LyrArc Article Gist
The Fed's interest rate policies to fight inflation have increased the return on US assets vs overseas emerging market countries such as Brazil and India. US Treasurys now offer 2% return after inflation. This means investors shy away from emerging markets as the extra yield offered by emerging market country bonds is diminishing. This reduces inflow of investment into countries from Turkey to Brazil. Higher rates also increase the value of the dollar vs other currencies including that of China and India, Brazil, Mexico. This means it is costlier for other countries to buy goods priced in dollars (India, Mexico)  or service dollar denominated debts (Argentina or Turkey). Where countries had raised rates to fight inflation this means central banks have less room to cut rates to stimulate their economies. This also happens as China's growth of 5% in 2023 as it has high debt and little room for stimulus measures, reduces any growth in countries in Latin America or Africa that export commodities from copper and iron to other materials. ...

LyrArc Article Gist
The northeastern region of Brazil, the poorest region of Brazil, has benefitted from the economic expansion in Brazil. The region's GDP went up by 4.2% a year for the last ten years compared to 3.6% for Brazil. Bolsa Familia, President Lula's anti-poverty programme has benefitted the northeast, but the Getulio Vargas research institute shows three quarters of growth coming from earnings and expansion of export based agriculture in soyabeans and other products and from mining export industries. Projects in the northeast include development of the port and industrial area around Suape. A petrochemical plant, a shipyard and a Petrobras refinery, are under construction. A new railway will link Suape to the interior. Much of the development is for export industries in soyabeans and iron ore, and for the rail and port infrastructure that supports these exports to China. As a result the development looks similiar to what is happening in Australia with the huge expansion in rail and port infrastructure in that country to support iron ore and other mining exports to China. Any slow down in China will affect Brazil as the IMF has recently warned, because of an overdependence on commodity exports to China. Alexandre Rands of local Datametrica consultancy points to this when he says that infrastructure booms while helpful are not enough to sustain development. Big firms train the workers they need which is how Brazilian companies cope with a weak educational system. Schools in the northeast are however not getting the financial support to improve education, a situation that affects Brazil as a whole, but is even more evident in the northeast....

LyrArc Article Gist
Last week the skies over Sao Paulo, the largest city in Brazil, in the lunch hour suddenly turned dark as smoke mixed with rain clouds appeared and turned day into night. It was the result of fires blazing in the Amazon- 43,000 fires set this year alone illegally. It could be ranchers clearing land for pasture or farmers clearing land for planting. Illegal logging has also increased since the severe recession in Brazil. 

The cash strapped government is also cutting the funding of the agency that controls illegal activiites in the Amazon leading to fires and illegal logging. Brazil's president is defiant amid world criticism of his lack of concern for what is happening in the Amazon.

LyrArc Article Gist
With over 35,000 deaths the deaths in Mexico from pandemic exceed that in Italy. Mexico now has about 300,000 cases. Brazil. Mexico and Colombia are hit hard.

LyrArc Article Gist
The death toll from coronavirus reaches 200,000 in Mexico, the third highest after the US and Brazil. Vaccine supplies are low in Europe affecting the vaccination drive. 

LyrArc Article Gist
Hit hard by the pandemic the people of Argentina, Brazil, Chile and Mexico are showing less vaccine hesitancy. This is enabling this region to catch up with the US in vaccinations. The difference is that people trust vaccinations. About two thirds of people in Chile and Uruguay are vaccinated. Supplies of vaccine are coming in from US, UK, Russia and China. Brazil is now doing 1.5 million vaccinations a day, compared to 750,000 in US daily. This report says that on a per capita basis taking into account the populations US is currently vaccinating at half the rate of Mexico and a third of the rate in Peru and Colombia, Argentina. With 8% of the population Latin America had one third the deaths making vaccination urgent and essential for this region. People are taking the threat of Delta variant seriously in the region. Astonishing as it may sound after all the publicity of deaths in Brazil this report in WSJ says 88% of people in Brazil want to get vaccinated, while 67% say this in the US, poll from Ipsos. Peru, Argentina, Mexico, Chile all top the US, says WSJ. ...

LyrArc Article Gist
A group of oil producing countries led by Saudi Arabia and Russia stall progress on climate change goals at the conference in Belem, Brazil. Even deforestation goals are left out. A standoff between European nations and oil producing countries leads to lack of agreement on how to phase out fossil fuels. The US is not present.  

LyrArc Article Gist
Uruguay, Ghana and Germany exit. South Korea and Portugal advance after a 90th minute injury time goal by South Korea. Brazil loses to Cameroon but advances. World Cup soccer with surprises.

LyrArc Article Gist
Mexico reports 1092 deaths from coronavirus. Mexico has 101,000 cases and 11,729 deaths, a death rate of over 10% of cases. Brazil passes 600,000 cases only 4 days after passing 500,000.

Germany is implementing a 130 billion euro package to revive the economy. Measures include temporarily reducing VAT from 19% to 16%, giving 300 euro payment for each child. Incentives to buy new cars, and relief for municipalities with high debt are also included. This is on top of 1.1 trillion euro rescue package in March. To fund this effort Germany approved new borrowing and disregarded the deficit rules.

LyrArc Article Gist
Former Brazil president Lula da Silva is questioned by prosecutors on March 3, 2016 in the investigation into corrruption at Petrobras. Federal police detained Mr da Silva, and police with auditors searched offices of Mr. da Silva in Sao Paulo.

LyrArc Article Gist
World leaders at COP26 in Glasgow 2021 agree to pledge that they will end deforestation by 2030. This includes countries with large forest areas such as Russia, Brazil and Indonesia, and countries in Africa. Forests act like a carbon sink absorbing carbon dioxide from the atmosphere. About one third of global emissions are absorbed in this way.

LyrArc Article Gist
Of the $17 billion in writeoffs by Petrobras for overvalued assets and bribe payments, about $2.1 billion is for bribe payments. This is affecting public confidence in the government, and exposing the weak links between Petrobras and the government in Brazil.

LyrArc Article Gist
A waning boom and lower growth rates in Brazil, and improving economic prospects for Mexico- diverging emerging markets and policy mix in 2013.

LyrArc Article Gist
With only 8% of the world's population Latin America has a third of the world's murders. Cities such as Acapulco once a tourist resort in Mexico are now seeing 953 violent deaths out of a population of 800,000. Daily tally for Brazil, Mexico, Central America and other countries in Latin America is 400 murder deaths and yearly 145,000 dead. One in four happens in Brazil, Mexico, Columbia and Venezuela. Mexico 31,174, Brazil 63,808. In China according to the UN it was 8,634. For European Union 5,351.

 

LyrArc Article Gist
The Brazilian economy is growing too fast, and this pace not only won't be sustained, but it has signs of serious trouble ahead. The Brazilian economy grew at an estimated annualized pace of 10% in the last 6 months and generated 962,000 jobs between Jan-April of 2010. Growth in 2010 is expected to be 7%. The jump in growth is partly the result of the stimulus measures of the Lula government. But a consensus of experts is that Brazil still saves too little, has not invested enough in infrastructure,and its economy has the potential of 5% sustainable growth each year. The central bank has increased interest rates - increase of 0.75% in April 2010, and economists in Brazil think the rate will go up to 13% in 2011. About $10 billion in cuts in spending have been announced but they are cuts to an already growing budget approved by Congress, so in reality it will only slow the increase in spending. Public debt is at 42.7% of GDP. Real interest rates have fallen from close to 20% in 2003 to between 5-10%. Costs per unit of labor are increasing at about half the rate of real wages according to a finance official. The National Development Bank or BNDES played a role in helping the economy with subsidized loans when the financial markets ran into trouble. It has expanded lending by 50%, with money from the Treasury of 180 billion reais. Some of the measures of the Lula government has reduced the skewed income distribution Brazil, and in doing so has increased consumer demand. Meeting high consumer demand, and meeting the need for commodities like soyabeans and metals from China, has boosted growth in Brazil to twice the sustainable rate and it is now at a par with China and India. But this places Brazil too dependent on the boom in Chinese demand, especially as the stimulus in China slows and the property bubble threatens China's economy. See links to China. A new President after the upcoming Presidential election will have to tackle the high interest rates in 2011, lower commodity prices, and the need for better infrastructure, and make the adjustment to a sustainable pace of growth....

LyrArc Article Gist
On October 6, 2008 the Brazilian real and the Mexican peso plunged. Mexico had to spend 10% of its foreign reserves in a few hours to prop upthe peso. It started with some foreign investors selling latin american assets to cover losses at home. The peso's slide increased with theunwinding of derivative contracts of Mexican companies. For Brazil the fall in commodity prices led to weakening of the real and derivative contracts unwinding worsened things. Forecasters expected to see growth of 4.5% in Brazil and 3% in Mexico, now this will be lowered by 1.5%.

LyrArc Article Gist
This editorial in the Economist says Brazilians deserve a chance to vote in a new general election for a new government that will tackle problems- including overspending that hurts growth by increasing debt, and the deep seated corruption in the political system. But knowing the history of this parliament and the political parties it says this is unlikely. Brazil will be left to deal with the problems under a weak government that does not have the confidence of voters to take needed action. Eventually an election will occur and voters will have an opportunity to choose a new government. Voters should grasp that opportunity to opt for better governance.

LyrArc Article Gist
The pandemic has affected Brazil, and Peru, Ecuador, the worst in Latin America. Countries where there was a lack of funding for public health and no consensus on how to tackle the crisis such as Brazil have done worse. Brazil has 11 deaths per 100,000 people compared to just 1.0 for Argentina. Chile with a political crisis and months of protests has no consensus in the country. It has done worse with 4 deaths per thousand and 95% of intensive care beds in the country taken, leaving hospitals overburdened and in stressful conditions. 

In Argentina the lockdown has been extended till June 7 and there appears to be a consensus on the government's approach to the crisis. Mexico under president Obrador decided to reopen earlier and now faces more coronavirus cases. Reopening the economy so that people in the informal economy could provide for their families was a priority for president Obrador. 

LyrArc Article Gist
Peru is one more example of how the corruption scandals surrounding Brazil's construction firm Odebrecht is affecting other countries in Latin America. A former president Alan Garcia was found dead having shot himself to prevent arrest by police in Lima, Peru. Alan Garcia was one of 4 Peruvian presidents involved in a vast Odebrecht scandal involving construction contracts, alongside Pablo Kuczynski, Ollanta Humala, Alejandro Toledo.

A judge in Lima ordered Kuczynski be on preventive custody in a money laundering investigation. PPK or Kuczynski led Peru until 2016 until resigning in March 2018 after moves to impeach him over links to Oderecht. Garcia served as president for 2 terms 1985-1990, and 2006- 2011. In Brazil the Odebrecht scandal and the scandal in oil company Petrobras led to a change in government after elections that led to a win by Mr Bolsonaro over the ruling Workers party that governed Brazil for over a decade.

LyrArc Article Gist
The problems Brazil faces with a sea of liquidity from developed countries with low interest rates going to emerging market countries with higher interest rates. Brazil is taking steps including a recent cut in interest rates to stem the flow. But interest rates at 12% are still too high not to attract business people in the carrying trade who borrow at low rates in the U.S. and Europe and invest the money in Brazil. The foreign direct investment has also increased. The result is an artificially overvalued currency- by as much as 36% since Jan 1, 2009 according to analysts- which hurts exporters and job creation in Brazil, as it becomes cheaper to import products than manufacture at home. Workers from VW recently protested in Sao Paulo as imports of cars are up significantly and there is a fear of job reduction at VW plants in Brazil. Brazil's automakers association estimate is for car imports to make up 25% of all cars sold in Brazil in 2011. This compares with 5% of cars sold being imported in 2005. It also shows up in production statistics. Brazilian industrial production declined by 1.6% in June 2011 from May. The cost of inputs are increasing rapidly for labor, raw materials, transportation, making Brazil a costly place to do business. The cost of living is now higher in Sao Paulo than in New York city. Cynthia Benedetto, the CFO of Embraer, a large Brazilian aircraft maker, says she always thought since she was a little girl that Brazil was the place of the future. But its deceptive now that the future is here, because this euphoria of progress could be shortlived. Embraer is investing in technology to reduce labor costs and is opening factories overseas. Bombardier, one of Embraer's competitors from Canada recently announced plans to build a manufacturing plant in Mexico. Brazilian president Rousseff is aware of this, and told Latin American leaders in Lima, Peru: "we have to defend ourselves against this immense, fantastic, extraordinary sea of liquidity that finds its way to our economies in search of returns that it can't find in its own." At the same time Rousseff has election promises to fulfill that require larger spending and for which the capital inflows are convenient but could prove erratic- for social welfare projects, and for infrastructure spending in advance of the Olympics. Turkey is seeing a similiar situation with booming consumer credit sustained by capital inflows even as its manufacturing competitiveness has remained weak. ...