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Philadelphia Fed Apg2
Philadelphia Fed Apg2
Philadelphia Fed Apg2
Alfonso Prat-Gay
The Philadelphia Fed Policy Forum Budgets on the Brink: Perspectives on Debt and Monetary Policy Friday, December 2, 2011
2%
4%
50% 30%
10% 0%
3%
1%
0%
2%
4%
50% 30%
10% 0%
3%
1%
Ireland - 2008
Change PC/GDP: CA Deficit/GDP: Pub Debt/GDP: Fiscal Deficit/GDP 105% 6.5% 25% -0.1%
0%
2%
4%
50% 30%
10% 0%
3%
1%
USA - 2008
Change PC/GDP: CA Deficit/GDP: Pub Debt/GDP: Fiscal Deficit/GDP 34% 4.9% 70% 3.2%
0%
2%
4%
50% 30%
10% 0%
3%
1%
Italy - 2010
Change PC/GDP: CA Deficit/GDP: Pub Debt/GDP: Fiscal Deficit/GDP 44% 3.5% 118% 4.6%
0%
2%
4%
50% 30%
10% 0%
3%
1%
Spain - 2010
Change PC/GDP: CA Deficit/GDP: Pub Debt/GDP: Fiscal Deficit/GDP 43% 4.6% 61% 9.3%
0%
2%
4%
50% 30%
10% 0%
3%
1%
Portugal - 2010
Fiscal Deficit / GDP
0%
2%
4%
50% 30%
10% 0%
3%
1%
Iceland - 2008
Fiscal Deficit / GDP
0%
2%
4%
50% 30%
10% 0%
3%
1%
Greece - 2009
Change PC/GDP: CA Deficit/GDP: Pub Debt/GDP: Fiscal Deficit/GDP 139% 11.1% 129% 15.8%
0%
2%
4%
50% 30%
10% 0%
3%
1%
Average
Change PC/GDP: CA Deficit/GDP: Pub Debt/GDP: Fiscal Deficit/GDP 38.3% 4.9% 75.4% 4.1%
0%
Financial liberalization
Economic slowdown
Banking crisis
Currency crisis
Inflation pick up
IF FX PEG
Argentina 2002
(1) Peak to trough (2) Net Worth Change, two years after the crisis (3) IMF + Germany (TARGET2 + EFSF)
Poverty rate @ 57% Inflation @ 40% Provincial quasi-currencies @ 39% of base money Sovereign default (including with World Bank) Deposit freeze: 1/3 of deposits Banking crisis: - Non performing loans @ 37% - Rediscounts @ 105% of NW and 37% of deposits - Credit to private sector @ 30% of peak (i.e. down 70%) Balance sheets - ROE @ -50% Pesified claims (lawsuits @ 20% of bank deposits) All financial markets fully shut down ( counterparty risk)
FISCAL, FINANCIAL, PROVINCIAL AND JUDICIARY DOMINANCE
LESSONS LEARNED
1. 2. 3. 4. 5. Know the size of the bill Find out how deep is your wallet Accurate diagnosis
Draw the line (somewhere) Plan (way) ahead the next move Whenever possible, be ahead of the market
6. 7.
Benevolent dictator