Photo by Guille Álvarez on Unsplash

Rent prices in Barcelona are decided in Frankfurt

In recent days in Barcelona, there has been a discussion about regulating the price of rent. It is a general feeling that access to housing becomes complicated; prices increase faster than wages.

As in all issues, there are at least two opposing positions on whether or not to apply regulation; some say that applying restrictions on prices will limit the supply of rental properties and will create a black market, encouraging that in the end, there are payments for other concepts to choose between those interested, or when it comes to adjusting prices annually.

On the other side, those who defend the application of tight regulation. They base their position on the fact that property owners are, in most cases, people who live off the rents and who increase their wealth through the inexorable need for housing of others.

I am writing this article because after looking at the evolution of multiple market variables. I believe that the variation in prices may be included by factors other than the owners' rapacious profit motive (which I do not rule out). Instead, it transcends macroeconomic and monetary levels, which cannot be combated under the conditions proposed.

Let's do the exercise for someone who has been living in Barcelona for ten years and try to answer questions such as: how much of his income has he dedicated to renting an apartment, how much has his salary varied over these years, which will help us understand the magnitude of the variation if any.

The data we have come from the city council are the prices per square meter extracted from contracts signed between the first quarter of 2014 (1Q-2014) and the third quarter of 2020 (3Q-2020).



For this article, we will not detail by area, why some varied more than others, or the magnitude of prices. While I was cleaning the data for the analysis, I was betting that Sarrià-Sant Gervasi would be the district with the most significant change over time, and as you can see, it was not. 


The change in the prices of the square meter of rent in Barcelona between the periods 1Q-2014 and 3Q-2020 is 36.49%, far exceeding the average salary increase between 2013 and 2019, which according to estimates, was 5.80%.

The questions that arise are, how is it possible that the price of housing increases at a greater rate than the ability to pay for them, what factor or factors generate these changes, let's try to answer them.

One thing we can say for sure, the demand for apartments has been maintained despite the increase, insofar as, if the data that we analyze arise from signed contracts, there has indeed already been an agreement for the usufruct of the property.

The second, what causes this increase, is generally associated with:

  1. The stock of limited properties, Barcelona, has two natural geographic barriers. It is surrounded by the sea and by the Collserola, so it does not have many surfaces to develop new houses.
  2. Increase in the number of apartments dedicated to short stays, mostly for holidays, such as Airbnb.
  3. Accumulation of properties by a few forks, which increases the prices artificially.

As for the first thing, Barcelona has reduced its stock of homes by 1.11%, but this does not explain the more than proportional jump that this small reduction has at a price per square meter. It is, therefore, discarded for the moment.


Another commonly mentioned factor is the proliferation of tourist rental housing, which is diverted from the long-term rental market to the short-stay, high-turnover market.

The statistics regarding this sector are unclear, as there seems to be no census adjusted to reality. If we visit and look for a stay in Barcelona, the page indicates more than 300 properties to choose from; it is impossible to see the total number.

Suppose we go to the official sources, according to the last Census d'establiments d'allotjament turístic vigents amb num. d'expedient municipal, the total of properties properly registered reaches 696 properties.

If we stick to this number, not inquiring about its plausibility, its relative weight compared to the total number of housing units in the city of Barcelona (of any type and size) represents 0.09% of the residential real estate market.

The third point, that of large housing units, on July 29, 2020, La Vanguardia published the following:

According to the report, which is based on data from the municipal cadastre of Barcelona and the deposits made in the Catalan Land Institute, there are 212,901 homes for rent in the Catalan capital in the hands of 100,200 owners, giving an average of 2.1 homes for rent per owner.

However, 69,037 (32.4%) of these homes are concentrated in 2,344 owners (2.3%) who have more than 10.

The report referred to was produced by the Barcelona Metropolitan Housing Observatory (O-HB).

From this reality, we could assume that the decision of a few people affects the entire market. If there were collusion to set prices, this would be easily enforceable due to the 'power' it gives to a small group over almost a third of the rental housing market.

A widespread and coordinated increase in prices would be exploited by smallholders seeking to maximize their income, a phenomenon that is repeated in any supply and demand market.

However, there are no indicators that temporarily describe the change in rental prices in properties offered by large holders; the market is analyzed as one, and leaving all the explanation of variations in a single factor is not very responsible, from an analytical point of view.

How plausible is it to think that monetary policy affects pricing? 

Since 2008, in response to the great financial crisis caused by the fall of Lehman Brothers, the Federal Reserve, the European Central Bank, and the Bank of Japan has expanded the money supply, not only in the form of circulating money but also in the form of bonds and shares. This graph shows the change in the balance sheet of the ECB, on the asset side, which presents in purple what is called 'securities,' financial instruments to raise capital. Increasing its level means that the bank bought debt commitments from third parties in exchange for cash.

This money created by the bank enters the financial stream through the banks to boost aggregate demand in search of a supply response, which will translate into more employment and consumption. Until then, everyone is happy and in agreement.



Source: European Central Bank



The problem arises when these funds produce the so-called 'Cantillon effect', through which the first ones to receive the funds are the best placed, having an advantage over the other companies and individuals. This advantage translates into the possibility of acquiring goods at a lower price before the system absorbs the increase in the money supply.




This then reinforces a cycle of accumulation in which personal property purchase is one of its expressions. The intrinsic nature of these, the inexorable need for a roof, and the limited and even decreasing supply in their number has caused the price per square meter of rent to increase more than the cost of gold in 2014-2019.

Regulation, therefore, is ineffective, useless. In this regard, I do not advocate full freedom in the property system, as the rental market and housing, in general, have much more profound implications than, for example, taxes or even the labor market. The ideal scenario would be a free fluctuation of supply and demand -if the effect of expansive monetary policy did not exist-.

Statistically, the evidence is clear. The increase in rental prices corresponds almost entirely to the rise in Euros' money supply, which we determine through a simple correlation.

If there is no relation between the variables, the result will tend to 0 (zero), and if there is, the result will be closer to 1.



The value 0.96 (result) indicates that the two variables' growth follows the same pattern.

According to a press release, in November 2020, the European Central Bank announced that it was "preparing to extend in December the program of emergency purchases of public and private debt due to the pandemic (endowed up to now with 1.35 trillion Euros until the end of June 2021) and the injections of cheap liquidity to the banks so that they can grant credits.

These funds are expected to further inflate the prices of rents and properties themselves for two main reasons:

  1. liquidity tends to end up in the same hands, those with the capital to acquire more goods and/or get into debt for that purpose.
  2. The excess liquidity will keep interest rates very low, increasing the risk.

The issue of rent, therefore, is a two-sided coin. Europe is an important economy, the first market in the world. Its measures to encourage spending and reactivate the economic cycle are the same that generate unwanted side effects.

It is implausible that the expected growth can be achieved from a non-expansive policy, so in Barcelona, two phenomena will coexist, the first, more than a third of the stock of housing in the hands of few hands, the second, a regulation that will encourage agreements and payments outside the law.


Juan Carlos Golindano S.

November 13th, 2020

¿Y si los muertos fuesen nuestros vecinos?

Las muertes por COVID en España y su equivalente en Barrios de Barcelona. Este fin de semana tuve la oportunidad de escuchar una entrevista a Alberto Cairo, pionero en la visualización de datos, y comentaba que participó en un proyecto en Brasil que consistía en hacer ver a la población el impacto en número de muertes que representó la pandemia a partir de mostrarlo en función del equivalente en el número de vecinos que el total significaría para cada ciudad.

Tratando de imitar de forma muy básica su idea, según datos oficiales la diferencia para esta fecha entre 2019 y 2020 rondan los 52.453 muertos, atribuibles en su mayoría al COVID. Esto es equivalente a que todas las personas que viven en el Barrio de La Sagrada Familia hubiesen muerto, dejando desiertas 104 hectáreas, o 147 campos de fútbol para tener una mejor idea. Estamos en medio de una segunda ola, y seguramente vendrá una tercera.

La prevención es lo único que evitará que esta superficie blanca se extienda.

Series 4 - Random Facts & Data Posts

Infographics created for posts on Linkedin, Twitter, Instagram, or through my blog, as part of analyses related to financial policy, effects of the pandemic, energy, sustainability, mobility, among others.

Sources: Government statistics sites, public data repositories, ICIJ, newspapers.
Data analysis: Spreadsheets, Tableau.
Data Viz: Apple Keynote, Datawrapper, Adobe Illustrator.



Europe remains the king 👑 (at least before COVID)

Despite the colossal effort Europe has made to reduce 25% of its greenhouse gas emissions, it still reigns supreme in aviation emissions, doubling the United States' ones.

Cutting down emissions not only depends on enabling new technologies and diverting energy sources but also understanding that perpetual economic growth and rising profits are not compatible with nature's laws. . . .

#carbonemissions #sustainability #aviation #greenhousegases #parisagreement

tw/ig: @isdatanomics


Photo by Guille Álvarez on Unsplash

Los alquileres en Barcelona, se deciden en Frankfurt

En días recientes en Barcelona se ha estado discutiendo acerca de la conveniencia de regular o no el precio del alquiler. Es un sentimiento generalizado que acceder a una vivienda se hace complicado, los precios aumentan a una tasa mayor que los salarios.

Como en todos los temas, hay al menos dos posiciones encontradas acerca de si o no aplicar una regulación, hay quienes dicen que aplicar restricciones a los precios limitará la oferta de propiedades en alquiler y se creará un mercado negro, incentivando que al final haya pagos por otros conceptos para elegir entre los interesados, o bien cuando haya que ajustar precios anualmente.

En la otra acera, quienes defienden la aplicación de una regulación firme. Basan su postura en que los dueños de propiedades son en la mayoría de los casos, personas que viven de las rentas y que aumentan su patrimonio a través de la inexorable necesidad de vivienda de los demás.

Escribo este artículo porque después de mirar la evolución de múltiples variables del mercado, tengo la impresión que la variación de los precios puede estar incluida por factores distintos al ánimo de lucro rapaz de los dueños (que no descarto que exista), sino que trasciende a niveles macroeconómicos y monetarios, algo que no puede ser combatido en las condiciones planteadas.

Hagamos el ejercicio para alguien que vive en Barcelona desde hace diez años e intentemos responder preguntas como: ¿cuánto ha dedicado de su ingreso a alquilar un piso?, ¿cuánto ha variado su salario en estos años?, lo que nos ayudará a entender la magnitud de la variación, en caso que la hubiere.

Los datos que tenemos proceden del ayuntamiento de la ciudad, son los precios por metro cuadrado extraídos de los contratos firmados entre el primer trimestre de 2014 (1erT-2014) y el tercero de 2020 (3erT-2020).




Para efectos de este artículo no iremos a detalle por zona, por qué unas variaron más que otras o bien la magnitud de los precios.


El cambio acumulado para los diez distritos desde el 1erT-2014 al 3erT-2020 es de 3,55 euros por metro cuadrado, equivalentes al 36,49%, superando con creces el aumento del salario medio entre 2013 y 2019, que según estimaciones del fue de 5,80%.

Las preguntas que surgen son, ¿cómo es posible que el precio de las viviendas aumente a un ritmo mayor que la capacidad de pagar por ellos?, ¿qué factor o factores generan estos cambios?, intentemos responderlas.

Algo podemos dar por cierto, la demanda de pisos se ha mantenido a pesar del aumento, en cuanto, si los datos que analizamos surgen a partir de contratos firmados, efectivamente ya se ha producido un acuerdo para el usufructo de la propiedad.

Lo segundo, qué ocasiona este aumento, es generalmente asociado a:

  1. Stock de propiedades limitadas, Barcelona tiene dos barreras geográficas naturales, está rodeada por el mar y por la Collserola, por lo cual no tiene mucha superficie en la cual desarrollar nuevas viviendas.
  2. Aumento en el número de pisos dedicados a estadías cortas, vacacionales en su mayoría, tales como AirBnb.
  3. Acumulación de propiedades por parte de pocos tenedores, los cuales, aumentan de forma artificial los precios.

En cuanto a lo primero, Barcelona ha reducido su stock de viviendas en poco más de nueve mil inmuebles, un 1,11% menos. Aún así no parece ser la causa del salto más que proporcional en el precio por metro cuadrado. Queda por tanto, descartado.

Otro factor comúnmente mencionado es la proliferación de viviendas de alquiler turístico, que son desviadas del mercado de alquiler de largo plazo al mercado de estadía corta y alta rotación.

Las estadísticas relativas a este sector son poco claras, en cuanto parece no haber un censo ajustado a la realidad. Si visitamos y buscamos una estadía en Barcelona la página indica que hay más de 300 propiedades entre las cuales escoger, no es posible ver el número total.

Si acudimos a las fuentes oficiales, según el último censo realizado por el Ayuntamiendo de la ciudad el total de viviendas debidamente registradas alcanza las 696 propiedades.

Si nos atenemos a este número, no indagando acerca de su verosimilitud, su peso relativo frente a la totalidad de unidades de vivienda en la ciudad de Barcelona (de cualquier tipo y tamaño) representa el 0,09% del mercado inmobiliario residencial.

El tercer punto, el de grandes tenedores de vivienda, el pasado 29 de julio de 2020, La Vanguardia publicó lo siguiente:

Según el informe, que se basa en los datos del catastro municipal de Barcelona y de las fianzas depositadas en el Instituto Catalán del Suelo, en la capital catalana hay 212.901 viviendas en alquiler en manos de 100.200 propietarios, lo que da una media de 2,1 viviendas en alquiler por titular.

Sin embargo, 69.037 (el 32,4 %) de estas viviendas se concentran en 2.344 propietarios (el 2,3 %) que tienen más de 10.

El informe al que se hace referencia fue realizado por el Observatorio Metropolitano de la Vivienda de Barcelona (O-HB).

De esta realidad sí podríamos asumir que la decisión de pocas personas, afecta la totalidad del mercado. Si hubiere una colusión para fijar precios, esto sería fácilmente ejecutable debido a ‘poder’ que le otorga a un grupo reducido sobre casi un tercio del mercado de viviendas en alquiler.

Un aumento generalizado y coordinado en los precios sería aprovechado por los pequeños tenedores en búsqueda de maximizar sus ingresos, fenómeno que se repite en cualquier mercado de oferta y demanda.

No obstante, no hay indicadores que describan temporalmente el cambio en los precios del alquiler en propiedades ofertadas por grandes tenedores, el mercado es analizado como uno solo, y dejar toda la explicación de las variaciones en un solo factor es poco responsable, desde un punto de vista analítico.

Es entonces cuando una cuarta variable entra en juego. ¿Qué tan plausible es pensar que la política monetaria tiene un efecto en la fijación de precios?

A partir de 2008 a propósito de la gran crisis financiera originada por la caída de Lehman Brothers, tanto la Reserva Federal, el Banco Central Europeo o el Banco de Japón han expandido la masa monetaria disponible, no solo en forma de dinero circulante sino en compras de bonos y acciones. En este gráfico se muestra el cambio del balance del BCE, en el lado de los activos, los cuales presentan en color violeta lo que se denomina 'securities', instrumentos financieros para recaudar capital. Al aumentar su nivel quiere decir que el banco compró compromisos de deuda de terceros a cambio de efectivo.

Este dinero creado por el banco entra al torrente financiero a través de los bancos, para así impulsar la demanda agregada an búsqueda de una respuesta de la oferta, que al final se traducirá en más empleo y consumo. Hasta allí, todos felices y de acuerdo.



El problema surge cuando estos fondos, producen el llamado ‘Cantillon effect’, a través del cual los primeros en recibir los fondos son aquellos mejor situados, teniendo una ventaja sobre las demás empresas e individuos. Esta ventaja se traduce en la posibilidad de adquirir bienes a un precio menor, antes que el efecto del aumento de la masa monetaria sea absorbido por el sistema.



Esto refuerza entonces un ciclo de acumulación en el cual la compra de bienes muebles es una sus expresiones. De hecho, la naturaleza intrínseca de estos, la inexorable necesidad de tener un techo, y la oferta limitada e incluso decreciente en su número ha causado que en el período 2014-2019 el precio por metro cuadrado de alquiler haya aumentado más que el precio del oro.

La regulación, por tanto, es inefectiva, inútil. En este respecto no abogo por una libertad plena en el sistema de propiedad, en cuanto el mercado del alquiler, y de la vivienda en general tiene implicaciones mucho más profundas que por ejemplo los impuestos o incluso al mercado laboral. El escenario ideal, sería una libre fluctuación de la oferta y de la demanda -si no existiera el efecto que la política monetaria expansiva ejerce-.

Estadísticamente las pruebas saltan a la vista. El aumento de los precios en el alquiler se corresponden de forma casi perfecta con el aumento en la masa monetaria en Euros, esto lo determinamos a través de una simple correlación.

De forma sencilla, si no hay relación entre las variables el resultado tenderá a 0 (cero) y en caso de haberla, el resultado será más cercano a 1.


Al hacer esta operación, el resultado 0,96 indica que efectivamente, el crecimiento de las dos variables sigue el mismo patrón.

Nota: La correlación se hizo tomando los datos de 2013 para los pasivos del BCE y 2014 para los alquileres, suponiendo un rezago en el efecto del aumento de la masa monetaria.

En Noviembre de 2020, el Banco Central Europeo anunció que “prepara la ampliación en diciembre del programa de compras de emergencia de deuda pública y privada por la pandemia (dotado hasta ahora con 1,35 billones de euros hasta finales de junio del 2021) y de las inyecciones de liquidez barata a los bancos para que concedan créditos”.

Previsiblemente, estos fondos inflarán aún los precios de los alquileres y de las propiedades en sí, por dos razones principales:

  1. la liquidez tiende a acabar en las mismas manos, aquellos con el capital para adquirir más bienes y/o endeudarse para ello.
  2. El exceso de liquidez mantendrá las tasas de interés muy bajas, potenciando el riesgo.

El tema del precio del alquiler, por tanto, es una moneda de dos caras. Europa es una importante economía, el primer mercado del mundo. Sus medidas para incentivar el gasto y reactivar el ciclo económico son las mismas que generan efectos secundarios no deseados.

Es poco plausible que el crecimiento esperado se pueda lograr a partir de una política no expansiva, por lo cual, en Barcelona convivirán dos fenómenos, el primero, más de un tercio del stock de viviendas en poder de pocas manos; el segundo, una regulación que incentivará los acuerdos y pagos fuera de la ley.


Juan Carlos Golindano S.

12 de Noviembre de 2020

Series 3 – Random Facts & Data Posts

Infographics created for posts on Linkedin, Twitter, Instagram, or through my blog, as part of analyses related to financial policy, effects of the pandemic, energy, sustainability, mobility, among others.

Sources: Government statistics sites, public data repositories, ICIJ, newspapers.
Data analysis: Spreadsheets, Tableau.
Data Viz: Apple Keynote, Datawrapper, Adobe Illustrator.




Size does matter.

Amid the pandemic, schemes to avoid abrupt increases in unemployment have come at an unexpected cost to governments.

In Europe, much of the wage burden on businesses has been covered by furlough schemes. In the US, mainly, the stimulus package has been directly through mailed checks to the population or through credit lines to businesses.

Considering that Europe's stimulus packages reach 750 billion euros, and around 2.5 trillion dollars in the United States, here is a comparison of the size of the measures taken in these three countries according to the American economy's size.

TW/IG: @isdatanomics


Inequality - Part II

It is common to hear that income inequality is widening over time. It is a phenomenon applicable to the stock market. If compared, the trends between small capitalized companies vs. highly capitalized ones, you’ll see a clear divergence.

What’s the importance of this? The businesses that are being hit the most by Covid are the smaller ones.

When extending this to the small retail sector, the numbers are grim.

The decisions we make have a huge impact.

Series 2 - Random Facts & Data Posts

Infographics created for posts on Linkedin, Twitter, Instagram, or through my blog, as part of analyses related to financial policy, effects of the pandemic, energy, sustainability, mobility, among others.

Sources: Government statistics sites, public data repositories, ICIJ, newspapers.
Data analysis: Spreadsheets, Tableau.
Data Viz: Apple Keynote, Datawrapper, Adobe Illustrator.



Have you ever wondered why we still using cash?

It's known that the majority of illegal activities run on cash. $100 bill note is the predilect among those who want to keep their activities out of the tax authorities' radar.

Here's a second question: Why large bill notes, often not possessed by most people and workers, still available in large quantities?

In his book, "The curse of cash," Kenneth Rogoff states that Robert Rubin thought 500 Euro notes might challenge the $100 bill in the global underground economy, acknowledging at least partially that it is the final utility for those notes, intermediate shady deals.

European Central Bank estimates 20 to 25% of the Euro notes are outside the Euro area.

#economy #recovery #policy #covid #stimulus #monetary

TW/IG: @isdatanomics



How to build a factory without using your own money.

Tesla will pay for its new Gigafactory in Berlin by selling carbon credits to other automakers, namely, FCA Fiat Chrysler Automobiles.

The company has traded its rights to pollute. Critics say that this type of operation, instead of impulsing companies to use renewable energy sources, allows both buyer and seller to legitimize a broken system, on which you can buy forgiveness.

#renewableenergy #energy #energy #carbonneutrality
TW/IG: @isdatanomics


Random Facts & Data #7

Is Netflix losing momentum?
Let’s wait for the results after wave 2 and 3 hits.
#coronavirusoutbreak #faang #tech #streamingservices
TW/IG: @isdatanomics



Series 1 – Random Facts & Data Posts

Infographics created for posts on Linkedin, Twitter, Instagram, or through my blog, as part of analyses related to financial policy, effects of the pandemic, energy, sustainability, mobility, among others.

Sources: Government statistics sites, public data repositories, ICIJ, newspapers.
Data analysis: Spreadsheets, Tableau.
Data Viz: Apple Keynote, Datawrapper, Adobe Illustrator.









Photo by Dominik Dancs on Unsplash

Are Carbon Credits a Financial Scam?

When money is the way to avoid an announced disaster. 

All about the source. 

For keeping our modern way of life uninterrupted, lots of hydrocarbons are required.

A fancy trip from the US to Thailand accounts for lots of Co2 Kg per person. Getting clothes and electronics delivered from factories in Asia to your doorstep in Europe requires to burn fuel. Hosting work files and selfies in the cloud requires electricity. 

Every day the world consumes gigantic amounts of energy; roughly 84% of it comes from fossil fuels, oil, natural gas, and coal. This percentage remains almost uniform, independently of the countries considered (OECD 80%, Non-OECD 87%). 



Even after the effect Al Gore's movie 'An Unconvenient Truth' caused, fossil fuel consumption grew by 20%, from 113,613 to 136,762 TWh (Data from Emissions soared 17.5% in the same period (Statistical Review of World Energy). 

"Energy is indeed the major contributor to climate change and to local air pollution", Global Energy Fundamentals by Simone Tagliapietra (2019).

Temperatures are rising. Mainstream scientists agree on the origin of that phenomenon. Carbon dioxide is to blame, even though the primary greenhouse gas is water vapor, the well-known H2O. 

Ideally, fossil fuels should be replaced by cleaner options, but that is impossible to this day. It even might be the case that replacing one with the other on a 1:1 basis could be achievable, not because the sun, sea, or wind are not abundant enough, but because the potential energy contained in fossil originated liquids is more significant than the one obtained from renewable sources.

But that's physics. Finance has a different interpretation. 

As Maslow said, “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” If emissions are the consequence of keeping economies growing, it could be applied the other way around by creating financial incentives to fight global warming.

After all, morale alone was incapable of stopping them (and us).


Carbon Credits 101

Let's start with the official definition

..."a carbon credit is a tradable permit or certificate that provides the holder of the credit the right to emit one ton of carbon dioxide or an equivalent of another greenhouse gas. The main goal for the creation of carbon credits is the reduction of emissions of carbon dioxide and other greenhouse gases from industrial activities to reduce the effects of global warming"...

Based on the text, a Carbon Credit is a tradeable instrument that gives the buyer the right to pollute. 



It is like admitting you're not capable of changing yourself and procure it from others. A man can't stop drinking; therefore, he buys some soberness from one of his acquaintances. 

This Carbon Credits are presented in the form of projects. Companies can put their money in diverse initiatives, mostly in developing countries, allowing the local population to improve their quality of life. 

Many of them have had remarkable results, such as providing stoves, preventing poor communities from inhaling toxic fumes when cooking. Other examples like reverting desertification or investing in young female education in Asia and Africa have been successful. 

Sadly, in parallel, Carbon Credits also opened the door for polluters to clean their image. Instead of changing their practices, they can concur to a market that assigns value to a particular volume of gas that threatens us in the long run. The most pervasive effect of it is the network of commission-getters. Lobbyists, financial institutes, and high-standard living NGO executives live out the credits exchange and project management.    

Even an under a non-exhaustive assessment of greenhouse emissions' effects would consider externalities such as respiratory problems. The model's design is a mild solution for a significant crisis. 


How a Carbon Credit is calculated

There is no convention on measuring the cost of a carbon dioxide tonne, and it doesn't surprise me, to be honest. 

It depends on the program the buyer engages in. It works more like a menu on which you fish for prices depending on your budget and how cool is the project you want to 'support.'  

You love nature, so let's plant some trees in Patagonia. Are you a social rights activist? Let's support knitting schools for girls in Sri Lanka. Is your dog your best friend and consider all living nature part of your family, you have to stick to the great cats' program in Kenia. 

Let's take the Air Travel Industry as a reference. When buying a ticket, soon to be passengers have the option of paying for the CO2 their trip will generate. Options vary from S$3 up to S$25 (US$2.20 to US$18.41) 

Don't get me wrong; I think any program meant to benefit nature, equality, and improving life quality is welcomed. What causes a massive dissonance is that countries' economic activity and companies are the roots of some of those problems.

A vicious cycle encompasses advertising products and services people don't need, overspending using easy-to-access credits, and permanent change of trends and values. 

When approaching this model, a question arises, who calculates the total amount of emissions a country or company generates? 

I've been part of a team whose responsibility was to determine the volume of the emissions from the company I used to work for originated. My task was to give a consultant all the data for them to come up with an estimation.

To this day, I believe the environmental consultant assigned to our project trusted in what she was doing. She put a lot of effort into having an overall image of how offices, workers commuting, electricity, air conditioning, logistics activities, and goods purchased from China generated emissions.

The results were vague. I understood that it is almost impossible to have an accurate idea of the carbon footprint based on the information available. Internal procedures are not designed for it. Even on those that have been updated, it is common o find flagrant emissions miscalculations.  


Follow the money

Our ever-growing economy works under the promise of more significant returns in the future, doing whatever is necessary today for achieving so. 

In Jørgen Randers, author of The Limits to Growth (1972) words: 

"It is cost-effective to postpone global climate action. It is profitable to let the world go to hell.

I believe that the tyranny of the short term will prevail over the decades to come. As a result, a number of long-term problems will not be solved, even if they could have been, and even as they cause gradually increasing difficulties for all voters"

Here comes the profitability - sustainability paradox. Everyone agrees something has to be done, introduce a price on carbon, on fuels, on polluting activities in general, but when election times come, no one votes for those alternatives. 

Societies and business will put short term goals before a blurry defined future. 

If a political option wins the election and issues new rules capping pollution quotas, it is enough for businesses to relocate to other territories with lax regulation. Money not only flows through financial institutions but between countries. 

Under the current Carbon Credit system, in most cases, as stated before, money flows from highly industrialized to developing countries. And on its way generating fees for those managing and allocating the funds. 


The Controversy

I side with those who think it's better to do something than nothing. If you believe weather conditions are changing, you also understand that the consequences are terrible. Storms, droughts, wildfires, and extreme temperatures are most likely to occur in severe forms due to a hotter planet. 

Nevertheless, the tools developed have serious flaws, and we must talk about them. 

Have the Carbon Credits model impacted the amount of Co2 emitted in some way? 

The answer is: No. 

You don't have to be an expert or a researcher to find that emissions soared in recent years; just Google it. 

Let's forget the difference between the proper price of the carbon emissions effect and the one market assigns to it. Instead, let's focus on the message it generates, replacing the co-responsibility we as a whole have by creating a similar market instrument, and not in the opposite way, adapting the current financial-productive system based on growth and resource depletion into a common good one. 

The way we relate to the planet highly depends on how we've been raised. I was born in 1977. I come from an oil-rich country with carbon-copied customs from the US; sustainability, environmental concerns, or clean energies were subjects I don't remember listening to when growing up. 

Current policies and agreements are made by a generation even older than me, people that I believe are trying to make a real effort to clear the path for a better world, but this work is far from good; younger minds have to jump into the discussion. 

The program subsidized thousands of projects, including hydropower, wind, and, infamously, coal plants that claimed credits for being more efficient than they would have been. CDM became mired in technical and human rights scandals, and the European Union stopped accepting most credits. A 2016 report found that 85% of offsets had a "low likelihood" of creating real impacts. 

Source: ProPublica

Like coins, carbon credits are two-sided. Several researchers affirm that up to 85% of the funds traded in the concept of carbon credits have either non or minimal impact on the environment. 

On the other hand, hundreds of public affairs specialists showcasing numbers that support the system's effectiveness. 

Weak tools lead us to mediocre results, the clock is ticking, and we're far from addressing 'the emissions issue'. Ambivalent solutions and perspectives are human approaches. In the meantime, the planet is still ruled by the laws of nature. 


Written by: Juan Carlos Golindano

October 17, 2020

Analysis: GDP per barrel of oil consumed

Methodology: The numbers presented are the product of the Gross Domestic Product division in U.S. dollars by the number of barrels of oil consumed by a country in a calendar year.


E.g., China RATIO (2019) = (Chinese GDP in US$ 2019 / Barrels of oil consumed in China in 2019)


Important: This is an exercise to obtain a ratio that allows the uniform of oil impact in the national accounts; we do not assume that oil is the only source of energy used by the countries analyzed.



  1. GDP data: World Bank (GDP current $)
  2. Energy consumption data: B.P., Statistical Yearbook 2020 (Oil Consumption Barrels).

The purpose of this analysis is twofold:

  1. Economic: Compare the efficiency of each economy transforming inputs. Understand if there are coincidences, convergences between countries analyzed.
  2. Environmental: Attempt to determine if it is possible to maintain the level of growth and meet the debt obligations of the countries and, at the same time, replace oil with clean energy.



Based on the above table and referring to the first motivation for this analysis, we can state the following:

  • Countries in which the GDP/barrel of oil ratio are higher are those with higher value-added embedded on their exports, with greater industrial technification, and a more significant financial services component in relation to ist GDP.
  • Countries with the lowest ratio are those that either have an abundance of oil resources (Saudi Arabia, Russia), with a low-tech industrial sector (India), or a higher percentage of the primary sector within the total GDP (Argentina).

However, when comparing between 2019 and 2009, the countries that have increased the ratio the most are Russia and China (6.72 and 4.09 times, respectively). The explanation may lie in the increase in the added value of the goods produced or in taking advantage of the opportunity to improve, that is, moving from rudimentary processes to others that are a little more technologically advanced, a process that was no longer possible in industrially developed countries (Germany).

The graphic representation of the table above is like this:


Out of which we can differentiate two groups:

  1. Switzerland, Germany, Japan, the Netherlands, and the United States
  2. China, Poland, Argentina, Mexico, India, Russia, and Saudi Arabia.


To answer the second question, regarding the capacity to repay the sovereign debts contracted while decreasing oil consumption, we will take one country from each group as an indicator. From the first group, the United States, from the second group, Mexico.

According to Trading Economics, the total foreign debt of the United States amounts to 5,371,451 million euros, that of Mexico to 446,898.10 million U.S. dollars.
Maintaining our initial consideration by which we use the ratio of GDP barrels of oil, the number of barrels required for the repayment of the foreign debt (we insist, maintaining the current ratio), would be as follows:



Legend: Country, Debt in US$, GDP created per consumed barrel, Number of barrels required, years.

The United States would need to extract 10.25% of its proven oil reserves (almost 69 billion barrels) and Mexico 184.74% of its reserves (nearly 6 billion barrels) to cover its foreign debt, assuming that they would devote all their income to paying it, which is impossible.

The above is a non-scientific conclusion; it is only an indicator of the pressures that energy use will put on certain countries; in the case of Mexico, its energy transformation is a necessity not only for environmental reasons but also for financial ones, its dependence on external energy sources will make it susceptible to external shocks and the increase in the cost of living for its inhabitants.

In the case of the United States, the increase in reserves and inventories from fracking as an extraction process places it in a less compromised situation. However, this industry -oil fracking- depends mainly on government subsidies because its high extraction price per barrel makes it unviable to compete with countries like Saudi Arabia or Russia.

We can also assure that debt will continue to grow (Q.E. and Post-COVID bond purchase, financed by the Federal Reserve and the ECB). Economic activity under current growth models at all costs will only decrease the use of fossil resources through increased productivity.

Incorporating clean energy on your initiative in resource-rich countries or countries with large populations looks complicated. Technologies that incorporate renewable sources require active training of the labor force, not to mention that in energy-intensive processes such as steelmaking or aeronautics, there are not yet fuels capable of generating a similar return to fossil fuels.


Article wrote by Juan Carlos Golindano for Datonomía on October 1st, 2020.

Weekly Economic Report CW22/23-2020

Selection of news, studies, papers, events, and any other source of information I use as a reference to understand current and future economic scenarios. Views very obviously mine.


1. Europe’s Hamiltonian moment

The new Franco-German proposal for a €500 billion European recovery fund could turn out to be the most important historic consequence of the coronavirus. It is even conceivable that the deal struck between German Chancellor Angela Merkel and French President Emmanuel Macron might one day be remembered as the European Union’s “Hamiltonian moment,” comparable to the 1790 agreement between Alexander Hamilton and Thomas Jefferson on public borrowing, which helped to turn the United States, a confederation with little central government, into a genuine political federation

The plan amounts to only 3% of the EU’s GDP, compared with the 15% of GDP already committed by Germany to industrial support. Creating any EU recovery plan will require unanimous support from the EU’s 27 member countries – and this will involve unseemly late-night squabbles between the self-styled “Frugal Four” northern governments (the Netherlands, Austria, Finland, and Sweden), which have vehemently opposed funding for Mediterranean EU members which, according to Wopke Hoekstra, the Dutch Finance Minister, have mainly themselves to blame for “failing to reform.”


Is this enough for the EU to remain united as an institution? What we've seen is that Germany and France stood up and put in place a financial instrument for 'Mediterranean' countries for accessing to credit, it is common that in multilateral organism some of its members opposed to certain measures but in the case of Europe it is not simply divergence in positions, it is a challenge for the way of life of the south.

If Spain, Greece, Italy, and Portugal, were to make deep changes in their government and social structures they will be all their political ground, opening the possibility for the extremism to overtake power. It is not only the amount of money to which they can access, it is the future of entire countries that is in play.

Is the EU capable of attenuating differences, potentiating each country's capabilities instead of shortcomings? Time will tell.

2. Europe's economy has 'likely bottomed out' and is starting to bounce back, according to a set of closely-watched business surveys

"The eurozone saw a further collapse of business activity in May but the survey data at least brought reassuring signs that the downturn likely bottomed out in April," Chris Williamson, chief economist at IHS Markit, said in a statement.



"Although the pace of decline has eased since April's record collapse, May saw the second largest monthly falls in output and jobs seen over the survey's 22-year history, the rates of decline continuing to far exceed anything seen previously,"


2008-2009 crisis can't be seen as a reference for this period. Its causes were different, its timing and the way of 'contagion', starting from real-estate until reaching sovereign debt implications. Nonetheless, what we know is that markets bounce and start having a non-predictable pattern on which they go up and down in a fast fashion. Saying that the EU is back on track on its path for recovery is undoubtedly good news, the question is, is this a sign that without even being free of COVID19 is there a chance for going ever lower than in March/April period. Are institutions and authorities creating false expectations?

My interpretation is that there’s no way of knowing how the economic activity will be until we all get back on business, until the last sector starts assessing how are their capabilities after the virus shock.

Perhaps a second wave of the illness hit us back, or even the system’s workers' absorption capacity doesn’t recover at the expected pace. Note aside, financial crisis took 12 to 14 months to fully impact the system, this time could be worse.

3. Germany's Economy Is A Bigger Risk Than Ever For EU Stability

No country in Europe is in a better position than Germany when it comes to funding domestic economic recovery. But in Brussels, Rome and Madrid, politicians see that as a potential problem: They're worried that less economically stable countries might be left behind by the coronavirus pandemic, and that Germany and other countries with strong economies will widen the gap between themselves and the rest of the EU.

The worry is that the crisis will only widen the gap, as richer countries such as Germany, the Netherlands and Austria can afford to pump a lot of money into their national economy to see it through the pandemic. Last year, Germany's national debt fell below 60% of GDP, the level set out in the Maastricht Treaty, and before the crisis the social security office was sitting on reserves reaching into billions of euros.


Germany is the leading country within the EU, is a powerhouse that owes its success to a great industrial network, productive and talented workers. That translates into growing gaps of positive trade and capital balance, that can be then reinvested, the system feeds itself.

Is Germany widening the difference between


4. Banks will struggle to generate profits even as the global economy recovers, IMF says


"Banks’ earnings have already been hit hard by the economic shock of the pandemic. JPMorgan Chase, for example, reported a 69% drop in profit for the first quarter compared with one year earlier. The KBW Bank Index, which tracks two dozen bank stocks in the U.S., has plummeted 39% year to date".

“Banks go into this crisis with a lot of capital and liquidity,” Tobias Adrian, financial counsellor of the IMF, told CNBC. “Having said that, this is a very, very severe economic crisis.”


How is this possible if the most significant packages stimulus of the history has been approved? In the US, Europe, and many other countries, freshly electronically created money has been injected for the economy to regain impulse. These measures use the financial system as a link between production, corporations, and small businesses and monetary authorities who print that money.

In the end, the dynamism this new system will adopt and how the monetary base circulates will most likely end up with the banks collecting this money for diverse reasons. Either by increasing financial activity due to an economic boost (impulsing the intermediation activity nature of the financial institutions) or by keeping their vaults to the top due to low returns on bonds, corporate shares, or any other instrument, that make cash as a favorite option for parking wealth.

The only set back I might foresee is a potential slow down on money's velocity of circulation, that even with high levels of liquidity and expansive policies may dry up the profit scheme that feeds the banking system.

5. How The Crisis Is Making Racial Inequality Worse

"Job losses are "dramatically concentrated in the low end of the wage distribution," says Erik Hurst, an economist at the University of Chicago's Booth School of Business. He is the co-author of a new study, "The U.S. Labor Market during the Beginning of the Pandemic Recession," which analyzes payroll data from millions of American workers between early March and mid-April".


This is a repeated phenomenon, those who end up carrying the worst part of a crisis are those who were already in bad situation before the virus. Minorities are prone to live in the outskirts, to have difficult access to services and food supply, depend on daily basis jobs with no fixed contract, and no possibility of remote work.

6. Tanzania's President Insists COVID-19 Was Defeated With Prayer Amid Concerns Scale of Outbreak Being Hidden

On just one day this month, 50 Tanzanian truck drivers tested positive for the coronavirus after crossing into neighboring Kenya. Back home, their president insists that Tanzania has defeated the disease through prayer.

The president has argued that if restrictive measures are adopted, Tanzanians may have nothing to eat.

“Make all kinds of noise as a sign of thanksgiving to show our God has won against disease and worries of death that were making us suffer,” Paul Makonda, the regional commissioner of commercial hub Dar es Salaam, said at a news briefing. In March, Magufuli ordered three days of national prayers against COVID-19 and has since said they have been answered.


7. Latam Airlines seeks bankruptcy protection as travel slumps


“We are looking ahead to a post-COVID-19 future and are focused on transforming our group to adapt to a new and evolving way of flying, with the health and safety of our passengers and employees being paramount,” he said in a statement announcing the bankruptcy filing.

Latam's move comes little more than two weeks after another major Latin American airline, Avianca Holdings, filed for bankruptcy protection in New York. Australia's second-largest carrier, Virgin Australia, sought bankruptcy in its home market last month.

Latam's bankruptcy filing includes parent company Latam Airlines Group S.A. and its affiliated airlines in Colombia, Peru, and Ecuador, as well as its businesses in the U.S.

The company is not including its affiliates in Argentina, Brazil, and Paraguay in the turnaround effort. It says it is talking with the Brazilian government about how to proceed with its operations there.

Latam is South America's largest carrier by passenger traffic. It operated more than 1,300 flights a day and transported 74 million passengers last year.

The airline had more than 340 planes in its fleet and nearly 42,000 employees on its payroll, according to its more recent annual report. It reported a profit of $190 million in 2019.



8. World Bank: 48 Countries Hold 15.6 TW of Offshore Wind Technical Potential


“To date, relatively little research has been undertaken on the potential for offshore wind in emerging markets. Any assessment of this kind must start with an estimate of technical potential, that is, the maximum possible installed capacity with current technology, as determined by wind speed and water depth. Subsequent steps in analyzing a country or region’s offshore wind potential will add further detail to the assessment, including environmental, social, technical and economic constraints”, the World Bank states.


Is COVID19 outbreak reshaping the way we source energy? Is this really a feasible scenario, moving more aggressively into renewable sources while the world needs cheap oils and raw materials and for recovering its industrial activity levels?

That's something I've been mentioned, environmentalists

9. Oil prices climb on prediction of swift demand rebalance

Oil has surged more than 80% this month as demand returned following the easing of lockdown restrictions in some countries, while output cuts have started to chip away at the oversupply. The International Energy Agency sees oil consumption eventually rebounding past pre-virus levels, even as some argue that the coronavirus outbreak will fundamentally shift patterns of consumption.

“Global supply is still heading lower while demand is rising,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “This all lays the ground for higher prices down the road.”


  • West Texas Intermediate crude for July delivery rose $0.84 from Friday to $34.09 a barrel as of 10:26 a.m. London time
  • Brent for July settlement added 1.8% to $36.17 a barrel



10. Pandemic could cost global economy $82 trillion in depression scenario

$26.8 trillion, or 5.3% of five-year GDP, to be lost.

For the U.S., the potential five-year loss ranges from $550 billion to $19.9 trillion.

It’s safe to say financial markets are not pricing in a global depression. The S&P 500 SPX, 1.69% has climbed over 30% from the lows of March.

If the numbers sound too outlandish, consider that growth and returns on assets can be depressed up to 40 years after the pandemic has passed, according to Keith Wade, chief economist at U.K. fund manager Schroders.




11. Josep Oliu: "With each passing day it seems that the recovery will be faster"