This is an obvious conclusion after talking at length with interim President Roberto Micheletti, judicial and legislative authorities, members of the opposition, business leaders and foreign observers during a recent visit. Nobody in the current government is interested in a fraudulent election, nor is one likely given safeguards that include a widely respected national electoral tribunal and Supreme Court. The authorities seem eager to have...]]> Tue, 10 Nov 2009 22:00:00 -0800 WASHINGTON -- Berkshire Hathaway's Warren Buffett, the fabled investor, has announced the biggest deal of his life: He will acquire the stake he doesn't already own in Burlington Northern Santa Fe, the railroad operator, for $26.6 billion and assume the company's $10 billion debt. At $100 per share, he will pay a 30 percent premium on BNSF's market value -- in his words, "an all-in wager on the economic future of the United States."

Given Buffett's iconic power, the global recession, and the conjectures on the future of U.S. capitalism, the move has triggered a fascinating debate. Has Buffett (a director of The Washington Post Co.) finally lost his marbles, as some point out,...]]> Tue, 03 Nov 2009 22:00:00 -0800 WASHINGTON -- Historical moments are best judged from a distance, when the eye is able to focus on the whole canvas. Given the misconceptions that seem to surround the fall of the Berlin Wall, what is striking about the 20th anniversary of the events of Nov. 9, 1989, is not how much, but how little time has passed for countries still living under totalitarian conditions.

Many people, young and old, believe the collapse of communism in Europe was bound to happen. "Crushed by its own weight," "implosion" and "untenable" are usually attached to the disintegration of the Soviet empire, symbolized in the announcement given by East German propaganda minister Gunter Schabowski on the...]]> Tue, 27 Oct 2009 22:00:00 -0700 WASHINGTON -- Moises Naim, the editor of Foreign Policy magazine, recently wrote that what is said about Brazil today -- that the country's potential has finally been unlocked -- was said of Mexico in the 1990s, a nation that now finds itself in the economic doldrums. Naim had also brought this up at a panel we shared at the U.S. Chamber of Commerce. I agree that the issue bears much discussion: Mexico's reversal of fortunes contains lessons for other countries, if not for Mexico itself.

Mexico's reforms stalled in part because of the dead weight of the long-ruling Institutional Revolutionary Party, or PRI, and of the antediluvian left, but also because the now-governing National...]]> Tue, 20 Oct 2009 22:00:00 -0700 WASHINGTON -- Between August and December 2007, Latin America was enthralled by a political melodrama involving a suitcase with $790,550 confiscated after a private flight carrying Argentine and Venezuelan officials arrived in Buenos Aires in the middle of the night. The affair led to a high-profile court case in Miami arising from charges against Venezuelan agents who tried to force a businessman to assume responsibility for the clandestine money and cover up the real story behind the suitcase -- a contribution from Hugo Chavez to the campaign of Cristina Kirchner, then a candidate seeking to succeed her husband as president of Argentina.

There was only one man who could tell the...]]> Tue, 13 Oct 2009 22:00:00 -0700 WASHINGTON -- Like so many people, I own gold and silver as a hedge against the "Latin Americanization" of the United States -- money printing, deficits and debt. The talk about ending the world's dollar dependency should be music to the ears of the millions of us who have sought refuge in precious metals. But we are in a trap from which there is no immediate escape. In the absence of a new gold standard, the alternatives to the dollar are even worse.

Let us remember how we got here. After World War II, nations such as Britain and France, partly because they were weakened and partly because they were in awe of the mighty United States, proclaimed the era of the dollar. With its...]]> Tue, 06 Oct 2009 22:00:00 -0700 WASHINGTON -- Salomon Lerner Febres, the philosopher who headed Peru's Truth and Reconciliation Commission, has received a barrage of death threats. His two dogs were poisoned and killed by people who warned that he faced the same treatment. These incidents have taken place in the context of vicious attacks against Lerner and a Museum of Memory Commission of which he is vice president by a cast of characters that includes high-ranking members of President Alan Garcia's government.

The Truth and Reconciliation Commission investigated the violence that traumatized Peru between 1980 and 2000 in the wake of the Shining Path terrorist campaign and the government's indiscriminate...]]> Tue, 29 Sep 2009 22:00:00 -0700 WASHINGTON -- Roman Polanski, the famed film director arrested in Zurich under a U.S. extradition request, has a perverse ability to bring out the worst in the judicial system. He must be thinking that the characters in his legal rigmarole resemble those incomprehensible creatures in his masterpieces who tell us normality does not exist.

This should have been a straightforward case. Polanski was accused of having sex with a 13-year-old girl in 1977, spent a short time in jail, admitted to the charges and entered a plea bargain. But then stuff happened. Backtracking, Judge Laurence Rittenband, a publicity maniac, signaled to Polanski's attorneys that he would not abide by his deal...]]> Tue, 22 Sep 2009 22:00:00 -0700 BUENOS AIRES -- A few weeks ago, Hilda Molina, a delicate, soft-spoken neurosurgeon, obtained an improbable victory against Cuba's regime when she left Havana and joined her son and grandchildren in Argentina. Listening to her story in a Buenos Aires restaurant, I could not keep from thinking that the real measure of the Caribbean tyranny is not how it treats its enemies but its friends.

Molina was her country's first female neurosurgeon. In 1989, she founded the International Center for Neurological Restoration. It quickly gained attention; by the early 1990s, Molina's prestige in the scientific community was so great that Fidel Castro decided to use her politically. The party...]]> Tue, 15 Sep 2009 22:00:00 -0700 WASHINGTON -- Being a buffoon can buy a lot of time in international politics -- you can do naughty things for a long while before people begin to take them seriously. This is the case of Venezuela's Hugo Chavez, whose relationship with Iran was the subject of a recent presentation by Robert Morgenthau, the legendary Manhattan district attorney.

Based on his office's investigations, third-party collaboration and snippets of public information, Morgenthau concludes that Venezuela and Iran are "acting together in our backyard on the development of nuclear and missile technology."

The news is not really new. For instance, a small group of private investigators came to my...]]> Tue, 08 Sep 2009 22:00:00 -0700 WASHINGTON -- In a new book on the housing bubble published by the Cato Institute, Swedish writer Johan Norberg likens the financial crisis that erupted last year to the confluence of a high-pressure system from northern Canada, a low-pressure system over the coast of New England and a nearby hurricane that in 1991 came together to produce a monster storm with 75-mile winds and waves as high as 100 feet.

Four key elements, he thinks, converged behind the housing bubble in the United States. First, a loose monetary policy that in 2001 brought down interest rates from 6 percent to 1.75 percent and did not take them back up to 5 percent until 2006. Second, the political peddling of...]]> Tue, 01 Sep 2009 22:00:00 -0700 GENEVA -- Repercussions continue to mount here over the deal by which Switzerland will give the names of presumptive tax evaders to the U.S. government.

I'm referring, of course, to Bern's decision, under colossal pressure from Washington, to hand over the names of 4,450 clients of banking giant UBS, the institution accused of hiding money for American taxpayers. The U.S. wanted to confirm the identities of 52,000 suspects (it had managed to obtain about 250 names from UBS in February), but settled for fewer in order to avoid a diplomatic escalation. The Swiss government had warned that UBS would violate Swiss law if it gave in to the IRS.

Swiss public opinion is divided...]]> Tue, 18 Aug 2009 22:00:00 -0700 WASHINGTON -- Recessions can be a good thing -- they wring the excesses out of the economy and focus people's attention on public policy mistakes that often are the root causes of investment bubbles. Many people thought that this particular recession would offer another kind of benefit. By bringing oil prices back to earth, it was supposed to debilitate the autocracies, from Russia to Iran to Venezuela, that depend on them.

This has not happened. Oil prices dropped 80 percent in the early stages of the recession, but had climbed back to $70 a barrel by June. Their sails have since lost a bit of wind, but the prospects, even if the recession lasts long, point to sustained high...]]> Tue, 11 Aug 2009 22:00:00 -0700 WASHINGTON -- Venezuela's Hugo Chavez has never been coy about his imperial plans. What started as the Cuba-Venezuela axis now includes Ecuador, Bolivia, Nicaragua and the Caribbean islands of Antigua and Barbuda, Saint Vincent and the Grenadines, and Dominica. They all belong to the Bolivarian Alliance for the Americas (ALBA). Argentina and Paraguay often cooperate with the group. El Salvador's governing party answers directly to Chavez.

The fact that moderate left-wing governments lend international support to Caracas and that center-right leaders tread carefully for fear of domestic consequences allows the Venezuelan autocrat significant latitude. Using Petrocaribe, a mechanism...]]> Tue, 04 Aug 2009 22:00:00 -0700 WASHINGTON -- Several U.S. banks posted impressive second-quarter earnings. Citigroup's $4.3 billion, Bank of America's $3.2 billion, Goldman Sachs' $3.4 billion and JPMorgan Chase's $2.7 billion are being touted as signs that the financial institutions have turned around. But a closer look indicates otherwise.

Some banks (Citigroup, Bank of America) have reported positive earnings because they have engaged in one-off sales of some big assets, not because their core business has recovered. Others (JPMorgan Chase, Goldman Sachs) have benefited from the collapse of competitors in the midst of the meltdown, from the fact that many companies are raising money by issuing debt and...]]> Tue, 28 Jul 2009 22:00:00 -0700 WASHINGTON -- Honduras, where an ally of Venezuela's Hugo Chavez triggered a military response after violating the law in his attempt to stay in power, reminds us that today's threat to liberal democracy in Latin America comes from authoritarian populists who abuse the legitimacy of the ballot box. It also suggests that the Organization of American States (OAS), the hemispheric body supposed to uphold the rule of law, is part of the problem.

For years, the OAS has been ignoring the plight of Venezuelans, Bolivians, Ecuadorians, and Nicaraguans, to mention four countries where so-called "21st-century socialism" is undoing republican checks and balances and plundering private...]]> Tue, 21 Jul 2009 22:00:00 -0700 WASHINGTON -- "Bruno," Sacha Baron Cohen's new shock-and-awe movie, is being accused of fanning prejudices about homosexuality, defaming Austria, using false representation to entice unsuspecting people to the camera, and staging situations. Those are the wrong charges -- and probably music to the ears of Cohen and Universal Studios.

Bruno is a self-obsessed, extravagant gay fashion reporter from Austria who comes to America in search of fame. His antics run up against obtuse attitudes toward homosexuality, celebrity and political correctness, often putting his life in danger.

America's Gay & Lesbian Alliance Against Defamation maintains that parts of the film...]]> Tue, 14 Jul 2009 22:00:00 -0700 WASHINGTON -- Although I do not entirely rule out having tried to imitate his moonwalk on a moving skateboard in my earlier years, I was more fascinated by Michael Jackson's public persona than by his lyrics, videos or eclectic version of rock music. He was a modern heretic, something that tells us more about the times we live in than about the King of Pop.

All ages have had their heretics. Up to the modern era, they involved a challenge to the laws or morals emanated from religious orthodoxy. Socrates was sentenced to death because he offended the Greek gods with his probing philosophy. Simon the Sorcerer, the first heretic of the Christian era, tried to prove his divine powers...]]> Wed, 01 Jul 2009 22:00:00 -0700 WASHINGTON -- Anytime a bunch of soldiers break into a presidential palace, pick up the president and put him on a flight to exile, as happened in Honduras last Sunday, you have a "coup." But, unlike most coups in Latin America's tortuous republican history, Honduras' deposed President Manuel Zelaya bears the biggest responsibility for his overthrow.

A member of the rancid oligarchy he now decries, Zelaya took office in 2006 as the leader of one of the two center-right parties that have dominated Honduran politics for decades. His general platform, his support for the Central American Free Trade Agreement with the United States, and his alliances with business organizations gave...]]> Tue, 30 Jun 2009 22:00:00 -0700 WASHINGTON -- The midterm elections in Argentina have dealt a devastating blow to President Cristina Kirchner and her husband, former President Nestor Kirchner, who is the power behind the throne. The couple's support has not only been seriously eroded among the larger society but also, and perhaps more importantly in a country in which "Peronismo" represents an entire culture, within their own party.

The government lost its majority in Congress, and was defeated in all the major electoral districts, including Buenos Aires, Santa Fe, Mendoza and Cordoba, as well as the Kirchners' home province of Santa Cruz. The former president, who was running for Congress, was beaten by a...]]> Tue, 23 Jun 2009 22:00:00 -0700 WASHINGTON -- It has been painful to see so many political leaders in the United States devalue the Iranian uprising -- potentially the most important event since the fall of the Berlin Wall -- by using it to score cheap points off each other, disrespecting the people who are risking everything in the name of freedom.

The right had been blustering against Tehran for years and scolding the left for wanting negotiations with the Islamic tyranny. And yet, as soon as millions of Iranians took to the streets in defiance of both Mahmoud Ahmadinejad, the president, and Ayatollah Ali Khamenei, the supreme leader, much of the right acted as if it was more enraged about the possibility that...]]> Tue, 16 Jun 2009 22:00:00 -0700 WASHINGTON -- Two years ago, the life of Manuel Mendez del Rio, general director and head of global risk management at the Spanish bank BBVA, took an unexpected turn. His fellow directors decided to entrust him with the responsibility of launching a BBVA Microfinance Foundation that would bring credit to the poor in Latin America. The conditions were simple: He would have 200 million euros (about $277 million) at his disposal, but he would have to run a profitable enterprise because the foundation would not get one more penny from the bank.

The mission fit Mendez del Rio's own philosophy well. He believed in enterprise rather than charity and was convinced that the big financial...]]> Tue, 09 Jun 2009 22:00:00 -0700 WASHINGTON -- The European parliamentary elections have dealt a devastating blow to the left. Even if many of the victorious right-wing parties have been responding like socialists to the economic recession, the election results express mistrust in the ability of Europe's true socialists to address the so-called failures of free enterprise.

In those countries where socialist parties are in power -- such as Spain, Portugal, Austria, Britain or Hungary -- they were resoundingly defeated. In conservative-controlled countries such as France, Italy, Germany, Poland, Denmark, the Netherlands, Finland or the Flemish part of Belgium, the socialists also took a severe beating. Only in two...]]> Tue, 02 Jun 2009 22:00:00 -0700 CARACAS, Venezuela -- A group of foreign writers, academics and politicians was invited here to celebrate the 25th anniversary of Cedice, a Venezuelan think tank that promotes liberal democracy and the market economy, both of which President Hugo Chavez wants to destroy. The government's thuggish reaction turned the visit into a public showdown that helped expose what Venezuelans are going through these days.

Although there were visitors from three continents, the authorities took aim particularly at those from Latin America. Four of us were detained at the airport, in my case for three hours, and told to refrain from making political comments. We were followed by the secret...]]> Tue, 26 May 2009 22:00:00 -0700 WASHINGTON -- No one who has talked to Colombian President Alvaro Uribe can be surprised that his country's Senate has now approved a constitutional referendum that would allow him to run in 2010. Uribe thinks that the presidency remains his destiny.

There are still some institutional obstacles, particularly the Constitutional Court, but the decision will almost certainly be made by Colombians at the polls. The law requires a turnout of at least 25 percent -- almost the same number of people who voted for him when he was re-elected in 2006. For the good of Colombia, Uribe, the most successful Latin American president in a generation, must be stopped.

There is no excuse for...]]> Tue, 19 May 2009 22:00:00 -0700 WASHINGTON -- In the last few years, an abundance of consumer demand, credit and investment coming from the rich nations combined to pull millions out of poverty worldwide. Because the bubble-induced international conditions showered every corner of the planet, it was unpopular to point out that some countries were still in need of major reforms and would not continue to prosper indefinitely.

Now that the feast is over and the day of reckoning is here, one way to sort the chaff from the wheat is to look at the 2009 Institutional Quality Index, authored by economist Martin Krause for the International Policy Network. It ranks countries according to how much economic freedom,...]]> Tue, 12 May 2009 22:00:00 -0700 WASHINGTON -- The sex scandal of the Rev. Alberto Cutie, a Catholic priest well-known throughout the Spanish-speaking world who was photographed frolicking with a woman on a Miami beach, has rekindled the debate about clerical celibacy.

Cutie was the head of the St. Francis de Sales parish in the South Beach area of Miami Beach and the director of the radio stations owned by the Archdiocese of Miami. At one time he hosted a TV talk show. And his popularity seems intact: A survey by The Miami Herald among Catholics indicates that 78 percent continue to have a favorable opinion of him despite the sinful pictures on the sand.

True to his nature, Cutie's appearance Monday on...]]> Tue, 05 May 2009 22:00:00 -0700 WASHINGTON -- With the market value of Warren Buffett's Berkshire Hathaway down 30 percent in the last year, financial oracles seem highly overrated.

But a few got things right. Jim Rogers, the legendary American investor, repeatedly warned against the real estate bubble and the fundamental weakness of economies that relied on credit without savings. People should pay attention to his latest book, "A Gift to My Children: A Father's Lessons for Life and Investing," a short volume with advice to his daughters -- and all of us.

Rogers, 66, founded the Quantum Fund with George Soros in 1970. He obtained returns of 4,200 percent in 10 years and then left to tour the world, first...]]> Tue, 28 Apr 2009 22:00:00 -0700 WASHINGTON -- Most Americans seem to reject the U.S. trade embargo against Cuba. According to a Washington Post/ABC poll, 57 percent of Americans now oppose the policy. A survey by Bendixen & Associates shows that only 42 percent of Cuban-Americans continue to back it.

I have been conflicted on this issue for years. Until not long ago, I favored the embargo. As an advocate for free trade, I would normally have called such a measure an unacceptable restriction on the freedom of people to trade with whomever they pleased. But I thought that trading with a regime that had killed, jailed, exiled or muzzled countless of its citizens for decades was not a worthy objective, as it...]]> Tue, 21 Apr 2009 22:00:00 -0700 WASHINGTON -- Hugo Chavez's gift to President Obama at the recent Summit of the Americas -- a copy of Eduardo Galeano's "Open Veins of Latin America" -- has many people wondering what the fuss is about.

A decade ago, I and the other two co-authors of the "Guide to the Perfect Latin American Idiot" devoted a chapter to refuting the historical and ideological fallacies contained in Galeano's tract, which we called the "idiot's bible." Everything that has happened in the Western Hemisphere since the book appeared in 1971 has belied Galeano's arguments and predictions. But I guess Chavez has given it the kiss of life and, since people are asking, here I go again.

The author...]]> Tue, 14 Apr 2009 22:00:00 -0700 WASHINGTON -- Memo to President Obama:

The Summit of the Americas taking place in Trinidad & Tobago this week will be your first trip to the Latin American region. Here are some thoughts:

Since Latin America and the Caribbean are still bitterly divided over what social model to adopt, you might point out to your counterparts that Trinidad & Tobago is more than just a meeting venue. It is a model of sorts. Its parliamentary democracy and market economy have given its inhabitants a per capita gross domestic product 50 percent higher than that of Venezuela, another oil and natural gas-producing country situated nearby.  

The recessionary trembles that...]]> Tue, 07 Apr 2009 22:00:00 -0700 But prosecutors built a devastating case demonstrating Fujimori's responsibility for the strategy, the operational structure and the political cover-up related to the Colina group's activities. The key figure in unlocking the case was Vladimiro Montesinos, a jailed army captain with a history of treason who would never have commanded the colossal power that he did without the only person who could delegate it to him -- Fujimori himself.

Military witnesses testified that soon after coming to power, Fujimori ordered the implementation of a new antiterrorist strategy based on the use of the National Intelligence Service and the appointment of Montesinos as its de facto...]]> Tue, 31 Mar 2009 22:00:00 -0700 In response to the pressure to boost public spending, the German chancellor offers this devastating logic: "This crisis did not come about because we issued too little money but because we created economic growth with too much money, and it was not sustainable growth."

One would think that Merkel is speaking from the comfort of a country that is being spared much of the punishment that others are receiving. Actually, as the world's No. 1 exporter, Germany's economy is on course to contract by 4.5 percent this year. No economy will be more affected than Germany's, in absolute terms, by the 9 percent drop in international trade forecast by the International Monetary...]]> Tue, 24 Mar 2009 22:00:00 -0700 This monetary alchemy was no different, in essence, from the one that led to the Crash of 1929: During the 1920s, the money supply grew more than 60 percent in total. It also echoed the Sherman Silver Purchase Act of 1890, when the government injected dollars into the economy through the purchase of silver. That brought on the depression of 1893.

Former Fed Chairman Alan Greenspan argues that foreign savings were the real culprit of the housing bubble because the Chinese pumped too much money into the U.S. by purchasing Treasury bonds. But it is the Fed that sets the interest rate target. By Greenspan's own logic, the Fed could have kept a higher target and taken out of...]]> Tue, 17 Mar 2009 22:00:00 -0700 Quiroz's book presents corruption as a continuum that runs through the different types of governing systems Peru has endured. In doing so, it underscores the institutional as opposed to the episodic nature of corruption. Over the years, Peru's colossal graft can be attributed to the way in which power is organized and rules are set.

The author attempts to quantify corruption, a daunting enterprise since the calculation includes the theft of public money and the wealth that could have been created in a more secure environment.

His findings: Between 1680 and 1810, graft amounted to an annual average of 4.3 percent of the country's economy. Between the 1820s,...]]> Tue, 10 Mar 2009 22:00:00 -0700 Echoing the Prohibition era in the United States, illegality has engendered organized crime empires that, in order to supply narcotics, undermine the peace and institutions of many countries. The latest example is Mexico, where President Felipe Calderon has unleashed the wrath of the state against the drug lords. The war between the state and the cartels, and among the mafias themselves, has mostly taken place in northern cities such as Ciudad Juarez, Tijuana and Culiacan. Ten thousand people have been killed and drug-related corruption has been exposed at the highest levels, including the attorney general's office.

The anti-drug budget worldwide is staggering: The United...]]> Tue, 03 Mar 2009 22:00:00 -0800 The banking system is in a humongous mess. Potential losses by U.S. banks on loans and securities amount to nearly $2 trillion. The response by two consecutive administrations -- government-funded loans, capital injections and guarantees -- has not inspired confidence. The markets know that the banks are concealing the value of their bad assets by not selling them at the low prices investors would offer.

The reason for not letting Citigroup, Bank of America, Wells Fargo and others go down is, we are told, that credit needs to keep flowing in order to avoid a depression. But that reasoning is backward. Credit is not the father but the child of economic prosperity. Garet...]]> Tue, 24 Feb 2009 22:00:00 -0800 One example of this balderdash is a lawsuit filed by Tapeshwar Vishwakarma, who represents a charity and claims that the human rights of the slum dwellers have been violated. Another high-profile protester has excoriated the Indians associated with the production for accepting the use of the word "slumdog." Shyamal Sengupta, from the Whistling Woods International Institute in Mumbai, calls the film "a white man's imagined India" and "a poverty tour."

How ironic, in the light of these highbrowed attacks, that, according to numerous news accounts, residents of the slums of Mumbai celebrated the triumph of Danny Boyle's movie at the Oscars as their own. They are the ones...]]> Tue, 17 Feb 2009 22:00:00 -0800 Even though the opposition was not able to defeat Chavez this time, the referendum confirmed that he still faces millions of Venezuelans who abhor his regime. The opposition obtained 45.6 percent of the vote -- 9 percentage points more than in 2006, when Chavez won his third term. The "no" vote won in five key states and got more than 40 percent in nine others. He was only able to win in one of the five states governed by the opposition -- and lost the state of Merida, governed by a Chavista.

If in next year's legislative elections the opposition obtains similar results, it will control almost half of the National Assembly -- a big shift with respect to the current...]]> Tue, 10 Feb 2009 22:00:00 -0800 Darwin did not set out to deny God. Anyone who has read "The Origin of Species," "The Descent of Man" or his correspondence is immediately struck by how careful Darwin was to avoid what we would today call an "ideological agenda." But this diligent student of nature did make one shattering discovery: not the theory of evolution itself, which had been proposed many times and can be traced back to the Greeks, but the fact that evolution is a random process of natural selection whereby certain variations that become well-adapted to the environment are gradually preserved through hereditary transmission. Ultimately, all species have a common origin.

This finding posed a...]]> Tue, 03 Feb 2009 22:00:00 -0800 WASHINGTON -- Several Chinese readers have contacted me to express astonishment at the chorus of voices blaming China for the U.S. recession. They wonder: Is this the preamble of a protectionist backlash?

There is plenty that China deserves to be bashed for -- its political system and its backing of Sudan and Zimbabwe, for instance -- but not the U.S. recession. Yet although it is hard to see how China-bashing would translate into protectionism when Washington needs Beijing's financial help, one should never underestimate people's capacity to self-inflict damage in times of panic. The "buy American" provision barring the use of foreign steel and iron in the economic stimulus...]]> Tue, 03 Feb 2009 22:00:00 -0800 China-bashers maintain that Beijing cheapened its exports through currency manipulation, encouraging Americans to devour them; the Chinese then invested part of that money and other savings in U.S. assets, prompting the drop in interest rates that in turn fueled the housing bubble. With variations, this view is shared by the previous and the current secretaries of the Treasury, the chairman of the Federal Reserve, some members of Congress, not to mention some well-known commentators. They claim that the U.S. has been spending too much because China has been saving too much (I kid you not!).

Yes, in the last 10 years the real personal saving rate in the U.S. has been close...]]> Tue, 27 Jan 2009 22:00:00 -0800 A decade ago, the IMF was a major player in Latin America, having lent an accumulated $50 billion. Since Brazil and Argentina paid off their debts, the IMF became irrelevant: The fund's initials had the whiff of a bygone era. Now, because of reduced access to capital markets, a drop in exports and about $250 billion in debt that falls due this year, many governments are thirsting for funds. The IMF -- that hairy monster parents used to threaten their kids with when they didn't finish their meal -- is back! Other financial bodies are expanding their offers of credit. The Inter-American Development Bank has promised $6 billion to commercial banks and will make another $12 billion...]]> Tue, 20 Jan 2009 22:00:00 -0800 Now, faced with the greatest economic crisis in generations, Obama will need to make a choice between his intellectual formation, which points to interventionist government, and his temperament, which pulls him toward restraint.

There is a short-term and a long-term challenge. The first has to do with the recession, the second with government commitments that cannot be met and that will sap the capacity of Americans to remain prosperous.

The response to the first problem, which is under way, has been extremely risky. In the last three months alone, the money supply has increased by an annual rate of 40 percent, if we don't count savings deposits. (It was 17...]]> Tue, 13 Jan 2009 22:00:00 -0800 This is the one silver lining in the gathering storm of increased government power caused by the current recession. In the wake of the collapse of collateralized debt obligations and credit-default swaps, the government basically nationalized part of the financial services industry. A running joke in Washington used to be that the separation of powers was not the balance between the three branches of government but between Wall Street, where securities were traded, and Washington, where laws were traded. Now both are traded in Washington. As the money supply and fiscal expenditure expand astronomically in response to the recession, the one mitigating circumstance is that...]]>