IF 200 -- August 29, 2011 -- 18/20

I have identified simple and straightforward actions that every government, if truly willing to work for the good of people, should consider at the national level, possibly also coordinate it internationally, without any further delay.    These actions are:

1. Reconsider the size of the government and cut down “all” excesses and “all” inefficiencies;
2. Simplify the fiscal system, eliminate all niches -- only able to capture votes at election time -- and build a fiscal system more “just” and totally cleaned up of all complexities mostly incomprehensible to the people;
3. Reconsider the financial “derivatives” market structure in order to allow the use of derivatives only for hedging purposes of “real” transactions in the “real economy”.
4. Cut entirely the unnecessary sophistication of financial markets across the globe.
5. Forbid the “making money with money” strategies and black pools activities (computers trading with computers) and let the people be part again of the financial market.

In other words, the financial market should stick primarily to its essential role of being the intermediary between savings and the use of these savings in the “real economy”.    Banks should return to their main role of financing the “real economy”.

I believe that these measures, although requiring real political commitment and daunting efforts, could be discussed, negotiated and implemented in a much easier and rapid way than any other visionary international new structure at the moment.    The people around the globe would understand, appreciate and support such efforts.

Admittedly, these measures might sound retrograde at the present time.    But, when the machine is broken as it is now, the clock must be stopped for a while and even turned back.    A dose of common sense is necessary in order to consider each economic and strategic issue in the proper perspective.    Then, global economies can rebound in a stronger and sustainable way in a “NEW WORLD standing on VALUES”! 

Undoubtedly, as the world economy goes through major transformative change in its growth dynamics and industrial landscape, there will be time to design appropriate mechanisms for the global governance of economies, international liquidity and reserves, and the creation of global liquidity for specific global issues (famine and water, for instance), aiming at global growth and financial stability.

The current monetary system most probably needs to be totally overhauled in order to accommodate the new realities of globally intertwined economies.

Therefore, I strongly believe that the above-mentioned first steps must imperatively be considered in each country.    Indeed, a solid building requires serious architectural work at its foundations first.    Otherwise, the outcome could only be a “monumental ruin” standing on multiple ruins! 

Allow me to conclude this presentation with some recommendations for your beautiful country.    Uruguay should particularly focus on economic strategies that would engineer internally generated growth, able to ensure solid employment perspectives to all citizens, especially to its youth.    Uruguay should reduce its dependence on foreign capital and be particularly vigilant to prevent foreign speculative capital from gaining substantial control of domestic strategic economic sectors and corporations.    Political, economic and fiscal stability, are essential to attract foreign investments.    But, above all foreign investors scrutinize the level of security provided by the government of Uruguay.    THANK YOU. 

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