred needs, to break its commitment of system axis and let in the air the Bretton Woods Agreement.

It takes about ten years to design the new principles of monetary policy. There are no firm rules but concepts. Inorganic emission disappears and gives way to the monetary programming. Exchange rates abandon their stiffness and controlled flexibility is promoted, but always with the aim to guarantee order, stability. The autonomy of central banks is consolidated and embodied the seeking of broad integration agreements. Protectionism does not yield. Multilateral agreements leave misunderstandings.

Technology invades the world and changes the economic structure. Barriers disappear to financial integration. Capital markets that were always the fear of official schedules are released.

Protectionism is beginning to be questioned. Europe seeks to form a cluster and specific treaties.

Asia countries take off. Latin America does not find the formula of development. It is late and suffering. Africa still gives no sign of wanting to leave the hole. The internet connects online and instantly everywhere. The cell has a capacity of three million times superior to the first computers. It embodies a new variable: confidence. It was in the attic of the economic policy and now it

determines its consistency. Traders gain strength and states are beginning to look their decisions more carefully.

A new era has started in which crisis can contaminate others. There is interdependence. Financial systems are unprotected and it appears signs of weakness and inconsistency of economic policies.

It has concluded the time of asymmetry in global surveillance. Henceforth all countries are subject to the existence of stages of distrust and instability. Some countries understand the message and correct their policies. The world has been transformed. Emerging economies share the size of the advanced ones and international financial transactions have increased from 18% of world GDP in 1974 to 120% in 2014.

However, the cost has been the loss of stability because from 1970 to 2014, 400 banking, currency and debt crises have occurred worldwide. Four coins are consolidated: Dollar, euro, yen and pound.

SDRs do not take off. Now, 75% of global growth depends on new actors: the emerging.

Commodity markets bloom and the terms of trade are reversed. The setting of world trade changes.

Bilateral FTAs are multiplying. Technology becomes the hub of the world of the XXI century.

The economic policy gets its principles of consistency. The classical postulates with the Keynesians are integrated to solve the crisis. Macroeconomic imbalances are accepted temporarily and with controlled levels. They are the exception at times of high risk and fall of dynamism. Stabilization funds are multiplied to mitigate cycles and minimize social damage. The lesson makes clear messages: the welfare and equity are only obtained with perseverance and consistency. Stability is an indisputable ingredient to improve the quality of life. The unorthodox experiments crash again, they incubate misery and waste opportunities. The rules to have success must be respected. No room for improvisation or discretion.

But learning does not end. So development. Always active and changing. There is his essence. It is a living process that does not surrender. It begins to exist signals of new weaknesses. Some advanced countries recover initiatives. Change their structure and cover their threats. Emerging eventually become infected and lose their vitality. The markets for raw materials and energy are showing signs of exhaustion. It seeks to strengthen the mechanisms of regulation of financial systems and capital markets to close the gateway to the crisis. There are new winners and losers will have to reinvent themselves. In this high tech world that changes everything, we live. The more prepared and foresight, will move forward. For some, scarcity revives. They believe it was overcome. There is nothing to do: we must always be awake and ready. Be consistent and also transparent to cultivate trust. That is the heart of financial globalization.

FIFTEEN YEARS OF DOLLARIZATION IN ECUADOR: LET'S CELEBRATE THE FIFTEEN-YEAR-OLD DOLLARIZATION

Review: International seminar: After fifteen years of dollarization: analysis and perspectives

Dr. Luis Espinosa Goded Professor at the Universidad San Francisco de Quito ORGANIZED BY THE UNIVERSITY SAN FRANCISCO DE QUITO Supporters of a strong currency and prosperity in Ecuador are celebrating: the dollarization which turns fifteen years and we want to celebrate the teenager as she deserves.

Fifteen years is enough to evaluate how it has grown that "monetary experiment" that was not the daughter of planning or a peaceful or romantic situation, but the daughter of the bad handling, riots and emergence time. However, in the past fifteen years it has shown as a beautiful splendid young woman who has brought peace and prosperity, a young woman who must be the "pretty girl" of all Ecuadorians, the one that has allowed the top fifteen years of economic growth of the entire history of Ecuador since its foundation, the one that has allowed that all social classes be able to save, generating a new and burgeoning middle class, the one that has allowed monetary justice.

As professor of economics of eighteen-year old students -just entered in college and who have lived their entire conscious life in a dollarized economy, I'm surprised of the ignorance they have on what it was and what the dollarization of Ecuador means. In the Ecuadorian collective memory it seems to blend causes with consequences, holiday, freezing, high inflation; with the solution, which was dollarization.

That is why at the Universidad San Francisco de Quito (USFQ) we are committed to celebrate, analyze, disseminate and defend dollarization. To do this on the 11th and 12th November we organized a free international seminar for more than 400 people in the CIESPAL of Quito, where we talk about dollarization from different points of view.

For the opening the Chancellor of the USFQ, Santiago Gangotena, was present, who expressed the commitment of the USFQ with dollarization since its inception, and in fact submitted designs for dollar coins that were made in the USFQ with national values like quinoa or cultural diversity; but, unfortunately, were rejected, having recourse to usual political topics as national heroes.

Then Mateo Villalba, General Manager of the Central Bank of Ecuador, participated who gave a broad view of the institution throughout history, trying to prove that the period of instability of the Central Bank in the history of Ecuador was short in connection with periods of stability, concluding that "It has taken a policy decision to keep dollarization and the ECB works to strengthen and sustain this monetary scheme". It was a relief for many to hear from the General Manager of the Central Bank that dollarization going to be maintained, although it raised some concern due to a political decision and not a conviction of the institution that assumes independent.

Pablo Davalos, an economist at the Catholic University, spoke against dollarization, saying that it is an inflexible scheme, that fails to provide autonomy to the political system that has disadvantaged many (something that he did not explain to whom) and that the new Ecuadorian electronic currency should be used to "de-dollarization" the Ecuadorian economy, since, as noted, no monetary system is eternal, and the fifteen years dollarization, is doomed to end; the question is only when and why it will be replaced. One possibility that disturbed us a lot, and that the General Manager of the Central Bank does not explicitly denied despite the direct question that economist Davalos launched.

Pablo Lucio Paredes, director of the Institute of Economics at the USFQ, made a very positive assessment of these fifteen years of dollarization, but especially noted the dangers posed to the Ecuadorian monetary system because of the large fiscal imbalances that are occurring. Pablo Lucio warned that if macroeconomic problems occur in Ecuador it will not be due to the use of the dollar as currency, but to the lack of implementation of other policies of competitiveness and fiscal responsibility, which can lead Ecuador to macroeconomic problems.

In the second panel of the first day we were privileged by some of the protagonists of dollarization in Ecuador. First, Joyce di Ginatta, who in a brilliant exposition commented about the process of dollarization and what advantages a strong currency has brought to Ecuador. Faced with the problems posed for Ecuadorians as not to be able to save on time of the sucre, or be victims of the bad economic management of the currency by the Central Bank. Opposing the possibility of saving now, rising wages and quality of life for all economic classes of Ecuador with the past situation.

Professor Franklin L贸pez, author of "Why and how dollarize", expressed economic arguments in favor of dollarization, like "taming inflation," expands and increases exports, allows long term calculation, strengthens the right to private property, and above all, separates politics from currency.

Alfredo Ar铆zaga, analyst, consultant, and Minister of Finance in 2000, closed the day. Mr. Arizaga made a rather worrying analysis of the situation in Ecuador after dollarization, showing how dollarization has allowed fifteen years of prosperity, increase exports and reduce inequality, however, the macroeconomic government handling of the Citizen Revolution endanger the Ecuadorian economy.

The second day was devoted to the international perspective of monetary policy. First spoke Mauricio Pinto, businessman and analyst, who gave an overview of how competitiveness have increased in Ecuador since dollarization was adopted and the measures that have hampered the competitiveness, which together with macroeconomic imbalances in Ecuador, made him presented not a very positive outlook about business in Ecuador today.

Very interesting were the prospects of international analysts as Ivan Carrino, Argentine monetary economist, of Freedom and Progress Foundation; he presented why convertibility in Argentina in the 90s is not equivalent to dollarization, since it allowed a relatively easy way out of it which is in fact what occurred when fiscal imbalances made convertibility unsustainable. And that is something that Ivan emphasized a lot: they were the high and sustained fiscal imbalances of the 90s who disrupted the currency, not the same currency board. Something that should serve as a warning to Ecuadorians regarding dollarization, although the advantage of the latter on the former is the difficulty of reversing the process.

Carlos Ernesto Gonzalez, from the Panama Freedom Foundation, presented to attendees the functioning of the Panamanian economy under a monetary freedom. In Panama, since its founding in 1904, there is no legal tender currency, is not that the Panamanian economy is dollarized, as some analysts mistakenly say, but that Panamanians choose to use the dollar, but they have complete freedom to use the currency they wish in their transactions. This system without Central Bank and with complete monetary freedom, has provided the most sound banking system in Latin America, because due to and not despite of, the absence of a central bank acting as "lender of last" instance, that is, that avoid the "moral hazard" because each bank is responsible for its good

management. It was so categorical the data on the strength of the Panamanian financial system without Central Bank that was presented by Mr. Gonzalez, that many doubted about his statement: "I do not understand why you need an Ecuador Central Bank if it is a dollarized system, it can only bring costs or hazards to the system."

In the absence of Venezuelan last minute guest, myself, Luis Espinosa Goded, professor at the USFQ, presented the case of the monetary situation in Venezuela, which is a real inflationary disaster and depreciation of the bolivar, causing shortages and misery for Venezuelans, solely attributable to the bad policies of the Venezuelan government, which devalue the currency legal tender for Venezuelans; and that can be a true reflection of what could happen –yet- to any Latin American country abandoned to populism with the monetary policy in the hands of an irresponsible government.

And that's the most important conclusion of the seminar. The advantage of dollarization over other monetary systems is what prevents the government from the "management of monetary policy", euphemism that almost always means "to devalue".

And in right Castilian, devalue stands for: vilify, do scoundrel, devalue, denature, depreciate, corrupt, pervert, adulterate, do bastard ... If these arguments are not sufficient for a Castilian that devalue, i.e. to handle by the government or central bank (comes to the same thing) the coin is detrimental, I not know what more arguments could be presented. Perhaps the economic history of Ecuador itself in the last fifteen years could convince those who do not know the correct meaning of words and prefer to be guided by the facts.

Therefore I defended the "monetary freedom," that is, that every citizen is free to pay with the currency you want, as it is free to pay, save, and collect in the currency you choose, and you are free to buy what you want. Theory I learned from our last speaker, Lawrence White.

It was a real intellectual luxury for all those attending the seminar, to have at the closing ceremony the presentation of Lawrence White, monetary theorist and international reference for his theories on Free banking. Lawrence showed us as a free banking system with not central bank intervention that not only could and should work in theory, but that operates for more than two centuries in Scotland, and over fifty years in Hong Kong. Lawrence White also launched two very interesting ideas for the Ecuadorian economy, one is the printing of banknotes by Ecuadorian banks. The printing of banknotes by banks creates a system of competition and stability that allows a much more transparent and robust financial system. One more step towards monetary freedom that would allow Ecuador to be placed at the top of the list of the free countries in Latin America (as it did fifteen years ago with dollarization), and deepen in the monetary freedom. Plus it would allow banknotes to be more original than the current dollar all represented by politicians.

But what was importantly is that Mr. White was extremely concerned of the launch of a new electronic money by the Central Bank of Ecuador. Making a comparative international analysis, and analyzing the functions of the Central Bank of Ecuador, concluded that it can only be detrimental to the Ecuadorian economy and a serious threat to the dollar. Below I copy the paragraph with which he finished his speech, which is a call to action for all Ecuadorians committed to dollarization, committed to the prosperity that has brought a strong currency: I'm sure you do not need an outsider's advice on this issue, and I'm sure efforts are underway, but I would advise friends of dollarization to resist the project to have the government issue mobile-phone credits before it starts. Cut off from the root this electronic currency.

Given this coming warning of such authority to the friends of dollarization, we must follow the advice and the example of Mr. White, and through the dissemination, discussion and spread, warn of the dangers for dollarization that represents a new Ecuadorian electronic currency, or the large and

sustained fiscal imbalances, and advocate for a free monetary system for Ecuador, which can bring prosperity to the country.

At the USFQ we are committed to dollarization, and you will find all seminar papers and a series of interviews to some of its protagonists (Joyce di Ginatta, Pablo Lucio Paredes, Dora de Ampuero, Jose Luis Cordeiro, Lawrence White, Franklin L贸pez Buena帽o, Miguel Davila ...) on the website: dolarizaci贸n.usfq.edu.ec

WHO DEFENDS OIL PRICES?

Rene G. Ortiz, Eng. Former Secretary General of OPEC, Minister of Energy and Mines of Ecuador; currently serves as an international consultant on energy and investments

I want to start noting a phrase - which call the attention of the FORUM of SEMINARIUM called th ENAEP, National Meeting of Energy and Petroleum, held on Wednesday, November 19 , 2014, in Quito - Joseph Stanislaw, founder, Daniel Yergin, of the famous Cambridge Energy Research Associates, CERA; today acquired by IHS Houston: "The world of energy and oil - now - is upside down, says Stanislaw." And in Quito, over 10 years ago right here in Quito, Joe said that the most predominant of global oil reserves - throughout the world - is located in what is often called the "Arabia Axis - Middle East - Russia - Canada -. and the US".

With this aim in mind, the "oil prices crisis� reveals - then - that the defense of prices could be primarily in the hands of three major oil producers in the world, namely, Saudi Arabia, Russia and the US. Approximately- among the three countries produce about 30 million barrels of oil per day.

Saudi Arabia roughly 9.3 million barrels per day, the US produces about 9.2 million barrels per day; and Russia about 10 million barrels per day.

If by the time a surplus of 2 million barrels per day is recorded, it is relatively easy to analyze what is inside the head of each of these three great exponents of the oil market.

Russia is not the superpower that many imagine it is. It has at present an economy of the size equivalent to Italy (which is not a superpower); it faces a set of economic sanctions by the international community in retaliation for the annexation of the Crimean Peninsula, on March 18, 2014 - and undergoes a process of global isolation that assigning a rating as weak (without "teeth" or "no teeth ", to qualify the subject without capacity to infringe hurting anyone), it is practically without flounder).

The US once again become a major producer of oil in the world - thanks to the application of science and technology in Slate (oil impregnated rocks shale), forbid to export crude oil by an Act of the 1970's oil; but the most significant is the legal impediment, because of the rule of Anti-Monopoly Law, which prevents the oil companies operating in the US, dare to meet to plot a reduction in production infringing harm to consumers.

Saudi Arabia, delimit many international means of mass communication, had advanced public comment prior to OPEC meetings - in Vienna, Austria - that revealed a reluctant position to act within OPEC and other oil producers of the world as the "swing producer", the modulator producer, playing the dominant role - sacrificing his own oil production - to reduce production and stop the fall in prices, as happened in November 2008 when the price of oil is collapsed in the market of a level quote of 147 USD /barrel to $ 30/barrel, as a result of the International Financial Crisis.

Additionally, high-level international opinions are recorded in the Saudi kingdom, indicating that the market should be the one that finally "form the price" and that they have sufficient reserves of over 750 billion dollars to overcome this crisis that includes discounts to Asian buyers and protect their "market share" in the market.

Therefore, there is no one to defend an oil price level in the market.

BUDGET 2015, RISKS AND UNCERTAINTIES

Jaime Carrera, Ec. Director of the Observatory of Fiscal Policy

HIGH DEFICIT, LOW SUSTAINABLE PUBLIC FINANCE Non-tax revenues show a significant overestimation of hundreds of millions of dollars. There is optimism in tax revenues and the doubts about the fulfillment of oil revenues have solid fundamentals. Forecasts for the payment of interest of the public debt and current transfers are underestimated in hundreds of millions of dollars. The absence of convincing justifications and livelihoods of calculating income tax, no tax and petroleum; expenditures, potential loan disbursements and payment of principal and interest on the debt, is less reliable to a vital tool for economic and social policy as it is the state budget, which must observe basic criteria of realism and prudence in forecasting.

The deficit of $ 5.369 million, 4.9% of GDP, which could be located close to $7,000 million to correct the overstatement of income and underestimating expenses, shows a strong dependence of new internal and external credits to hold high public spending. In turn, the primary deficit (calculated without debt interest) is almost 4% of GDP. The country must borrow to pay the interest. Such deficits, the highest in Latin America and the world, result in aggressive increase in public debt.

Determinants in increasing country risk and poor qualification of foreign debt, elements that show the little fiscal sustainability in the medium and long term and are reflected in the lack of investment, therefore, in the potential for economic growth and employment generation.

Almost 50% of capital expenditures and planned investment are financed with new debt, the other 50% goes to transfers to GADs and running costs included as investment. The country does not know the details of the investment projects to be financed with $ 5,369 million new debt. The acute dependence on investment of new loans, mostly with high interest rates, demonstrates its fragility and becomes imperative to reduce current spending in order to create opportunities to sustain investment in time and also creating conditions for private participation in the financing of public investment.

The generality of countries in Latin America and the world, keeps reduced fiscal deficits and primary surpluses. Many countries observe rules that tend to balance and/or fiscal surpluses and public savings, as a collective value and premise of the fiscal stability and sustainability, precondition and foundation to promote economic growth, social equity and redistribution of wealth towards the underprivileged. The 2015 Budget is not oriented in that direction.

To cover the deficit of $5.369 million and amortization payments and other liabilities for $ 3,438,000, the budget proposes funding needs to be covered with internal and external borrowing by $ 8,807 million. This figure may be higher or lower depending on the actual implementation in 2015. Such financing requirements, 8.1% of GDP, are disproportionate to the size of the economy. Given the high risks, the costs to cover them will be even higher, undermining the future fiscal sustainability and economy.

OIL VULNERABILITY, INFLATION, EXTERNAL DEPENDENCE. The calculation of oil revenues with a price of $ 79.7 a barrel of oil, looks unrealistic in the light of the technical underpinnings worldwide that would place the price at around $70 a barrel, after discounting the punishment. Oil revenues below the expected, will increase deficits and may affect investments. Reducing oil prices reiterates the secular vulnerability of public finances to volatile oil

prices, with obvious consequences for macroeconomic stability in the medium and long term, reflected in higher costs of public financing and private investment. It urges, therefore, the implementation of public policies to sustain economic growth and poverty reduction in the dynamics of private investment.

The macroeconomic projections leave several questions about the future strength of the economy.

Inflation above 3% for the coming years, to be located on inflation in the US and at lower prices in neighboring countries and other competitors, are less competitive to production and international trade activities, deepening productivity gaps with consequent impacts on the economic growth.

Expected levels of growth, about 4%, are insufficient for a real reduction of poverty and the gap with developed countries, goals that demand higher rates to 7%, only possible with a significant boost in domestic private investment and external.

The country needs imperatively the government foreign loans to cover the negative balance on the current account of the balance of payments, which can be extended by lower revenue from oil dollars, forcing in addition to new restrictions on imports. To this scenario it becomes indispensable a friendly environment to attract foreign direct investment, capital flows and diversification of non-oil exports.

What Matters Is Today Rodney Goodwin A week ago, I was sitting down to dinner with a dear friend and business colleague of some fifteen years. He had an amazing military record as a top fighter pilot and squadron commander in Vietnam and a long career as a successful commodities broker which began at the Chicago Board of Trade. We were sharing thoughts about all kinds of subjects, as we usually do. The following evening he died of a massive stroke.

The news of this friend’s passing was certainly a shock. My perspective on life shifted in that moment and, as we all would, I found myself refocusing on what matters, and what is important.

Yes, I considered my own mortality. It had me reflecting on how we tend to live with such emotional, mental and physical investment in everything. We hardly pause a moment in our lives, least of all in business, to realize that from one moment to the next, life may change. Like my friend, one minute he is here with everything in full motion, thriving, with aspirations for a full life, and the next it is over.

This is not meant as a morbid thought for all of us have such experiences, be it with loved ones or friends. As someone said, “One thing you can count on is death and taxes!” But it is provocative as we contemplate how we deal with life, family and the world at large. For the vast majority, the greater percentage of the day is dedicated to work. Values that we hold dear to our personal lives and families for some reason are frequently left at home the moment we step out the door. This is why the work place becomes so tricky for us because it is where we frequently face a threatening and competitive environment. We leave home in a mad dash in the morning and return home late, often exhausted. The entire day is fully absorbed with meetings, phone calls, hunching over computer screens or pacing the office with the Iphone pressed to our ears. Everything is intense, urgent and seemingly more important than anything else.

In my experience, most of us compartmentalize our lives. We put the family, the home, the children, in one compartment and business in another. It is interesting to note how many of us change when we leave the house, strapping on “the amour, helmet, shield and sword”, so to speak, ready to “do battle” in the marketplace. The mentality shifts, the jaw is set. The tone is aggressive and tough, even right there on the phone in the car pushing hard through traffic, addressing the first issue of the day. Perhaps at that moment we should look at ourselves in the mirror. What happened to the decent person who was relaxed, kind and considerate just a few hours earlier? It seems that being “on the job” gives many of us a license to be less than civil. We tend to become impatient, arrogant and unkind. Why? What happened to consistency and consideration? Many are just plain “frightened”, insecure, on edge -- looking over their shoulders waiting to hear what will be the next problem, the next threat. The tendency is to mask this fear with anger. Anger is just fear with a voice.

As we close another year, most of us are working hard to fill a quota, meet a budget, anxious for bonuses, and pushing to fill an order book. Some are writing yearend reviews. It is about money and the bottom line. It is about getting ahead, the promotion, the position of authority, the assurance of success, pleasing the boss or just wondering how to get along with the a difficult person in the cubicle next to us. All of that is real. However, much of this takes us out of today and focusing on the future. All are expectations of the next week, the next year, leaving us stressed.

From my experience, there are two powerful tools that have helped me cope with these fears and stresses. The first is that we must not fall into the trap of living in the future and understand the importance of living in the moment. We have all had the experience of being in a conversation with someone and we are already looking past their shoulder, already thinking about something else, someone else, moving beyond the moment. That has been done to us too. The person we are talking too has become irrelevant. The person is not present in our life and all because we “fly off” to supposedly more important matters “out there”. We had expectations of the future, of what is

around the corner. We lose so much pleasure, miss opportunities to connect meaningfully and overlook important advice all because we don’t live in the “now”. We only have this moment. We have heard it said, “We cannot be anxious for what will happen tomorrow for it does not belong to us”. Yes, we can plan, but in then in this context understanding that we have to come right back and live right now, enjoying every person and every minute of the day.

The second tool is paying attention to what we “feel”. All of us have been in high powered meetings, board rooms, or just sitting across the desk listening to someone expound on a business matter, a strategy, or express their opinion about us personally. In early years I would listen with my head, my intellect, rationalizing, analyzing, and cataloguing. I would be trying to impress, to respond in a sophisticated way. Years and countless countries later, I have learned to ask myself the question: “What do I feel about this?” I am in a sense making an appeal to my intuition, my instinct, my “gut”, as we call it. For rationalization with my head gives me false information. With my “intuition”, I feel the truth about the situation. It applies to everything. The offers, the deals, the proposals, the telephone calls, the behavior and words of colleagues, friends and family, should be passed through the filter of the “gut”. So few of us pay attention to this but it is a truly powerful tool to “know” who or what you can trust.

We seek genuine people every day. We like to do business with kind people, those who are trustworthy and reliable. In our business dealings it is like we uncovered a gold treasure when we come across that person; they do what they say they will do, are on time, professional, look us in the eye and have a firm handshake. It makes our day when that person is the same today and the same a year later. In a world increasingly more difficult, with pressures mounting in every aspect of our lives, especially business, there has to be a way to stay more balanced. We have to be to others the way we want them to be to us. That means making sure that we are genuine, honest and consistent too; that we are the same person at home and on the job; that we are thoughtful and courteous from the least to the most important. The positive energy we put out draws an equal response. This all translates into the success of our business, our personal performance, our confidence and the bottom line results. Most of our fears are unfounded – we create monsters in our imagination which never materialize. So, it is time to put away fear, trust more in our intuition and live in the present.

WHAT INTEGRATION?...

Dr. Vladimiro Alvarez Grau The recent meeting of Presidents and senior officials in our country responsible for international relations of the member countries of UNASUR, has aroused great expectations among citizens of the region, for the decisions expected of such high organism, to the benefit of our peoples.

The Ecuadorian government prepared this meeting very hard. They contracted the construction of a beautiful and impressive building, that according to official information, has cost more than fortythree million dollars, raised in a symbolic place in the middle of the world, with the government's claim that symbolically the building is equated to the United Nations (UN) building New York. That, plus the announcement that UNASUR would become the axis around which rotate a common international policy of all member countries to each other and in relation to other multinational blocs such as the European Community, and in particular "with the countries of empire. " But the proposal repeated by all representatives of competing states, was the social, political and economic integration.

This interesting proposal is in addition to those that have been tried before, as one in which at the time was called the "Andean Pact", which became the "Andean Community of Nations (CAN)"; then the MERCOSUR; Pacific Partnership; ALBA; and, finally, some attempts of unity on various topics, and, among others, economic, the possibility of issuing a common currency; and in social and political issues it was even discussed to achieve a "South American citizenship."

As long as these meetings take place, many participants make attractive approaches amid directed speeches to conquer a regional leadership, or to strengthen the support of their voters ... but not all state representatives, and citizens, are driven by enthusiasm, but they objectively analyze the proposals and realism.

And in the analysis yields, for example, in economic matters, to question the possibility of integration when there are serious monetary and currency imbalances, or concerning tariff policies, or huge differences in the control or the encouragement of national and foreign investment, prioritizing in some cases the intervention and state participation, to the detriment of the private sectors of production.

As for the possibility of establishing through UNASUR a common front to negotiate under similar conditions with other multinational blocks or with the so-called "countries of the Empire", the difficulty arises from the peculiarities of each of our South American countries in terms of similarity of products that generate our soils, and the necessary competence against third parties, which has been repeatedly expressed in the FTAs signed by some and rejected by others demagogically.

As for the wonderful binding proposal and South American integration, it would be extraordinary if we could achieve internationally, when internally in some of our countries, governments are permanently responsible for reasons of political strategy to divide and confront various sectors of society, through speeches and attitudes of permanent confrontation, not only with those who do not share the official proposals, but even with those who have supported them and participated in government management.

If we want the union and South American integration, let's stop the internal confrontation, considering the harm done to the present and future of Ecuadorians and the inhabitants of each of our countries, with a personal attitude or a political strategy of permanent confrontation and division among all for reasons of ideological position, or political, or economic, social or ethnic status, or by any other reason that hatred, resentment or rejection can generate of each other. We must make

an awareness of the need to ensure unity among all to look concerted solutions towards common objectives, national and international.

Although the attitude of many political actors it might seem impossible, I think now is a good time to promote some degree of national agreement, that we have been claiming from all sectors of citizenship.

And for that, as we have said countless times, we need to find some common objectives to be achieved in this and future governments, at short, medium and long term, both in politics and in education, health, housing, stimulus to production and generating jobs.

Some of the previous governments resolved to lead the country towards reforms that would allow institutional recovery, without creating friction or useless confrontations in the process, including drawing lines to retrieve an international policy handling, which should take the country of dignity and sovereignty. Many of the former rulers made great efforts for the independence between the functions of the state is respected, as well as the fundamental rights of citizens without suppress freedom of expression, and prioritizing social projects.

However, it has been impossible to have a national agreement, either by the intemperate position of some parties, leaders and opposition groups, or by the intransigent or even warmonger attitude of who, at various times, has been at the head of the government, and of some of his ministers and advisors; or, in many cases ... by petty interests in the game.

The current regime began its work, backed by extremist groups, with actions aimed not at achieving consensus and unity among all, but led to exterminate those who from the beginning he considered his enemies: submitting to “palazos� (particular hit with a shovel) to members of the then Supreme Electoral Tribunal, of the Constitutional Court and the National Congress, and then ... to all he could.

But right now, unquestionably it requires to joint efforts of all sectors to work for the achievement of big national objectives, neglecting gang attitudes and different interests that inspire the decisions and actions of many actors of national life, refusing confrontation enabling to question national and international integration ... what integration?

THE LEAN SEASON STAMPEDE Francisco X. Swett, Ec. In the first half of this year, the Ecuadorian economy grew at a rate of 3.5% over the same period last year. As shown in the graph in which the annual growth rates are presented from the First Quarter of 2011, the slope is markedly descending and it should be added, in circumstances where a barrel of oil was between $ 95 to $ 100.

The household consumption and government (the largest component of GDP) slowed to 5.4% in the second quarter of 2011 to 2.6% in the same period this year. The once powerful investment (Gross Fixed Capital Formation in technical language) went from 14.1% to 4.6%: The external sector, however, became the mainstay of the economy: exports grew 1.8% to 7.3%, and imports from -1.1% to 2.6%. The cited figures, produced by the ECB, show the slowing economy – that we all feel these days.

The crux of public policy is in knowing how to take advantage of good times to get prepare for adjustment, and that's where opinions diverge. In my book, the observance of fiscal discipline is not a gibberish, but a rigorous principle of good economic management: it is the opposite of bad economic practice concept. The price of oil continues to support the evolution of the Ecuadorian economy, with personal whims of a market on which the country does not have the slightest hint of control, and regarding the temporary bonanza, it has not exhibited the lowest forecasting.

The growth of 3.5% was driven by three sectors: oil (0.87%), construction (0.68%) and professional and technical activities, i.e. services (0.58%). Followed in descending order, the primary sector, agriculture, fisheries and shrimp (0.34%), manufacturing (0.31%), and more distant transport (0.26%), trade (0.24%), electricity and water (0.22% ). The other sectors did not come together to 0.30%, and the negative contribution of the flagship social sectors that receive special attention from the government (-0.06%) and so battered telecommunications (-0.07%) was observed. The contribution of government, in a self-described socialist government and that professes that all economic activity is generated from the aspect of public expenditure, was a zero percent.

In terms of the evolution of gross value added (GVA) of the different sectors, in the last financial year to June 30, the trade fell in minced, from 6.4% to 0.5%, and the construction of 9 5% to 6.8%.

These two sectors are committed to job creation and in the case of trade, it is the largest contributor of taxes to the IRS. The telecommunications sector rose from 9.6% growth to a negative rate of 1.9%, and the industry and manufacturing 5.6% to 2.6%. As I said, the two social sectors: health and education fell from 2.7% to -0.3%, and the abundant bureaucratic consumer spending is not enough to boost the economy as the growth in value added has dropped 3,6% to zero percent (when in the abundance of 2012, it was 15.9%). The touted change in the production mix has

settled to trade, but imports of raw materials and intermediate goods continue to expand, which is typical of a (inequitable, inefficient, concentrator and anti-consumer) strategy of import substitution.

The "inertial" movements of the economy are present in the downturn, and there is no simple and effective way to shake them promptly. Moreover labor, monetary, and earth (goodwill) reforms are recessive and worthwhile to say, accelerate the slowdown. The regime of permanent employment and wage structure may sound like we're in a cage, but it will primarily affect young people who are seeking employment and find the doors closed for demand. Rationing and credit requirements will make it move with parsimony and extreme care, leading to upward trends in the banking credit market.

What can be said then about the second half, close of the present year-end, and the one to come?

On the one hand, oil has dropped from $ 95 in about $ 15 to $ 80 in the second half. This represents a loss of revenue of about $ 1,000 million. To compensate, the low own income has been replaced with debt: $ 2,000 million in bonds, $ 400 million pledge of gold, $ 1,000 million for Petroecuador and renewal of petroleum advances with China. The recessive effect of income, in other words is compensated, but when the slowdown multiplier is applied, the accounts are again in red and the growth rate tends to fall. The bulk of the problem is to be seen since for 2015 it is unreasonable to think that oil reaches an average of $ 79 (should add $10 below the macroeconomic forecasts), and the influx of revenues from indebtedness will be more scarce, precisely, at the slightest credibility of the country due to the drop in oil prices, and the government continued political bombast.

It is easy to conclude then that the feast is over and the lean season stampede breaks out.

Reprinted article from the journal MIPYMES – Edition

January-February 2014

Economy THE GAME CURRENCIES: Euro dollar and undervaluation of the Yuan Alberto Dahik, Ec. Former Vice-president of the Republic of Ecuador

In the difficult time that the global economy is facing, a possible new recession in the United States versus the lack of agreements to resolve the tax issue, the already prolonged and structurally complex European recession, and the China slowdown, the question arises: what will happen to the exchange rate between the three coins representing the three largest economies in the world: Unified Europe, United States and China? The question arises especially: can China sustain its artificially low exchange rate?

To speculate, which is the only possible thing on these issues, let's ask yourself first: Will the Euro disappear? That is very difficult. If this happens, immediately the German currency would revaluate against the Spanish, Italian, Portuguese, Greek and the rest of Europe currency, and have a an exchange rate relative higher than the euro against the other world currencies. What is the engine of Europe? Germany, which would then lose competitiveness and would affect the entire region.

Similarly, various coins have the serious problem of fixing exchange rates again and put to several countries in the risk of massive devaluations of their currencies. Europe would have a very high cost in getting rid of the Euro.

The second question is: Does the US has in its current fiscal problem and in its possible recession as a result of this, concern about the exchange rate? This country remains the least distress on the currency issue. It is the least import dependent economy with increased production capacity and substitution of imports by domestic production in relation to GDP. Therefore, unlike Europe or China, for which the exchange rate is a big issue, for the United States is a minor appearance.

Then comes the question: Can China continue with an undervalued currency? The recipe that by an exchange rate artificially low achieve a strong growth in exports, and thus of the economy, is not new in the East. Japan at the time, Taiwan and other Asian countries did it. But this has a limit, and the time comes when domestic inflationary pressures arising from the same growth and accumulation of reserves that can not be absorbed, forces a more realistic exchange rate.

Given these considerations and with the enormous difficulty that always means to predict a currency future, we see that Europe has the crossroads of maintaining the Euro by any means, and that that money has no economic factors that, by itself, lead to appreciate. However, seen against the dollar, the US will not have pressure in turn to hold an exchange rate against the Euro.

What then remains for China? China or will have to slow down much its economy, or adjust its exchange rate.

If the possible US recession and the permanence of European stagnation converge, the exchange rate of the Yuan would not have theoretically great pressure.

SYNCRETISM AND SYMBIOSIS: A COMPARISON OF THE JEWISH CHRISTIAN TRINITY AND THE ANDEAN COSMOVISION

Gustavo Costa von Buchwald, BA, Mgs. e-mail: gussy2013@outlook.com In tradition, the Judeo Christian religion is represented by the sacred trilogy, "The Father, the Son and the Holy Spirit," which helps explain all the mythology and Christian sacredness. Across the Atlantic, the Andean societies maintained a religious order in which the imagery of the sacred trilogy, represented by: the Hanan Pacha, Kay Pacha and Urku Pacha. The first is represented by the Condor; the second, by the Puma and the latter by the Snake; and "Pacha" linguistic term for time and space in the Kichwa language.

Representation of the trilogy of the Inca worldview: Hanan Pacha; Kay Pacha and Ukhu Pacha.

The contact of these worlds, Western and Andean produces a range of social tensions; if we understand the process of conquest as a system of juxtapositions of power, which in the religious case, they can be explained by two epistemic tools: syncretism and symbiosis.

The syncretism is understood as the process by which societies come to cohesion in religious, moral and ethical terms. Specific examples may be found in the colonial architecture, popular songs and in the Andean art in general.

Symbiosis is the process by which the symbolic elements merge to form new symbols; i.e., with other features and concepts. Worldwide there are these symbiosis processes since societies are dynamic and the cultural contact undisputed; It is for this reason that our traditions are influenced by other cultures. The example of Western society that has influenced throughout our daily lives, far more than we can suppose.

Plastic art representing the syncretism between the Western and the Andean world.

The representation of the trilogy of the Judeo Christian religion affected by the syncretism of the Andean world. Three elements: the Father, the Son and the Holy Spirit, asymmetrical with the Condor, the Puma and the Snake Inca.

The symbols have the following roles in the collective imagination: Father God, omnipresent and omnipotent, creator of our universe; with a sun in his cloak, represents the Almighty God of the Andean worldview. The second: the Son, the Son of God, who represents the earthly and profane has a picture of the sheep, which is in the Kay Pacha world, that in the Inca imagination is the world of the living. And finally, the Holy Spirit, the world of the spiritual and abstract, is also represented by a dove with fire which is inserted in the Ukhu Pacha that is the underworld, the world of the dead and spirits. The Incas believed that the dead accounted seeds to be reborn, so they were buried as fetal, as they were born. For the Incas death was simply the passage to the afterlife.

The festivities, a mixture between Andean and Catholic.

Today the religious world is changing and recreating as they are autonomous social processes. The festivals are a clear example of how modernity and ancestral are combined and somewhat confused.