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domenica 12 ottobre 2014

Fall in oil: warning Professor Mebtoul the Algerian government

According to "algerie.com"
"If a fall in the price of oil, the risk of a property bubble in Algeria"
The impact of the financial crisis of 2008 is not over yet because we do not tackle the fundamental, despite some progress Basel III to supervise banks, but insufficient for lack of a macro approach overall economic and global regulation. So are we witnessing the supremacy of the financial sector on the real sphere whose only credits from banks approach the global GDP (in Europe more than three times GDP and countries like Luxembourg tax haven more than 100 times ) with greater concentration since 2008.
Meanwhile, non symbiosis between economic performance and social dynamic, bonuses awarded to bank executives are often more than three times the rate of profit in the productive sectors. Also, some experts predict budgetary bubbles with so deferrals of debt on future generations because of the successive state intervention to bail out failing banks, which have replaced bank bubbles, which can amplify the global crisis, as well as new technologies the urgency of the security of computers in order to address the risk of the spread of cyber crime. This crisis has an impact on the Algerian economy completely externalized via hydrocarbons, 98% of foreign exchange earnings and 70% of the major needs of households and businesses and contributing over 80% of public expenditure, the consequence futures because of subsidies and social transfers, $ 60 billion or 27% of GDP would be a housing bubble with social and political consequence.
Reminder 1.- impact of the housing bubble in 2008
a- banks made mortgages to insolvent households with little or guarantees, with high rates of interest.
b-Diffusion of bad debts in the market to remove the risk, banks "securitize" their claims, that is to say, they cut their debt in financial products to sell on the market. Globalization has made ​​the rest, disseminating these risky securities in investor portfolios across the globe.
c Hedge funds (hedge funds) have been big buyers of subprime mortgages, often on credit to boost their yields (up to 30% per year), and play the leverage, hedge funds taking up 90% of the funds needed.
d Flipping the American housing market: the end of 2005, interest rates began to Americans back then that the financial market was faltering. Thousands of households were unable to meet their repayments resulting in losses to banks and investors who bought the bonds saw their value collapse.
e Confidence crisis: banks found themselves in a situation where, as in a poker game, they know what they have on their balance sheets, but not what is in the other because these bad mortgages were purchased around the world and no one knows what is the distribution of risk resulting in a serious crisis of confidence and since July 2007, this has reduced scholarships and paralyzes the inter-bank market.
f- Banks do lend themselves more or very little fear that their counterparts are in a red line.
g-face paralysis in the market, the central bank intervened massively early August 2007, injecting hundreds of billions of dollars and euros cash.
As a result h- with probe absorber for the current period, we went from the banks' debt to national debts.
2 The danger of a housing bubble in Algeria
In case of fall of hydrocarbon prices, depletion of regulatory fund revenue, and going to the depletion of reserves (to leave a minimum if the dinar on the parallel market coterait more than 400 dinars for euro), banks will inevitably raise their interest rates, can no longer be recapitalized through pension hydrocarbons, with the insolvency of many citizens who have purchased housing at subsidized interest rates which may cause real social and political crisis. This is the same effect of the impact of the crisis of 1986 when during the years 1989-1991 for projects approved by the OSCIP, where as a reminder approval required the signing of three Ministers, where the rate of interest was increased from 5% to 15% resulting in the collapse of many private operators. It's the same situation experienced by the USA during the 2008 crisis or that of Spain, which has backed the BTPH (which by the way in Algeria ancient construction methods are used consumes a great round concrete, cement and energy), which has experienced the worst economic crisis in its history. Ironically after termination of the housing crisis without real economic recovery, with this individualization (a couple may not live even housed with 20,000 / 30,000 net dinars per month) the nest is prepared to vast social challenges. For now several families living under one roof, with a total family income (same pot, burden sharing of water, electricity etc ...). This mitigates the deterioration of individual purchasing power and increasing family income and the consolidated contribution to social cohesion.
Hence the importance already for reasons of national security to think of governance-related structural reforms and the establishment of appropriate institutions coupled by a strategic vision for long-term reform of the financial system Algerian including public that concentrates more than 85% of lending, issue of power and lung reforms. This determines the choice of segments, in terms of comparative advantage, cost-quality under international stocks (industry-agriculture-services) if we want to make the transition to production and export from oil itself linked to energy and avoid wasting the productive fabric transition, the industrial sector represents less than 5% of GDP to go to 15/20% minimum by 2020 So I draw the attention of the government is to foresee -gouverner - the danger of a housing bubble in Algeria during a fall in the price of oil inevitably would cause a social crisis without precedent. Chinese come to understand restricting real estate loans whose BTPH is about 25/30% of GDP, even at the risk of slowing growth rates.
University Professor Dr. Abderrahmane International Expert Mebtoul
Chute du cours des hydrocarbures: mise en garde du professeur Mebtoul au gouvernement algérien