ACTIVIDADES CLASE 5

Actividad individual (comisión semipresencial en clase, comisión virtual se entrega)

A. Leer el texto “Investors snap up Argentina’s 100-year bonds” y realizar las siguientes actividades:
1. Traducir el título y el subtítulo
2. What was Argentina like in 1917? What was the reason for that economic situation?
3. How much will these bonds yield by their due date?
4. Why do investors expect Argentina’s 100-year-bonds to be a good investment?
5. Why are investors still unconvinced of buying these bonds?

Investors snap up Argentina’s 100-year bonds Jun 24th 2017

Six defaults in the past 100 years do not deter a bet on 2117

ONE hundred years ago, Argentina was not the country

it is today. Thanks to a belle époque of lavish foreign
investment, rapid inward migration and bountiful
agricultural exports, its GDP per person in 1917 was
comparable to that of Germany and France. Although
the first world war brutally interrupted international
trade and investment, the country profited from filling
the bellies of soldiers on the front with tinned corned
beef.

No one knows how Argentina may change over the next

100 years. But many investors seem willing to bet on one forecast: that its government will in 2117 repay
$2.75bn-worth of dollar-denominated, 100-year bonds, sold to enthusiastic investors on June 19th.
Since Argentina has defaulted six times in the past 100 years, that belief seems brave. But instead of looking
backwards, investors are looking from side to side, at the miserable yields on offer elsewhere. Argentina’s
“century” bonds yield almost 8%. That is comparable to what investors can now earn on an equally long-dated
bond issued in 2015 by Petrobras, Brazil’s state-owned oil company. And it is several percentage points more
than the yield on Mexican bonds due in 2110 or Russian paper due in 30 years’ time.
Moreover, many investors will hope to make a profit long before this belief in Argentina’s 22nd-century
creditworthiness is tested. If their case merely becomes more plausible (or if yields elsewhere prove
disappointing), Argentina’s bond prices are likely to rise, allowing their holders to sell at a profit. And the
longer the life of a bond, the more the price will move (in either direction).
For Mauricio Macri, Argentina’s president, the successful bond sale is a timely endorsement of his reform
efforts. His team had hoped that MSCI, which compiles stockmarket indices, would decide this week to
readmit Argentina into its widely-followed emerging-market index, rescuing it from the lower tier of “frontier
markets”. But on Argentina, unlike China, MSCI decided instead to wait. Investors, it said, are not yet
convinced Mr Macri’s reforms are “irreversible”. It is unusual for equity investors to be more circumspect than
bond buyers. But they have a point. At times over the past 100 years, Argentina has shown that it can reform
itself, reverse itself, and reverse those reversals.
Actividad grupal - Leer el texto “Prepare for the coronavirus global recession”
Traducir las oraciones subrayadas en el texto.
1) Responder las siguientes preguntas en castellano:
a) What did forecasts show when the coronavirus outbreak started?
b) What do many economists predict for the future of the global economy? Are they optimistic?
Why?
c) What measures did the Fed take to help the US economy?
d) What will policymakers do in the UK to deal with the current economic crisis?
e) How does Covid-19 affect demand and supply?
f) What does “u-shaped recession” stand for?
Prepare for the coronavirus global recession
Sun 15 Mar 2020
Travel bans. Sporting events cancelled. Mass In the coming weeks the Bank can be expected to cut
gatherings prohibited. Stock markets in freefall. interest rates to 0.1%, the lowest ever seen. The Fed
Deserted shopping malls. Get ready for the Covid- will have to add the £12bn set aside to deal with
19 global recession. Up until a month ago, it was Covid-19. It has been clear from the start that Covid-
assumed that the coronavirus outbreak would be a 19 affects both sides of the economy: supply and
localized problem for China and that any spillover demand. The supply of goods and services is
effects to the rest of the world could be comfortably impaired because factories and offices are shut and
managed by a policy easing by central banks. output falls as a result. But demand also falls
When it became clear that Covid-19 was not confined because consumers stay at home and stop spending.
to China and that the economic effects would be
more widespread, forecasts started to be revised Economic disruption caused by Covid-19 is
down. But central banks, finance ministries and enormous. Entire countries –Italy and Spain– are in
independent economists took comfort from the fact lockdown. The problems facing airline companies are
that there would be a sharp but short hit to activity symptomatic of a crisis facing the global travel
followed by a rapid return to business as usual. industry, from cruise companies to hotels that cater
If history is any guide, the global economy will for tourists.
eventually recover from the Covid-19 pandemic, but Discretionary spending by consumers has collapsed
the idea that this is going to be a V-shaped recession in recent days. Despite globalisation, much economic
in the first half of 2020 followed by a recovery in the activity remains local but here, too, there will be an
second half of the year looks absurd after the impact as people cancel appointments at the dentist
tumultuous events of the past week. or put off having their hair cut. Paul Dales, the chief
What’s more, the Federal Reserve –the US central UK economist at Capital Economics, has estimated
bank– cut interest rates to nearly zero and pledged to that output in Britain will shrink by 2.5% in the second
expand its balance sheet by $700bn. In the coming quarter but says a 5% fall is possible. The more
weeks the Bank of England can be expected to cut pessimistic estimate looks quite plausible. What’s
interest rates to 0.1%, The coordinated response by more, in a service-sector dominated economy much
the Bank of England and the Treasury last week was of the lost output is never going to be recovered.
seen as a textbook example of how policymakers It also seems likely that the economic pain will go on
ought to respond to the crisis. for longer than originally estimated. Having imposed
It was, though, only the start. Airline companies will bans and restrictions, governments and private-sector
quickly go bust unless they receive financial bodies will be cautious about removing them.
assistance. The same goes for retailers, many of Countries such as Italy will be wary of opening their
them hanging on by their fingertips even before borders while there is a fear of reinfection.
Covid-19. Britain has a new chancellor of the There is also a question of how long it will take
exchequer and a new governor of the Bank of consumer and business confidence to recover. Policy
England; they will both be aware that the risks of action by central banks and finance ministries can
doing too little too late are far greater than those of help in this respect but only so much. The chances
doing too much too soon. are that the imminent recession will be U-shaped: a
steep decline followed by a period of bumping along
the bottom. There will be recovery but it will take time and only after much damage has been caused.