Monday, May 05, 2008
Peru Upgrade Follows Strong Growth

REASON TO CELEBRATE: Peruvians should celebrate the country's impressive macro achievements and wish President Alan Garcia (above) the best of luck, the author says. (Photo: Dante Zegarra/Peru President's Office)


PERU MACRO RESULTS. CLICK TO ENLARGE


The investment grade of Peru by Fitch ratings follows years of solid growth.

Gobierno de Alan García aprovecha crecimiento sólido y grado de inversión entregado este año por Fitch:
Perú sigue cosechando buenos resultados y desplaza a Chile en ranking de riesgo país
Desde el 2 de mayo que el EMBI chileno dejó de ser el más bajo de Sudamérica. Perú quiere ser el primero en la región.

La competencia que está llevando a cabo Perú es "deportiva y amistosa", según palabras del propio Mandatario peruano.



FRANCO VERA Y FRANCISCA URROZ

El Presidente Alan García lo dijo la semana pasada: "Queremos ganarle, queremos ser mejores". Sus declaraciones se referían a Chile, sus instituciones y su economía, en una reunión frente a empresarios de Latinoamérica y de la Unión Europea.

Tras demostrar el aprecio y la admiración que sentía por cómo se han hecho las cosas en nuestro país, el Presidente peruano destacó que Perú no se va a quedar de brazos cruzados tras los triunfos conseguidos. Y es que los últimos meses han sido sólo de buenas noticias desde que Fitch le otorgara "grado de inversión" a este país de casi 30 millones de habitantes.

La última sorpresa de Perú fue su índice EMBI, que calcula a diario el banco de inversiones JP Morgan y que mide el riesgo de los países frente a la economía de EE.UU. (ver recuadro), cifra que desde hace años era liderada en la región por Chile -debido a su baja deuda y alta estabilidad- junto a México -país que a veces tiene menor riesgo país que Chile.

Ayer, Perú tenía 151 puntos de riesgo y Chile 158, y llegó a estar con 12 puntos menos de riesgo el 13 y 14 de este mes.

Buenos competidores

La "competencia deportiva y amistosa" que está llevando a cabo Perú, según palabras del propio Alan García, se demuestra con creces al analizar las cifras de este país, que el año pasado tuvo una tasa de crecimiento de 8,3% en su economía, la mayor desde 1994.

Otra prueba para ver cómo va la competencia a la que hace referencia García, es analizar el último índice de competitividad mundial que presentó la semana pasada la Facultad de Economía de la Universidad de Chile, según el respetado estudio que realiza el Institute of Managemet Development (IMD) de Suiza. La versión 2008 del ranking incluyó por primera vez a Perú, el que tuvo un gran debut en el puesto 35, por sobre países como Colombia (41), México (43) o Brasil (50).

Lo más interesante es que, de entrada, se ubicó a sólo 9 lugares del ranking obtenido por Chile, quien se mantuvo 26 por segundo año consecutivo, luego de caer desde el lugar 18 que ocupó en 2005.

Todos suben y Perú baja su riesgo

Expertos que analizan el riesgo país (EMBI) explican que hay factores razonables para que Chile no se preocupe por estar ganando puntos de riesgo, pues desde julio del año pasado todos los países emergentes han tenido un aumento en el Riesgo País.

Pese a todo, Chile ha logrado mantenerse entre los que tienen el riesgo más bajo de la región, pero se ha visto afectado por la poca liquidez de sus papeles: la deuda es pequeña y está en manos de inversionistas que no van a salir a venderla. Esta falta de movimiento del dinero chileno es "castigada" por el EMBI.

Perú, en cambio, sigue teniendo una alta deuda, pero ha hecho las cosas bien, mejorando sus términos de intercambio y conservando un crecimiento sostenido. Eso es premiado en el riesgo país. Ahora lo importante (dicen los analistas) es que logre sostener este buen momento.

Riesgo país

Hay distintas formas de medirlo. Una de las más usadas es la fórmula del Banco de inversiones JP Morgan, conocida como EMBI. Esta forma calcula el diferencial (conocido también como "spread") que existe entre la tasa de interés de los bonos que emite un país determinado (en dólares) y la del bono del Tesoro de EE.UU., la base de comparación. A mayor diferencial, mayor es el riesgo.

ENCIFRAS

8,7%
fue el crecimiento económico de Perú en 2007. Chile alcanzó un crecimiento de 5,1%.

35
fue el puesto en el que debutó Perú en el Ranking de Competitividad 2008, según el estudio del IMD (Suiza). Chile se ubicó a sólo 9 lugares, en el puesto 26.

37%
rentó la Bolsa de Valores de Lima en 2007. Con esto se alzó como la segunda bolsa más rentable de Latinoamérica, sólo superada por la Bolsa de Sao Paulo (42%).

Fuerte expansión y baja inflación son sus cartas

EL MAYOR CRECIMIENTO DE LA REGIÓN

Perú sería este año el país de Latinoamérica con la mayor tasa de crecimiento, según el Fondo Monetario Internacional (FMI), el que proyecta un 7%, bastante por encima del promedio, apenas por sobre el 4% que se ha calculado para la región. También, el Banco Interamericano del Desarrollo (BID) espera que Perú obtenga un crecimiento de 8% durante el período 2008.

Los buenos precios internacionales de los commodities han ayudado a Perú a mantener una importante tasa de crecimiento, destacándose el sector de la minería, motor de parte importante de su economía.

SE RECOMIENDA INVERTIR

Ése debería ser el letrero de las entradas fronterizas de este país. Fitch fue la primera clasificadora de riesgo que otorgó el "Grado de Inversión" a este país, luego de lo cual llegaron rumores de que varias de las otras grandes agencias de calificación (como Standard & Poor's o Moody's) ya tendrían sus ojos bien puestos en Perú. Fue entonces cuando llegó el turno para Brasil, pero esta vez la calificación de grado de inversión la entregó Standard & Poor's, lo que incrementó los rumores sobre Perú y un probable mejoramiento de rango por parte de otras calificadoras.

Es eso lo que están haciendo muchos inversionistas chilenos, quienes apuestan sus fichas hacia el sector agrícola peruano, siguiendo por las inversiones inmobiliarias y, por supuesto, sin dejar de lado las inversiones financieras.

PISÁNDOLE LOS TALONES A CHILE

En sólo 3 años (entre 2005 y 2007), nuestros vecinos han logrado tres acuerdos comerciales. El primero de ellos fue firmado en 2005 con Tailandia (TLC), con miras de entrar al mercado asiático. Posteriormente, en 2006 se firmó un acuerdo de complementación con Chile, y en 2007 el Congreso de EE.UU. les aprobó un TLC. La próxima meta es la Unión Europea. Ayer se dieron plazo de un año para obtenerlo.

Y en Argentina... cae la confianza de los consumidores

Los argentinos al parecer no ven con buenos ojos su economía. Algunos inversionistas han retirado sus posiciones y la confianza de los consumidores trasandinos cayó a su peor nivel en cinco años.

¿La razón? El temor de un posible "corralito", situación que los economistas descartan. La confianza de los consumidores cayó 11,6% en mayo, acumulando un retroceso de 23,8% en los últimos 12 meses, según informó la Universidad Torcuato Di Tella. La caída del índice se suma al hecho de que la semana pasada, y a raíz del conflicto agrario, 7 de cada 10 ahorristas argentinos a los que se les venció el depósito bancario en pesos a plazo fijo habrían comprado dólares.

Para Enrique Álvarez, de Idea Global, la economía argentina está presionada por el conflicto agrario y las tasas de inflación, ya que hay un divorcio entre lo que el mercado estima y lo que anuncia el Instituto Nacional de Estadística y Censos (Indec).

Según Pablo Salcedo, de Compass, el hecho de que la autoridad argentina haya decidido manipular el dato inflacionario explica la baja en la confianza. "Si la cifra dice una cosa, pero la gente percibe otra, es entendible el deterioro", explica.

"Argentina está en una situación más benévola que hace unos años. Tiene reservas internacionales altas, una banca sana y un superávit fiscal (...) pero cuando hay inquietud, la gente actúa y después pregunta", argumenta Alberto Bernal, analista para Latinoamérica de Bear Stearns.

Para el economista Tomás Flores, el temor de una nueva crisis explica el momento por el que atraviesa Argentina, pero coincide en que la situación es distinta. "Hoy es menos real que haya un corralito nuevamente", sostiene.

ANÁLISIS EN THE WALL STREET JOURNAL B 11

The Next to Notch an Upgrade?
Peru, Russia Could Follow
Brazil's Higher RatingBy JOANNA SLATERMay 12, 2008; Page C2
Getting moved up -- or down -- in the sovereign-rating hierarchy can have a profound impact on stock and bond markets in developing countries.

These days, there is a distinct divide within emerging markets. Some are winning kudos for their economic policies and seem ready to leap up the ladder of credit quality. Others appear increasingly vulnerable to the effects of the credit crunch and may be poised for a slide.



Last month, Brazil vaulted into the ranks of countries whose external debt is considered "investment grade," a momentous occasion for a country that less than a decade ago was gripped by financial crisis. Although the move was anticipated, it sent Brazilian shares to an all time-high.

The next country in line to receive an upgrade on its sovereign rating could be Peru. "That's the one that everybody is focused on," says Joyce Chang, global head of emerging-markets strategy at J.P. Morgan Chase.

Fitch Ratings has already judged Peru's external debt to be investment grade, but its larger counterparts, Standard & Poor's and Moody's Investors Service, have yet to follow suit. An S&P analyst said in April it may upgrade Peru to investment-grade status later this year.

Clinching that status carries a host of benefits, because some institutional investors have restrictions on how much they can allocate to places that aren't considered investment grade.

Propelled by exports of raw materials, Peru's economy is expected to grow 7% this year, according to the International Monetary Fund, compared with a little over 4% for Latin America as a whole. In recent years Peru has greatly reduced its overall level of debt and now depends only modestly on financing from overseas. "It's a little country that's working like a clock," says Guillermo Mondino, head of emerging-markets research at Lehman Brothers.

Russia is another country that could merit a positive change in status, say some investors. "Their fundamentals are so strong, and they've been so prudent with fiscal policy, that economically they should be upgraded," says Thomas Cooper, who helps manage $6 billion in emerging-market debt at GMO LLC. Russia's external debt is already investment grade, but ratings agencies are reviewing the possibility of moving it a notch higher, potentially to a coveted A rating.

By contrast, as the credit crunch has intensified this year, ratings agencies have alerted a host of countries that their sovereign-credit quality is at risk of slipping.

In the past two months, S&P has added Kazakhstan, Turkey, Hungary and Romania to the list. All four are affected in varying degrees by tighter borrowing conditions worldwide, because their governments or banks depend on overseas financing.

"The global credit squeeze is more severe, and likely to prove more prolonged, than anticipated," S&P noted late last month in its warning on Kazakhstan's rating.

Another country that risks a downgrade: Argentina. It is struggling with accelerating inflation and recently faced a series of protests by farmers. The resignation of the country's economy minister after just five months on the job is part of an ongoing struggle over economic policy.

The minister's departure prompted S&P to change its outlook on the country's sovereign rating to negative from stable. "The instability there has picked up quite significantly," says Mr. Mondino of Lehman.

Lima a la carta

De la mano del consagrado chef Gastón Acurio y del ultra chic Rafael Osterling recorrimos los restoranes más deliciosos de Lima. Estos son sus datos para probar las mejores recetas criollas, la nueva cocina de autor, los sándwiches y, desde luego, los cebiches más sabrosos de la capital culinaria de Sudamérica.

Texto: Amalia Torres desde Lima, Perú. (Domingo El Mercurio, 11/05/2008)

En el taller de cocina de Gastón Acurio, todos los días se crea un plato nuevo. Ahora mismo, mientras hablamos, un cocinero trae un sándwich de unos quince centímetros con carne, plátano frito y otros vegetales que no se alcanzan a distinguir, antes de que Acurio le dé un buen mordisco y diga que sí, que el invento resultó, que ahora lo pruebe el resto del equipo. Creador del afamado Astrid & Gastón, de la cebichería La Mar y responsable de internacionalizar la comida peruana, Gastón Acurio saca ahora un trozo de cuello de alpaca de una olla, su último hallazgo. Y más allá prueban helado de coca.

Pero Acurio no es el único que está innovando. El año pasado en el foro gastronómico de Gerona, España, se decretó la comida peruana como "un auténtico paraíso de la cocina de fusión", y tanto el New York Times como el Washington Post, han aplaudido la nueva carta limeña. Según Rafael Osterling, dueño y chef del glamoroso restorán Rafael, este boom se debe a que la cocina está profesionalizándose. Por eso, hoy aterrizar en Lima es sinónimo de comer –sin exagerar–, los mejores platos de su vida. Pero cabe una advertencia: si usted está a dieta, o es de esas personas que alega si la comida tiene una pizca de ají, mejor no siga leyendo.

CEBICHERÍAS

Clásico del mar Cuando uno le pregunta a Gastón Acurio por su plato favorito su respuesta es inmediata: cebiche de pejerrey. Y si él lo dice, es para creerle. Por eso nada mejor que partir comiendo en su local, la ondera La Mar. "Esta cebichería revolucionó todo. Es una cocina contemporánea, que experimenta en técnicas, algo que antes no se hacía en Perú, porque el 90 por ciento de los propietarios de cebicherías no son chefs profesionales, como Gastón", dice Rafael Osterling. Acá, tanto la gente linda de Lima, como los turistas repletan las mesas, y por eso la mejor opción es ir muy temprano o pasadas las 3 de la tarde. Pero sin importar la hora, no pecar de gula es una tarea difícil desde que se pone un pie en La Mar. No sólo porque al pasar por la barra va a ver cómo preparan frescos sashimis y tiraditos, sino porque en vez de pan, a su mesa llevarán plátanos, yucas y distintos tubérculos fritos. Una tentación. Seguramente no puede esperar por probar el cebiche, pero no olvide que hay algunos datos que debe manejar si no quiere delatarse como turista inexperto. Primero, debe saber que este plato se come con cuchara para poder disfrutar de la leche de tigre, como se llama al jugo que deja en el fondo. Segundo, el camote no se mezcla en el mismo bocado con los otros ingredientes, sino que se come aparte, para que su dulzor suavice el ácido del limón y el picante del rocoto. Y tercero, en Perú, las cebicherías sólo abren a mediodía porque antiguamente se creía que en la noche caía mal, y hoy la tradición se respeta. Sabiendo esto puede elegir libremente, aunque nuestras sugerencias van por el cebiche mixto, y el cebiche nikkei (10 dólares cada uno), que logra un toque dulzón inigualable gracias a aceites orientales. Especialista en pescados y mariscos, La Mar también ofrece tiraditos de pejerrey (10 dólares) y causas con centolla, atún, o langostinos, por nombrar algunas (entre 10 y 12 dólares). Para beber, no puede dejar de pedir el Chicha Punch, una invención de este restorán que combina chicha morada (jugo típico hecho de choclo morado), con pisco, almíbar de piña, cherry brandy y un toque de limón (6 dólares). Es refrescante y especial para el mediodía. Además, no debería irse sin probar el cremoso y adictivo derrumbado de chirimoya, o el bizcocho con canela, manjar, crema y piña caramelizada (6 dólares cada uno). ¿Le dio hambre? La buena noticia es que La Mar abrirá dentro de dos meses en Vitacura, y ya no será necesario viajar para comer el mejor cebiche de su vida.

Otro imperdible según nuestros guías culinarios es Chez Wong. Se trata de la casa del chef Javier Wong que, sólo luego de reserva telefónica con al menos un día de anticipación, lo atenderá con pescados recién sacados del mar. "Son tres mesas y es un solo tema: el lenguado. Tú entras y él saca unos lenguados gigantes, y cuando te sientas te prepara un cebiche. No hay carta, menú, nada. Luego te pregunta si quieres un segundo plato. Y saca una sartén, y según la inspiración del momento te inventa un plato para ti. Es una experiencia fascinante, de culto", afirma Acurio. El cebiche en Chez Wong vale 16 dólares. Ahora, si prefiere algo más relajado y económico, pero igualmente sabroso, La Red es la opción. A sólo tres cuadras de La Mar, el ambiente sencillo invita a la extendida sobremesa. La carta ofrece causas de pulpo al olivo por 5 dólares, y un abundante saltado de conchas por 9. LA MAR Dirección: Av. del Mar 770, Miraflores. Teléfono: (51–1) 421 3365. Horario: de 12 a 17 horas.


CHEZ WONG Dirección: Enrique León García 114, La Victoria. Teléfono: (51–1) 470 6217. Horario: desde las 12 horas. La reserva es fundamental. LA RED Dirección: Av del Mar 391, Miraflores. Teléfono: (51–1) 441–1026. Horario: de 12 a 17.30 horas. El cebiche se come con cuchara para poder disfrutar de la leche de tigre, es decir, del jugo. INSPIRACIÓN DE AUTOR: La fusión de los sabores Los nuevos restoranes de autor también son una buena excusa para viajar a Lima. Rasgos franceses, tai, indios y peruanos, entre otros, se encuentran en la carta del Rafael. Por fuera, su decoración minimalista ni siquiera incluye un cartel, sólo el nombre escrito discretamente en los vidrios del restorán. Pero eso no impide que se llene, sobre todo en las noches, de jóvenes profesionales que vienen a cenar o a disfrutar de su bar. El ruido obliga a subir la voz pero a nadie parece importarle. Para olvidarse de la bulla, lo mejor es partir con el pulpito a la grilla con salsa chimichurri de pimientos braseados, aceitunas kalamata y ajos confitados (13 dólares), o las conchas horneadas en mantequilla y ajo crocante (13 dólares). Le aseguramos, no se arrepentirá. De fondo, el cabrito de leche horneado, con salsa de miel, tacu tacu (mezcla de arroz con frijoles que se tuesta sobre una sartén), plátanos fritos y arroz (18 dólares) es sublime. Se trata de un cabrito de cuatro meses que va al horno por dos horas, y luego de empaquetarse al vacío se hace cocer por seis horas más. Todo para terminar deshaciéndose en su boca. Para beber puede tentarse con un generoso y nada de dulce pisco sour (6 dólares), o atreverse con la barra del Rafael, que va desde Martini de maracuyá, hasta el coca sour, un pisco macerado durante un mes en hojas de coca, por lo que adquiere su aroma y tono verde. Si aún puede seguir comiendo, no deje de probar el tembloroso sponge de chocolate con emulsión de cacao, frambuesas rostizadas y helado de leche y miel (9 dólares), o los ravioles de mango con espuma de lúcuma, frescura de maracuyá, burbujas de avellana y sorbete de manzana verde (8 dólares). La Gloria es otro imperdible. Su público promedio bordea los 50 años, y su fuerte son los platos "atemporales", como la tortilla de patatas o los riñoncitos al jerez (12 dólares). "En pocos lados siguen sirviendo el estofado de cola de buey (19 dólares)", confiesa Osterling, aunque recuerda que también las creaciones más novedosas son de altísima calidad. ¿Un ejemplo? El lomo a la parrilla con una delicada salsa de concha, acompañado de puré de brócoli, con un toque de espuma de mar y crocante de pimienta roja (18 dólares). Tan famoso se ha vuelto La Gloria, que le recomendamos reserve antes de partir de Santiago. El Scena también tiene una carta fusión aunque destaca aún más por su moderno diseño.

RAFAEL Dirección: Av. San Martín 300, Miraflores. Teléfono: (51–1) 242 4149. Horario: De 12 a 17 horas. Y desde las 20 horas en adelante.

LA GLORIA Dirección: Atahualpa 201, Miraflores. Teléfono: (51–1) 445 5705. Horario: De 13 a 16 horas, y de 20 horas a la medianoche.

SCENA Dirección: Fco. de Paula Camino 280, Miraflores. Teléfono: (51–1) 445 9688. Horario: De 12.30 a 16 horas, y de 19.30 a las 0.30. El coca sour es un pisco macerado durante un mes en hojas de coca, así adquiere su aroma y tono.

ALTA COCINA PERUANA: Reinventar las recetas criollas Aprovechar los ingredientes propios del país para crear platos únicos es lo que ofrecen los restoranes de la alta cocina peruana. Malabar, de Miguel Schiaffino, por ejemplo, rescata productos de la selva y otros altiplánicos, para lograr una comida de sabor internacional. Para partir, un pan cortado muy fino, conocido como rulero, con queso mantecoso, tomate de árbol y jamón de alpaca (5 dólares), o un rocoto confitado relleno de morcilla y arroz (6 dólares). Si quiere probar las pastas, no deje de comer los tortellini de arracha (12 dólares), un tubérculo parecido al camote, servidos encima con raíz de apio. Su sabor y textura es inigualable. En los postres, la sugerencia es la degustación (10 dólares), que incluye arroz con leche, suspiro limeño, alfajor con manjar blanco, y picarones con helado de chancaca. Ideal para no quedarse con gusto a poco. Y si después de la buena mesa le dan ganas de fumar, pues la carta también incluye una amplia variedad de puros. El restorán gourmet Fiesta es otro imperdible según Osterling y Acurio. Se trata de comida norteña reinventada, nacida en Chiclayo, pero según los entendidos, mejorada en Lima. La raya preparada en todas sus formas es un infaltable de la casa, y un buen ejemplo es la tortilla (8 dólares). También hay patitas de cerdo acompañadas de salsa de vinagreta (9 dólares), y el clásico lomo saltado, con papas fritas y arroz.

MALABAR Dirección: Camino Real 101, San Isidro. Teléfono: (51–1) 440 5200. Horario: de 12.30 a 16 horas y de 19.30 a medianoche.
FIESTA Dirección: Av. Reducto 1278, Miraflores. Teléfono: (51–1) 242 9009. Horarios: desde las 12.30 a las 22.30 horas.
PICADAS DE BARRIO: Para sentirse peruano Los pequeños y más baratos restoranes de barrio siguen siendo una institución entre los limeños. Se los conoce como "huariques", y son tan famosos, que Acurio confiesa que es frecuente que camine hasta el sencillo pero sabrosísimo Café Tostado. No le importa que el piso sea de cemento, ni que haya que compartir los mesones con desconocidos. Él va sagradamente por el menú, que puede variar desde ravioles caseros, hasta menestrón (el plato del día cuesta 4 dólares). Claro que lo más cotizado es el conejo a la naranja, "Un must", para Rafael Osterling. Con conejos criados por su propio dueño y servido junto a camote y una salsa agridulce, la recomendación es llegar con hambre. El plato cuesta 10 dólares y puede fácilmente compartirse entre dos. Mi Perú es otro secreto de Osterling. "¡El concentrado de cangrejo está de muerte! Se trata de una sopa con su carnita, que tiene el sabor picante y de las especies", dice Rafael. La atención es coloquial y el ambiente, de barrio. El plato sólo le costará 9 dólares, pero lo dejará con ganas de seguir descubriendo huariques peruanos. CAFÉ TOSTADO Dirección: Nicolás de Piérola 222, Barranco. Teléfono: (51–1) 247 7133. Horario: de 12 a 19 horas.

MI PERÚ: Dirección: Av. Lima 861, Barranco. Teléfono: (51–1) 247 7682. Horario: de 12 a 17.30 horas.

SANDWICHERÍAS: Perú entre panes Tan imperdonable como estar en Lima y no comer un cebiche, es no atreverse con los sándwiches locales. "Yo recomendaría a eso de las 11 de la mañana ir a la Antigua Taberna Queirolo a sentir el sándwich peruano con una cervecita", afirma Gastón Acurio. Con 127 años de existencia, la Taberna es uno de los locales más antiguos de Lima, y un buen tentempié para quienes visitan el Museo Arqueológico, pues queda sólo a una cuadra. El sándwich que motiva la peregrinación a este local es el de jamón del país. Se trata de una sabrosa carne que se ha dejado cocer por horas, y que se acompaña con cebolla morada cortada pluma y ají. Este soberbio y sencillo sándwich puede disfrutarse por un poco menos de 3 dólares. Puede pedirlo para llevar, aunque la recomendación es sentarse en la barra o en sus mesas y mirar las fotografías de la Lima de comienzos del siglo pasado que adornan el local. Otra alternativa, es la moderna sanguchería de Gastón Acurio, Pasquale Hnos. Los seis locales de esta cadena de comida rápida buscan rescatar los sabores propios del Perú y su fama hace que se repleten –sobre todo entre la 13 y las 14 horas–, de familias y ejecutivos. Según nos confesó Acurio, el próximo año, ya piensan deleitar a los chilenos con estos sándwiches. Un pan que no puede dejar de probar es el de lomo saltado (5 dólares), que viene con cebolla frita, tomates, ají amarillo, pimentón asado y queso fundido. También hay otros como el de chicharrón, que es cerdo confitado servido con su jugo, o el de lechón horneado (desde 3 dólares), igualmente buenos. Aquí las papas fritas se han cambiado por las sabrosísimas boliyucas, el plátano frito y el camote, y en vez de ketchup y mayonesa, puede encontrar crema de rocoto o salsa huancaína. Todo bien peruano, pero con sabores amigables hasta para los paladares más mañosos. "Nuestra lucha como cocineros pasa por hacer que lo que nosotros somos tenga una presencia en el mundo. Si ya comiste ketchup 30 años, ahora vas a comer huancaína. Esa es la idea", dice Acurio.

ANTIGUA TABERNA QUEIROLO Dirección: San Martín 1090, Pueblo Libre. Teléfono: (51–1) 460 0441. Horario: de 9 a 23 horas.
PASQUALE HNOS. Dirección: Sus seis locales se pueden ver en la página www.pasqualehnos.com.pe. Teléfono: (51–1) 243 3100. Horario: Desde las 8.30 horas. Datos prácticos LLEGAR A la ciudad de Lima vuelan Gol, Lan y Taca, desde 209 dólares más impuestos. DORMIR Miraflores Park Hotel: El más lujoso de Lima, ubicado frente al Malecón de la Reserva, en el exclusivo sector de Miraflores. Dobles desde 435 dólares. Av. Malecón de la Reserva 1035. Tel (51–1) 242 3000; www.mira–park.com. NM Lima Hotel: Hotel de diseño minimalista en el distrito residencial de San Isidro. Dobles desde 140 dólares. Av. Pardo y Aliaga 300. Tel (51–1) 612 1000; www.nmlimahotel.com. Solís Dies: Bien ubicado en Miraflores, es una buena alternativa para quienes andan con menos dinero. Dobles desde 31 dólares, no incluye desayuno. Calle Porta 245. Tel (51–1) 793 5573. OJO CON... Un dólar equivale a 2,85 soles. De pollos y Asia "En Perú dicen que para que un pueblo adquiera esa categoría, tiene que tener al menos una pollería y un chifa. Sino, es sólo un caserío", dice Acurio. El chifa es comida china con sabores peruanos y que en Lima se encuentra casi en cada cuadra. El Salón Capón (Jirón Paruro 819), es un clásico. "A los aventureros les aconsejaría el pejesapo al vapor, un pescado extraordinario, y los bocaditos dim sum", señala Acurio. En las pollerías, Osterling prefiere el paisaje campestre de La Granja Azul (Carretera central km 11,5) y El Chalet Belga (Carretera central, km 40,5 Ricardo Palma). La comida nikkei, o japonesa, también es un infaltable. El Costanera 700 (Av. del Ejército 421, Miraflores) es el favorito del jet set local. Dulces locales A pesar de la fama de los suspiros limeños, los postres nunca han sido el fuerte nacional. "Nuestros postres se están perdiendo, y hay que cultivarlos un poco más", admite Gastón Acurio. La mayoría tiene influencia española, como el suspiro, que según explica Rafael Osterling no es otra cosa que una adaptación peruana del "mana", una lenta cocción que se hacía en los conventos con huevo, azúcar y leche. Sí es propio del Perú la mazamorra morada, un budín hecho a base de maíz morado, frutas confitadas, pasas, y almendras. ¿El postre favorito de Osterling? Los picarones bañados en chancaca. Y según asegura, nada mejor que comerlos en los restoranes de comida criolla y las pollerías. Amalia Torres.

COMMENTARY: THE WEEKEND INTERVIEW
Alan GarcíaPeru's Born-Again Free Marketeer
By MARY ANASTASIA O'GRADY
May 3, 2008; Page A9' (Wall Street Journal)

Lima,Peru

Knock on the door," a solider standing guard in front of Peru's Government Palace says when I tell him I have an interview with President Alan García. I gaze up at the massive wooden portal – the perfect entry for the palace's 6-foot-5-inch resident or even someone twice that size – and do as I'm told.

A small wicket in the middle of the big door swings open and I give my name. I am admitted and escorted through the famous mirrored "golden salon," modeled on a room at Versailles. At 8:30 on a Saturday morning, the palace is silent. The click of my high-heels on the marble floor echoes under the vaulted ceiling. We reach another smaller chamber; coffee is served.
Terry Shoffner
The Peruvian economy is doing well these days, but with the world's attention focused on an aspiring dictator in Venezuela, its success has gone relatively unnoticed outside the region. Thus I want to talk to Mr. García and he has agreed to talk to me: A clever and seasoned politician, legendary for his silver-tongued populism, he is now in the business of marketing his country to investors. And why not? With an average growth rate over the past six years of better than 6.2%, the story is a good one. And it is about much more than a boom in mining exports. Peru has blossomed because of competitiveness, something that could not have been imagined a decade ago.
Mr. García led Peru once before, from 1985-1990. That presidency ended in disaster. In July of his last year in office, when his successor Alberto Fujimori was sworn in, the monthly inflation rate was 63%.
Price controls had spawned long lines for food. The government had a fiscal deficit totaling a whopping 7.5% of GDP. The economy contracted 8.8% in 1988 and 12.2% in 1989. Meanwhile, Shining Path terrorists dominated the countryside, making life miserable for the peasant population, unattractive to foreign investors and impossible for tourism.
Mr. García left office in shame and, hounded by corruption charges, fled in 1992 to live in exile in Colombia. Upon his return nine years later, he lost a bid for the presidency against Alejandro Toledo.
In 2006, he ran again and won in a run-off against a hard-left populist who was promising to replicate Chávez-style government in Peru. His victory was owed in part to the many Peruvians who, despite bitter memories of his disastrous administration, held their noses and voted for him just to avoid the horror of chavismo. Then they braced themselves for life again under the man known as "crazy horse."
So far not only have their fears not materialized but something truly unexpected has happened instead: Mr. García now speaks the language of a born-again economic liberal and defends markets as a way to reduce poverty. Whether the conversion is authentic is a matter of much debate in Peru these days. What I can say for sure, after a 70-minute interview, is that he firmly grasps the principles behind the arguments he now professes to believe.
Peruvian growth is often assumed to be about the mining sector – copper, gold and the like. But Peruvians are discovering their comparative advantages in niche markets around the world in a host of other sectors, including manufacturing, apparel and agriculture. A visitor to Lima immediately appreciates vast improvements in services compared to even a half-decade ago.
How has all this come to pass? "I think the essential change is in the commercial economic model of Peru," he says. The country "has decided to insert itself in the global economy, open its borders to investment, lower tariffs [and] guarantee fiscal and monetary stability. I think this, sustained for more than 10 years now, is bearing fruit."
Mr. García also recognizes the fact that many of his neighbors are not courting investors, making his country a beneficiary of their bad attitudes. "Peru looks like the country [in the region] most favorable to modernization," generating a level of investment "that is extraordinary." The country has had "an important rate of growth in the past three years, from 6% annually to almost 8% and then 9%. We expect to maintain, this year, the highest growth rate and the lowest level of inflation in South America."
For a country defined by decades of poverty and violence, this borders on the miraculous. But what may be more amazing is that the region's most notorious left-wing populist of the 1980s now champions free enterprise. Even Colombian novelist Gabriel García Márquez never wrote such a surreal tale. I ask the president to explain his epiphany.
The question produces a burst of laughter that seems to contain at least a kernel of irritation, but if so it fades quickly. He immediately goes to the heart of the issue. "First, more than reading, one has to see the reality and this reality is what has changed." For the president, that reality is all about the birth of the microchip. "Twenty-five years ago the world was divided in two," he says "and what did not exist was the extraordinary revolution in communication and information, which is the basis of all the change in the world economy now and of the change in our ideas. The Internet, electronic money, the economic opening of trade without borders," this is what's driven the shift in thinking. "This new reality demands that we not oppose the wave of globalization but take advantage of it in favor of society."
More shocking for those who remember the old Alan García is his newly espoused faith in the private sector as an engine of human progress. "I have an enthusiastic and hopeful perspective that we are beginning a new economic phase of the economy, like in 1750 with the steam engine. We are beginning a totally different chapter in economics. The world is linked and there is a growing democratization through participation by consumers and producers.
"At the same time there is the process of individualization of decisions, communications that makes humanity more free. Just like when Cho En Lai was asked if he judged the French Revolution a success and he said, 'It's too early to tell,' I think we are in the first years of something that may take centuries to evaluate." Government's role, in Mr. García's opinion, is "to persuade the people – this is its role as a leader – to be open to all the possibilities of . . . investment and, with this, to decentralize economic activity and thereby create more employment."
Still, his critics in Lima say that he has yet to prove his mettle by pushing through the next phase of reforms. Businesses still toil under a massive regulatory and tax burden; and Peru particularly needs labor reform that will lower the cost of hiring and firing workers. This will require cuts in payroll taxes and in severance obligations of companies when workers are let go.
Mr. García agrees that labor regulation is a drag on businesses and has no trouble diagnosing the problem: "We no longer live in a closed economy with protection. It is an economy of competition and speed. And therefore the businesses are destined to be born, live and die because any company can enter a market and displace others. In this sense, businesses are condemned to instability. As a consequence we cannot continue with concepts that come from another time and another situation."
Instability, he says, is particularly a problem for services and low-tech manufacturing businesses that face stiff competition from around the globe. But he also notes that the problem makes life difficult for Peruvian workers. "We need a reform that formalizes the masses – some 70% of Peruvians workers – who work in the informal sector and have no rights, as well as the businesses which are not legal and don't pay taxes."
For decades politicians around the region have looked at different ways to reduce the size of the underground economy. Most see the answer as more law enforcement; Mr. García seems to favor incentives. Rather than hiring an army of tax and labor inspectors to force compliance, he recognizes that the rules of the game have to be changed. He says Peru has to lower the cost of being in the formal sector if it wants to "increase its internal saving capacity through the pension funds and increase its ability to offer health care to Peruvians." Without such changes, the country will be stuck with "informality," what the president calls "the slavery of the 21st century."
Opponents of labor reform, he says, include workers in the formal sector who want to protect their privileges enshrined in regulation, and businesses that dread the organizing power of legal workers. But Mr. García says that the 70% who don't have formal-sector jobs will be liberated from the slavery if the reform that he is working on is passed by the Peruvian Congress. It is a "pro-jobs" reform, he insists, more than a labor reform.
Meaningful labor reform would go a long way toward erasing his past sins, and maybe even secure his legacy. But much will depend on what happens to the inflation rate, which has been heading north of late. Poor Peruvians, particularly in the mountainous area of the country which favored his opponent in the run-off election, have been demonstrating in the streets against rising food prices. Mr. García blames this on rising global demand for rice, "the disastrous ethanol program" and the fact that the country grows no wheat and has to import it all from abroad.
Just to be provocative, I ponder aloud whether price controls wouldn't be a good way to help the poor. He snickers and then shoots back: "Price controls are my enemy." Instead, he says, the answer to rising prices is to increase the productive capacity of Peru. That's not a bad course of action, though it will take some time. What would be better is to let the "sol" appreciate. Regrettably, the central bank is loath to do that because it believes it will make exporters less competitive, a view that has led many a government into trouble.
President García wants the world to know that he is a born-again believer in the connection between liberty and human progress. And as a world-class orator, he has no trouble laying out the case. But Peruvians once bitten are thrice shy, and they are not so eager to bless his conversion. The key, it would seem, to ending the debate and rewriting the history books that will tell of his heroic leadership is to put his vision into action. No wonder all eyes are on this former populist's attempts to tackle the difficult issue of labor reform.
He certainly packs the optimism necessary for the job; he has no time for the doom-and-gloom set. "When they say that the world is threatened by immigration, poverty, destruction of the environment and concentration of monopolies, I laugh. I have complete faith in human intelligence and technology to overcome any obstacle, geographic or social."

WSJ Americas columnist Mary Anastasia O'Grady says although the Peruvian economy is experiencing growth, it's not uniform throughout the country. She speaks with Kelsey Hubbard about the struggle between modernity and atavistic socialism. (May 2)

March 9, 2008
Downturn Tests the Fed’s Ability to Avert a Crisis
By VIKAS BAJAJ
In the last seven months, policy makers have cut interest rates, injected money into the banking system and approved a fiscal stimulus package in an effort to keep the economy from slipping into a recession. Often, the moves seemed to work at first, only to be overtaken by more bad news.
The failure of any of the usual fiscal and monetary policy tools so far raises questions about what the Federal Reserve and federal government can do in the near term to counter the forces that have battered housing prices and pushed down the stock market and are now causing a hiring slowdown.
“There are times when there is only so much the Fed can do,” said Barry Ritholtz, chief executive of FusionIQ, an investment firm in New York. “It can smooth out the business cycle a little bit, but last I checked, we haven’t done away with the business cycle.”
One of the main problems now is a deepening crisis of confidence that is compounding the ill effects from the housing downturn. As lenders and businesses become more cautious about whom they lend to and hire, they are slowing an already weakened economy.
If the housing boom was a manifestation of irrational exuberance, some say it has swung too far in the other direction, to irrational despondency.
“Banks went from giving money away like drunken sailors to not lending to the most credit-worthy borrowers,” Mr. Ritholtz, who writes the popular economics blog The Big Picture, said.
The latest signs of panic in the markets came last week. Banks began calling in loans they had made to hedge funds, mortgage companies and others, forcing them to sell billions of bonds. The moves prompted concern about securities backed by Fannie Mae and Freddie Mac, the large government-chartered buyers of mortgages that many investors believe have the implicit backing of the federal government.
When big investors are forced to quickly dump billions of dollars in securities, trading can seize up, especially when buyers are scarce, as they are now. Just a few weeks earlier, a similar bout of forced selling drove down the prices of municipal bonds issued by states and cities.
In mid-January, the Fed moved to arrest the crisis in the financial system after markets plunged around the world and a French bank announced a big trading loss; markets in the United States were closed because of a holiday. The Fed cut interest rates three-quarters of a point and cut them another half-point a week later at a scheduled meeting.
With the exception of a few days, the market rallied those two weeks, and investors even drove down mortgage interest rates, sending millions of homeowners shopping for new loans.
But the relief was short-lived. Mortgage interest rates headed back up almost immediately, and by early February the stock market was falling again after reports showed a drop in employment and a slackening in the service sector.
“The Fed rate cuts aren’t doing anything for my clients except confuse them,” Steve Walsh, a mortgage broker in the Phoenix area, wrote in an e-mail message at the end of January.
Fed officials would say that mortgage rates would be higher still had they done nothing. But given the shortcomings of the response so far, the Fed and members of Congress are working on more aggressive tactics.
The Fed is expected to cut rates further when its policy-making committee meets next week. It will also increase the money it lends to banks in periodic auctions to $100 billion, from $30 billion.
Fed officials have been meeting with aides to Representative Barney Frank, Democrat from Massachusetts, who is chairman of the House Financial Services Committee and has argued for more government intervention. The Fed supports some of the ideas Mr. Frank has been discussing, including having onerous mortgages refinanced and guaranteed through the Federal Housing Administration. But the central bank, at least so far, opposes the purchase of troubled loans by the federal government, an idea suggested by Mr. Frank and other Democrats.
Much of the focus will remain on housing, because policy makers and analysts think banks and investors will not regain confidence until the real estate market stabilizes. Uncertainty about how far home prices will fall has made banks less willing to lend and consumers reluctant to buy.
Banks are also unwilling to lend because they are worried they will not be paid back. Nearly 7.9 percent of home loans were in foreclosure or past due at the end of last year, and most economists expect that more borrowers will encounter trouble.
Some lenders are also trying to preserve their capital because they expect to have more losses. Last week, Citibank said it would reduce its holdings of home loans by 20 percent.
“Lenders can’t lend in this environment because they fear they are not going to get paid back,” said Daniel Alpert, a managing director at Westwood Capital, an investment bank in New York. “And guys who own homes have no value left to hock.”
The interest rate on 30-year fixed mortgages is back above 6 percent, still historically low, after falling below 5.5 percent in December. Banks are demanding bigger down payments and cutting off home equity lines of credit to borrowers, especially those who live in states where home prices are falling fastest.
Mr. Alpert and others see a parallel between the credit problems today in the United States and the economic crisis in Japan in the 1990s. In both cases, reckless lending and a bubble in real estate contributed to enormous losses and tightening of loans.
There are significant differences, however. American banks have been quick to recognize losses, and policy makers have moved to contain the damage and protect the broader economy. In Japan, many lenders did not write off bad loans and the central bank was much slower to respond. The 1990s is broadly seen as a “lost decade” for that country.
Mr. Alpert, who bought troubled loans from Japanese banks for pennies on the dollar, said that while American financial institutions are moving fast, policy makers should encourage or even force them to write down and restructure bad mortgages faster so they can get back to lending.
“If you fail to clean up the problem and take aggressive action, you are going to have years and years of stagnation as Japan did,” he said.
There are signs that the logjam in some markets is loosening as bargain hunters move in to take advantage of the turmoil. When enough investors step in to buy beaten-down securities, it can restore confidence and make banks willing to lend more freely.
In the municipal bond market, for instance, prices rose steadily last week as retail investors and mutual funds bought bonds that distressed hedge funds were selling at deep discounts, said Douglas A. Dachille, the chief executive of First Principles Capital Management, a firm that specializes in bonds. Prices on one index compiled by The Bond Buyer, a trade publication, rose 5.7 percent last week after falling 6.2 percent in the last week of February.
That “problem was solved,” Mr. Dachille said Friday. “By the end of this week, the muni market is functioning well again.”

April 30, 2008
Fed Cuts Rates by a Quarter Point, and It Signals a Pause
By STEVEN R. WEISMAN
WASHINGTON — The Federal Reserve, mixing its concern about the weak economy with worries about the rising cost of energy and food, reduced short-term interest rates Wednesday for the seventh time in seven months, and signaled a likely pause from any additional cuts for now.
The Fed’s action, lowering short-term rates to 2 percent from 2.25 percent, followed new indications that the American economy remained fragile, expanding by 0.6 percent on an annualized basis in the first quarter, not an overall downturn that would have indicated a full recession had begun.
The poor record of economic growth, reported by the Commerce Department on Wednesday morning, reflected what most Americans have been experiencing since late last year — declines in consumer spending, housing prices and business investment, along with spreading unemployment.
Wall Street gave up sharp gains after the Federal Reserve announcement. The Dow Jones industrial average, which was up about 120 points and moved higher after the announcement, was up less than 30 points about an hour later.
Wednesday’s interest rate action was accompanied by a parallel decision to lower the Fed’s discount rate, the rate the Fed charges banks and thrift institutions, from 2.50 percent to 2.25 percent.
Although many economists have called on the Fed to shift the focus of its worries from a possible recession to the spike in inflation caused by huge increases in the cost of food and energy, the Fed appeared to remain primarily focused on signs of weakness and instability in the financial markets and the economy at large. Yet it also said in its statement that inflation remained a concern.
The Fed’s action once again opened a window into what many economists say has been a lively internal debate over whether inflation or a slowing economy posed a greater threat.
Two anti-inflation hawks — Richard W. Fisher, president of the Dallas Fed, and Charles I. Plosser, president of the Philadelphia Fed — voted against lowering the rates, as they had last month when the Fed’s action cut rates to 2.25 from 3 percent.
In its statement, the Fed said that “It will be necessary to continue to monitor inflation developments carefully.”
The indication of a pause in future rate cuts came in the committee’s declaration that its actions to date, including its opening new lending facilities and its step last month to bring about the orderly purchase of the investment bank Bear Stearns, “should help to promote moderate growth over time and to mitigate risks to economic activity.”
Although some prominent economists have suggested that inflationary fears are so high that it did not make sense to cut rates further, the smallness of the cut on Wednesday might not aggravate inflation significantly.
Martin Feldstein, professor of economics at Harvard and president of the National Bureau of Economic Research, had earlier said he opposed a quarter-point cut but said in an interview on Tuesday that such a cut would not be “significant one way or another.”
“I think it will do little good in terms of economic expansion and the credit markets problems,” Mr. Feldstein said shortly before the announcement by the Fed. “I think it will exacerbate somewhat the commodity price boom. It would be better not to do it than do it. But if they feel they have to do it one more time and quit, that wouldn’t be the end of the world.”
The latest step by the Fed follows a period of unusual ups and downs in its interest rate policy in the last four years, as the economy has veered from an overheated state to its current downturn. In 2004, when fear of inflation was paramount, the Fed embarked on a succession of rate increases, pausing in mid-2006 at 5.25 percent.
It was then, however, that high interest costs helped burst the housing bubble, ushering in a period of defaults in subprime mortgages and shakiness among sub-prime lenders and mortgage holders. By July of last year, the Fed chairman, Ben S. Bernanke, was warning of a crisis in the subprime market.
As financial markets plunged in August, Mr. Bernanke led the Fed into its current phase of lowering interest rates. The Fed also pumped liquidity into the markets by making it easier for banks to borrow, and it began suggesting that it would do what was necessary to combat the tight credit market.
But even in the last six months, the Fed has offered mixed, and occasionally discordant, signals. In October, the Fed was still saying that inflation was as much of a concern as a recession. “The upside risks to inflation roughly balance the downside risks to growth,” it said.
In a somewhat embarrassing reversal, however, the Fed changed course after banks and financial institutions in Europe and the United States began writing off the costs of their bad housing loans. The Fed had to abruptly cast its inflationary fears aside, set up new lending facilities for troubled banks and inject more money into the markets.
The most recent crisis culminated in mid-March with the Fed’s extraordinary role in arranging the sale of Bear Stearns to JPMorgan Chase, accepting $29 billion in mortgage-related securities as collateral in a deal that averted what Mr. Bernanke said was the possibility of a global panic in financial markets.
But the Fed’s actions in March were accompanied by internal disagreement as Mr. Fisher and Mr. Plosser voted against the cut of three-quarters of a percentage point.
Some critics of the Fed’s policies say it has been too quick to respond to momentary trends and should have a more steady and stable policy of interest rate changes based on economic fundamentals.
“My view is that the Fed is back doing the silly things it did in the 1970s, of trying to make judgments that have long-term consequences based on short-term data,” said Allan H. Meltzer, professor of political economy at Carnegie Mellon University. “It should get back to the period of 1985 to 2003 known as the Great Moderation.”
The Fed’s recent move, coupled with the uncertain performance of the economy, appeared likely to deepen the partisan impasse in Washington over how to respond to joblessness, the mortgage crisis, energy costs and other problems.
Since the enactment of the $168 billion economic stimulus package earlier this year, Democrats and Republicans have increasingly accused each other of inaction. Mr. Bush is demanding that Democrats make permanent the tax cuts that expire at the end of 2010, and Democrats are pressing for an additional $30 billion in spending.
Noting that the first rebate checks have started to go out to Americans from the stimulus package already enacted, Mr. Bush and his aides argue that Congress should measure the effects of the stimulus, and lower interest rates, before taking further action.
There has also been no agreement on what to call the current economic downturn. The administration has avoided the word recession and will probably continue to do so after the anemic but still positive growth figures released earlier Wednesday. Many Democrats unhesitatingly say the United States is in a recession.
On Tuesday Mr. Bush said “these are very difficult times, very difficult.” Treasury Secretary Henry M. Paulson Jr. has said that despite progress in stabilizing the financial markets, the economic risks in the future are “to the downside.”
On Monday, the Treasury Department painted a gloomy outlook, noting that unemployment had reached a two-and-a-half year high of 5.1 percent last month, and that non-farm jobs were hit by the first quarterly decline since 2003.
Like many analysts, administration economists say that housing is the weakest part of the economy. But Mr. Paulson and his aides say that the sharp declines of prices, sales and new construction of homes reflects a “necessary correction” after years of an unsustainable bubble.
Housing starts and sales of new single-family homes fell to a 17-year low in March, the Treasury said, and starts of single-family homes had dropped by 63 percent from a peak in January 2006.
Congressional Democrats have been moving toward enactment of legislation aimed at helping the estimated two million homeowners in danger of defaulting on their mortgages in the next year. But the administration opposes the Democrats’ approach, which would widen availability of federally insured mortgages.
The White House favors “modernization” of existing programs and agencies as a better way to help homeowners.
Economists disagree over whether lower interest rates will by themselves spur a turnaround in housing or business investment.
Many specialists, for example, say that the larger problem of skyrocketing American indebtedness and the danger of weak banks and investment banks, as well as possible defaults in consumer debt, student loans and other forms of debt, are putting a damper on lending even as lending rates decline.
While many economists say that inflation has become as big a threat as a recession, especially because of soaring energy and food prices, the Bush administration maintains that “core inflation” — outside the energy and food sectors — has remained stable, at about the same range of about 2.5 percent that it has been in the last four years.

January 12, 2008
Bush and Congress Seen Pushing for Stimulus Plan
By STEVEN R. WEISMAN and DAVID M. HERSZENHORN
WASHINGTON — The Bush administration and Congressional leaders, increasingly concerned about a possible recession, are moving closer to agreeing that an economic stimulus package is needed soon, Washington officials said Friday.
A Republican familiar with the administration’s thinking said Mr. Bush would present ideas to stimulate the economy, most likely in the form of tax relief, in his State of the Union message on Jan. 28. Mr. Bush will not decide on the details until he returns from the Middle East next week.
Democrats and Republicans on Capitol Hill are also suggesting that they might be able to put aside longstanding partisan differences and work on a stimulus measure, lawmakers and aides said Friday.
In a fresh sign of the possibility of an agreement on a roughly $100 billion package of tax cuts and spending to spur the economy, Nancy Pelosi of California, the speaker of the House, and Senator Harry Reid of Nevada, the majority leader, wrote to President Bush on Friday saying, “We want to work with you.”
On Monday, Mr. Bush acknowledged that Americans were “anxious about the economy” and said he was studying what actions to take. But this Republican, speaking anonymously to avoid pre-empting the White House, said, “If the decision was going to be ‘no,’ he wouldn’t have put that out there.”
Some Democrats say they could support tax relief focused on lower-income people and, perhaps, even tax cuts for corporations, if the White House and the Republican Congressional leadership accept some spending increases like extended unemployment benefits or aid to states to help them avert spending cuts.
Responding to Ms. Pelosi and Mr. Reid’s letter, Tony Fratto, a White House spokesman, said Mr. Bush had instructed aides to get views from all sides as he decided on a possible economic package.
“We would of course want to proceed in a bipartisan way,” Mr. Fratto said, adding Mr. Bush planned to meet, perhaps next week, with Ms. Pelosi and Mr. Reid to report on his Middle East trip.
Some lawmakers said that calls from the presidential campaign trail for limiting partisanship and changing the way Washington works were resonating on Capitol Hill, but that it would still not be easy for the administration and Democrats to bury their ideological differences on an economic rescue package. One model could be the bipartisan measure combining tax rebates, corporate tax relief and unemployment benefits that Congress approved in the last economic slump, in March 2002.
But these Democrats said the White House would have to agree not to try to attach favorite measures like repealing the estate tax or making permanent Mr. Bush’s 2001 and 2003 cuts, just as Democrats would have to refrain from attaching extraneous spending.
“It would make sense for the president to do something in a bipartisan way,” said Representative Charles B. Rangel, Democrat of New York and chairman of the Ways and Means Committee. “But I’m scared to death to even talk about tax rebates because of what that might open up.”
A senior Republican aide said: “Republicans will have to talk about making the tax cuts permanent and all that kind of stuff. Democrats are going to want things on their long-term agenda. But if you figure those cancel each other out, there’s probably a playing field where everyone can agree.”
Democrats appeared to be further along in their thinking than the administration, having decided in December to spend the early part of 2008 blaming Mr. Bush for the economic anxieties of the middle class. Until recently, Republicans in Congress and in the presidential campaigns have said the economy was healthy.
With the House returning next week, Representative Rahm Emanuel of Illinois, the House Democratic caucus leader; Representative James E. Clyburn of South Carolina, the Democratic whip; and Representative Barney Frank of Massachusetts, the chairman of the Financial Services Committee, plan to give major economic speeches in Illinois, Washington and at Harvard.
Democrats are also planning a party retreat at the end of the month where they are scheduled to hear from Ben S. Bernanke, the chairman of the Federal Reserve, among other economic experts. Ms. Pelosi plans to meet with Mr. Bernanke on Monday.
Still, some Bush administration officials say any action should be sooner rather than later. “Time will be of the essence,” Henry M. Paulson Jr., the treasury secretary, said Friday on Bloomberg Television. “So I think we want to do something as quickly as possible if we do it.”
The tone changed quickly over the last few weeks, especially after the level of unemployment grew, oil prices reached $100 a barrel, the stock market stumbled and the housing crisis worsened. Leading Republican and Democratic economists soon began voicing fears of a recession, with some even suggesting one had already begun. New polls show Americans are increasingly alarmed, and the topic has figured more and more in presidential debates. On Tuesday, New Hampshire primary voters in both parties cited the economy as their top concern.
Mr. Bernanke laid out a bleak picture of the economy on Thursday and suggested that the Fed would cut interest rates soon. That has made it more acceptable for lawmakers to discuss the need for actions to avoid being blamed for failing to respond.
The first presidential candidate, indeed the first leading Democrat, to offer a package was Senator Hillary Rodham Clinton of New York, who on Friday proposed $70 billion in spending for housing, heating subsidies and state aid and $40 billion in tax rebates if conditions worsened.
Mrs. Clinton’s package drew on the thinking of leading Democratic policy makers, many of whom served under President Bill Clinton and are advising Democratic leaders in Congress.
One of those advisers, Gene B. Sperling, was on Capitol Hill on Friday for meetings with Democrats. Mr. Sperling worked closely with Ms. Pelosi on the economic stimulus package that she brokered with Mr. Bush shortly after she became minority leader.
Leading Democrats said they envisioned a proposal of at least $100 billion, which economists say is the minimum needed to counter a recession that many for now say would probably be short.
Many Democrats are reciting what they call the “three T’s” for the stimulus package, that it should be temporary, timely and targeted to low- and middle-income Americans. The mantra is intended as a shield against Republican attacks that Democrats would go on a spending spree, as well as Republican calls to make Mr. Bush’s tax cuts permanent after they expire in 2010.
Republicans are expected to emphasize tax cuts for individuals and businesses. Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute, said tax relief to spur business investment would be especially useful now.
“These issues aren’t really in dispute,” Mr. Hassett said. “If you want to do a stimulus package, it should juice up activity this year and then go away. But it has to have two components, one for individuals and one for business firms to spur capital investment.”
Mr. Hassett and other Republican economists also warned that a package that was caught up in grandstanding on both sides might come too late to do any good. In 1992, for example, after President George Bush invited Democrats to submit a stimulus package, both sides argued as the recession came and went.
But many Republicans said there was a risk of their seeming indifferent to the economic situation, especially to Americans in danger of losing their homes because of the subprime mortgage crisis, and a risk of holding a package hostage to their long-term tax-cutting agenda.
Democrats are hardly united, however. Some are likely to demand spending for public works as part of any package. Others say they are worried that they will be accused of violating the party’s promise to “pay as you go” by offsetting any tax cuts or spending increases with savings.
But most Democrats are saying that, at a time of an economic downturn, they do not need to stick to that promise.
“Once pay-go is set aside, you could really see the discussion take off,” a Democratic Congressional aide said. “You could start to align the House and Senate and then triangulate with the White House on what could be done on a faster track.”

April 2, 2008
Paulson Again Urges China to Open Financial Market
By THE ASSOCIATED PRESS
BEIJING (AP) — Treasury Secretary Henry M. Paulson Jr. urged Chinese leaders on Wednesday to press ahead with changes to their financial market but acknowledged the tight credit markets might make them hesitant.
Mr. Paulson met with the Chinese president, Hu Jintao, and Beijing’s new point man on trade ties with Washington, Wang Qishan. Mr. Paulson said he assured them that Washington was trying to resolve its credit crisis but cautioned it was no finished and there would be ”more bumps in the road.”
“There is no doubt that what is happening in the U.S. markets clearly has to give the Chinese pause,” he said. “They may be too polite to say that directly. But it clearly has to be giving them pause.”
Mr. Paulson, who was in Beijing as part of a dialogue on trade and other contentious issues, said the two sides discussed financial reform, though he declined to say what Chinese officials said.
He said once again that Beijing must open its financial markets wider to competition if it wanted to continue to develop.
“They have headed down the path to a market economy, and capital markets are a very powerful force for good,” Mr. Paulson said. “Until they have efficient, competitive capital markets, their people will not receive adequate returns on their savings.”
China’s top economic official, Prime Minister Wen Jiabao, said last month that he was “deeply worried” about the market turmoil, the decline of the dollar and the direction of the American economy.
Mr. Paulson said he told Chinese officials the United States was going through a “period of turmoil” but is fundamentally strong.
However, he said, “I continue to think there will be some more bumps in the road.”
Chinese banks hold risky mortgage-backed securities and have set aside reserves to cover losses. Economists have cut growth forecasts for China because of slumping American demand for imports.
Mr. Paulson was scheduled to meet Mr. Wen on Thursday, a reflection of the importance that Beijing places on access to American markets.

March 28, 2008
February Spending Flat, Inflation Threat Recedes
By MICHAEL M. GRYNBAUM
Consumer spending stayed stagnant in February, growing at the slowest pace in more than a year, as the housing slump and a weak job market continued to put pressure on the pocketbooks of Americans. The number helped drive the markets lower Friday.
At the same time, inflation receded and Americans took home slightly more income, a pair of positive developments that suggest a weak economy, not a collapsing one.
Adjusted for inflation, consumer spending stayed flat in February after growing 0.1 percent in January and declining in December. In current dollars, spending rose 0.1 percent last month, the Commerce Department reported on Friday.
“The consumer has lost whatever support they might have had from wages and salaries,” said Joshua Shapiro, the chief United States economist at MFR, a New York research firm. “There’s no momentum, no growth.”
The consumer spending report along with the profit warning Friday by J.C. Penney pushed the down slightly Friday. The Dow Jones industrials ended the day down 86.06 points at 12,216.40. The Standard & Poor’s 500-stock index fell 10.54 points. to 1,315.22, while the tech-ladened Nasdaq dropped 19.65 points to 2261.18 Trading throughout the day was fairly quiet, reflecting none of the recent volatility.
For the week, the dow was down 151 points. The Nasdaq gained 3 points while the S.& P. 500 dropped 17 points for the week.
Crude oil for May delivery fell $1.96 to $105.62 on Friday. Gold prices also declined. Treasury prices rose.
Spending by consumers is the primary engine of the economy, accounting for more than two-thirds of the gross domestic product. Recent surveys suggest the drop-off will continue. Confidence in the economy remained at a 16-year low in March, according to a separate report released Friday by the University of Michigan and Reuters.
Americans also feel worse now about the economy’s prospects than at any time since 1973, according to a private survey of 2,500 households released earlier this week.
the Standard & Poor’s 500 indexInvestors may have been pleased about an unexpected increase in personal income, which accelerated to 0.5 percent last month after a 0.3 percent reading in January. The savings rate — a measure of how much income Americans retain after expenses — moved back into positive territory after three consecutive months of flat or negative readings.
And one major impediment to spending — the soaring price of consumer products like food and gasoline — may be receding. A closely watched measure of inflation, known as the “core” P.C.E. deflator, rose at an annual rate of 2 percent in February, returning to the so-called “comfort zone” that the Federal Reserve prefers. The January reading was revised down to 2 percent.
“The Fed is getting more concerned about inflation risks the lower it pushes interest rates, but this reading indicates that the Fed has room to cut further,” Nigel Gault, an economist at Global Insight, a research firm in Lexington, Mass., wrote in a note to clients.
The “core” gauge excludes volatile prices of food and energy products but offers insight into price pressures in the broader economy. Over all, inflation grew 3.4 percent last month, declining from a 3.5 percent reading in January, which was revised down from its initial estimate.

March 26, 2008
A Political Comeback: Supply-Side Economics
By LOUIS UCHITELLE
When Ronald Reagan ran for president in 1980, he promised to cut taxes in what seemed, at the time, a magical way. Tax revenue would go up, not down, he said, as the economy boomed in response to lower rates.
Since then, supply-side economics, as it was called — first with derision but then as a label embraced by its supporters — has become a central tenet of Republican political and economic thinking. That’s despite the fact that the big supply-side tax cuts of the 1980s and the 2000s did not work out as advertised, as even most supporters acknowledge.
But advocates see broader economic benefits from lowering tax rates, which is one of the reasons the concept has reappeared as a point of contention in this year’s election campaign, in an amended form.
“What really happens is that the economy grows more vigorously when you lower tax rates,” said Kevin Hassett, an adviser to the presumptive Republican nominee, John McCain, and the director for economic policy studies at the conservative American Enterprise Institute. “It is beyond the reach of economic science to explain precisely why that happens, but it does.”
Even with a growing economy, however, the promised boon in tax revenue never materialized. Arthur B. Laffer, the renowned proponent of supply-side economics, still holds that tax revenues “rise dramatically” when tax rates are cut.
In the 1980s, though, during the initial era of supply-side tax cuts, per capita revenue from personal income taxes, adjusted for inflation, rose an average of just 0.7 percent annually throughout the Reagan presidency, according to the White House Office of Management and Budget.
That was far below what turned out to be an average annual increase of 6.5 percent in the eight years of the Clinton administration, when tax rates at the high end of the income ladder were raised.
Since 2001, the annual per capita revenue from income taxes fell 1 percent under President Bush even though tax collections picked up sharply starting in 2005. The budget surplus Mr. Bush inherited turned into a deficit.
“If you are cutting taxes without offsetting the cuts through reductions in spending, then all you are doing is increasing the debt and postponing the taxes,” said Jason Furman, director of the Hamilton Project at the Brookings Institution, and also a policy adviser to the Democratic presidential candidates.
Circumstances vary across the decades, of course, and it is difficult to sort out all the various influences on the economy and tax revenues. But when Mr. Reagan and his supply-side advisers first pushed through a range of tax cuts, they applied their logic to the broad mass of taxpaying workers. They argued that the incentive from lower rates on additional increments of income would prompt people to work that extra day or get more education to qualify for a better job.
Similarly, a spouse might take a new job, encouraged to do so by the promise of more take-home pay. The family’s taxable income, and the nation’s, would grow, the theory suggested, producing more tax revenue even at the lower rate.
That was before so much more of the national income flowed to upper-end households, and before the actual tax collections of the last three decades undercut the supply-side argument. Now the supply-siders single out the wealthiest Americans and argue that because they have so many ways to shelter their money from taxes, the incentive to declare more taxable income is much greater when tax rates are lowered than it is for the less well-to-do.
“The supply-side argument these days really applies to upper-income people,” said Robert M. Solow, a Nobel laureate in economics who served in the Kennedy administration. “They are portrayed as the golden geese, and you don’t want to discourage them from laying their eggs.”
By contrast, Mr. Solow says, “the Democrats are convinced they’ll lay their eggs anyway, without tax cuts as an incentive.”
Senators Hillary Rodham Clinton and Barack Obama, contending for the Democratic presidential nomination, reflect that point of view. They say that they have no intention of undoing the Bush tax cuts on families earning less than $250,000 a year. Married couples with incomes above that level, however, would once again be taxed by either candidate at up to 39.6 percent — the top rate reached during Bill Clinton’s presidency.
President Bush pushed through legislation in 2003 that cut the top rate to 35 percent, but only until 2011. Senator McCain wants to extend the 35 percent rate indefinitely and his camp increasingly cites as justification the supply-side effect on upper-income families.
Having once voted against the Bush cuts, Mr. McCain has reversed position and now has even enlisted Mr. Laffer as a special adviser. “McCain is on the right track,” Mr. Laffer said.
While Mr. Laffer insists that tax revenue will rise when tax rates are cut, other supply-siders are less categorical. Martin Feldstein, a Harvard economist who was the first chairman of President Reagan’s Council of Economic Advisers and now supports Senator McCain, estimates that a 10 percent tax cut would in fact reduce tax revenue — but only by 3 to 5 percent.
“It is not that you get more revenue by lowering tax rates, it is that you don’t lose as much,” he said.
Not since Mr. Reagan ran in 1980 have supply-side tax cuts been so central a campaign issue. George H. W. Bush and Bill Clinton each ended up raising taxes, ignoring the supply-side thesis, which the elder Mr. Bush once called “voodoo economics.”
Now his son argues that his tax cuts strengthened the economy. Growth resumed after Mr. Bush pushed his tax cuts through Congress, but that position, critics say, is harder to maintain now, given that the election campaign is unfolding in the midst of a credit crisis and an incipient recession.
Still, even in hard times, the incentive from a tax cut is particularly strong among the wealthy, supply-siders say. A drop of four or five percentage points in the top tax rate of these households saves them tens of millions of dollars. Above all, the supply-siders say, less money will be wasted on accountants and lawyers hired to find ways to dodge taxes when the rates were higher. These outlays will be put to more productive use.
The supply-siders also argue that at the corporate level, lower tax rates, which Senator McCain favors, prompt companies to hire more workers and to invest in new equipment, generating more output and more taxable income.
The Democrats, and many economists who describe themselves as nonpartisan, have a different perspective. Tax incentives might indeed increase labor supply and output, they acknowledge, but what good is that if there is insufficient demand for the additional labor and for the goods and services that are produced?
The Democrats are quick, as a result, to support the $160 billion stimulus package, with its rebate checks that millions of Americans will be encouraged to spend, supporting demand. They also are prepared to raise taxes to introduce more equity into the tax system and as a means of shrinking or eliminating a large budget deficit.
The excessive borrowing required to finance the deficit, they say, acts as a drag on the economy, pushing interest rates higher than they otherwise would be, adding to the cost of business investment.
Gene Sperling, an economic adviser to Bill Clinton during his administration and now to Mrs. Clinton as a candidate, said that supply-siders vastly exaggerate the incentive effect of relatively small changes in tax rates while ignoring the benefits of bringing government revenue more closely in line with spending.
“The supply-siders predicted in the 1990s that raising rates, even for deficit reduction, would lead us to recession,” Mr. Sperling said. “What followed instead was the longest recovery in history, and the people whose tax rates went up had exceptional income gains.”
The tax issue, for all its importance, does not yet have a prominent place in the campaign. That is mainly because Senators Clinton and Obama are still struggling with each other on issues other than taxes, on which they generally agree. A winner has not emerged to cross swords with Senator McCain.
“When there is finally a candidate,” said Austan D. Goolsbee, chief economic adviser to Senator Obama, “then we’ll debate taxes and the flaws in the supply-side argument.”