http://www.economist.com/world/americas/displaystory.cfm?story_id=13829366
Among the last to fall into recession, Brazil may be among the first to grow out of it
“NEVER before in the country’s history” is the catchphrase of President Luiz Inácio Lula da Silva that most annoys his opponents. The president, in his selective amnesia, would have voters believe that everything good about Brazil dates from his election in 2002. Even more infuriating for the previous government, which provided the precursors for progress but got no credit for it, he is often right. Take interest rates: on June 10th the central bank cut its benchmark SELIC rate to 9.25%, the first time the figure has been in single digits since the 1960s.
A host of measures, from the value of the stockmarket to the creation of credit, are now nearly back to their level before the collapse of Lehman Brothers in September last year. The economy performed less badly than expected in the first quarter: GDP shrank by only 0.8% compared with the last three months of 2008. Many analysts believe that Brazil is now starting to grow again, and will return to annual growth of 3.5% to 4% next year. If so, that would mean that the country has escaped with only a brief recession.
There are several reasons for this. One is that the normal business cycle is at work, as Arminio Fraga, a fund manager and former Central Bank president, points out. Brazil was overheating in the early part of last year, and the Central Bank raised interest rates. Now looser monetary and fiscal policy is speeding recovery. The financial system is sound, and domestic demand has remained robust. Brazil’s changing trade patterns have also helped to shield it. This year, for the first time, China overhauled the United States to become Brazil’s single biggest trading partner.
But familiar problems are also coming back into view. First among these, some think, is the real’s recent appreciation against the dollar (see chart). For exporters the currency is once again painfully strong, as it was before September. To ease the pressure, the powerful industrialists’ association in São Paulo wants to see some form of tax or restriction on short-term financial inflows. At the moment this looks unlikely. Left-wing economists in the governing Workers’ Party have been asking for the same thing for some time, but Lula has ignored them, preferring the Central Bank’s argument that the strong real is helping to curb inflation.
Industrialists might mind a bit less about the currency if borrowing were cheaper still. One obstacle to further cuts in interest rates, which remain high in real terms, is the existence of a popular savings account (called caderneta de poupança), which offers an 8-9% guaranteed interest rate. As the Central Bank’s headline rate approaches this level, the government frets about a flood of money into these accounts from investors, draining liquidity from the market for government bonds. It is mulling over whether to limit the number and size of poupança accounts, but tampering with this familiar product is politically difficult. Some opposition parties are stoking fears by unfairly reminding voters about a notorious bank raid by a previous president, Fernando Collor, in 1990 when the nation awoke to find much of its savings frozen.
A further bar to lower interest rates is that half of the goods that make up the main inflation measure, the IPCA, are at least partly indexed to the previous year’s inflation, says Sergio Vale of MB Associados, a consultancy. This tends to dampen movement in the IPCA, and encourages the Central Bank to be cautious.
Even so, Brazil’s never-before situation is leading to an uncharacteristic outbreak of long-termism. Bradesco, a large bank, has started to offer 30-year mortgages, something that would have been unthinkable a short time ago. Maílson da Nóbrega, a former finance minister, expects lower interest rates to bring a rapid expansion of mortgage finance, which at present amounts to just one percent of GDP.
Good things of this kind could still be delayed by a fresh outbreak of gloom abroad. But the debate is really about when they happen, rather than if—a testament to hard-won progress.
Originally posted by generalissimoI think one of the lessons from Brazil goes out to the international community that has shunned latin america during times of crisis. This time around, investors can see relatively less capital flight in Latin America. It is the changes instituted in the last couple of decades that should make investors recalculate part of their skittishness and fear of the region.
http://www.economist.com/world/americas/displaystory.cfm?story_id=13829366
[b]Among the last to fall into recession, Brazil may be among the first to grow out of it
“NEVER before in the country’s history” is the catchphrase of President Luiz Inácio Lula da Silva that most annoys his opponents. The president, in his selective amnesia, would ha ...[text shortened]... ut the debate is really about when they happen, rather than if—a testament to hard-won progress.[/b]
Originally posted by eljefejesusYes we've seen the demise of U.S. backed fascist dictatorships and National Security States (corporatism's favourite kind of political set up) and the rise of social democracy and wealth generation through increased pro-poor policies. Rumsfeld was down there a few years ago trying to persuade various countries to ressurrect the National Security State model but it seems that South Americans are now looking for more of a balance between collectivism and "capitalism" than was the case when U.S. "capitalism" loomed large and armed its proxies to the teeth. Good news for the people of the region.
It is the changes instituted in the last couple of decades that should make investors recalculate part of their skittishness and fear of the region.
Originally posted by FMFFMF, you're hilarious.
Yes we've seen the demise of U.S. backed fascist dictatorships and National Security States (corporatism's favourite kind of political set up) and the rise of social democracy and wealth generation through increased pro-poor policies. Rumsfeld was down there a few years ago trying to persuade various countries to ressurrect the National Security State model but ...[text shortened]... " loomed large and armed its proxies to the teeth. Good news for the people of the region.
Your mistakes include equating capitalism with dictatorship, and yet democracies outside of Scandinavia have preferred capitalism over socialism for decades (and even in Scandinavia they are backtracking on their socialist pension systems).
Don't forget dictators such as Castro in Cuba and Kim in Korea, now that's socialist dictatorship!
You love speaking out of ignorance, yet won't study about the economic, capitalist reforms going on in the growing countries of the world including Brazil and China.
They used to rely too much on centralized spending and have allowed markets to start leading growth in their economies. China had a very low base from 1950's-1970's socialism but have now started trading with capitalist countries and started stock markets and investment zones on the coast, leading to a couple of decades of dramatic catching up to the rest of the capitalist world
So-much for centrally planned economies!
In Brazil the government experienced decades of government-caused hyperinflation. They have now taken that power from the federal government and allowed their central banks and and the markets influence interest rates and stopped printing so much money. Welcome to capitalism China and Brazil, or as the leaders in China have put it:
It is glorious to become rich!
Originally posted by eljefejesusYour amusement is very nice.
FMF, you're hilarious.
But it doesn't cover up the fact that you have not addressed my points about the demise of National Security States and rise of social democracy having been the most obvious trends in the last two decades.
South America for so long was the sweatshop/laboratory/free-fire zone of U.S. "capitalism". It's interesting how boggle eyed advocates of "capitalism" are always so quick to disown its manifestations, its impacts, its paradoxes in the real world.
Like wajoma and normbenign, you come across little different from the besandled, cloud cuckoo land Marxist lecturers of this world. Peddling your pet ideology regardless of what is going on in reality.
You can't even cite a currently functioning "capitalist" system anywhere on Earth.
Originally posted by FMFPeddling ideology?
Your amusement is very nice.
But it doesn't cover up the fact that you have not addressed my points about the demise of National Security States and rise of social democracy having been the most obvious trends in the last two decades.
South America for so long was the sweatshop/laboratory/free-fire zone of U.S. "capitalism". It's interesting how boggle eye ...[text shortened]... .
You can't even cite a currently functioning "capitalist" system anywhere on Earth.
There you go again, trying to portray your opponent with false comparisons.
You avoid the issue that was being discussed about economic growth in Brazil except to say that social Democracy created the growth, but have no support or even demonstrate any knowledge to support your argument. Show your support, don't just make more soundbites about things you don't understand.
You say social democracies lead to economic growth, how? You want to leave that out and start attacking others? You haven't even made a case for your argument, you just want others to make their case so you can attack it.
Where is your case?
You went on to some outlandish attacks against capitalism causing sweatshops. Tell me, are these alleged sweatshops forcing their employees to work there, or are they allowing people to compete for those jobs? Could it be that outside these capitalist jobs their lives could be even worse?
As for a functioning capitalist system, the US is an obvious example. Plus, you love attacking the US and capitalism, so have at it... but try to make a case for your own points too. Fair's fair.
Originally posted by eljefejesusYou yourself said that the favourable investment climate has been created due to the changes of the last couple of decades. I agree with you. The last two decades have seen a shrinking of the nightmarish influence and intervention of U.S. style "capitalism" and the growth and the consolidation of homegrown autonomous social democracy. The "case" I am making is exactly the same as yours - except that you don't specifically atrribute the improvement to specific changes in the last couple of decades, as I do, because to do so would not fit the specific ideology you are trying to peddle for your own specific intellectual reasons.
You avoid the issue that was being discussed about economic growth in Brazil except to say that social Democracy created the growth, but have no support or even demonstrate any knowledge to support your argument.
Originally posted by FMFNice try slick politician,
You yourself said that the favourable investment climate has been created due to the changes of the last couple of decades. I agree with you. The last two decades have seen a shrinking of the nightmarish influence and intervention of U.S. style "capitalism" and the growth and the consolidation of homegrown autonomous social democracy. The "case" I am making is e ...[text shortened]... the specific ideology you are trying to peddle for your own specific intellectual reasons.
but anyone who examines what you actually said in your post will see that you don't support how you believe the existance of social democracy in general leads to growth.
I pointed to specific economic reforms regarding central banks and reduced money-creation ending hyperinflation which limits savings and investments. It should be obvious to anyone with at least half a brain (except maybe politicians and politically biased types such as yourself) that your causation (the existance of social democracy) is less specific than my reasons given.
How do you get to growth from social democracy specifically, if you don't mind addressing the question?
Originally posted by eljefejesusMoney invested in health, education and a legitimate legal system creates wealth, reduces poverty, fosters entrepreneurship. Reducing poverty increases wealth because it increases productivity. These are things that social democracies explicitly commit themselves to.
How do you get to growth from social democracy specifically, if you don't mind addressing the question?
Growth in harness with 'trickle down' and hardnose corporatism has no impact on poverty, or indeed middle class propserity in real terms. Growth within the framework of social democracy (I cite European countries, and emerging democracies in Asia) leads to a more widely enjoyed propsperity than any theoretical purely "capitalist" model is mathematically capable of delivering.
Stark inequalities in the distribution of wealth, something that can only be sustained by force and violence, and not by boggle eyed mathematics alone, is counterproductive to the pursuit of sustainable prosperity. Thank goodness for the relative demise of U.S. style capitalism in South America, although there's still a long way to go.
Originally posted by FMFWhen you cut away your political talk, we actually agree that investing in the future through education is a contributor to future growth.
Money invested in health, education and a legitimate legal system creates wealth, reduces poverty, fosters entrepreneurship. Reducing poverty increases wealth because it increases productivity. These are things that social democracies explicitly commit themselves to.
Growth in harness with 'trickle down' and hardnose corporatism has no impact on poverty, or demise of U.S. style capitalism in South America, although there's still a long way to go.
However, capitalism will continue to help countries other than Venezuela or Cuba to grow.
If there is change in latin america that helps their economies, it is modernizing economic reforms that help, as well as modernized legal systems as in Columbia and Mexico's legal reforms, and even in Mexico's health insurance for children.
Latin American needs more coorporations and jobs, not less. It needs to cut spending and debt levels, not grow them, so its benefits to unions through pensions have needed reforms in many national.
Including in the topic of this post, Brazil, pension reform is nescessary.
Latin America has a lot of characteristics not typical of other capitalist nations, including the US. It has a more unequal distribution of wealth, nepotism, and corruption that has taken years to be worn down and is still too high. However, that is not a capitalist cause. In fact, the PRI flirted with socialism in the 60's and 70's in Mexico with its past policies and funded its programs with the oil it found. Brazil had many millitary rulers and corruption with one of the most unequal economic wealth distributions in the world.
Only now are they becoming both more capitalist and more unequal by combining poverty reduction and growth of business and trade with investments in the future through educational reforms and other reforms.
Originally posted by FMFYou can't even cite a currently functioning "capitalist" system anywhere on Earth.
Your amusement is very nice.
But it doesn't cover up the fact that you have not addressed my points about the demise of National Security States and rise of social democracy having been the most obvious trends in the last two decades.
South America for so long was the sweatshop/laboratory/free-fire zone of U.S. "capitalism". It's interesting how boggle eye ...[text shortened]... .
You can't even cite a currently functioning "capitalist" system anywhere on Earth.
Describe "functioning".
Originally posted by eljefejesusHow cute. The reality of the 200 year old legacy of U.S. "capitalism" in the region is swept under the carpet thusly! Unequal distribution of wealth, nepotism, and corruption were all part and parcel of the system of levers and pulleys that Washington DC and U.S. industrialists manipulated in the service of the American brand of "capitalism". While setting up social security and a web of other social services at home, America was payrolling death squads to eliminate those demanding such things in Latin America. However, social democracy has at last been able to take root. A properly functioning and just economy needs to find a compromise and a synergy between aspects of collectivism and market mechanisms.
Latin America has a lot of characteristics not typical of other capitalist nations, including the US. It has a more unequal distribution of wealth, nepotism, and corruption that has taken years to be worn down and is still too high. However, that is not a capitalist cause.
Originally posted by generalissimogeneralissmo: The economy performed less badly than expected in the first quarter: GDP shrank by only 0.8% compared with the last three months of 2008.
http://www.economist.com/world/americas/displaystory.cfm?story_id=13829366
[b]Among the last to fall into recession, Brazil may be among the first to grow out of it
“NEVER before in the country’s history” is the catchphrase of President Luiz Inácio Lula da Silva that most annoys his opponents. The president, in his selective amnesia, would ha ...[text shortened]... ut the debate is really about when they happen, rather than if—a testament to hard-won progress.[/b]
Yes, an economy not shrinking as badly as expected is an economic miracle.
Originally posted by FMFHow can anyone possibly consider you a good debater??
How cute. The reality of the 200 year old legacy of U.S. "capitalism" in the region is swept under the carpet thusly! Unequal distribution of wealth, nepotism, and corruption were all part and parcel of the system of levers and pulleys that Washington DC and U.S. industrialists manipulated in the service of the American brand of "capitalism". While setting up so ...[text shortened]... ds to find a compromise and a synergy between aspects of collectivism and market mechanisms.