Analysis of Argentina Balance of Payments

The economic situation of Argentina was interesting between 1998 and 2007. However, it can be assumed that the worst year of the Argentinean economy was 2002. Before 1998, some factors such as a huge debt reaching 55% of the GDP, a currency pegged to the US $, the â€Å"Tequila† crisis in 1995, the devaluation of Mexican and Brazilian currencies, were responsible of the crisis Firstly we compared trade and GDP, to obtain the trade openness ratio. It increased strongly in 2002, due to a high increase in trade (133% 2001 to 2002) compared to the GDP that declined 11bp. The relatively high level of trade openness registered in 2002: 10. 08%, is based on the steep drop in imports 56%, related to the peso devaluation. As the peso stabilized and GDP undertook an ascending trend trade openness bounced back to low level again. Secondly, the balance of payments of Argentina can be analyzed in order to compare the exports to the GDP. The trade index of the country is under 20% until 2005, which is lower than the Global Trade Index at this time (30%). Nevertheless, it increased to reach a better level in 2007 (25%). For the valuation of the liquidity level, we compared the reserves to the imports, in volume and number of days. Since 1998, it is decreasing, sharply in 2001 and 2002, then recovering a better level between 20% and 30%. Therefore we can not consider that 4 months of reserves to be sufficient for maintaining a good level of liquidity, it’s a bit lower than the 6 months objective. In 2006, reserves influenced by the crisis in Mexico, dropped to 10%. To assess the debt service, we assumed a 5% interest rate, applied to interest payments and exceptional financing. Debt declined in terms of export multiplies especially due to the rise in exports and not to reimbursements. The highly indebted Argentina actually resorted to IMF financing and additional loans in 2001, when confronted with $3bn capital flight. Fluctuating between 900% in 1998 and 380% in 2007, the debt service ratio, far away from the optimal level of 33% , clearly emphasizes the state’s debt burden. The interest ratio is high, but still decreasing jointly with the debt, reaching a sane level below 0,25 in 2006 and 2007. Still this figure is actually deceiving, the interest ratio plunging due to ascending exports and not decreasing debt service. All liquidity indicators point out to a disappointing position for Argentina, still the reimbursements made in the recent years and the IMF account clearing entice improvements at this level. We can notice a huge change, in the current account since 2002. The negative current account which lasted for several years, had been replaced by a positive one in 2002. This change was attributable to the big decision of switching from a pegged currency (to the US$), to a floating currency. Consequently, the Argentinean peso was devalued. On a current account view, this means less imports, and an increase of the exports. Actually the volume of the exports didn’t take off the day when the decision of devaluating the Argentinean peso, but 2 years after. This phenomenon could be explained by the J curve theory. 2001 was a turning point in the history of Argentina. Forecasting the devaluation of the peso, investors revised their position towards the Argentinean market, foreign direct investment dropping by 80% from 2000 and 2001. This way FDI decreased drastically its role as a financing source (before 2001, Argentina was financing between 5 and 10% of its debt by the Foreign Direct Investment). Faced with such a drastic cut in foreign direct investment and portfolio investment, Argentina issued additional debt worth $ 10 bn. Over the last ten years Argentina experienced serious turbulence in its financial position that has negatively impacted its state rating and fuelled even more financial distress. Still, in recent years, rescue came and it was in the form of economic growth. This restored investors’ confidence, translating into higher absolute FDI inflows, and allowed for debt restructuring. With an outstanding debt of $6 bn towards the Venezuelean government, obligations of $ 500 m in the international debt market and a state rating of B (Moody’s), any investment in the Argentinean market will carry high risk that might not necessarily be offset by a high return. For the time being, we recommend not investing in Argentina.

Red Spot Markets Company Essay Example | Topics and Well Written Essays - 1500 words

Red Spot Markets Company - Essay Example Possibly, a third and more strategic issue is the decision to close down the Providence center and shift all operations to Newburgh. First, we try and understand the impact of the first problem. Shrinkage directly impacts retailer margins since it is a loss of inventory. This is of concern to the senior management. At the operational level, this leads to a different kind of conflict. The DC (Distribution Center) loads cartons in which, as per the delivery note or shipment advice, a specified number of bottles or packs of a particular product is packed. However, when the stores receive the goods and they find shortage, then they report it as short receipts and make a note accordingly. Often, the DC employee states that it is not his problem and blames in-transit loss of goods. For the stores, it is a problem since the shelves would not be fully stacked. Repeated complaints from stores would imply the seriousness of the problem. Yet, managers who seek to address such problems need to d iscuss with DC personnel and with the store teams on these issues. Decisions cannot be taken without consulting both sides. The second problem is handling a dominant employee who seems to exert both a positive and negative influence on his team members. The situation would have been positive if, even in Bigelow’s absence, the DC operated smoothly with very minor lapses due to lack of leadership. But we find clear evidence that he has been able to influence his co-workers to sabotage daily operations because of his unjustified suspension. This kind of negative influence is bound to affect the company in the long run. It shifts the focus from an impartial, unbiased dedication to work to dependence on a single person, who can drive day-to-day activities. For an aggressive DC manager, Bigelow is bound to create problems. He is unlikely to take orders from his superior. In fact, Bigelow has been trying to lord over his superiors. A second problem is that such a leadership (Bigelow ’s) would foster a cover-up of real problems. For instance, if two or three poor performers are there in his team, then Bigelow would try to cover their shortcomings. This would impact worker morale and productivity. A similar attitude of covering up of performance metrics (such as shrinkage) would ensue since we have glimpses of such acts towards the end of the case. The third issue, more strategic in nature, calls for a decision to shut down the DC in Providence and shift to Newburgh. This could have a bigger impact on the company. The first is that there must be a thorough assessment of whether the Newburgh facility can handle the volumes which were earlier managed by the Providence DC. It needs proper computation of DC space, forklift movement space and additional personnel needed to man operations. The second point of concern is the distances which need to be served if all logistics were to be managed from the Newburgh center. Response time may increase leading to empty or partially replenished shelves at the retail stores. This would directly hit the store revenues. The third issue would also lead us to the problem of managing retrenchment or re-allocation of personnel from the Providence DC. Employees with strong roots may resist any attempts to re-locate and they may be willing to give up their jobs. Additionally, this could result in legal problems if any of them decide to sue the company. Plus, there could be talented, good performers at the Providence DC, who may not

Paintings of Picasso during the Modernism Essay

Paintings of Picasso during the Modernism - Essay Example The essay "Paintings of Picasso during the Modernism " will help to understand the role of Pablo Picasso's art in the modernism. Art paintings that emphasizes material content and the social perception is perceivable as incomplete compared to art paintings in which the content is down played, and formal elements emphasized. The principles of modernism period are clearly visible in the works of Pablo Picasso, who perhaps can be considered as the most illustrious modern painter; conversely, the difference that exists between content and form is not one-sided or simplistic. Considerably, Pablo Picasso's paintings were not absolutely abstract; in most instances the paintings contained references, though unclear, to the material art world. Furthermore, while Pablo's paintings were characteristically concerned with the Cubism and universality, it helped shape and model abstract art. Social elements that were of interest then were incorporated in most of his works. Incorporation of social e lements in his works further complicated Picasso’s stature as a modernist artist. Consequently, though Picasso's art paintings encompass modernistic elements they are considerable as more complex in a modernistic sense because of all the elements incorporated in them. In the early 1900s, Picasso instigated his first unique style, which is referred to as the Picasso’s blue period. He restricted the color scheme he employed to blue, Picasso illustrated withered and solitude body forms whose figures and appearance signified the inferiority.