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from Breakingviews:

U.S. is minimum-wage laggard given its prosperity

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By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

America is a minimum-wage laggard – at least relative to its economic prosperity. With Washington considering a higher pay floor and Peru’s prime minister losing his job over the issue, a Breakingviews analysis shows that minimum wages as a percentage of local income levels are still low in the United States and, for instance, in neighboring Mexico.

Most decent-sized economies feature minimum wages, though Germany, Scandinavian countries and South Africa are notable exceptions. Legal pay floors vary widely compared to per-capita GDP in 2012, as measured by the World Bank – outliers aside, from around 20 percent of output per head to 60 percent. Some places, like China and the Philippines, also have different pay rules for wealthy urban regions and poorer hinterlands.

A minimum wage to average prosperity ratio – call it a MAP score – at a very high 80 percent or more of reported GDP per head occurs in Nigeria and Pakistan, where the informal economy is large and official figures may be understated. More credibly generous regimes arise in New Zealand, with a MAP score of 60 percent, and some European countries. That’s consistent with the idea that higher wage floors are more sustainable where incomes are already relatively equal and the minimum pay level affects only a tiny proportion of employees.

from Photographers' Blog:

Living on climate change

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Huaraz, Peru

By Mariana Bazo

Climate change now has a historic route in the Andean cordillera. The gradual melting of tropical glaciers (glaciers located within the tropical latitudes) in one town has led to a decline in tourism that has made villagers look for alternatives to continue attracting tourists.

Peru is a country of multiple ecosystems. To travel from the seaside capital of Lima to 5,000 meters (3,107 feet) above sea level requires just a few hours driving uphill. One of the most important cities in the altitude, Huaraz, is famous for its nearby snow-capped mountains and glaciers. Huaraz is also frequented by mountain climbers, many of whom aim to reach Huascaran, Peru’s tallest mountain and the highest point in the world’s tropics at 6,768 meters (22,205 feet) high.

from Global Investing:

Emerging Policy-Hawkish Poland to join the doves

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All eyes on Poland's central bank this week to see if it will finally join the monetary easing trend underway in emerging markets. Chances are it will, with analysts polled by  Reuters unanimous in predicting a 25 basis point rate cut when the central bank meets on Wednesday. Data has been weak of late and signs are Poland will struggle even to achieve 2 percent GDP growth in 2013.

How far Polish rates will fall during this cycle is another matter altogether. Markets are betting on 100 basis points over the next 6 months but central bank board members will probably be cautious. Inflation is one reason  along with the  the danger of excessive zloty weakness that could hit holders of foreign currency mortgages. One source close the bank tells Reuters that 75 or even 50 bps would be appropriate, while another said:

from Photographers' Blog:

Love within boundaries

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By Mariana Bazo

The Lurigancho prison in Lima is one of the most overcrowded, violent and unruly jails in Latin America. More than 8,500 prisoners live within its walled perimeter with so much freedom that they have created their own city which reproduces the urban society on the outside, including its most unjust and grotesque aspects. The passageways and open areas are filled with vendors, food stands, soccer fields, industrial zones, rehabilitation centers, barber shops and even pet animals.

It is a tyranny with its own laws imposed by the president and bosses of each sector. Its unique social and economic strata, with classes of poor and rich, are all governed by the power of money and force.

from Global Investing:

Fed re-ignites currency war (or currency skirmish)

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The currency war is back.

Since last week when the Fed started its third round of money-printing (QE3), policymakers in emerging markets have been busily talking down their own currencies or acting to curb their rise. These efforts may gather pace now that Japan has also increased its asset-buying programme, with expectations that the extra liquidity unleashed by developed central banks will eventually find its way into the developing world.

The alarm over rising currencies was reflected in an unusual verbal intervention this week by the Czech central bank, with governor Miroslav Singer hinting at  more policy loosening ahead, possibly with the help of unconventional policy tools. Prague is not generally known for currency interventions -- analysts at Societe Generale point out its last direct interventions were conducted as far back as 2001-2002.  Even verbal intervention is quite rate -- it last resorted to this on a concerted basis in 2009, SoGen notes. Singer's words had a strong impact -- the Czech crown fell almost 1 percent against the euro.

from Global Investing:

Russia: a hawk among central bank doves?

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This week has the potential to bring an interesting twist to emerging markets monetary policy. Peru, South Korea and Indonesia are likely to leave interest rates unchanged on Thursday but there is a chance of a rate rise in Russia. A rise would stand out at a time when  central banks across the world are easing monetary policy as fast as possible.

First the others. Rate rises in Indonesia and Peru can be ruled out. Peru grew at a solid  5.4 percent pace in the previous quarter and inflation is within target. Indonesian data too shows buoyant growth, with the economy expanding 6.4 percent from a year earlier. And the central bank is likely to be mindful of the rupiah's weakness this year -- it has been one of the worst performing emerging currencies of 2012.

from Photographers' Blog:

Trapped with a way out

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By Mariana Bazo

It would be impossible to think of rescuing miners and not to associate such thoughts to the rescue of the Chilean miners in San Jose, Copiapo, 2010. That really was a glorious rescue after a lengthy sixty-nine day underground wait.

This time in Peru, nine miners were trapped in an illegal copper and gold mine in the desert of Ica, south of Lima.

from Photographers' Blog:

The hunt for treasure

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By Mariana Bazo

On my numerous trips around the outskirts of Lima I’ve long been struck by the sight of elderly women combing garbage dumps and lugging huge bags filled with recyclable items. I’ve photographed several of them and while talking to them I always get the same story – they pick up bottles, paper and cans they can sell later, and that little money allows them to survive. Some of the women are abandoned and have no relatives, but others prefer to live on their own means rather than depending on handouts. It’s common to hear them say that this is the only job they can get at their age. I often notice a certain glimpse of happiness when they talk about their hard-earned independence.

Peru’s national statistics bureau has published figures that older adults who don’t have retirement plans are forced to develop strategies for survival, to avoid being economically dependent and socially vulnerable, and these garbage pickers fit exactly that description. Many poor elderly women are excluded from social services and have never been in the formal workplace. Many are Andean migrants without the same education opportunities as men, to the extent where many are illiterate.

from Photographers' Blog:

Guardians of biodiversity

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By Diego Cortijo

The jungle is a place too inhospitable to allow large human settlements, or that's what we have always believed until now. New archaeological discoveries tell of highly developed cultures that have lived in the heart of the jungle. The myths of ancient cultures and places lost deep in the jungle may no longer be myths in light of these new discoveries.

With this proposal I began my second expedition to the Amazon rainforest as a member of the Spanish Geographic Society, to try to learn about and document unknown places in the jungle. Members of native communities I visited in the past had spoken to me about ancient settlements, and now I wanted to locate them.

from Global Investing:

Interest rates in emerging markets – - harder to cut

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Emerging market central banks and economic data are sending a message -- interest rates will stay on hold for now.  There are exceptions of course.

Indonesia cut rates on Thursday but the move was unexpected and possibly the last for some time. Brazil has also signalled that rate cuts will continue.  But South Korea and Poland held rates steady this week and made hawkish noises. Peru and Chile will probably do the same.

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