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  • #138372

    Max
    Member

    I have been looking, but have not found much discussion about the valuation of the Real against other currencies, in my case the GBP.
    Does anyone have any thoughts? Today it is sitting at 2.77 Reals to the GBP.
    Can it get much worse than this? The UK is in terrible shape with interest rates at around 0.5%, while Basil is sitting on some of the highest rates on offer with a booming economy. So when you think about it, if the pound is still swinging haymakers at 2.77 under these circumstances, it must only get better from here, must it not?
    It reminds me of the Monty Python skit from The Holy Grail when the chap has all his arms and legs chopped off but still insists on fighting, asking if that’s all you’ve got!
    If the Brits elect a new government in May, this should see the beginning of an improvement in the exchange. On the other hand, a hung parliament will be disastrous, as will be a downgrading in the UK’s credit rating, and both scenarios are possible.
    I would be interested to know what anyone has to say on the exchange rate and where they believe it is heading. Is now just the most stupid time ever to be investing in Brasil with current rates for the GBP, the Euro and the USD?
    For instance, buying a house now for 277K £100,000 would require a resale of 360K at a rate of 3.5 to the GBP just to get your money back after local taxes, meaning the house has to increase in value by 30% just to break even, assuming of course those exchange rates.
    So; getting back to where I started, if the GBP is still managing 2.77 (and often going back above 2.85) with everything stacked this hard against it, then a rate of 3.5 and beyond is very much within the realms of possibility, maybe even within this year.
    If that holds true, and to answer my own question, now would not seem to be the right time to be investing in residential property in Brasil, if your money is coming in from abroad. I am very happy for others who know about these things to tell me why I am wrong. Many thanks.

  • #138373

    irishvan
    Member

    My two cents: I think the rate will be going back up shortly. Could be an interesting election soon in Brazil..and even with that, the country itself needs a better rate for exports. I personally think it will soon begin to creep up and hover around 2.25 to the US dollar, different from the 1.75 now. I would disagree with holding off on real estate investing. I have never believed that you don’t buy/invest because of an exchange rate. You look at the value of the property in its own currency, not what it takes to buy it in yours. While it does make a difference to the buyer on a personal level – the value of the property is established and rises because of its location, not because of the exchange rate. A buy is a buy because of its local price, not because of the rate-that could be an added bonus and is beyone your control….

  • #138374

    celso
    Member

    [QUOTE=MovingSoon]My two cents:

    I think the rate will be going back up shortly. Could be an interesting election soon in Brazil..and even with that, the country itself needs a better rate for exports. I personally think it will soon begin to creep up and hover around 2.25 to the US dollar, different from the 1.75 now.
    I would disagree with holding off on real estate investing. I have never believed that you don’t buy/invest because of an exchange rate. You look at the value of the property in its own currency, not what it takes to buy it in yours. While it does make a difference to the buyer on a personal level – the value of the property is established and rises because of its location, not because of the exchange rate.
    A buy is a buy because of its local price, not because of the rate-that could be an added bonus and is beyone your control….

    [/QUOTE]
    I agree that the Real is way overvalued. When the US starts to move interest rates upward, the carry over trades will implode and the real will run back to 2.80 in about a month.
    About real estate. If you have a place in mind that you love, do the math. Even with a screwed up exchange rate there are always some bargains to be had.
    Otherwise be patient. The real will implode and you will get a much better exchange rate a year or two from now.
    Brazil has a gigantic internal debt at high interest rates and and a long list of other issues that will pull down the real.

  • #138381

    micko
    Member

    [QUOTE=Richard V]For instance, buying a house now for 277K £100,000 would require a resale of 360K at a rate of 3.5 to the GBP just to get your money back after local taxes, meaning the house has to increase in value by 30% just to break even, assuming of course those exchange rates. [/QUOTE]
    I don’t understand this. I think it costs ~4-7% to buy a house. Look herefor example.
    I would say look for a house that you like that is a good deal then buy it. You never know what new crazy law they are going to pass here. The BC was looking to force the exchange rate back up to help exporters but recently I read they were planning to zero the import duties on insumos(consumables) used by exporters to help their situation.
    Best Luck!!!

  • #138382

    aagrin
    Member

    Its a very tricky position to be in Richard And I’m in the same boat of not knowing if to buy now or wait.
    Being in Rio the Prices are going up all the time “it feels like” and its hard to know if to take a hit on the crapy exchange rate would be a good Idea or not.
    My heart is telling me to buy… but my head is saying wait …
    Lets see whats going to happen back in blighty after the election… I’ll give it till then.
    Fingers crossed it doesn’t drop any more because things already are very expense Confused
    tomjo2010-01-10 13:10:50

  • #138385

    Max
    Member

    The hypothetical figures I used are an illustration of what happens if you buy when the Real is very high, and what you have to sell at if it drops in value, which likely it will.
    So the way I see it, an investment of R$ 277K now requires a sell price of at least R$ 360K to break even on possible exchange rate fluctuations. This is an increase of 30%. In the time it will take for a house to appreciate by 30% in Brasil, you have to think about what the rate might be at around that time, and I think that in 5-6 years from now, the Real will not be valued at its current rate, not because the Brasilian economy is over cooked (although it may well be), but because I think the UK (and US) economy will improve, and if the GBP can hold at 2.77 now when its on its knees, then 3.5 is in the offing with any decent signs of improvement.
    If you want to take your money back out of Brasil when you sell, then the buy and sell exchange rates are very relevant I would say, because it completely effects your return. That’s at least how it appears to me, but I am no economist, just a fella trying to make some sense of it all.

  • #138392

    Crybeaddy
    Member

    [QUOTE=MovingSoon] I think the rate will be going back up shortly. Could be an interesting election soon in Brazil..and even with that, the country itself needs a better rate for exports. I personally think it will soon begin to creep up and hover around 2.25 to the US dollar, different from the 1.75 now. [/QUOTE] It could be yes, but it could be no. I do not think it will be dependent on the election (of the president) this time. It was, 8 years ago, when Lula got elected and foreign investers were afraid of nationalizations, and withdrew their investments. The US is an important trade partner, but certainly not the only one. Be aware of the fact that the exchange rate against the Euro did not change much for several years (from about 3.00 to about 2,50 now). It was the USD that fell, much more than the BRL rose.

  • #138427

    I remmember when it was nearly 6 Reais to ¬£1 Pound about 8 to 10 yrs ago. I used to work in the U.K. and send money back here…oh the joy sending nearly $10,000 Reais back to my wife every month ..she thought I was some sort of criminal…LOL. Would love to see it get back to at least $3,5 to $1 POUND, would be happy with that as I still work in Europe and earn pounds when I go back.

  • #138440

    majazac
    Member

    This has been covered in other discussions, and I’ll mention some points again…..Brazil is heavily dependent on commodity exports (which are priced in USD), and high interest rates which are two of the main reasons behind the real’s drive. USD, GBP and EUR interest rates will not become investment attractive for a long, long, while – why – because high interest rates mean paying off a mortgage becomes more difficult, a threat to default, and a repeat of the banking crisis just experienced. If Brazil were to lower their interest rates that would help the USD/GBP v BRL rate, but of course would mean more consumer spending and higher inflation….wihch is problem for Brazil’s Finance Minister to sort out, and thankfully not me. I agree with MS – real estate is based on local mkt conditions, and IMO still represents good value. A 1bed apt in Copacabana last year cost me R$225,000 but brings in $r1500 monthly in rent…or 8% yield.

  • #138447

    Max
    Member

    I think that Brasil will take action to devalue its currency because the current valuation is not helping it’s main earners, exports and tourism, while it is making foreign investment much more expensive. Brasil will also have to keep the lid on inflation. I can’t imagine that the Brasilian Governments money boffins are altogether happy with the current state of play.
    Interest rates will begin to rise in Britain soon after the election if the Tories are elected, because the Government will have five years before it has to go to the polls again, and hard calls will have to be made early on. As mentioned, an exchange of 2.77 when things are this hard up against the GBP is pretty amazing really.
    So I do see a swing back to something above 3.0 within six months, and if it moves from both ends, meaning Brasil takes steps to devalue the Real, it could quickly get to 3.5.
    Apologies that this is all UK specific, and mainly of interest to anybody who, like me, has their savings in GBP, are is looking to buy a house in Brasil, but will want (need) to sell that house again, and repatriate their funds in 5-6 years time.
    In that situation, I think the figures I outlined above are mathematically correct, according to the assumptions, and that purchasing now at 2.77 and selling at 3.5 or above, will require at least a 30% appreciation of your house to break even on the original purchase price.
    I don’t think it will go back to rates of 5.0 and above within the next five years (but who knows) although I do see 3.5 as a feasible mark within 12 months, and I can see it staying around that mark over the next few years, plus or minus 5%, if the UK is able to claw its way back out of debt without hitting another mortgage or employment crisis.
    Sorry for boring some of you, but I think that my current POV is of significance for any readers who are thinking of spending their GBP’s now, but who also want (need) to get out again in the relatively short term of 5-6 years. If you are here for the long haul it matters less.
    As always, I welcome other views, because all I seek is to try and form a better understanding, to help me make my decisions.

  • #138457

    majazac
    Member

    Richard, What you write makes sense in the real-world – I live and work in the UK but one thing I’ve learnt is never to assume that exchange rates have bottomed out and that there is a ‘real-value’ zone that they will return to. The Bank of England have stated that there won’t be any rate rises until 4th qtr this year….and that will depend on what happens this year to the economy. A weak ¬£ also atttracts investment to the UK – we’ll see what measures Brazil takes to devalue, if they do.

  • #138464

    hoganti
    Member

    so when I come to Brazil in a month….don’t exchange much currency? (USD)
    where is the best place to exchange money? or should i just spend with my debit card?

  • #138465

    celso
    Member

    [QUOTE=hpeak13]so when I come to Brazil in a month….don’t exchange much currency? (USD)
    where is the best place to exchange money? or should i just spend with my debit card?
    [/QUOTE]
    Never exchange money at the airports. Those guys are bandits. All of them.
    In Rio and SP there are money exchanges in many travel agencies that give you a good rate for cash.(Casa de Cambio)
    Up in the NorthEast you can get cash from the ATM machines. Look for the various logos to find an international ATM.

  • #138468

    majazac
    Member

    You’ll get the best rates at an ATM….both CitiBank and HSBC are widespread in the bigger Brazilian cities…

  • #138471

    Finrudd
    Participant

    Regarding exchange – a friend of mine got nearly 2.8 BRL to the GBP in Curitiba, but only 2.57 in Centre 3 in Sao Paulo!
    I am also waiting to see an improvement in the exchange rates before I move any money into Brazil, and can see it happening.
    I think on one of the other threads, someone also cited China’s economy as being fairly important to Brazil. If China starts to implode, then we could see the Real devalue to some extent also.
    I am holding for 3.25 or thereabouts.

  • #138475

    aagrin
    Member

    3.25 whats quite an improvement to be waiting for Mr Rudd,
    I’d be happy with any thing just over 3 really…I got 2.90 in Copacabana last week when changing cash, I always get much better rates here in Rio if I’ve got cash to change… there are a few really good dealers that will give you grate rates…
    How ever this is in Rio and it would not be advisable to take sterling to say the north east or any where out side big city’s as its not likely they would change it for you.
    As for using ATM’s I’ve been here almost a year and haven’t used my UK cards once in that time, you get a better rate it you wire the money in to the country…but you will need a bank account to send it to, so it’s not practical for no-residence.

  • #138502

    majazac
    Member

    I’d also be happy with 3+…I’m closing next month on a house and it makes a big, big difference…….

  • #138968

    dgish
    Member

    [QUOTE=Richard V]I think that Brasil will take action to devalue its currency because the current valuation is not helping it’s main earners, exports and tourism, while it is making foreign investment much more expensive. Brasil will also have to keep the lid on inflation. I can’t imagine that the Brasilian Governments money boffins are altogether happy with the current state of play.

    Interest rates will begin to rise in Britain soon after the election if the Tories are elected, because the Government will have five years before it has to go to the polls again, and hard calls will have to be made early on. As mentioned, an exchange of 2.77 when things are this hard up against the GBP is pretty amazing really.

    So I do see a swing back to something above 3.0 within six months, and if it moves from both ends, meaning Brasil takes steps to devalue the Real, it could quickly get to 3.5.

    Apologies that this is all UK specific, and mainly of interest to anybody who, like me, has their savings in GBP, are is looking to buy a house in Brasil, but will want (need) to sell that house again, and repatriate their funds in 5-6 years time.

    In that situation, I think the figures I outlined above are mathematically correct, according to the assumptions, and that purchasing now at 2.77 and selling at 3.5 or above, will require at least a 30% appreciation of your house to break even on the original purchase price.

    I don’t think it will go back to rates of 5.0 and above within the next five years (but who knows) although I do see 3.5 as a feasible mark within 12 months, and I can see it staying around that mark over the next few years, plus or minus 5%, if the UK is able to claw its way back out of debt without hitting another mortgage or employment crisis.

    Sorry for boring some of you, but I think that my current POV is of significance for any readers who are thinking of spending their GBP’s now, but who also want (need) to get out again in the relatively short term of 5-6 years. If you are here for the long haul it matters less.

    As always, I welcome other views, because all I seek is to try and form a better understanding, to help me make my decisions.[/QUOTE] Hi Richard V, I’m in a similar position to you, moreover I totally agree with you! Buying property in Brazil right now and exchanging GBPs for Reals at a historically ultra low exchange rate doesn’t seem intelligent to me. It is all about timing (buy low, sell high), it would be like investing in the Brazilian stockmarket right now, the BOVESPA has increased by 80% over 12 moths mainly (in my opinion) due to speculation from abroad, people that have never set foot in Brazil (AKA Wallstreet) looking to make a quick buck and jumping on the band wagon. This money could and I predict will be pulled out of Brazil in a heart beat when commodity values (especially hard commodities i.e. metals) start to drop off. Effectively the UK / USA have zero percent base interest rates and very low inflation, equity markets have rallied in 2009 and commodity rich countries such as Brazil have been a speculator’s dream. Inflation will presumably increase in the US and UK, you can’t print money and not have inflation kick in, money clearly looses its value as you print more of it (look at the price of UK index linked GILTS for example, they are pricing in the likelihood of inflation hence the valuations are going up, the smart money knows it is coming). The famous economist Dr. Nouriel Roubini correctly predicted the credit crisis and stockmarket crash. He recently said that the current world wide stock market rally and emerging market rally are one in the same thing and that it is all massively over valued. He is predicting a very large fall at some point in the future. As I said above, Brazil has benefited from a massive rally in commodity prices and as a consequence of this the country is looking like the new band wagon to jump onto for the herd. I’m definitely expecting the Real to depreciate against the GBP and USD in 2010, I can see 1 GBP:3.5 Reals or better. Please see this Financial Times article written by Nouriel Roubini, it will make you feel better. http://www.ft.com/cms/s/0/9a5b3216-c70b-11de-bb6f-00144feab49a.html… A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggers a co-ordinated collapse of all those risky assets ‚Äì equities, commodities, emerging market asset classesand credit instruments….”C1122010-01-18 10:49:17

  • #138970

    majazac
    Member

    One point omitted is that if (like me) considerable time and effort has been spent finding a property which meets all expectations e.g. local price, location, amenities, views, etc to attain that property you have to pay the price within an acceptible period of time, else someone else will buy it and you have to perform the search / offer / exchange process again with no guarantee that you’ll find a similar property again. Also, regardless of how low the rate is, that is the market rate – with all the market makers factoring all knownavailable economic conditions. The unknown is just that – unknown. Not undervaluing Dr Roubini, but anyone can predict a very large fall ‘at some point in the future’ !!Bubbles2010-01-18 11:45:29

  • #138971

    dgish
    Member

    Hi Bubbles, You are absolutely correct with regard to time and effort and I would agree that this is a very important point to make. Yes the Spot rates should in theory price in all currently available information and reflect the most efficient price (i.e. look up: A random walk, CAPM pricing model, Efficient Market Hypothesis et al) however market makers trade on Technical Analysis 99.9% of the time which completely contradicts CAPM. In addition to this, bubbles would not appear in asset valuations if all prices were truly efficient. Uninformed investors and speculators sadly often push prices to irrational levels. To quote Roubini again (from his website): Dr. Nouriel Roubini pointed out that Brazil’s real is overvalued and the country’s economic outlook depends on its capacity to approve structural reforms. There’s too much euphoria about Brazil. There’s probably too much capital inflow to the country. The strengthening of the currency is too strong on the basis of the long-term fundamentals. I’m positive on Brazil, but not as euphoric, Dr. Roubini stated. If there’s an acceleration in reforms, the future is going to be bright. (via Bloomberg, 12/18/09) News Bloomberg Jens Erik Gould and Veronica Navarro Espinosa Roubini Says Brazil Real Overvalued, New Laws Needed (Update2)Also, Goldman Sachs Group declared Brazil’s Real the most overvalued currency in their gauge of currencies citing an overwhelming amount of foreign currency that keeps flowing into the country, despite the government efforts to curb it. Goldman Sachs economist Thomas Stolper notes: after some initial success with capital controls, real appreciation appears to be on the rise again. Additionally. Goldman Sachs notes expansionary policy inconsistencies feeding appreciation pressures. (Bloomberg, 11/25/09) News Bloomberg Paulo Winterstein and Laura Price C1122010-01-18 11:54:17

  • #138981

    majazac
    Member

    C112, I should add that like most others on this site, property purchases in Brazil are more for non-profit reasons ie we love the country and all the things that come with it – so we’ll pay the cost, whatever that may be as long as it’s within a budget. I did actually hedge on the BRL by buying into a UK mining stock (Xstrata) so haven’t lost out as much as I had by doing nothing. I do think that the real will devalue, but personally cannot wait for it to do so as that’s my 30% deposit on a house gone…..

  • #138984

    dgish
    Member

    Well done with the Xstrata hedge, good foresight! Like you said earlier, you have to live somewhere and pay for things such as deposits in life. It is easy to get caught up waiting for things like exchange rates to change. I wish you good luck in Brazil! I’m British and live in Brazil too however after living here for sometime I’m probably more cynical than you these days, I still remember the Real being 1GBP:5R$ LOL

  • #138986

    Max
    Member

    We all have personal reasons to consider regards our timing to invest. For me, it’s not about profit as much as not wanting to take a bath on a very bad rate right now, to one that will likely improve over the next 6-12 months, maybe considerably over the next 3-4 years.
    If you are not here for the long haul, then those exchange rate swings matter a great deal.
    I think the consensus is that the Real is over valued, and that something will have to give, so for mine, I will be holding my GBP’s, and take a wait and see approach.
    Unless you really have found the place you want, and you plan to live here or have a house here for a good length of time, I see no reason to rush.

  • #138994

    dgish
    Member

    [QUOTE=Richard V]We all have personal reasons to consider regards our timing to invest. For me, it’s not about profit as much as not wanting to take a bath on a very bad rate right now, to one that will likely improve over the next 6-12 months, maybe considerably over the next 3-4 years.

    If you are not here for the long haul, then those exchange rate swings matter a great deal.

    I think the consensus is that the Real is over valued, and that something will have to give, so for mine, I will be holding my GBP’s, and take a wait and see approach.

    Unless you really have found the place you want, and you plan to live here or have a house here for a good length of time, I see no reason to rush.[/QUOTE] Agreed. My money is on Dr. Nouriel Roubini (see my previous posts on the last page) and a price correction w.r.t the R$ in 2010.

  • #139036

    majazac
    Member

    I’m in it for the long haul! It took me several viewings and two trips to Brazil to find the place I wanted in the area I wanted (Itanhanga in Barra da Tijuca) and I took a punt on Rio gaining the Olympics for the area to be developed further – the house price was incidental on this.

    I still intend to retain a place in the UK if things go wrong, but as oil and commodities will drive the global economy for some years I can’t see even 4 being hit for some time yet….I can also remember getting 5.8 around 2002…. Bubbles2010-01-19 07:14:21

  • #139317

    dgish
    Member

    [QUOTE=Bubbles]

    I’m in it for the long haul! It took me several viewings and two trips to Brazil to find the place I wanted in the area I wanted (Itanhanga in Barra da Tijuca) and I took a punt on Rio gaining the Olympics for the area to be developed further – the house price was incidental on this.

    I still intend to retain a place in the UK if things go wrong, but as oil and commodities will drive the global economy for some years I can’t see even 4 being hit for some time yet….I can also remember getting 5.8 around 2002…. [/QUOTE] I’m in for the long haul too, that’s why I tend to drip-feed money into Brazil at favourable exchange rates as I too don’t want to take a bath! However, I appreciate that you have to make a R$ payment now and have little choice in the matter. Richard V is right to wait. Have a look at this chart comparing the British Pound to the Brazilian Real over a 6 year period. The long term running average over this period is much much higher than the ¬£1 : R$2.77 that Richard V was concerned about. It averages out at >> ¬£1 : R$4 (i.e. more than 44% higher than 2.77) Shockedhttp://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Linear&chdeh=0&chdet=1264170311687&chddm=2017641&q=CURRENCY:GBPBRL&ntsp=0C1122010-01-22 09:45:10

  • #139320

    majazac
    Member

    The chart is a good indication of what has changed over the 6 years globally economically, politically, etc. The Iraq invasion, huge oil discoveries off Brazil, huge demand for commodities, etc, etc. Not sure it will reverse, or partially reverse (50%) over the next 6 years to be honest….. Bubbles2010-01-22 10:09:33

  • #139321

    Max
    Member

    Thanks for all the info you have sent through during the course of this discussion C112. I posted this topic because I was not finding the kind of info that you have made available, and I think it has been excellent information.
    How we interpret the information is personal, but my observation since moving to Brasil eight months ago is that the Real and the GBP sure dance fast, and can move rapidly for and against.
    We now have the GBP back to 2.93 (it was at 2.71 when I posted this topic only a few weeks ago), and this swing is without any move from Brasil to dampen the rate from their end, and this will surely have to come, while the UK is showing small signs of improvement, with a new conservative government in the offing who will have no choice but to tackle debt. Personally, I see the rate at above 3.5 some time over the second half of this year.
    So a move from 2.71 to my hypotheticl 3.5 menas that a R$300K investment at the time of my original post would have cost 110K GBP. If it does move to 3.5, that same investment costs 85K GBP. I would say that a 25K GBP upside makes it worth the wait if you are in a position to buy some time.

  • #139323

    majazac
    Member

    RV I agree that you should wait…but disagree that 3.5 will be hit! Rates will always go to extreme ranges before the mkt realises and corrects itself…. Additionally, property prices may well increase which would dampen any GBP strength… Bubbles2010-01-22 10:16:04

  • #139326

    Max
    Member

    Mine is just my personal view bubbles. This topic should present a lot of info for anyone who is looking to invest now or hold, and your views will be help them to make their call, just as mine or C112’s will.
    For what its worth, house prices may appreciate over the next 11 months, but they do not move anywhere near as fast or as dramatically as exchange rates, and these exchange rate moves add or strip value very rapidly. So I will be hoping to see my hypothetical model come through, and save myself 25K GBP. Even at 3.2 I will save near on 17K from 2.71

  • #139328

    majazac
    Member

    RV, I hope you, I and everyone else saves as much as possible too!

  • #139400

    Gotta agree with those that advise to think in Reais, not in “home” currency. Waiting in Real Estate in a market that is booming all over the country is simply saying you are fine paying 20% more next year or more, (where I live 100% a year the last 5 in many cases with raw land). So you get a bit better rate MAYBE but have to pay way more so what have you gained? And it could be worse for many years to come so you have missed out worrying about exchange rates instead of thinking asset appreciation in Reais. Onward, PD

  • #139614

    dgish
    Member

    Since Richard V posted this, the R$ has moved from 1:2.77 to 1:2.98 i.e. the Real has depreciated against the British currency by about 7.5%. Actually the Real has moved by 7.5% in the last 3 weeks!!! In otherwords so far he has saved himself 7.5%, I would say that was a smart move wouldn’t you? I don’t mean to sound cheeky, however, if the area that you live in continues to increase in value by 100% per annum then a given property/land valued at R$100,000 today will be worth: R$ 3,200,000 in 5 years time i.e. 100000*(1+1)^5 R$ 102,400,000 in 10 years time i.e. 100000*(1+1)^10 R$ 104,857,600,000 in 20 years time i.e. 100000*(1+1)^20 If your area has been increasing in value so rapidly then you will see a massive correction at some point as this clearly isn’t economically sustainable either that or there are Gold deposits sitting underneath the ground LOL. The only places that prices increase this rapidly are in the likes of Zimbabwe where hyper inflation is taking place or indeed Brazil’s neighbour in the 1980s (Argentina) etc. Don’t forget that the average wage in Brazil is still less than ¬£4000 per year and that 1 in 8 people are illiterate Confused. Brazil has a long history of high inflation and economic turmoil. Many of the very rich Brazilians have been getting their money out while the going has been good hence the reason why there are adverts in the high brow magazine for $12 million dollar penthouses in New York and so on I suspect. Also, check out the number of private Brazilian banks based offshore!! C1122010-01-26 13:59:39

  • #139651

    majazac
    Member

    C112 – 7.5% is a great saving, but remember that the process to negotiate a house price, and completion is usually about 3 months. So you could negotiate today for a house priced say $900,000 which at 2.98 will cost roughly ¬£300,000 but the rate in 3 months may go back to 2.90 or 2.85, or even up to 3.1, 3.2 – no-one knows! The point PD makes is that any gain made in ex. rate differences would be partiallly offset at least by a natural rise in property or land prices…. 10% is a feasible annual rise here. Bubbles2010-01-27 06:58:38

  • #139662

    aagrin
    Member

    Bubbles why didn’t you move the money over on a good day then start looking for a house to buy? or was it that you don’t have a bank account here yet.

  • #139663

    majazac
    Member

    Exactly – no Bank account. I found the house I wanted last year…negotiated on a price in Oct 09 with completion of next month. I’ve already sent 30% as a deposit….the recent surge, if it maintains momentum or just keeps as is, will help a lot.

  • #139713

    dgish
    Member

    [QUOTE=Bubbles]C112 – 7.5% is a great saving, but remember that the process to negotiate a house price, and completion is usually about 3 months. So you could negotiate today for a house priced say $900,000 which at 2.98 will cost roughly ¬£300,000 but the rate in 3 months may go back to 2.90 or 2.85, or even up to 3.1, 3.2 – no-one knows! The point PD makes is that any gain made in ex. rate differences would be partiallly offset at least by a natural rise in property or land prices…. 10% is a feasible annual rise here. [/QUOTE]

    I fortunately managed to setup a bank account in Brazil and then transfer the money over before agreeing to buy a property, that way I knew for sure what my budget was in R$ and eliminated any currency risks. Having said that, as a Brit I do know how incredibly difficult it is to get a bank setup account here so I can see why you have fallen into this predicament!!! It’s all about knowing the right chaps here in the banks I’m afraid… C1122010-01-27 18:33:13

  • #139718

    majazac
    Member

    Yes, glad it worked out for you…..I’ve been using TransFast to send money to the sellers account for the deposit, and I found their rates and delivery to be excellent….so will also use them for the principal.

  • #139719

    micko
    Member

    Bubbles – If you use Transfast does the money get registered with Banco Central as a direct foreign investment? This helps if you decide to repatriate the funds. This makes a difference to some people.

  • #139721

    aagrin
    Member

    Good question Dunga I’m not sure LCC or Transfast registered the money with Banco Central as a direct foreign investment or not ether.

  • #139725

    majazac
    Member

    Dunga, I don’t think it does. TransFast do require a copy of the sale contract for Compliance as the amount is significant ie over $R10,000. In my case I don’t intend to repatriate but good point. It also depends on the cost of the property. If you sell up for $R200,000 it wouldn’t be difficult to siphon back the funds in smaller amounts…but anything over that would be more difficult. Another option of course is to sell to another non-resident and settle outside of Brazil – that’s how I bought my two apts. Bubbles2010-01-28 04:19:52

  • #139733

    micko
    Member

    Bubbles – Mark this subject ‘Don’t do as I do, do as I say’ but I have seen a lot of people discussing R$300-400k properties (say in São Paulo or beach front) and have followed more than a couple of posters who have left Brazil after a year or two and the realities set in. One, well-spoken and organized, sold his SP apartment and easily repatriated the funds, doing quite well for himself, due to the currency fluctuation in the larger part. Others have been quiet on the subject.

  • #139737

    I would second Dunga’s implication.My friend came to Brazil,got married to the “love of his life” and then 4 years later is contemplating divorce and running around in circles trying to figure out how to repatriate the funds he spent on 2 expensive apartments(the purchase money was not registered with Central Bank).There are ways around it of course but one should never think that Brazil is forever(or any other country you move to).Things change,health issues arise,or you simply discover another place you like better.

  • #139746

    majazac
    Member

    I agree with both above posts….my case is different as I’ve spent considerable time in Brazil so am aware of the ‘realities’. I was lucky enough in prior jobs to have spent a lot of time in different places globally, and whilst there are other places I would certainly consider retiring to (San Francisco, Italy, Singapore), Brazil is my primary choice. I intend to split my time 50:50 UK/Brazil, and am fully aware of getting married and the potential headache that could cause down the line, but if I felt it’s the right person, that’s the risk I’d take…..Bubbles2010-01-28 07:28:48

  • #139752

    micko
    Member

    I consider Brazil to be like a black hole … or a sailboat, a hole in the ocean you drop money into …

  • #139760

    majazac
    Member

    Depends on who you know / trust. I’ve paid ‘gringo’ tax in the past but consider myself wise enough now with enough genuine friends and contacts in Brazil to see through such schemes…

    Bubbles2010-01-28 08:32:01

  • #139797

    dgish
    Member

    I know for sure that MoneyCorpin London do indeed register money sent from the UK to Brazil with the Bank of Brazil (Banco Do Brasil). If you have to get your momey out of Brazil then this will be critical UNLESS you have a “private” bank account here.

  • #139801

    [QUOTE=C112]I know for sure that MoneyCorpin London do indeed register money sent from the UK to Brazil with the Bank of Brazil (Banco Do Brasil).

    If you have to get your momey out of Brazil then this will be critical UNLESS you have a “private” bank account here.

    [/QUOTE]
    I presume you meant to say “Banco Central do Brasil” which is a separate entity from Banco Do Brasil.

  • #139803

    aagrin
    Member

    [QUOTE=C112]I know for sure that MoneyCorpin London do indeed register money sent from the UK to Brazil with the Bank of Brazil (Banco Do Brasil).

    If you have to get your money out of Brazil then this will be critical UNLESS you have a “private” bank account here.

    [/QUOTE]
    When you say “private” bank account here you mean with the likes of HSBC?
    How will this help matters?
    tomjo2010-01-28 16:41:10

  • #139814

    Deleted User
    Moderator

    If a country’s currency exchange rate depends upon the health of its economy then I damned if I know why the US dollar or the UK’s pound have managed to hang in there for as long as they have. Both countries are swamped in debt not only because of the consequences of imprudent financial services [services?] but because of reckless public spending; meanwhile both are on negative credit watch. Sure, both economies are noted for their resilience however, it’s difficult to imagine how these countries can extricate themselves in an environment of ever increasing competitive global markets without allowing inflation to ease their massive debts.

    I sometimes get the impression that FX traders live in a dark tunnel while they play their manipulative see-saw games. Should Ben Bernanke blow his nose the dollar drops a point, and if Darling utters a single word the pound blows its nose. We’re all in the dark here.

    The American administration has a further three years in office to pursue its progressive suicidal policies and therefore no hope for prudence is in the offing. Although a change of government is likely in the UK, [whisper to me the difference between the parties] an immediate reversal of the country’s downward spiral is unlikely because of the fear that a cut in spending or an end to quantitative easing [lovely term] would put a halt to recovery. The world is changing because the first world’s home ground is no longer competitive. Or maybe I’m just nervous about losing my bet that we’ll see R$1.35 dollar? If I lose it’ll cost me an expensive lunch! Ouch

  • #139817

    majazac
    Member

    yes, it’s completely illogical. The US and UK are seen as ‘safe havens’ in times of financial crisis so assets tend to be pulled out of ‘risky’ countries or emerging mkts which Brazil falls into. Bubbles2010-01-29 04:14:03

  • #139818

    majazac
    Member

    [QUOTE=tomjo] [QUOTE=C112]I know for sure that MoneyCorpin London do indeed register money sent from the UK to Brazil with the Bank of Brazil (Banco Do Brasil). If you have to get your money out of Brazil then this will be critical UNLESS you have a “private” bank account here. [/QUOTE]

    When you say “private” bank account here you mean with the likes of HSBC?
    How will this help matters?
    [/QUOTE] With HSBC Premier you have the ability to perform online ‘global transfers’ between international accounts. So you sell your house, the funds go into your HSBC Brazil account, and you transfer online to your HSBC UK or US account. Would be interesting to know if anyone has done this?

  • #139825

    Finrudd
    Participant

    Hi Bubbles – the HSBC Global Transfers are fine for small amounts, but you would need to get your account manager to raise your daily transaction limit to an amount the would cover the funds, and I don’t think will let you go over a certain amount.
    I have been in to see HSBC Brasil regarding a transfer into the country, and they do it separately from the main account – reason being that they can get you a better forex rate, and they also need proof of where the money has come from. In my case that is a letter from my employees stating my salary, and how long I have worked there, so I can justify my savings.
    The forex rate is never going to be great doing it this way, but it’s better than through the global transfers method – you can also hold the money in Brasil in GBP and choose when you make the final transfer into BRL. I am not sure how long you can leave it in limbo for, but the man at HSBC implied you can leave it there for a week, before giving them the final nod.

  • #139838

    majazac
    Member

    Fin – hi, Yes, I wasn’t sure how the online transfers would work in Brazil, or if there was a daily online transfer limit between a BRL account and an non-BRL account. At present there’s no limit to transferring from my UAE account to my UK account, but when I went below the Premier limit I couldn’t transfer and had no prior warning… I know that there’s no linking between a US CitiBank account and a BRL Citibank account though, so as far as I am aware, this is limited to HSBC. Bubbles2010-01-29 12:31:34

  • #139842

    Finrudd
    Participant

    for small amounts it works well – it does still go through the same clearing process, but it’s transparent to the end user – I can’t recall how fast it is, but I have a feeling that as long as you are below whatever the max amount is – and it’s during both banks opening hours, it is credited almost instantly from UK to Brazil. Certainly not as fast as between HSBC UK and other countries, but pretty good.
    Let’s hope the current rally of GBP against BRL continues, as like you I am also waiting to get some Sterling into Brazil, mostly to avoid risks of a further weakening pound, but also to get invested in Brazil, where even a standard Poupanca account gives better returns that anything available in the UK (with a comparable risk rating).

  • #139846

    All foreign currency transactions must go thru the Banco Central do Brasil so I fail to see how transferring from HSBC here to HSBC in another country could avoid the restrictions that are in place.Perhaps you can avoid the documentation for sums under R$10,000 that is normally required however transferring R$9,000 per day 5 days in a row will probably raise some Red Flags at someones computer at the Central Bank.

  • #139851

    Deleted User
    Moderator

    [QUOTE=finrudd]

    …Let’s hope the current rally of GBP against BRL continues, as like you I am also waiting to get some Sterling into Brazil, mostly to avoid risks of a further weakening pound, but also to get invested in Brazil, where even a standard Poupanca account gives better returns that anything available in the UK (with a comparable risk rating).[/QUOTE]

    I know that the credit agencies are necessary however their recent record is one of catastrophic failure. Untold millions of investors trusted them for objective evaluation and but they shattered this bond of trust and contributed greatly to the financial meltdown. The money that financed the housing bubble was gleaned through dubious financial products that carried AAA ratings when in reality they weren’t worth the paper they were written on. Along with this, governments didn’t see this express train coming at full speed toward the buffers while its siren screamed the warnings that regulators ignored and did nothing to protect the public.

    Today everyone is looking for a scapegoat and the banks are conveniently in the crosshairs. Whatever the final outcome, nobody will go to jail despite the thousands that have had their lives completely ruined, the taxpayer lumbered with the cost, massive unemployment and the future prosperity of a generation placed in jeopardy. It would be immensely satisfying to see a few regulators, credit agents and politicians taken outside and whipped followed by a lead weight permanently fixed to their scrotum. Angry

  • #139853

    dgish
    Member

    [QUOTE=Segundavida] [QUOTE=C112]I know for sure that MoneyCorpin London do indeed register money sent from the UK to Brazil with the Bank of Brazil (Banco Do Brasil). If you have to get your momey out of Brazil then this will be critical UNLESS you have a “private” bank account here. [/QUOTE]
    I presume you meant to say “Banco Central do Brasil” which is a separate entity from Banco Do Brasil.
    [/QUOTE] Yes sorry I ment to say “Banco Central do Brasil”, well spotted.

  • #139854

    dgish
    Member

    [QUOTE=tomjo] [QUOTE=C112]I know for sure that MoneyCorpin London do indeed register money sent from the UK to Brazil with the Bank of Brazil (Banco Do Brasil). If you have to get your money out of Brazil then this will be critical UNLESS you have a “private” bank account here. [/QUOTE]

    When you say “private” bank account here you mean with the likes of HSBC?
    How will this help matters?
    [/QUOTE] No. Brazilian “Private” Bank accounts benefit from the secrecy laws in place in Brazil, HSBC Premier does not! This is Brazil where this is one rule for the very rich and another rule for everybody else…

  • #139858

    micko
    Member

    [QUOTE=C112][QUOTE=tomjo] When you say “private” bank account here you mean with the likes of HSBC?
    How will this help matters?
    [/QUOTE]

    No. Brazilian “Private” Bank accounts benefit from the secrecy laws in place in Brazil, HSBC Premier does not! This is Brazil where this is one rule for the very rich and another rule for everybody else…

    [/QUOTE]Siglio bancario (the banking privacy law) covers a wide variety of financial applications and transactions but is actually pretty weak protection if one is involved in any illegal activities unless expensive lawyering and political pressure is brought to bear. I don’t think that you will find that anything called a ‘private account’ is treated any differently by the BC than a standard account and is just a gimmick on the service side of the banking industry.

  • #140008

    majazac
    Member

    I just checked with TransFast – they do have an option to register the money via the Central Bank, but this is only available with their 24hr service where the rates are much lower. Also, the money (as per any money coming in via the Central Bank) will be taxed from the recipient – my guess is the standard 0.38% for foreign ccy. They have another option which uses their more favourable 48hr rate which just requires a sale of contract (for Compliance) and it is up to the recipient to declare the money, or not…. Bubbles2010-02-01 08:44:40

  • #140364

    Isos
    Participant

    I have been anxiously watching the currency market for sometime now as well. It seems like every June when I go to Brasil, I find my $ at a low. I am not sure if it is just dumb luck or there is something about that time of the year. With the news today of possible new debts troubles in Europe, I thought the US $ would be up against the Real…($ goes up in Europe trickles over to SA?), in the snap shot below the Real is the only currency the $ did not rise against (again just at the moment of this snap shot). Figures the one I care about it the one not giving me the results I want. Ahh the exchange rate of years ago…….

    Currencies

    Currency U.S. Dollar to Foreign
    Currency ($1= )
    Foreign Currency
    to U.S. Dollars
    Change in
    U.S. Dollars
    Euro 0.7335 1.3633 +0.0048
    Euro vs. U.S. Dollar

    1.3633 Bid:
    1.3635 Ask:
    1.3746 Day High:
    1.3582 Day Low:
    Japanese Yen 89.1800 0.0112 +0.0700
    U.S. Dollar vs. Japanese Yen

    89.1800 Bid:
    89.2000 Ask:
    89.8900 Day High:
    88.7800 Day Low:
    British Pound 0.6408 1.5606 +0.0060
    British Pound vs. U.S. Dollar

    1.5606 Bid:
    1.5608 Ask:
    1.5775 Day High:
    1.5554 Day Low:
    Canadian Dollar 1.0727 0.9322 +0.0002
    U.S. Dollar vs. Canadian Dollar

    1.0727 Bid:
    1.0731 Ask:
    1.0780 Day High:
    1.0639 Day Low:
    Swiss Franc 1.0743 0.9308 +0.0077
    U.S. Dollar vs. Swiss Franc

    1.0743 Bid:
    1.0746 Ask:
    1.0796 Day High:
    1.0642 Day Low:
    Czech Koruna 19.1770 0.0521 +0.0700
    U.S. Dollar vs. Czech Koruna

    19.1770 Bid:
    19.2370 Ask:
    19.2800 Day High:
    18.9450 Day Low:
    Danish Krone 5.4603 0.1831 +0.0388
    U.S. Dollar vs. Danish Krone

    5.4603 Bid:
    5.4604 Ask:
    5.4797 Day High:
    5.4128 Day Low:
    Hong Kong Dollar 7.7703 0.1287 +0.0001
    U.S. Dollar vs. Hong Kong Dollar

    7.7703 Bid:
    7.7708 Ask:
    7.7722 Day High:
    7.7679 Day Low:
    Mexican Peso 13.1900 0.0758 +0.0448
    U.S. Dollar vs. Mexican Peso

    13.1900 Bid:
    13.2020 Ask:
    13.2500 Day High:
    13.0938 Day Low:
    Norwegian Krone 6.0071 0.1665 +0.0461
    U.S. Dollar vs. Norwegian Krone

    6.0071 Bid:
    6.0109 Ask:
    6.0442 Day High:
    5.9439 Day Low:
    Swedish Krona 7.4808 0.1337 +0.0470
    U.S. Dollar vs. Swedish Krona

    7.4808 Bid:
    7.4832 Ask:
    7.5201 Day High:
    7.4135 Day Low:
    Singapore Dollar 1.4226 0.7029 +0.0011
    U.S. Dollar vs. Singapore Dollar

    1.4226 Bid:
    1.4233 Ask:
    1.4239 Day High:
    1.4183 Day Low:
    Brazilian Real 1.8815 0.5315 -0.0050
    U.S. Dollar vs. Brazilian Real

    1.8815 Bid:
    1.8825 Ask:
    1.8925 Day High:
    1.8620 Day Low:
    South African Rand 7.7850 0.1285 +0.1157
    U.S. Dollar vs. South African Rand

    7.7850 Bid:
    7.8000 Ask:
    7.8576 Day High:
    7.6174 Day Low:
    Israeli Shekel 3.7380 0.2675 +0.0150
    U.S. Dollar vs. Israeli Shekel

    3.7380 Bid:
    3.7530 Ask:
    3.7505 Day High:
    3.7203 Day Low:
    Australian Dollar 1.1573 0.8641 +0.0003
    Australian Dollar vs. U.S. Dollar

    0.8641 Bid:
    0.8643 Ask:
    0.8718 Day High:
    0.8574 Day Low:
    New Zealand Dollar 1.4599 0.6850 +0.0040
    New Zealand Dollar vs. U.S. Dollar

    0.6850 Bid:
    0.6854 Ask:
    0.6932 Day High:
    0.6803 Day Low:
    2:56 PM ET 02/05/2010
  • #140539

    Deleted User
    Moderator

    It’s remarkable; all this fuss in the Euro zone amid fears about the Greek economy. What is the Greek economy, the equivalent to a hotdog stand on main-street? Yet the US dollar is seeming unperturbed by the bankruptcy of California; a single State that ranks what, 8thin the global economy? Maybe California falls into the category of too big to fail and in the context of America’s swamp of debt where the word trillions trip off the tongue daily, a few hundred billion to bailout California is neither here nor there. Need more? Just print it or borrow it. The dollar is an international joke yet still regarded as a safe haven. Doesn’t the term bailout originate from sinking boats?

  • #140543

    Isos
    Participant

    [QUOTE=Esprit]

    The dollar is an international joke yet still regarded as a safe haven.

    [/QUOTE]
    Normal0falsefalsefalseMicrosoftInternetExplorer4

    As an American, the debt and sometimes perceived danger thedollar is in can be quiet alarming and leave me to feel unsettled about whatthe future might hold. All good things (or bad things I guess depending on onesview) do come to an end eventually. So it is with the American economy,though I hope that end is far distant yet.
    Because I do not know I ask:
    Is it possible that despite these troubled times the dollar finds its self in,it is still too important to devalue excessively (to big to fail as you mentioned)? For example what are theinternational debts worth if the dollar is not worth much? Those countriesowning the debts will loose a considerable amount more if the dollar keepsloosing its value. Americais a huge consumer if it cannot afford to by the worlds products, what good arethose products to the exporting country?
    Unfortunate I fear that it may take a dangerous confrontation with China, beforethis is resolved one way or the other. Chinaholds a lot of USdebt, Chinais progressing rapidly, Chinahas its own interests that are becomingmore and more at odds with Americasinterest. I hope I am wrong and the future paths of serious confrontation areaverted, but I do not know…. didn’t the Great Depression of the past end inpart because of a World War?
    Just personal thoughts of a partially uninformed world citizen…

    Also I think the Europe’s trouble is more than just Greece. Isn’t Spain and Portugal having similar issues?

  • #140559

    Deleted User
    Moderator

    It’s a global economy and so there is a great deal of trade interdependence. The emerging economies known as BRIC [Brazil, Russia, India and China] are rapidly taking up the slack in world trade because of their lower production costs. Countries like America find it increasingly difficult to compete in some areas because of regulation, taxes and trades union agreements that constrict flexibility. Certainly the US owes China a substantial amount of money and servicing this debt costs billions every year in interest payments. China has already voiced its concerns about the US level of borrowing and no doubt they fear that the recent massive increase in the US money supply can have but one result; inflation which is a convenient way to reduce the value of debt. Should US inflation gather any pace it is likely that no one will lend any more money at which point the US administration will have to find a solution to its irresponsibly high spending habits and deal with the current annual shortfall in revenue of about $1.3 Trillion. [Jesus wept]

    I feel that the dollar is worth diddly squat in reality however, there is no other currency with the self-confidence or sufficient liquidity to take over from it as the benchmark currency. In this respect China has its eye to perhaps a new and glorious revolution.

    Having taken advantage of massive growth, China is now developing its own consumer society and so its business will soon have not only the global market but its own swarming millions to add to its market. Meanwhile I shouldn’t worry about a military conflict between the US and China. [Keep an eye on North Korea and Iran not forgetting Afghanistan and Iraq?]

    From what I read I would agree that Europe has its own troubles and the grand federal dream seems a bit distant at present. The rapid expansion of the Euro zone with its mix of highly industrialised countries with culturally different and relatively poor countries is a recipe that only the social progressives could possibly concoct; a huge government, the redistribution of wealth and social justice for all. In a word, dilution and that equates to lower standards of living for hitherto successful countries.

  • #140976

    majazac
    Member

    [QUOTE=C112] Since Richard V posted this, the R$ has moved from 1:2.77 to 1:2.98 i.e. the Real has depreciated against the British currency by about 7.5%. Actually the Real has moved by 7.5% in the last 3 weeks!!! In otherwords so far he has saved himself 7.5%, I would say that was a smart move wouldn’t you?[/QUOTE] And 3 weeks later we’re pretty much back we’re we started…..as mentioned before, no-one can predict with any certainty what’s going to happen with these rates….let’s see where we are mid-March. Bubbles2010-02-19 10:01:47

  • #140985

    aagrin
    Member

    Bloody annoying… Just when it looked like every thing was stabilizing…Cry

  • #140991

    Deleted User
    Moderator

    The FX traders love this situation and they promote and encourage these seesawing movements as best they can; all of which has little to do with the actual day to day value of currencies. The Euro is in crisis, the Pound is in crisis as is the once almighty Dollar.

    Huge debt, continuing crazy deficits and a yawning gap of disconnect between politicians and reality that is supported by partisan economists. The 2009 financial meltdown was the first evidence of a chronic sickness and today the doctors are still trying to decide on which medicine can offer a cure. The sickness is a lack of competitiveness in the global market and the spending of money that has yet to be earned. It is inevitable that whatever medicine is offered it will have a very bitter taste. I’m no doctor yet my diagnosis is simply this; the currencies mentioned are screwed – inflate or devalue.

  • #140995

    majazac
    Member

    Tomjo – totally unrelated, but that was the first record I ever bought! 99p I think from Loppylugs in Edgeware, Xmas 1980. NB I also believe it’s ‘marching to and fromthe enemy’

  • #140997

    aagrin
    Member

    Bubbles – its a good track and I bet it made a good first record as well!
    I wonder what the exchange rate back in 1980 would have been…

  • #141788

    micko
    Member

    FYI –
    “The central bank will intervene in the case of excessive inflows orfurther appreciation of the currency, the bank‚Äôs president said. Thegovernment doesn‚Äôt intend to adopt capital controls and would useconventional market instruments to contain appreciation, he said.”
    http://www.businessweek.com/news/2010-03-04/brazil-may-overheat-on-investments-coutinho-says-update1-.html
    Just some fellow’s opinion I guess.

  • #141794

    majazac
    Member

    [QUOTE=DUNGA]Just some fellow’s opinion I guess.[/QUOTE] It’s always someone’s opinion! Until the US / UK start increasing interest rates to a level which will attract investment, exchange rates will pretty much stay as they are…

  • #141851

    BrazilBrasil
    Member

    The fear of a hung parliment is the is a major reason for sterling weakness at the moment (igoring the fact that the markets have convienently ignored our stupidly high level of national debt), and the greek situation is adding to the weakness for the Euro. These 2 factors are working for the BRL right now.

    Give it a few months and BRL will weaken off. Elections will be good for Sterling performance. Here’s what Dow Jones has to say:

    SAO PAULO (Dow Jones)–The Brazilian real is overvalued because of international factors that have little to do with the local economy but the government remains convinced that a floating exchange rate is the best option, Finance Minister Guido Manega said Friday.

    Speaking at an event in Sao Paulo, the minister said that floating exchange regimes are the quickest at correcting distortions, although the Brazilian government will continue to take measures to eradicate excessive volatility.

    “Some countries adopt ‘dirty’ intervention strategies that create market distortions. …That is not our way,” he declared.

    Brazil’s real has traded within a bandwidth of BRL1.70 to the dollar to BRL1.90 to the dollar since September. However, the government and exporters would prefer a rate above BRL2.00.

    While the weakness of the dollar has played an important role in the strength of the real, investors have also been attracted to Latin America’s largest economy by the prospect of robust economic growth at a time when many large economies are stagnant.

    Indeed, Mantega noted that Brazil may lead the world in terms of capital market operations in 2010.

    The popularity of Brazil as an investment destination is a testament not only to the growth prospects but also efforts to control inflation and government debt, the minister said.

    In October, Brazil imposed a 2% financial transactions tax on foreign fixed income and equity investments in an effort to contain short-term inflows.

    “This was a light measure designed to limit excessive exchange rate volatility,” said Mantega.

    Deane Roe2010-03-05 12:25:48

  • #141856

    Deleted User
    Moderator

    [QUOTE=Deane Roe] The fear of a hung parliment is the is a major reason for sterling weakness at the moment (igoring the fact that the markets have convienently ignored our stupidly high level of national debt), and the greek situation is adding to the weakness for the Euro. These 2 factors are working for the BRL right now. Give it a few months and BRL will weaken off. Elections will be good for Sterling performance. [/QUOTE]

    A hung Parliament eh. After 12, or is it 13 years of the same government rule? The UK is an economic mess and yet still a huge proportion of the collective idiot is ready to vote for more of the same; fascinating. This is an indictment against the opposing political parties and in no small part the result of the entitlement culture created by the nanny state. Should an opposing politician suggest major cuts in public spending in an attempt to reduce the financial deficit, this huge proportion of the electorate, the ones not subject to significant taxation or who are the recipients of benefits; a social group deliberately created by a caring socialist government, feel threatened and vote for the devil they know. Democracy doesn’t seem all that attractive when 10% of the population carry 90% of the tax burden. From each according to his ability,to each according to his needs. Karl Marx.

    And it’s not only the Greeks. Adding to that list is Ireland, Portugal and Spain along with a few other insignificant members of the Euro zone. What bright spark thought that such countries could stand with the economic strengths of Germany without independent currency controls? The necessary bailouts will have the effect of a dilution, a weakening of the Euro and wealth redistribution in the form of, from each according to his ability, to each according to his needs. The dawning of a Federal Europe is beginning on a grey miserable winter day.

  • #141873

    enchantbeau
    Member

    Esprit: 10% of the population carry 90% of the tax burden? Did you make that up or do you have a source to corroborate such a statistic? I think it is 10% of the population owns 90% of the wealth which is considerably different! And if your statistic is correct then democracy might only seem unattractive to the 10% innit! Pour another glass of Chateauneuf du Pape and shake those jowls!

  • #141874

    Deleted User
    Moderator

    [QUOTE=delco]Esprit: 10% of the population carry 90% of the tax burden? Did you make that up or do you have a source to corroborate such a statistic? I think it is 10% of the population owns 90% of the wealth which is considerably different! And if your statistic is correct then democracy might only seem unattractive to the 10% innit! Pour another glass of Chateauneuf du Pape and shake those jowls![/QUOTE]

    That’s an acute observation indeed. Of course it seems unattractive to that 10% of wealth generators and the reason why suck folk are leaving the country in droves or who establish a non-domestic tax status or off-shore trusts. If you doubt the figures that I’ve rounded off, you can check for yourself through a little research in the National Statistics and other search engines.

    The existing regime is unsustainable as evidenced by the critical UK debt levels and the warnings that have already been issued by the credit agencies and, in particular, the exchange rate of the Pound. Don’t worry about the wealthy; they can take care of themselves. What is of critical importance to remember is that it will be the 90% who are burdened with the repayment of this debt ‚Äì the poverty trap of the entitlement culture. Cheers!

  • #142702

    Deleted User
    Moderator

    [QUOTE=Floripa Cabana]A favorable window to take advantage of an excellent foreign exchange opportunity “should” be provided Sept-Dec 2010, because of the presidential elections. Yet like in 2002, it will be a brief opportunity.

    One might consider consolidating, even selling, some “foreign” (US/UK) assets, so as to be able to quicky transfer assets into the country (BR). Similarly, if one still has funds locked up in a 401k (or another retirement fund) they might want to consider “borrowing” from that fund (I believe it’s 45% of your holdings if you have a 401k) and using that cash for a transfer. The interest you will repay on such a loan will be paid to yourself.

    Granted, the past year (Mar 2009-Mar 2010) has shown phenomenal returns for stocks and mutual funds (45-60%), but it’s a not-based-on-reality rally. Also consider, that is 45-60% gain on the 100% most people LOST in Sept-Dec 2008!!! In other words, most people are STILL 40-55% behind their high of May 2008.

    Yet if the FOREX jumps 50% in Sept-Dec, and then you can lock your transfer into a safe CDB with a major bank like Bradesco, HSBC or Itau paying about 10% interest (compared to the miserly 1-2% in the US), you will be WAAAAY ahead of the game!!! AVOID Banco do Brasil, Caixa Economica, or other partially run-by-the-government banks, which are subject to frequent strikes!

    [/QUOTE]

    There’s a lot of truth in this post particularly the disconnect between the markets and the debt burdened real US economy. Depositing cash in Brazilian banks and experiencing the joys of compound interest is to be highly recommended and despite Brazilian inflation of say 4% the money is still well ahead of the game.

  • #142718

    celso
    Member

    If the China real estate bubble pops, commodity prices will tumble and so will the Real, so I expect a great time to buy the Real as we roll in towards the elections.
    The Fed must tighten and the dollar will ramp up. If all three happen at the same time, you will easily see 2.80 to three or more reais to the dollar.
    GreatBallsoFire2010-03-20 11:52:43

  • #142719

    Andrewfroboy
    Participant

    you’d wanna sell the real if it will go from 2.8 to 3 to the dollar, not buy it, means it will be worth less

  • #142724

    Deleted User
    Moderator

    Come on guys, the dollar is in very perilous waters. Huge and continuingly increasing deficits along with mind boggling unfunded liabilities, a doubling of the money supply, credit agencies warnings of a downgrade in credit status, a combined unemployment and underemployment rate of 17%, an administration seemingly oblivious to anything other than its ideology, a collapsed housing and commercial property market, a reluctance to lend more money from the Chinese, running two unfunded wars and the potential of a cap & trade legislation that will cripple its industry…2.8- to 3.00 real to the dollar? It’s getting closer to my prediction of 1.65.

  • #142739

    Deleted User
    Moderator

    I’ve been given to understand that because of the American debt it holds, China has the ability to crash the dollar at will yet refrains from doing so because it would not serve their best interest. Should this be true isn’t this, or ought it to be, an intolerable position for the most powerful economy in the history of the planet? Maybe the context of this situation redefines American power as being the dominant partner in a global symbiosis. Ermm

  • #145597

    majazac
    Member

    Time to revist this post – I did write a few months ago that predicting the reai was impossible and I didn’t think that GBP/BRL of 3 was sustainable….but would never have thought it would fall to 2.58!!

  • #145601

    micko
    Member

    Well I wouldn’t say it was the real. It has bounced around the current 1.77 to the dollar for about 6 mos. (even though though I read that the price of a cesta basicarose 25% this year in one capital in the NE.) There is no true GBP/BRL exchange rate it is interpolated from GBP/USD/BRL and the pound is taking a beating against the dollar right now, along with the euro.
    I, along with a lot of Brazilians, see the currency overvalued against the dollar, but I can’t expect to see it move until after the election.
    Best Luck!!!

  • #145607

    aagrin
    Member

    Has any one seen the Euro/Real rate resonantly as well! 1 Euro buys just 2.23 Reals!!!
    This is making Brazil very… very expensive indeed – roll on the Brazilian election and lets hope the new lot make some adjustments before some of us start getting evicted LOL… the apart-hotel I’m in is starting to look like a rip off – wonder if i could do the dishes for a weeks rent Ermm

  • #145610

    majazac
    Member

    [QUOTE=DUNGA]Well I wouldn’t say it was the real.[/QUOTE] True, it’s GBP or EUR v anything!! I was just emphasizing what the rate is… So a 2bed apt in Copa will now be around ¬£150,000…..

  • #145612

    majazac
    Member

    [QUOTE=DUNGA]There is no true GBP/BRL exchange rate it is interpolated from GBP/USD/BRL [/QUOTE] Sorry Dunga I disagree here – USD, GBP, EUR are primary mkt currencies…BRL is still viewed as secondary for many reasons – delivery being one. So AUD/BRL would be derived, but GBP/BRL shouldn’t be… Any FX traders out there to confirm????

  • #147066

    jeb2886
    Member

    The euro has issues on it’s own. They banks that are over extended still (were far worse than the US banks), they have several countries under performing, while others rely on them for their good economies (eg Germany selling to Greece), and the countries are showing that they don’t want to support each other. They had to see their Euro becoming really shaky before they really helped out Greece. Greece is still in trouble, and until they work with creditors to bring down that debt they will continue to be in that position.
    The USD gets lots of “bad” press, but in reality, it’s the only strong world currency that anyone will accept and everyone acknowledges. It has issues, but all news reports claim it’s impossible to get out of. In reality, it requires a bit of give from everyone. Some spending cuts, some growth, some tax increases, some spending cuts, some inflation. Put it all together, and nothing needs to change much, but the combined effects will add up.
    People go to other currencies for their large potential gains. Brazil has some great gains, like wise many other countries do to. But when investors think their capital is at risk at all, they RUN back to the USD and hide, taking 1% t-bills instead of their 50% foreign investment returns.
    As far as Brazil goes, it’s going to be choppy waters over the next year, to see what happens with this new election. The currency has very little upside right now, but a whole bunch of down side potential. How low could it go against the USD, before it strangles itself on exports and imports come rushing in? At 1.50, people were hurting. At 2.00 they’re pretty happy. With this election, I’m hoping for a big investor sentiment change and/or scare. I’m sitting in a liquid position right now to jump into an investment in Brazil (probably housing) if it makes a large swing, because past 2.00 it seems to be under valued. Between 1.80 and 2.20 seems to be fairly valued and capable of maintaining exports/imports at a realistic level.

  • #147068

    majazac
    Member

    Agree.

    All the issues that were raised when the EUR was conceived (e.g. the one interest rate for all) that were dismissed as being fanatical euro-sceptical are now coming to fruition, and their consequences seen. Blair was dumb enough to promise a referendum on entering the EUR, but wise enough not to push it through as it would have been an overwhelming and embarrassing ‘No’. Bubbles2010-06-09 18:37:37

  • #152660
  • #153091

    jeb2886
    Member

    Well it looks like the election will be going decently smooth, which means not much in terms of investor panic. Perhaps we’ll end up seeing a bit more stability through the rest of the year and part of the next at the 1.80 range.

  • #153123

    majazac
    Member

    I’m not a big fan of articles as they’re often speculative and opiniated, but attch this for perusal: http://uk.reuters.com/article/idUKTRE6892QJ20100910?type=GCA-ForeignExchangeBubbles2010-09-13 07:15:14

  • #153132

    agri2001
    Participant

    ” But the real is the most overvalued of all the world’s major 33 currencies, according to Goldman Sachs. Against the U.S. dollar, the real is overvalued by a whopping 53 percent, “
    Bubbles, It`s very easy for the BC to just devalue the real and watch those rats jump ship, but the powers that be will not do that because the same bankers that are castigating the Brazilian currency for being overvalued will turn around and devalue the Brazilian credit worthiness

  • #153134

    majazac
    Member

    I didn’t write, nor share views on the article’s content – just attaching!!

  • #153135


    The Banco Central obviously sets the rate, but it is indeed themarket that actually controls the scene.
    Milton Freidman, in his book The Lexus and the Olive Tree,states that while central banks may make attempts to protect (or evendevalue) their currency, it is in fact “the electronic herd”, thevast and nebulous consortium of anonymous stock, bond, and currency traders (which includes you and me) as well as the large multinational investors, each globally connected by computer screens andreal-time networks, are who actually determine“value”.
    Personally, I wouldn’t mind a brief “stampede” by the herd to a 2.50-2.75 rate. This WILL happen, someday, even if but for a brief time, but the big question is what event will trigger it (domestic OR international), and when.
    Obviously, with the election just a few weeks away, that event will not be the trigger….

  • #153136

    Max
    Member

    Can someone take a shot at explaining what the article means. To my reading, it suggests that while the Brasilian Govt would prefer a weaker Real, and while they may intervene, they may not be able to stop it from strengthening further, which is bad news for an export reliant economy, and bad news for gringoes who are bringing in dosh from abroad to pay for their life here.
    But if GS are saying its the most over valued currency in the world, and by 53%, how does the correction take hold? GS don’t get it wrong too often, so if they think the Real is way over the mark, does it follow that they anticipate a massive weakening of the Real in the future?
    If GS have this view, I dont really understand why foreign capital is still pouring into Brasil.

  • #153138

    majazac
    Member

    [QUOTE=Richard V]
    If GS have this view, I dont really understand why foreign capital is still pouring into Brasil.
    [/QUOTE] A simple way is to think of someone who has $1mm and wants a ‘riskless’ short-term investment – they can either stick it in US treasuries and attain at best around 1% return: http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/or convert to BRL and buy Brazilian Gov bonds and get 10%+: http://www.bloomberg.com/markets/rates-bonds/government-bonds/brazil/Therefore more overseas ‘investment’ pours into Brazil, there is demand for BRL (and minimal demand for USD) which keeps the rate at 1.7 or so. During the crisis the move from 1.7 -> 2.4 was mainly due to the withdrawal of funds back to domicile countries like the US and UK. To counteract the BRL’s strength either: The US/UK/Euro needs to raise interest rates substantially e.g. 5% so that cash stays domestically – this won’t happen for a long, long time as mortgage payments will become unaffordable leading to another crisis, or The Brazilian gov need to lower interest rates substantially to around 3% so that overseas investment is not so appealing – this also won’t happen as the cost of borrowing in Brazil will fall substantially, Brazilians will spend, spend, spend and the economy overheats! or Credit Agencies need to downgrade Brazil’s credit rating substantially such that there is a strong perceived risk of investing in Brazil which will deter investors. or Brazil needs to engage in a severe breakdown in economic ties with China or Prices of commodities/oil needs to fall substantially such that Brazil’s natural wealth of resources becomes worth less (or worthless). or Brazil needs to invade or engage in a war with another country – Argentina? It’s complicated! Bubbles2010-09-13 10:45:34

  • #153141

    celso
    Member

    [QUOTE=agri2001]” But the real is the most overvalued of all the world’s major 33 currencies, according to Goldman Sachs. Against the U.S. dollar, the real is overvalued by a whopping 53 percent, “

    Bubbles, It`s very easy for the BC to just devalue the real and watch those rats jump ship, but the powers that be will not do that because the same bankers that are castigating the Brazilian currency for being overvalued will turn around and devalue the Brazilian credit worthiness
    [/QUOTE] I agree the real is overvalued at least 53%. I just filled up my car here in the States at $2.85 a gallon. You pay nearly double for gas in Brazil. The same is true with just about everything except real estate. Got a great pair of Addidas Running shoes at Costco for 35 bucks. The same type in Brazil are over 200 reais. The real will crash after Dilma gets elected. I expect the fall in the next six months or so. The fact that the wealthy Brazilians are filling up on I-Pads, and whatever they can fit in their huge suitcases is proof positive that the real is way over valued.

  • #153142

    Max
    Member

    So for the most part fund managers are moving cash to Brasil to take the 8%, with the plan being to get out again without taking a hit on the exchange, meaning getting out before the valuation of the Real goes pop?
    Have you read anything further about why GS take their view, as if you follow what GS says, it becomes a dangerous game to be betting on the Real staying strong, unless you can get in and out very quickly, and still make your 8%
    It seems to me the most likely scenario for Brasil is inflation, meaning interest rates will go higher, attracting more foreign currency punters, and where does that cycle end?
    I can’t see a local war coming, or a massive falling out with China, or a wholesale collapse in commodities on the horizon, so does that suggest a continuing spiral of higher inflation, higher interest rates, a stronger Real, cheaper imports, less exports, and a continuing inflow of foreign cash.
    Obviously GS see a major reckoning coming – but what is it likely to be? A major shift in policy through the political process, but it does not look like thats happening either. Might the Brasilian Govt peg their currency to the dollar, as do the Chinese.
    Maybe we should just be following the money men and taking our 8%+ while we can. At the moment I am getting 0.5% from my UK bank!

  • #153143

    majazac
    Member

    I’m not a Fund Manager or Investment Analyst but whilst there are poor returns in UK, US, etc money will always go into Brazil and prop up the currency. There is still a perceived risk in investing in Brazil and it is more difficult to get your investment back comparatively to other countries.

    This argument about the BRL being overvalued has been going on for a while now – GS wrote a paper around this time last year on it. I can’t see how the BRL can weaken when the returns are so comparatively high – when the difference in returns is around 2% or so yes…but not when its over 8%!

  • #153154

    celso
    Member

    [QUOTE=Bubbles]

    I’m not a Fund Manager or Investment Analyst but whilst there are poor returns in UK, US, etc money will always go into Brazil and prop up the currency. There is still a perceived risk in investing in Brazil and it is more difficult to get your investment back comparatively to other countries.

    This argument about the BRL being overvalued has been going on for a while now – GS wrote a paper around this time last year on it. I can’t see how the BRL can weaken when the returns are so comparatively high – when the difference in returns is around 2% or so yes…but not when its over 8%! [/QUOTE] The above way of thinking wiped out the Europeans who had bought in deeply for years in Argentina. For many years Argentina pegged the peso at one to the dollar, then the peso blew up and the Europeans were left holding the bag. So why does Brazil “need” such high interest rates? Why does Brazil “need” the shower of foreign money? Brazil does next to nothing for the public schools, next to nothing for the roads and rail, yet 35% of tax revenue now goes to pay INTEREST ON PUBLIC DEBT! Who holds the public debt? The rich and the banks! (Who happen to love the Central Bank right wing policies.) Of course the Lula Government may say “we don’t like high interest rates,” but the Central Bank claims independence from the Federal Government. The Economist says Bolsa Familia is a joke because the Lula Government simply took away other benefits that the poor already had then gave them back the money with a new name. So with slight of hand, Lula and the PT win the hearts of the poor. Dilma will have a rough time going forward and so will the real. GreatBallsoFire2010-09-13 13:17:27

  • #153157

    jeb2886
    Member

    Argentina was a different situation. The Peso was pegged, which is different than a floating currency. A pegged currency has to stay at the same value no matter what, which brings in stability, which brings in investors, and makes business growth fairly easy, because it’s a known commodity and one less factor to think about when starting a business, or bringing in money from another country. However, when there are economic troubles, that is when the pegging really starts to hurt the government.
    Most small investors will be hurt when these things go poorly because they invest all their eggs in one basket. Large investors invest in multiple economies, so if one goes belly up (like the real dropping 50%), the others make up for it. In the end, the averages work out for them.

  • #153158

    Max
    Member

    Interesting GBOF. Can you forsee a way that the Real might collapse as the Peso did in Argentina, which as I understand followed a period of high, or hyper inflation, which perhaps is what lies ahead for Brasil, followed by some massive correction, possibly enacted by the government of the day.
    I still keep coming back to the GS position, and I want to know more about why they feel the Real is the most over valued currency in the world, and how that plays out, because if they are right, the correction has to come.

  • #153159

    jeb2886
    Member

    The problem with the Peso is that it had no way to let off steam. It was 1:1, and when it probably go to 1:1.2 or 1:1.5 it started to hurt, and as it got worse, the government couldn’t do anything. The government footed the bill in that case, it had to buy up USD to keep things like that. If someone said here is $500 Pesos, the government had to buy $500 USD, at whatever cost to them. Eventually the whole thing fell apart when the government could meet it’s obligations and then instead of a slide it dropped. Then people fled, and it got worse and worse, compounding things quickly.
    Brazil doesn’t have to do that. As people “flee” the currency will slowly devalue.
    The 53% premium on the Real is what people are willing to pay for it. People are valuing their investments in Brazil as fairly safe, the return pretty good, therefore they’re willing to pay the “premium” to invest in Brazil.
    It’s like the bond market. If you see a bond that will vest in one year, paying 10% for the year and it looks very stable, you’ll want to get it. Compared with the 2% you’ll make else where, 10% is great! The person who owns the bond isn’t going to give up their their bond, unless you’re going to offer them a little more. So you pay $105 for this bond. Now instead of making 10% you make roughly 5%, but still better than 2% elsewhere.
    Essentially that happens here.

  • #153160

    celso
    Member

    [QUOTE=jkennedy]Argentina was a different situation. The Peso was pegged, which is different than a floating currency. A pegged currency has to stay at the same value no matter what, which brings in stability, which brings in investors, and makes business growth fairly easy, because it’s a known commodity and one less factor to think about when starting a business, or bringing in money from another country. However, when there are economic troubles, that is when the pegging really starts to hurt the government.

    Most small investors will be hurt when these things go poorly because they invest all their eggs in one basket. Large investors invest in multiple economies, so if one goes belly up (like the real dropping 50%), the others make up for it. In the end, the averages work out for them.
    [/QUOTE] Oh yes the famous “this time is different story.” Brazil has had the cruzeiro, novo cruzeiro, cruzado, and now the real since 1985. Four currencies! If you had a savings account in cruzeiros, cruzado, novo cruzeiro you would have been wiped out. Sure you can play the game and buy the real now and hope your 10% will still be 10% once Dilma nad her cronies get in. What excatly has Lula done for Brazil? Given away her natural resources to China and become a dumping ground for chinese goods. Dilma has even less wiggle room as the debt has doubled. So I expect the real to go back to 2.40-3.00 in a year or two.

  • #153163

    celso
    Member

    [QUOTE=Richard V]Interesting GBOF. Can you forsee a way that the Real might collapse as the Peso did in Argentina, which as I understand followed a period of high, or hyper inflation, which perhaps is what lies ahead for Brasil, followed by some massive correction, possibly enacted by the government of the day.

    I still keep coming back to the GS position, and I want to know more about why they feel the Real is the most over valued currency in the world, and how that plays out, because if they are right, the correction has to come.
    [/QUOTE] Sure, all you need is for the Fed is the States to start raising rate or China to have a real estate collaspe, or Dilma to slide farther to the left. As you arrive in Brazil, notince the Brazilians at the baggage claim with the massive suitcases coming back from the States and Europe, while the gringoes go home with empty suitcases. That is the alarm bell of an over valued currency.

  • #153165

    jeb2886
    Member

    It’s not an alarm bell going off. It’s a 70% taxes on external goods. Brazil doesn’t make the Ipod. Therefore, buying it in the states is obviously a huge savings. A laptop, camera or any other electronic goods. Very few are made in Brazil, therefore buying in a country with out the 70% exchange rate is the way to go.
    It’s not “This time is different” it’s “this is completely different” situation. Comparing a pegged currency failure, with a non pegged currency isn’t the same. One collapses and corrects to it’s proper “value”, one EXPLODES.
    Comparing PAST brazilian currency failures with current ones is. Comparing the Mexican peso failure is. A pegged currency has completely different issues.
    Buy now, get 8% instead of 2%, after 4 years, you’ve made an extra extra 28-30% on your money. Now if you have that in 15 countries, even if one fails every 4 years, you’ve more than made enough. Your principal might be wiped out, but the money you’ve pulled out each year will more than make up for it, including the money you’ve made from the other countries. In fact, if your investment dropped 50%, you would still be ahead after roughly 6 years! It’s simply hedging your investments.

  • #153169

    celso
    Member

    [QUOTE=jkennedy]It’s not an alarm bell going off. It’s a 70% taxes on external goods. Brazil doesn’t make the Ipod. Therefore, buying it in the states is obviously a huge savings. A laptop, camera or any other electronic goods. Very few are made in Brazil, therefore buying in a country with out the 70% exchange rate is the way to go.

    It’s not “This time is different” it’s “this is completely different” situation. Comparing a pegged currency failure, with a non pegged currency isn’t the same. One collapses and corrects to it’s proper “value”, one EXPLODES.

    Comparing PAST brazilian currency failures with current ones is. Comparing the Mexican peso failure is. A pegged currency has completely different issues.

    Buy now, get 8% instead of 2%, after 4 years, you’ve made an extra extra 28-30% on your money. Now if you have that in 15 countries, even if one fails every 4 years, you’ve more than made enough. Your principal might be wiped out, but the money you’ve pulled out each year will more than make up for it, including the money you’ve made from the other countries. In fact, if your investment dropped 50%, you would still be ahead after roughly 6 years! It’s simply hedging your investments.
    [/QUOTE] You are right that Brazil has high import tarrifs, yet the minimum wage is a bit over 500 reais a month and the poor must pay world market prices for wheat. You are right about earnings in reais, but you cannot make assumptions as to the future strangth or weakness of the currency. Brazil in the past has frozen bank accounts by decree, they have declared maxi-devaluation as well. The other assumption that comes in is that interest rates will not come down in Brazil. I am willing to bet that Dilma will pressure the Central Bank to bring down local rates and the real will go back to 2.40 to 3.0 range. This is good for Brazil so they will have more money for social projects and infrastructure rather than to pay big interest rates to the world wide speculators. THis time is not different. Brazil still depends on exports of primary goods and that doesn’t create much work and if prices fall, Dilma and the real is in big trouble. GreatBallsoFire2010-09-13 16:33:42

  • #153172

    jeb2886
    Member

    Don’t forget that in the past, Brazil had less foreign investment. Freezing accounts and holding banks won’t cut it for large corporations. The government knows how fast foreign investors will pull out if they pull these kinds of moves. It could take 15 years to get those investors back, Brazil is on a real growth path because of constant and successive years of stable government and stable growth.
    My worry is that if the Chinese goods can keep flowing in there, they’ll eventually undermine the Brazilian manufactures, even with a 70% tariff. At which point they’ll start going bankrupt, and as they go bankrupt, the competitors left will be able to raise their prices (Chinese).
    My points about the future strengths aren’t about whether investors are correct or wrong, I’m simply saying that they have built their investments around a few of them going belly up. If Brazil goes belly up for them, they’re still ahead of the game. In most cases they won’t lose everything, so they’ll still have a partial investment left, meanwhile all those other years have most likely paid off handsomely for them.

  • #153187

    celso
    Member

    [QUOTE=jkennedy]Don’t forget that in the past, Brazil had less foreign investment. Freezing accounts and holding banks won’t cut it for large corporations. The government knows how fast foreign investors will pull out if they pull these kinds of moves. It could take 15 years to get those investors back, Brazil is on a real growth path because of constant and successive years of stable government and stable growth.

    My worry is that if the Chinese goods can keep flowing in there, they’ll eventually undermine the Brazilian manufactures, even with a 70% tariff. At which point they’ll start going bankrupt, and as they go bankrupt, the competitors left will be able to raise their prices (Chinese).

    My points about the future strengths aren’t about whether investors are correct or wrong, I’m simply saying that they have built their investments around a few of them going belly up. If Brazil goes belly up for them, they’re still ahead of the game. In most cases they won’t lose everything, so they’ll still have a partial investment left, meanwhile all those other years have most likely paid off handsomely for them. [/QUOTE] Hey, is is common sense, Dilma gets the Central bank to lower interest rates, Brazil has more money for social projects and infrastructure, and the multi nationals are happy to export products and create jobs. The real back at 2.40 to 3 to the dollar is great for the exporters and great for jobs. Lower interest rates would only harm those who want to spend reais abroad!LOLDilma cares more about the “povo” than the currency speculators. So let’s see where this goes.I’m betting on lower interest rates with Dilma and the real near 3.0 to the dollar in a year. GreatBallsoFire2010-09-13 23:56:12

  • #153188

    jeb2886
    Member

    Really? obvious? Most national debt needs to be rolled over. If you don’t offer high enough interest rates people won’t buy it. If they don’t buy it, then you have $0 to run the next year. It’s not obvious at all. It’s a balancing act, they can put the rates anywhere they want them, but when it comes time to sell more debt to pay off the current debt AND buy new debt, they won’t have any takers.
    Lower rates are good for exporters, but demand is what will keep it up. People want the Rais because the interest rates are good. If the interest rates go down, so will value, which will cause people to not want to buy new debt which will cause all kinds of financial problems as well.
    Either way, I’m ready to jump into the Brazilian market very quickly to snap up real estate if the Rais drops to 3.0, it will probably drop faster than real estate prices can adjust for, which means I’ll be buying up on great deals on real estate.
    Regardless, with every action there is an opposite reaction as well.. Dropping interest rates doesn’t just give you “good stuff all around” it also causes pain else where. I’m sure some of that Brazilian debt is backed in US dollars, if it drops too much, Brazil could end up paying even MORE on that debt! What a disaster that will be!

  • #153191

    majazac
    Member

    Sorry GBoF at the start of this thread (9 months ago) you predicted FX rates would be substantially higher in a year – then USDBRL was 1.75…I stated the same then as I do now…unless BRL interest rates drop substantially or US/UK/Euro interest rates rise substantially the FX rate is going nowhere….

  • #153195

    Deleted User
    Moderator

    The primary function of interest rates is the control of inflation – currently standing at approximately a high 5% Рand to prevent the economy over-cooking. Today the exchange rate is R$1.70 to the US dollar. Foreign investors would hate to see their investment evaporate through inflation. The balance of corporate and government debt is nominated in dollars and so a high value Real is good for repayment.

  • #153201

    [QUOTE=jkennedy] Either way, I’m ready to jump into the Brazilian market very quickly to snap up real estate if the Rais drops to 3.0, it will probably drop faster than real estate prices can adjust for, which means I’ll be buying up on great deals on real estate.[/QUOTE]
    Ditto! I have my eye on a few things, but with the miserable exchange rate, and the wildly appreciated local prices, it’s certainly not the time to buy.
    Some sort of event will occur, eventually, that will temporarily grant excellent opportunities to buy real estate, providedthe price is in Reais(and you have dollars/euros/pounds to exchange). Some cities, Rio for example, have many properties for sale with the prices listed in either dollars or euros. You want to find something listed in reais to take advantage of this window of opportunity, on the the next blip of the exchange rate.
    A good article on this subject here:
    http://www.escapeartist.com/OREQ1/Exchange_Controls.html
    As jkennedy alluded to, local prices WILL BE adjusted after a major shift in the currency exchange rate. Such windows of opportunity are open for maybe 3-6 months, to take advantage of the situation. By then, local prices have been adjusted, and the window begins to shut.
    While it’s certainly tempting to move all of one’s liquid assets from a CD or money market account paying 1% outside of Brasil, to a CDB paying 9-10% in Brasil, some liquid assets should be kept outside Brasil, ready to “pounce” on a significant fluctuation in the forex, if one is interested in a real estate purchase.
    Granted, you miss out on earning that 9-10%, but you could end up buying a house, apartment, or even raw land at a 50% discount. That’s exactly what occurred during the 2002 election!

  • #153203

    HelloBrazil
    Member

    Good topic; I’m reading even if not contributing.
    PS: I’m on the same boat, money in USD, ready to pounce.

  • #153207

    majazac
    Member

    Out of interest, for those holding $$$ aren’t there property opportunities in the US? With the amount of job losses, defaults and bank repos, there must be a lot of bargains out there for those with ready cash?

  • #153209

    Deleted User
    Moderator

    Of course a crystal ball would be very useful; the gift of being able to glimpse into the future would make anyone filthy rich. Meanwhile, mere mortals have to suffer the realities of not knowing what the future may bring. What we do know is that the global economy is in a state of flux and is ever changing. Some of these changes are irreversible. The emergence of economies such as Korea, China, India and Brazil has changed the game; their competitiveness a shock to the fat labour rates of the West. In all of this it should be borne in mind that the US and Europe is crippled by debt, stagnated growth, unsustainable fiscal deficits and high unemployment. The current strength of the dollar, although seen by many as low, is in a false position in my opinion because it is regarded as a safe haven and possibly rightly so. However on the basis of its real position, that of near bankruptcy, it ought to be worth far less than it is currently given that it has more than doubled the supply of dollars during the past year or so. This dilution of the dollar, Euro and Pound can only lead to inflation that may be regarded as a convenient method of reducing debt and improving global competitiveness. A cunning plan?

    The wildcard in all of this is the upcoming election. One can but hope that the future government, or rather the people who actually run the country, will stay what has been proven to be a steady economic course. Pity about the unnecessary expense of the World Cup and the Olympics.

  • #153210

    Max
    Member

    GFloripa – you seem to be taking the same view as GS that something will happen, its just a matter of when. In the meantime, I tend to agree with Bubbles, in that UK interest rates will be going nowhere fast for the next few years at least, so while the Real interest rate stays high, it seems to make sense to dump some dosh into a Brasilian bank and generate those interest rate funds, as long as you can get it out again, if need be.
    So that leads to the question, is it hard to get your money back out of Brasil as things currently stand? Of course who knows what legislation might be passed in the future, but right now, is it hard to get your money out of Brasil, and back to your home country?
    What tax do you pay on that interest earned?
    Are there other taxes that the Brasilian Governemt will levy when taking cash out of Brasil?

  • #153216

    [QUOTE=Richard V]GFloripa – you seem to be taking the same view as GS that something will happen, its just a matter of when. In the meantime, I tend to agree with Bubbles, in that UK interest rates will be going nowhere fast for the next few years at least, so while the Real interest rate stays high, it seems to make sense to dump some dosh into a Brasilian bank and generate those interest rate funds, as long as you can get it out again, if need be.
    So that leads to the question, is it hard to get your money back out of Brasil as things currently stand? Of course who knows what legislation might be passed in the future, but right now, is it hard to get your money out of Brasil, and back to your home country?
    What tax do you pay on that interest earned?
    Are there other taxes that the Brasilian Governemt will levy when taking cash out of Brasil?
    [/QUOTE]
    It all depends what your goal is. If one already (living in Brasil) has purchased a home, and is not interested in acquiring additional real estate as an investment, no doubt, a safe, virtually risk-free CDB paying 9-10% is the way to go.
    Here in Floripa, real estate has been appreciating 20-25% per year for the past several years! It’s a bubble that will eventuallyburst, but if in the meantime another “event” occurs, allowing one to buy in at a 50% discount, well, that’s the time to dive in head first!
    One doesn’t need prescient vision to know “events” occur, worldwide, all the time. The event could be internal, like a major election (2002), or external, like the collapse of US banks and brokerage houses (2008). When one will occur in the country of your personal focus, or an external event that effects that country (or at least their exchange rate), well, we can only make educated guesses, at best….
    But to answer your questions: Be it direct transfer from one’s non-BR account to one’s conta fisica or conta juridica, or transfer from your non-BR account into another Brasilian’s account for the purchase of real estate, it IS possible to repatriate those funds if you later sell the property, or close your BR bank account. Banco Central has the paper trail of your transfer(s), therefore a transfer back out is do-able and legit. The forum topic on bank accounts has more detailed information on this subject.
    However, those that brought significant sums of cash in undeclared, to purchase real estate, or open a business, may find it difficult to repatriate that money later on. What the fees and taxes are to repatriate funds, I don’t know, because I’ve not done that. I didn’t think they were too excessive to bring the money in, and the process was fairlysimple (in hindsight), but to take it back out is probably more complicated, and with higher fees.
    As for the taxes one pays on the interest earned on a CDB (similar to a CD), if you withdraw the interest in less than six months you pay 22.5% of your earnings to the government. Six months to one year, 20%; after 18 months 17.5%, after two years and onwards, you pay 15%.
    Similarly, if one sells a real estate holding, there will be 15% capital gains tax UNLESS you have not sold anything in the past five years, and the sale is less than R$440,000. You will be exempt from capital gains tax if you meet that criteria.
    Some good info at this link: http://www.offshore.hsbc.com/1/2/international/offshore-banking/tax-benefits/tax-going-to-brazil
    Obviously, don’t take that, or ANY web site as direct legal advice. Always consult with a reputable accountant! Note I said an accountant, not necessarily an attorney. Although primarily associated with helping those with small businesses, “most” accountants listed with SEBRAE are quite knowledgeable, and generally trustworthy.
    http://www.sebrae.com.br
    Gringo.Floripa2010-09-14 18:02:55

  • #153221

    [QUOTE=Bubbles]Out of interest, for those holding $$$ aren’t there property opportunities in the US? With the amount of job losses, defaults and bank repos, there must be a lot of bargains out there for those with ready cash?[/QUOTE]
    There are certainly major deals to be had now in the US, and the UKtoo. In some US cities you can buy a house for as little as 10k. Granted, not the best neighborhood maybe, but $10,000 for a house or apartment?!? Personally, in spite of the spin by the media and government, I believe the US real estate market is going to sink even further. So while you can indeed scoop up a bargain now, you won’t be able to liquidate that investment for a very, VERY long time!
    I think most ofus that frequent this site have left our “homeland” (or are planningto leave soon) because we sensed a better opportunity elsewhere. The ancestors on both sides of my family left their respective Europeancountries for the US,because of the dire situation that was developing in their birth-country, be iteconomic depression, famine, war, or a combo of all three. Were they “unpatriotic” by doing so? No. They were sensible, even wise.
    Interestingly,many of their fellow citizens emigrated to Brasil instead. I could have easilybeen born a child of the Southern Cross, than born in the northern hemisphere.

    This is essentially the theme of all of human history: seeking greener pastures,better opportunities. Sadly, there is much rhetoric now about how”unpatriotic” it is to seek a better life outside the land of one’sbirth. Yet these criticsconveniently forget EVERYONE in the USis related to an immigrantsomewhere down the line! Even the American Indians, whose ancestorsmigrated across the land bridge that once connected present Siberia and Alaska, were seeking “greener pastures”.

    Those who can trace their ancestry to slaves, which were forciblyrelocated to the New World, are the onlyones who cannot be “accused” of being unpatrioticbecause they lefttheir home country for better opportunities.

    Survival is the most primary instinct of every species on the planet,and political rhetoric, of whatever ideology, will never change that to be untrue for the humanspecies.

    Now, having said all that, I admit, I’m way off-topic!

    Gringo.Floripa2010-09-14 18:31:59

  • #153245

    Bob Judson
    Member

    I own property in Miami. Now is the time to buy long-term, I mean 5 years or more, cash and good credit are king! Shop around, a lot, and find whatever you want and you’ll be happy if you are 50 or under. If I was under 40, I’d buy all the RE I could logically afford there.

  • #153246

    Bob Judson
    Member

    Forgot to mention, do your business in the US, avoid the Brazilian implications if you can. Just my humble opinion.

  • #153247

    [QUOTE=Richard V]I have been looking, but have not found much discussion about the valuation of the Real against other currencies, in my case the GBP.
    I would be interested to know what anyone has to say on the exchange rate and where they believe it is heading. Is now just the most stupid time ever to be investing in Brasil with current rates for the GBP, the Euro and the USD?
    For instance, buying a house now for 277K £100,000 would require a resale of 360K at a rate of 3.5 to the GBP just to get your money back after local taxes, meaning the house has to increase in value by 30% just to break even, assuming of course those exchange rates.
    If that holds true, and to answer my own question, now would not seem to be the right time to be investing in residential property in Brasil, if your money is coming in from abroad. I am very happy for others who know about these things to tell me why I am wrong. Many thanks.[/QUOTE]
    Richard V: Though I’ve rambled a bit on this forum thread, it has been discussed that a possible opportunityfor a more favorable exchange rate with the Real could’ve/would’ve/should’ve been the upcoming election.
    Yet investors (AKA the electronic herd) don’t seem to be too concerned about who will become the next president of Brasil this time around (at least not right now). In 2002 there was great speculation that Lula would implement his “socialist views” on the economy (pay attention my Yankee brethren….), hence the “smart money” started fleeing out of the country, and the value of the Real fell.
    However, Lula (evidently) listened to his advisors, and focused more of his energies on around the world tours, rather than messing with the economy. The herd returned, in greater numbers, and with even greater investment wealth. “Timing is everything”, my father is fond of saying. China was/is in a stage of major growth, Brasil had/has the raw materials to feed their frenzy. It was, and still is, a symbiotic relationship. This timing, while not a complete explanation, is a large factor in Brasil’s recent economic success. Imagine, what would Saudi Arabia be today, if they did not have the raw material of oil to sell to the US???
    With your GBP presently buying very few BRL, and with real estate prices in most of Brasil at historic highs, it is certainly NOT time to buy real estate (sort of). Yet aside from the investment aspect, real estate can be, and usually is a very emotionally based purchase decision. If you happen to see a property you absolutely just LOVE, and can envision living there for many years, if not the remainder of your life, what price do you put on that?!? At the end of the story, will you feel you overpaid if it doesn’t appreciate 30%?
    I reiterate what has already been stated here, by several others….
    1) NONE of us have a crystal ball, with which to see the future. If we did, we ALL would have bought AAPL after their last split in 2005 for approx. $40 per share. Close today: $268!
    2) We can look for plausibleeventsthat might cause a significant flux in the forex (such as an election), but there is no guarantee it will happen. We can discuss all we want, but it’s merely speculation.
    3) We cannot predict unexpectedevents.In August of 2008, the Real was down to 1.55, yet a mere three months later (thanks to the financial crisis in the northern hemisphere), it was up to 2.45! Did anyone (other than the guilty parties) see that one coming?!?
    4) Cash is King.If you can have some cash ready, or at least some liquid assets that can be converted to hard currency within one week, then just sit tight! There WILL BE some sort of “event” that will create an opportunity to buy real estate in Brasil, and most likely at a substantial discount from the present going rate.
    The way I see the average Brasilian over-extending themselves with credit (a fairly new concept here), there just may be an internal melt-down, similar to what happened in the US and UK, but for different reasons.
    5) The Real is OVERVALUED.Every Central Bank, every financial expert, every amateur, knows this. What goes up, must come down….
    Gringo.Floripa2010-09-14 22:32:29

  • #153249

    Deleted User
    Moderator

    Perhaps the typical view of Brazil taken by gringos is coloured by our day to day experiences with the mundane aspects of our lives when the inevitable differences of culture, business practices, law & order and politics suffer under the microscope of comparative examination with our first world home countries.

    Such comparisons can weigh negatively on our level of respect for this, the country of our choice, warts and all. This negativity and reluctant compromise can result in blindness to Brazil’s current position in the grand scheme of things; the global economy.

    Having a GDP in the region of 1.6 trillion dollars it ranks 8thin the world and yet its exports value only 160 billion dollars suggesting that it is nondependent on exports but has a large and vibrant internal economy while imports value around 140 billion. It has a tolerable public debt of around 110 billion that is countered by 280 billion of foreign reserves. Suffering but a minor wobble during the meltdown of the Western economies, Brazil has yet to falter in its growth rate; overtaking that of Russia and closing the gap with India and China. Were we to ignore our personal negativities and take a detached view from our wish list of whatever currency value might suit us best, I’m sure that it would not be reasonable to suggest that the Real is over-valued relative to the faltering, debt ridden Western economies. All that can be hoped for is that, unlike the Titanic, Brazil has radar to avoid the catastrophic political policy icebergs that may lie ahead.

  • #153250

    jeb2886
    Member

    Well that isn’t the complete picture, you’re ignore the main issues.
    There is roughly $80B USD per year deficit per year, or the budget needs to be cut by 25% to balance it.
    There was 1,759,254,269,450R in debt as of 2008, since there is roughly 80B a year, with interestest, I believe it to be around 2.1Trillion Rais (which was another number I saw).
    Those numbers aren’t so rosy, especially when the GDP is mixed in, and the interest rates that are used to attract investors.

  • #153251

    HelloBrazil
    Member

    Well, Japan intervened to weaken then Yen… Shocked

  • #153255

    majazac
    Member

    [QUOTE=jkennedy]Well that isn’t the complete picture, you’re ignore the main issues.

    There is roughly $80B USD per year deficit per year, or the budget needs to be cut by 25% to balance it.

    There was 1,759,254,269,450R in debt as of 2008, since there is roughly 80B a year, with interestest, I believe it to be around 2.1Trillion Rais (which was another number I saw).

    Those numbers aren’t so rosy, especially when the GDP is mixed in, and the interest rates that are used to attract investors.

    [/QUOTE] Although those numbers seem huge (US$1Trillion), comparatively they’re not that bad (to say US, UK, Germany) as debt to GDP ratio is 43%: http://www.visualeconomics.com/gdp-vs-national-debt-by-country/and is planned to be 30% by 2014: http://www.reuters.com/article/idUSN1317331920100913

  • #153256

    Deleted User
    Moderator

    Something occurred to me that may not be at the forefront of exchange rate thinking which is that despite the increase in the value of the Real, consideration should be given to the decrease in the values of Stirling and the Dollar that have the effect of exaggerating this process. Both the American and UK economies have actually shrunk in size because of the housing mortgage crisis. Or should it better be described it as a debacle that should have every economist hang his head in shame; the condoning of reckless lending based on the unsustainable if not fantastic appreciation of housing values. Trillions of dollars evaporated from what was, and remains to be, a significant component along with its derivatives of those economies – growth through borrowing.

    Despite quantitative easing, various stimuli and bailouts, the respective economies are not bouncing back as forecast simply because the vital housing element is painfully missing; added to which is the cost of these recovery elements which in turn have their own additional cost burden. The ramifications of the meltdown are still very much in play globally as we see developed nations struggle to recover a new balance of currency values; China is under constant pressure to revalue while Japan tries desperately to devalue. If there is a lesson in all of this it should be that despite the joy of seeing massive and unjustified appreciation in personal asset values, we actively participate in the inflation of bubbles. Only children are allowed to cry when their bubbles burst. Brazil should heed the warnings.

    Esprit2010-09-15 08:14:13

  • #153265

    jeb2886
    Member

    I believe some of the concerns with the Brazilian debt level have to do with interest rates. While the GDP ratio might be lower than some others, the 10% carrying costs are fairly high compared with other nations. If the currency where to lose any value, the external debt would radically increase as well, adding more pressure.
    To balance the budget in many other countries will require additional taxes, some layoffs, and some cuts to spending. That means a lot of these great extra programs might be cut around here.
    How are 30% cuts in Brazilian government spending going to go over? Assuming administratively they aren’t going to cut anything there, this will come from all other social programs.

  • #153281

    HelloBrazil
    Member

    http://www.pernambuco.com/ultimas/nota.asp?materia=20100915155352&assunto=25&onde=Economia
    Mantega thinks the real is gaining value due to a conspiracy? Ermm

  • #153282

    [QUOTE=jkennedy]To balance the budget in many other countries will require additional taxes, some layoffs, and some cuts to spending. That means a lot of these great extra programs might be cut around here.
    How are 30% cuts in Brazilian government spending going to go over? Assuming administratively they aren’t going to cut anything there, this will come from all other social programs.[/QUOTE]
    Yes, I’m waiting to see how Castro’s laying off one million civil servants is going to go over! If he succeeds, then maybe Brasil will take note and start cutting the fat. Yet I think this announcement in Cuba may result in another “collapse of the Berlin Wall” scenario.
    The fact that politicians, judges, and the rest of the upper echelon of the Brasilian political structure receive pensions equal to 100% of their former salary is just mind-boggling to me! You’re right JK, the needed cuts won’t be administrative, it will be the povo that get hit (below the belt).
    Gringo.Floripa2010-09-15 16:01:35

  • #153284

    Anonymous

    [QUOTE=Gringo.Floripa] If he succeeds, then maybe Brasil will take note and start cutting the fat. [/QUOTE]
    I would wait until the flying pigs start to fall out of the sky, or the snowball delivery with a return address: Hades, before beginning to hold my breath, personally. Don’t get me wrong, wish it could happen, but i think it would take nothing short of a revolution.

  • #153286

    Deleted User
    Moderator

    [QUOTE=zerotres]http://www.pernambuco.com/ultimas/nota.asp?materia=20100915155352&assunto=25&onde=Economia

    Mantega thinks the real is gaining value due to a conspiracy? Ermm
    [/QUOTE]

    Knowing precious little about Brazilian politics yet assuming that its politicians are from the same international mould for the breed, I can but suggest that Mantega is waffling. Apart from the president of the central bank running naked with an erection and running after a donkey, all things being equal, I see little way that the Real’s value could be made to sink. As a free floating currency the only viable method of changing the dollar/Real exchange rate is none other than for Brazil to buy lots and lots of dollars. In fact Japan, having similar problems, has just attempted to do likewise.

    As to Brazil’s demonstrating great ability to turn difficulties into opportunities during this latest crisis, I fail to see the connection. The cause and effect are as different as chalk is to cheese. But hey, what do I know.

  • #153288

    jeb2886
    Member

    Castro was running a communist society. There are 11.5M people in Cuba. 3.5M are blow 15, or over 65, leaving roughly 8 Million people. Apparently there are roughly 5.1M people who work, meaning over 20% of the entire workforce will be laid off. That is not fat cutting, that is a change is a countries direction.
    The Real can be devalued by investors who start to fear their investments. As they leave the country, they will try and pull their money out, buying other currencies, much like the government would do. Based on other peoples views, that the currency is 50% over valued, this value is most likely coming from investors willing to buy up Reas with a 50% premium because the return still makes it worth while. So investor fear can cause a correction as well.

  • #153293

    Deleted User
    Moderator

    The timing of opportunities for governments to curb spending has never been better; it is the political soup of the day. The near collapse Greece exposed the outrage of fat civil servant empire building along with all the benefits and pensions that have beleaguered and outraged the taxpayer. Taxpayer anger can equal a political will that can ride roughshod over sanctified and ancient practices when votes are at stake. Portugal is off and running on the same track as is the UK and a number of others. Brazilian politicians can point in that direction by offering these world examples of leadership in troubled times.

    Brazilian politicians should also focus on the black market that has an untaxed annual turnover that incredibly matches that of Argentina’s GDP. It’s time to save money and collect money that, if spent correctly, might provide an infrastructure and education system worthy of a country ranking 8thin the world.

  • #153296

    Deleted User
    Moderator

    [QUOTE=jkennedy]
    …The Real can be devalued by investors who start to fear their investments. As they leave the country, they will try and pull their money out, buying other currencies, much like the government would do. Based on other peoples views, that the currency is 50% over valued, this value is most likely coming from investors willing to buy up Reas with a 50% premium because the return still makes it worth while. So investor fear can cause a correction as well.
    [/QUOTE]

    Apart from the ludicrous suggestion [by others] that the Real is overvalued by 50%, you are perfectly correct in saying that money talks as is demonstrated by foreign investors who are not in the game without the expectation of getting good to excellent returns. The value of everything is based on the sale price that buyers are willing to pay; everything and anything will find its own level in the marketplace. However should the unthinkable happen; say the election of a lunatic fringe government, then all bets are off, buy a plane ticket and get the hell out. [standing room only].

  • #153297

    jeb2886
    Member

    Unfortunately Greece and Portugals responses aren’t adequate to keep the countries going, they’re adequate to keep creditors off their backs. The sheer debt level is going to decimate their economies and only going to cause them to further go into a recession, further putting pressure on the government to cut even more services.
    Brazil has some wild spending, but if you were to make every politicians salary and pension drop to 0, you likely wouldn’t dent the budget. While they might seem to be robbing the people blind, they’re actions are very small in the grand scheme of things.
    GDP is an interesting metric, but it’s more important to view average income when saying things like “Worthy of a country tanking 8th in the world”. The average is very low per person, compared with other industrialized countries, which in turn means even if more money goes to education, there are just far more people to educate and thus each child will receive a very small amount. Netherlands ranked #16 is one of the best countries in the world to live. GDP can’t be used to show lifestyle conditions.
    Unfortunately, like any country, politicians will end up “hiding” their true compensation from the public. A huge cut in their pay will be made up with other incentives which the public won’t understand. Meanwhile, the only place to get true cuts is in large social programs.

  • #153298

    jeb2886
    Member

    Btw, I was hoping for a real interesting election with lots of unknowns, and lots of fear. Unfortunately, it appears that the elections are going to go pretty smoothly, that the new president isn’t likely to go off the deep end, and that they’re likely to keep investors moderately happy, as seen by the steady value of the Real over the last 6 months, even growing a tiny bit stronger as elections approach.
    I was hoping a massive investor panic would create a great buying opportunity.

  • #153301

    HelloBrazil
    Member

    [QUOTE=jkennedy]Btw, I was hoping for a real interesting election with lots of unknowns, and lots of fear. Unfortunately, it appears that the elections are going to go pretty smoothly, that the new president isn’t likely to go off the deep end[/QUOTE]
    I see a hint of crazy in Dilma’s eyes, so there’s hope for something “real interesting” during her term. LOL

  • #153302

    jeb2886
    Member

    I hope not, I don’t want to invest then. I wanted to invest when there was unjustified fear, which would result in a quick solution and a stable government there after.
    Selling because she’s crazy isn’t fool hardy, it’s a necessity to project your capital.

  • #153303

    [QUOTE=Esprit]

    Taxpayer anger can equal a political will that can ride roughshod over sanctified and ancient practices when votes are at stake.

    Brazilian politicians should also focus on the black market that has an untaxed annual turnover that incredibly matches that of Argentina’s GDP. It’s time to save money and collect money that, if spent correctly, might provide an infrastructure and education system worthy of a country ranking 8thin the world.[/QUOTE]

    Taxpayer anger” in Brasil?!? Brasilians can’t even get angry enough, long enough, to deal with the massive corruption that is a cancer in this country. Explain to me how someone like Sarney is still even allowed to hold any sort of political office?! Brasilians are far too passive a people for such anger; one reason I love them. They rather make love, not war. The recently formed “Tea Party” in the northern hemisphere would never even get off the ground here.

    With the implementation of the SIMPLES tax system for small businesses, the gov’t is tryingto get some of that undeclared, untaxed income of the huge underground economy into the treasury’s coffers, but the mindset to cheat the government (because the government [politicians] cheat the people) is a hard one to break, much less reform.

    In my small business we issue a nota fiscal, for the ACTUAL value, and then pay our taxes based on the actual amount collected. How many of you have made a major purchase, but the company issues the nota fiscal for a value substantially less than what you paid, so they don’t have to pay as much tax to the gov’t? Wow! Would you look at the show of hands!?!

    If there was a way to end the pervasive corruption, starting from the top down, imagine the potential this country would have, and the wealth available for each class of society! Your key phrase Esprit is “if spent correctly“. Unfortunately, I don’t see that happening, or at least, not in my lifetime….

  • #153304

    jeb2886
    Member

    Every political system has masses of corruption. Every one of them, and it’s always massive. The sheer amount of incompetence is also massive in every government. Every one of them.
    There is a point where collecting taxes becomes a zero sum game. Increase taxes and people decrease what they report. From all the business discussions I’ve had , the tax system in Brazil is broken to a point that corruption is the only way to do business. Changing the system won’t change the mentality, that will take a long time, as in decades to change. Chasing people down will help, but it will just cause others to find new ingenious methods of circumventing the laws. Until people culturally change, it won’t change.

  • #153305

    [/QUOTE]However should the unthinkable happen; say the election of a lunatic fringe government, then all bets are off, buy a plane ticket and get the hell out. [standing room only]. [/QUOTE]
    I’d like to request permission to use this quote, to send to some friends up north, should Sarah Palin ever move into the WH!!!

  • #153306

    jeb2886
    Member

    The safest place in that case will be within the US.

  • #153307

    [QUOTE=jkennedy]Every political system has masses of corruption. Every one of them, and it’s always massive. The sheer amount of incompetence is also massive in every government. Every one of them.
    Until people culturally change, it won’t change.[/QUOTE]
    That’s it in a nutshell JK… the corruption here is part of the culture. Yes, EVERY political system has corruption (power corrupts, right?), but not everycountry has corruption as part of their culture! To change a culture, you must change both the minds AND hearts of the populace.
    I was in South Africa shortly after Apartheid was abolished. I was appalled to see white people cut in front of black people in line at the supermarket, yet no one even blinked! You can change the laws with the stroke of a pen, but the hearts and minds, take a generation, maybe even two generations, to change.
    Gringo.Floripa2010-09-15 23:46:52

  • #153308

    815
    Member

    [QUOTE=jkennedy]The safest place in that case will be within the US.[/QUOTE]
    LOLYeah, because that crazy “See you next Tuesday” would probably lob bombs all over the place every time one her white trash daughters gets knocked up out of wed lock! LOL

  • #153316

    Deleted User
    Moderator

    [QUOTE=jkennedy]Unfortunately Greece and Portugals responses aren’t adequate to keep the countries going, they’re adequate to keep creditors off their backs. The sheer debt level is going to decimate their economies and only going to cause them to further go into a recession, further putting pressure on the government to cut even more services.

    Brazil has some wild spending, but if you were to make every politicians salary and pension drop to 0, you likely wouldn’t dent the budget. While they might seem to be robbing the people blind, they’re actions are very small in the grand scheme of things.

    GDP is an interesting metric, but it’s more important to view average income when saying things like “Worthy of a country tanking 8th in the world”. The average is very low per person, compared with other industrialized countries, which in turn means even if more money goes to education, there are just far more people to educate and thus each child will receive a very small amount. Netherlands ranked #16 is one of the best countries in the world to live. GDP can’t be used to show lifestyle conditions.

    Unfortunately, like any country, politicians will end up “hiding” their true compensation from the public. A huge cut in their pay will be made up with other incentives which the public won’t understand. Meanwhile, the only place to get true cuts is in large social programs.
    [/QUOTE]

    I would agree that GDP is by no means an indication of the quality of life yet it is the basis from which measurement can be analysed e.g. GDP per capita; a product of population size. Brazil’s per capita has some way to go as it stands at only 25% of that of the UK and a mere 17% of the US. Things start to get interesting when GDP is compared to population size. Brazil manages $1.6 trillion from its population of say, 190 million souls whereas the UK manages $2.1 trillion from its population of just 60 million and the US a massive £14 trillion from say, 300 million. Clearly Brazil has a long way to go even at the existing rate of growth to get even a sniff at the US figures; possibly sixteen years at the current rate of 8%; assuming of course that the US will stand still.

    When I mentioned infrastructure and education; the two outstanding issues that facilitate growth, I had in mind the very large uneducated section of the population that dilutes if not corrupts Brazil’s per capita number and a sharp reminder of the significant gap between the rich and the poor. Okay, let’s take a look in the biggest city in Brazil, Sao Paulo. Sixty percent of Brazil’s millionaires live there. There are more Arabian thoroughbred horses than anywhere else in the world. More Bentleys and Rolls Royce are sold than anywhere else. It’s top dog for global Ferrari sales, second in the world for Porsche, second for Lamborghini and fourth for Maserati – what’s wrong with Maserati? Great numbers of luxury power boats & yachts are sold there and more grand Cru wines are consumed than on any part of the planet. Education would lift this untapped the human resource that is currently being wasted on no better an endeavour that voting for numb nut politicians promising an extra bowl of rice.

  • #153317

    Deleted User
    Moderator

    [QUOTE=jkennedy]Btw, I was hoping for a real interesting election with lots of unknowns, and lots of fear. Unfortunately, it appears that the elections are going to go pretty smoothly, that the new president isn’t likely to go off the deep end, and that they’re likely to keep investors moderately happy, as seen by the steady value of the Real over the last 6 months, even growing a tiny bit stronger as elections approach.

    I was hoping a massive investor panic would create a great buying opportunity.
    [/QUOTE]

    A strange wish; wiping out billions that would negatively affect millions just to save you a few grand, and of course after your purchase you’d like the investors to return to enable your feel good factor. Few investors stand on the sidelines; he who dares, wins.

    Perhaps this election risk has been already discounted by investors and is truly carrying Lula’s legacy in as much that he was erroneously thought to be the bogyman prior to his election. That is not to say that his replacement will not turn out to be Jack the Ripper.

  • #153319

    [QUOTE=Esprit]That is not to say that his replacement will not turn out to be Jack the Ripper.[/QUOTE]
    All my Brasilian friends, here in the south, say she is a Black Widow Spider!
    Gringo.Floripa2010-09-15 23:40:04

  • #153321

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa] [QUOTE=Esprit]That is not to say that his replacement will not turn out to be Jack the Ripper.[/QUOTE]

    All my Brasilian friends, here in the south, say she is a Black Widow Spider!
    [/QUOTE]

    Aw, she‚Äôll make her mark on something or other and then, hopefully, will become intoxicated by not only her predecessor‚Äôs favourite tipple but also her position on the world‚Äôs media stage of handshakes and State dinners leaving the running of the country to those who feel they know what they‚Äôre doing. If it ain‚Äôt broke, don’t fix it. Shocked

  • #153323

    jeb2886
    Member

    She’ll do fine, and perhaps even manage to shake out some of the corruption, it’s really hard to say though.
    She is going to have to deal with a lot of unpleasant issues with the economy, and debt. Over the next 8 or so years, she’s going to be hit hard with a lot of unpopular decisions.

  • #153327

    [QUOTE=jkennedy]she’s going to be hit hard with a lot of unpopular decisions.
    [/QUOTE] Such as???

  • #153328

    [QUOTE=Esprit]

    Aw, she‚Äôll make her mark on something or other and then, hopefully, will become intoxicated by not only her predecessor‚Äôs favourite tipple but also her position on the world‚Äôs media stage of handshakes and State dinners leaving the running of the country to those who feel they know what they‚Äôre doing. If it ain‚Äôt broke, don’t fix it. Shocked[/QUOTE]

    Yes, I think the glamor and privilege of the position will certainly go to her head. You can already tell, she adores the photo-ops!

    Let’s do hope she follows her predecessor’s habit of spending more time out of the country, rather than in it, and like you said, leave the real decisions to the more knowledgeable and adept, just as has been done these past eight years….

  • #153350

    jeb2886
    Member

    Interest rates will effect jobs, how much the government can get for it’s debt when it sells it, inflation rates and what not.
    I was looking at other top paying governments and the only ones above Brazil, I wouldn’t even consider visiting. Lower them, and inflation starts to kick in. Keep them too high, and debt builds up too quickly.
    Something will have to be done with the debt. It’s building fast enough that it’s going to become potentially destabilizing in the future. Low interest rates + Inflation might help that out, but then again inflation isn’t a fun beast to play with.
    How about the oil? Oil can be quite a curse. Especially for a nation that could start doing decent exports within 5-10 years. The Real will be forced even lower in that case, because people will want to buy the oil. Now what happens? Who wants Brazilian goods when you can get Chinese goods for 80% less? Or American goods for 50% less than the locally produced goods? You might think people will say “Buy Brazilian!” but when it comes down to it, price will win out for the majority of the people.
    Currently China has already started to really dig into Brazil as a new market. It’s building up it’s relation very quickly over there, in just the last 5 years I’ve seen more goods coming from abroad. With the strong Real, these goods can compete with local products, even with that 70% tariff. If that is allowed to go uncheck for long, it will display a huge part of manufacturing in Brazil. But it’s going to be viewed as bad relations with China, or “hurting the poor” who just want the cheapest goods possible.
    Then don’t forget, the politicians are going to view many of these necessary changes are hurting THEM directly, while not giving a damn about the regular population. Getting a nice pay check + great value on the Real means lots of bargains over seas. Bargains on luxury goods, that no one else can afford. They’re currently getting upto 50% discount on those goods right now via just the Real being so strong.

  • #153365

    Deleted User
    Moderator

    [QUOTE=jkennedy]Interest rates will effect jobs, how much the government can get for it’s debt when it sells it, inflation rates and what not.

    I was looking at other top paying governments and the only ones above Brazil, I wouldn’t even consider visiting. Lower them, and inflation starts to kick in. Keep them too high, and debt builds up too quickly.

    Something will have to be done with the debt. It’s building fast enough that it’s going to become potentially destabilizing in the future. Low interest rates + Inflation might help that out, but then again inflation isn’t a fun beast to play with.

    How about the oil? Oil can be quite a curse. Especially for a nation that could start doing decent exports within 5-10 years. The Real will be forced even lower in that case, because people will want to buy the oil. Now what happens? Who wants Brazilian goods when you can get Chinese goods for 80% less? Or American goods for 50% less than the locally produced goods? You might think people will say “Buy Brazilian!” but when it comes down to it, price will win out for the majority of the people.

    Currently China has already started to really dig into Brazil as a new market. It’s building up it’s relation very quickly over there, in just the last 5 years I’ve seen more goods coming from abroad. With the strong Real, these goods can compete with local products, even with that 70% tariff. If that is allowed to go uncheck for long, it will display a huge part of manufacturing in Brazil. But it’s going to be viewed as bad relations with China, or “hurting the poor” who just want the cheapest goods possible.

    Then don’t forget, the politicians are going to view many of these necessary changes are hurting THEM directly, while not giving a damn about the regular population. Getting a nice pay check + great value on the Real means lots of bargains over seas. Bargains on luxury goods, that no one else can afford. They’re currently getting upto 50% discount on those goods right now via just the Real being so strong.
    [/QUOTE] Fascinating…but don’t give up your day job. Confused

  • #153375

    Two articles along the lines of this forum topic, exchange rates (in the form of currency wars) and the strong economy in Brasil (hence a strong Real)….
    http://theeconomiccollapseblog.com/archives/currency-war
    http://www.cnbc.com/id/38758907
    The CNBC article has already been posted in another forum thread on this site.

    Gringo.Floripa2010-09-17 07:16:46

  • #153376

    Another one to read with your cafe da manha….
    http://www.gata.org/node/9014

  • #153422

    agri2001
    Participant

    The old saying in the markets is when a broker put`s a “buy” signal that is the time to sell.
    Mr Zell does not mention the fact that he has been disengaging from Brazil for the past year or so.

  • #153440

    [QUOTE=agri2001] The old saying in the markets is when a broker put`s a “buy” signal that is the time to sell.Mr Zell does not mention the fact that he has been disengaging from Brazil for the past year or so.
    [/QUOTE]
    Could be… but maybe Zell was just unloading an additional chunk of Gafisa, which he probably bought at it’s low of $2.70
    A cold wind blowing here in the south, dropping to 45F/10C over the weekend….
    A good time to do nothing but some reading. A few articles, perhaps to be of interest to others, in no particular order.
    Bom FDS!
    http://www.creditwritedowns.com/2010/06/brazil-real-is-rich-might-get-richer.html
    (once PBR offers these new shares, maybe we’ll see a “weaker” Real)
    http://www.fundmymutualfund.com/2010/08/cnnmoney-is-party-about-to-end-in.html
    http://topforeignstocks.com/2010/05/16/the-10-most-profitable-brazilian-companies
    http://www.investmentu.com/2010/July/bargain-hunting-in-brazil.html
    http://www.bloomberg.com/news/2010-09-15/brazil-s-real-falls-from-nine-month-high-as-brazil-steps-up-intervention.html
    http://online.wsj.com/article/BT-CO-20100917-705791.html

  • #153492

    The comments on this particular forum thread have embraced far more than mere predictions in the exchange rate of the BRL in 2010. The future economy of Brasil has been discussed, as well as the near-horizon economies of N. America, the EU, and even China.
    I happened upon these videos tonight:
    http://www.youtube.com/watch?v=udT3dbbryEU
    http://www.youtube.com/watch?v=BIVVL43qPXY
    The first youtube link may paint a prescient picture of Brasil’s (possible) future. I found the following statement about Japan’s GDP growth reason to pause; Brasil could possibly be following the same footsteps.
    “In the 1960’s Japan’s GDP grew by an average of 10%; 5% in the 1970’s, and 4% in the (early) 1980’s.”
    Yet by 1986….
    The other youtube link paints a not-so-pretty (possible) picture of what might be the very near-future scenario in the US. And if so, most likely will follow to be the same in the EU.
    Brasil is in a VERY fortunate position (presently), in that she is completely independentin the crucial categories of (in order of priority) water, food, and oil. The fact that approx. 80% of the country’s electrical energy is generated by (clean) hydro means, is another major plus, and was one reason on my list to move here!
    I keep blowing my trumpet to my family and friends: “Come here! Come now!”

    “Progress, far from consisting in change, depends on retentiveness.
    When change is absolute there remains no being to improve
    ,and nodirection is set for possible improvement:
    and when experience is
    not retained,as among savages, infancy is perpetual.
    Those who cannot remember the past are condemned to repeat it.”
    ~ George Santayana: The Life of Reason~

    ALL opinions, pro or con, are welcome….

    Gringo.Floripa2010-09-19 21:39:03

  • #153495

    jeb2886
    Member

    It’s unlikely you’ll see anything similar to Japan. The population was highly educated, it was very dependent on exports and it had a very different culture where there are dozens of middle men.
    The worst case, is Brazil defaults on it’s debt and basically “starts over”. Worst case. The starting point would see all foreign investors leaving, but probably little else changing. The rich will stay rich, the middle class will hurt a bit possible. The uneducated will stay where they are.
    Better case, things are balanced out, and more emphasis is put on education.
    The US has enough water, if they were to max out water usage tomorrow, they would simply need to implement water saving strategies. Something like 18% of the water in NYC is lost through leaks! Toiled, showers and sprinklers just go through water like crazy. It would require tidying up the system. No big deal. Food, it’s a world exporter, no big deal. Oil, well it creates 40% and lets be fair, Canada and Mexico are tide together, that gives them 70%+. Coal usage could be stepped up without major problems. *MINOR* improvements in gas usage could probably close that 30% gap over night!

  • #153498

    [QUOTE=jkennedy]The US has enough water, if they were to max out water usage tomorrow, they would simply need to implement water saving strategies. Something like 18% of the water in NYC is lost through leaks! Toiled, showers and sprinklers just go through water like crazy. It would require tidying up the system. No big deal. Food, it’s a world exporter, no big deal. Oil, well it creates 40% and lets be fair, Canada and Mexico are tide together, that gives them 70%+. Coal usage could be stepped up without major problems. *MINOR* improvements in gas usage could probably close that 30% gap over night![/QUOTE]
    Just curious JK, but you wouldn’t happen to be mole for the US gov’t would you, planted on this site for spin control?
    It’s a known fact, the Ogallala Aquifer is severely depleted, and is not being replenished. And just where do you think the “wheat belt”, the “bread basket” (the bulk of the US farms) is located? Above the Ogallala Aquifer. Now compare that with the Guarani Aquifer….
    “Tidy up the system…”?! Do you have any idea how many major US municipalities have ANCIENT and CRUMBLING water supply systems in desperate need of overhaul and reconstruction? Last time I looked, these municipalities are also on the verge of bankruptcy! “No big deal” to repair them?!? Then why isn’t it happening NOW?
    Go ahead, step up the use of burning coal to create energy, without”major problems” (air pollution and acid rain).
    http://www.policyalmanac.org/environment/archive/acid_rain.shtml
    Give me CLEAN hydro-electric any day of the week.
    And just WHERE do you come up with these figures (18%; 40%; 70%; 30%)???
    Don’t mean to be disrespectful, and as I stated, ALL opinions welcome. Yet some confirming links to the various statistics you simply just throw out there would be appreciated, not just by me, but I think the forum at large….
    Gringo.Floripa2010-09-20 00:36:04

  • #153499

    jeb2886
    Member

    You think the government hasn’t done some research on these items? They aren’t critical, or anywhere near it. The media picks up extreme cases, because “It’s peaks interest in viewers” not because it’s notable news.
    You would take hydro over coal power? Hm ok. But that doesn’t help the US, where most hydro power has been already tapped. The question for the US is, if they ran out of oil is: should they take no food, no water, no electricity, no heat, over coal?
    Some general oil figures:
    http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html
    http://www.eia.doe.gov/energyexplained/index.cfm?page=oil_home#tab2
    Water loss figures. You’ll see a few cities on there, showing it’s a pretty common problem. This is the first link from my search, and not the numbers I was referring too, but it’s pretty obvious it’s a large scale problem, with the potential for huge gains if necessary.
    http://www.corrosion-club.com/waterfigures.htm

  • #153500

    [QUOTE=Gringo.Floripa]
    The fact that approx. 80% of the country’s electrical energy is generated by (clean) hydro means, is another major plus, and was one reason on my list to move here!

    [/QUOTE]
    Correction: I was wrong… 91% of Brasil’s power is hydroelectric, not 80 percent. In the US, it’s 12 percent.
    http://www.waterencyclopedia.com/Ge-Hy/Hydroelectric-Power.html
    http://www.vector1media.com/articles/features/14744-hydroelectric-plants-power-brazils-economic-growth-

  • #153507

    HelloBrazil
    Member

    You’ve gotta take those NIA videos with a grain of salt. They want to scare people about inflation so you then buy the gold they recommend on their website and newsletter.
    [QUOTE=Gringo.Floripa]
    Brasil is in a VERY fortunate position (presently), in that she is completely independentin the crucial categories of (in order of priority) water, food, and oil.[/QUOTE]
    Water yes. Until the rainforest is all engulfed by sugarcane and soy, and the interior turns into the Republic of the Sertão. Then what?
    China buys Brasil’s raw materials, makes crap, and sells it back to Brasil. The US is dependent on China too, and China’s investing heavily in Africa. Unless Brazil can develop local industry to start producing here (from raw material to finished product) then China is getting the biggest piece of the profit in that process. Brasil can’t have long term, sustainable growth if it depletes the land to sell it all to China asap.
    Brazilians are paranoid about the US invading the Amazon, but it’s China that’s buying land in Brazil.
    There’s a sensitive issue about oil. Brazil has all this oil, some fields are not yet producing. Will the price of oil go up soon? Will Brazil be a bigger producer by then to take advantage of the higher oil prices? What happens to the price of oil if the world invests more in eolic and solar? (I don’t know the answers to these.)
    Brasil buys too muchwheat from abroad. Either Brasil knocks down more forest to grow wheat, or Brazilians stop eating their paozinho.
    Same for high end electronics. Lower taxes would bring in companies like AMD and Intel. (Not essential to survive some sort of apocalyptic world, of course LOL)
    Those are some random morning thoughts…

  • #153509

    celso
    Member

    [QUOTE=Gringo.Floripa] [QUOTE=Gringo.Floripa]
    The fact that approx. 80% of the country’s electrical energy is generated by (clean) hydro means, is another major plus, and was one reason on my list to move here!

    [/QUOTE]

    Correction: I was wrong… 91% of Brasil’s power is hydroelectric, not 80 percent. In the US, it’s 12 percent.

    http://www.waterencyclopedia.com/Ge-Hy/Hydroelectric-Power.html

    http://www.vector1media.com/articles/features/14744-hydroelectric-plants-power-brazils-economic-growth-
    [/QUOTE] Yet due to the corruption and high taxes, your electric bill will be higher than what you pay in Europe or the States.LOL

  • #153567

    [QUOTE=GreatBallsoFire]Yet due to the corruption and high taxes, your electric bill will be higher than what you pay in Europe or the States.LOL[/QUOTE]
    Infelizmente, e verdade! But that’s all the more reason to be as much “off-grid” as possible; solar and wind are very feasible in almost all of Brasil. PV panels are still pricey, but perhaps that’s one item the Chinese can begin to “flood the market” with here. ;-) And while energy remains cheap(er) in US and EU, people won’t feel there is a need to embrace alternative forms energy, at least not the mainstream….
    Gringo.Floripa2010-09-20 18:24:52

  • #153568

    [QUOTE=jkennedy]You think the government hasn’t done some research on these items?
    You would take hydro over coal power? Hm ok. But that doesn’t help the US, where most hydro power has been already tapped. The question for the US is, if they ran out of oil is: should they take no food, no water, no electricity, no heat, over coal?[/QUOTE]
    Are you referring to the same entity that had conclusive evidencethere were WMD’s in Iraq??? With political family dynasties, that were in the oil business (or still are, by way of proxy), I’m not so sure if I’d rely on what “research” has been published.
    Jimmy Carter installed solar panels on the roof of the WH. Reagan removed them. Imagine in the 30 years since JC, each and every administration was seriousabout alternative energy?! Imagine if the ONE TRILLION dollars spent injust the past nine yearson the wars in Afghanistan and Iraq had been spent on R&D using alternative energy??!! Using it not as a novelty, but as a necessity. Shoot, let’s just cut that expenditure in half, to 500 billion dollars…. Imagine!
    The major oil companies have had several years running of the best profits EVER, yet they’ve spent a mere 4% of their profits on alternative energy R&D (statistic from Eaarth, by Bill McKibben). If we didn’t have to imagine these scenarios, but they were in fact reality, you wouldn’t even have to be considering using a fossil fuel like coal. Enjoy the carcinogens and acid rain….
    Gringo.Floripa2010-09-20 18:47:47

  • #153569

    jeb2886
    Member

    % wise brazil is producing more hydro power.
    Canada369.5
    Brazil363.8
    United States250.6
    But looking at it this way, you’ll notice that the US is already producing a lot of power. The key difference is that the US requires *MASSIVE* amounts of power.
    There is no one solution that could easily replace fossil fuels for the energy demands of the US. There are lots of ideas if expanded to enormous scale would, but of course that would be nearly impossible. There will be many power sources in the future, including nuclear, wind and solar that will come into play but there will be a demand for fossil fuels for decades to come. It’s unfortunate but it’s how it will be.
    Solar power isn’t cheap either, it requires a lot of expensive hardware and production. It isn’t cheap to make solar, and there is a lot of money currently chasing “cheaper” solutions. There are a few that look promising, but at current, it’s not that cheap. Solar takes about 12 years to “pay off” in the US, with a 30% tax credit and ultra low interest rates. In Brazil, I don’t believe there is a solar credit, I could be wrong, but +30%lost tax credit + 70% tariffs + 10%/year interest rates make it prohibitively expensive in Brazil.
    Brazil doesn’t have a climate that is well suited to wheat. So it will always import. Not a big deal, they have other valuable crops to trade with wheat producing nations.
    There is oil everywhere in the world. Canada has possibly the largest oil reserves in the world in the tar sands, unfortunately it’s expensive to get it out, but as oil prices rise it becomes more feasible.
    Brazil has a huge manufacturing base, but it isn’t competitive. Even with a 70% tariff people want the chinese products! People refer to it as crap often, but when it’s the only viable source, it gets bought. Brazil has enough manufacturing.
    No one is “invading” the amazon. Water can be purified and brought in from other sources. It’s just a silly rumor people like to send out. If water becomes an issue, trying to import it from half way around the world isn’t going to be viable in *ANY* sense. Oil is $70 barrel. I can buy water in that quantity for pennies. HUGE difference. To make water worth while, we would have to bring it up to several dollars per gallon. At which point, Americans aren’t going to be flushing their toilets for $20 a flush. http://www.cornerstonesmud.com/id46.htm shows you where you use your water. A family uses roughly 255 gallons a day, 180 goes to showering and flushing. What would be your first inclination? Pay $20 per flush your toilet, find a better solution, or go to war and then pay $10 per flush with your cheaper water. It’s not happening, no one is stealing any water, and water solutions will implemented when it becomes cheaper to implement them than it does to get more water.

  • #153570

    jeb2886
    Member

    It seems that you’re confusing what would be best for people and/or the country with what is necessary for the country to continue.
    I agree, investing in alternative energy is good.
    Is it needed? Not right now. When it becomes necessary, it will happen. When oil hits $200/barrel there will be masses of developments and lots of innovation. Until then, no, it’s not necessary. Wise yes, necessary no.

  • #153578

    [QUOTE=jkennedy]I agree, investing in alternative energy is good.
    Is it needed? Not right now. When it becomes necessary, it will happen. When oil hits $200/barrel there will be masses of developments and lots of innovation. Until then, no, it’s not necessary. Wise yes, necessary no.[/QUOTE]
    So I have learned I have cancer… My doctor told me quite sometime ago to alter my diet, but what does he know? Right now it’s a just small tumor, so not really necessary to have surgery. When it grows bigger, when I become incapacitated, when my life and lifestyle is severely affected, when it’s absolutely necessary, the surgery will happen. Besides, there may soon be some developments and lots ofinnovations….
    Uahhh cara, o que te fumando?!?!???

  • #153579

    jeb2886
    Member

    Comparing high gas prices, with a life threatening tumor. Obviously not the same thing.
    This is like any other world issue, and how it’s likely to be handled. Maybe it would be nice to handle it early, but unlikely, and again not necessary. A solution will be made, when it is necessary. The worst case scenarios are not life threatening, but obviously life altering until a solution is put in place. Food won’t just disappear one day. It might cut back. Gas won’t disappear one day, it will scale back each year, putting more pressure on the price of gas.

  • #153590

    [QUOTE=jkennedy]Comparing high gas prices, with a life threatening tumor. Obviously not the same thing.[/QUOTE]
    I believe the premise was energy (oil) dependencevs independence, not high gas prices. Brasil has one of the highest prices of gas on the planet!
    Dependence on oil IS life-threatening. I wasn’t “comparing”, that was a metaphor. Denial is a legitimate survival mechanism, problem is, it doesn’t work in the long term….
    Gringo.Floripa2010-09-20 23:21:00

  • #153593

    jeb2886
    Member

    Really? If it’s the highest in Brazil, Brazil must be on the brink of absolute chaos and destruction.
    Or it could mean that the US has a LONG ways to go in terms of pricing for GAS to become a complete and devastating or life threatening problem that you seem to think it is.
    It’s the same in most European countries, with gas being in line with the cost in Brazil. The US has very cheap fuel, and it’s only because of the limited amount of taxes placed on fuel, not the actual cost of the fuel itself. Europe isn’t about to die from a tumor like wound from high gas prices.

  • #153604

    Deleted User
    Moderator

    UK Gas [petrol] price is approximately R$3.13p/l Diesel is R$ 3.22p/l

  • #153608

    sven van ‘t Veer
    Participant

    [QUOTE=Gringo.Floripa]
    Brasil has one of the highest prices of gas on the planet![/QUOTE]

    Ever been to Europe ? In most countries the price is around 1.40 euros, about a sixth higher than here in Brazil.

  • #153621

    agri2001
    Participant

    Yes, true but try comparing the wage scale between EU and Brazil and you can see that Brazilian consumers are at a deep disadvantage.Wink
    Besides, I thought Brazil was self sufficient in petroleum and last year they spent 5 billion dollars in petroleum purchases to keep up with internal demand. Something doesn`t add up

  • #153674

    [QUOTE=sven] Ever been to Europe ? In most countries the price is around 1.40 euros, about a sixth higher than here in Brazil.[/QUOTE]
    I suppose it depends what grade you’re buying (and when in Europe, local friends do the driving, not me). But here in Brasil, I just bought gas today, at the BR posto. Podium, which is their highest grade, will cost you a pretty 3.19 per liter! With today’s (miserable) 1.71 rate, that comes to 1.87 USD per liter. So if one US gallon equals 3.78 liters, you’d pay over $7 PER GALLON (for this grade)! What is “high-test” selling for in the EU the these days (converted to USD/Gal)? When my Yankee brothers cry about the price of gas, I turn a deaf ear….

  • #153682

    jeb2886
    Member

    Well then, if gas is so much more expensive based on income in Brazil, the rest of the world has a LONG ways to go before worrying about gas prices! Everyone else in the world will have to give up on oil long before the US has to! Which will keep the oil flowing to the US as high prices, but it will keep flowing!
    The difference is, in Brazil cars, cities, jobs, buses and activities are all based around moving around cheaply. The US has cheap gas, but cars, cities, buses and activities are not designed to be done quickly, cheaply or on limited fuel. While gas might be 1/4 of what it cost in Brazil, people need 10X more to live their lives here.
    This is of course what will change as oil prices increases. People will move closer to their jobs, ensure they don’t need to drive from one side of the city to the other every day, and they’ll be purchasing more fuel efficient cars. SUV’s get like 12mpg. A prius gets around 65. A simple change from SUV to prius like mobile will net them a 5x savings in fuel.
    We wear jackets in our office because it’s too cold during the summer.
    We wear jackets in the mall because it’s too cold
    We wear tshirts at home during the winter because we have the heat jacked so far up that we’re sweating indoors.
    There are many areas where very very small modifications to our way of living will make huge impacts on the amount of energy required to run the country. Without getting aggressive at all, there are dozens of possibilities. When the time comes, the change won’t be hard. All of these options require almost no thinking and will mitigate any major issues very quickly, giving us time to ramp up other solutions.
    Net/net there isn’t anything to worry about right now. Nothing dramatic will happen.

  • #153687

    [QUOTE=jkennedy]Well then, if gas is so much more expensive based on income in Brazil, the rest of the world has a LONG ways to go before worrying about gas prices! Everyone else in the world will have to give up on oil long before the US has to! Which will keep the oil flowing to the US as high prices, but it will keep flowing!
    Net/net there isn’t anything to worry about right now. Nothing dramatic will happen.[/QUOTE]Normal0falsefalsefalseMicrosoftInternetExplorer4

    AGAIN… the premise whichyou and I were discussing JK (which has wandered greatly from this forum topic)wasdependency on oil, nothow much a gallon/liter of gasoline costs, inBrasil, the US, or even China. Butwhatever….

    You evidently are contentlooking through your rose-colored glasses, and live in bliss with pat genericresponses like “it will happen, when absolutely necessary”; when thetime comes, the change won’t be hard; and “net/net there isn’t anythingto worry about right now”. Acordacara!When your “absolutelynecessary” scenario arrives, others will have made preparations when itwasn’t yet necessary. You’ll bescrambling to catch up, while others calmly move onward and upward. Those that have eyes to see, and ears tohear, already understand. However, forthe deaf and blind. BOA SORTE!!!Gringo.Floripa2010-09-21 20:12:18

  • #153688

    HelloBrazil
    Member

    [QUOTE=jkennedy]The difference is, in Brazil cars, cities, jobs, buses and activities are all based around moving around cheaply. The US has cheap gas, but cars, cities, buses and activities are not designed to be done quickly, cheaply or on limited fuel. [/QUOTE]
    The US has cheap gas, and poor public transport. It’s a car culture. When oil prices go up, the consumers feel the hit. The public transport system isn’t good enough for people to switch to it, and the government won’t be able to quickly improve it to attend the possible demand. Transportation will come to a halt for those who can no longer afford gas.
    In Brazil, public transport is subsidized by the government. Bus fares are affordable and routes are decent. I’m pretty sure bus companies pay lower taxes. Brazilians who drive cars (and pay dearly for gas and IPVA today) can easily make the switch to public transport. The government will need to put more buses on the street, but with high oil prices that’s unlikely without a fare increase.
    So we’re all in trouble when oil prices skyrocket. LOL

  • #153690

    jeb2886
    Member

    Unlikely, if someone comes out with viable alternatives in any other country, they will be viable in the US. If others are prepared, the US will simply buy those solutions and implement.
    No country can go without oil currently, and no other viable alternatives are out there. Therefore, we’re all going to step into the big messy situation down the road together. If someone works out a solution early, the US will simply move to it, without much worry.
    When oil takes off to $200/barrel, who will be able to buy it? What will it effect? Who will it hurt? Well all energy costs will shoot up. Food costs will go through the roof. The people effected by this are the poor and countries who can’t afford $15/gallon. While it would be ultra painful for the US, they will be able to pay the $15 AND buy the solutions others have found, bridging the necessary gap. Others will be reeling from food costs and energy costs that are destroying their countries, while the US will be dealing with complaints of high gas bills. No food, or it costs a lot to fill up my SUV!!! which is worse? :)
    Some countries will be better off than others, but in the end, it’s going to be the poor who will pay the ultimate price.

  • #153691

    jeb2886
    Member

    If gas his $12/gallon here, simply moving from an SUV to a Prius would solve their problems.
    If it moved to $24/gallon, well a little car pooling would again solve their problems.
    I remember the first time I drove in the HOV lane with my wife, she said why aren’t others in this lane? As we zipped past miles upon miles of stopped cars. And I said, there are 2 of us in this car, we get to go in this lane. That is when she realized that 5 lanes x miles upon miles of cars had single occupancy, while the HOV lane was EMPTY.
    Direct public transportation is pretty horrible in the US, but a combination of car pooling, and public transmit will go a long way IF gas got expensive enough.

  • #153692

    [QUOTE=jkennedy]Unlikely, if someone comes out with viable alternatives in any other country, they will be viable in the US. If others are prepared, the US will simply buy those solutions and implement.[/QUOTE]
    As previously stated (and reference already given): 91% of Brasil’s electricity is hydro-electric; the US generates 12% of it’s electricity by hydro. Water. Free. Clean energy. Are you seeing it yet?
    Limiting your driving because of high gas prices is one thing. Living in the dark, with no refrigeration (amongst other things) is another….
    “The US will simply buy those solutions” you say. With WHAT, worthless paper???
    Gringo.Floripa2010-09-21 20:29:04

  • #153693

    jeb2886
    Member

    Brazil has very little in terms of energy usage per person
    Their buildings aren’t running heavy A/C
    Their citizens don’t heat their homes to 80 in the winter (in the south)
    Their citizens don’t cook their homes to 70 in the summer
    What happens as citizens demand more comforts? When the average citizen wants 10x the energy they’re currently using? Heating and cooling are massive drains on an electrical system. Brazil will need to find a lot of new areas to dam up.
    Assuming Brazils energy needs don’t skyrocket, you’re talking about *1* country in the world. How about much of Africa? or Asia? What will they do?

  • #153694

    You’re still not seeing it JK. Try removing those rose-colored glasses for clearer vision.
    It doesn’t matter what the demand is. What matters is what is being usedto meet that demand. Reliance on oil is a dead-end, and the first country that will hit that end is the US, if she “stays the course”….

  • #153695

    [QUOTE=jkennedy]Brazil has very little in terms of energy usage per person
    [/QUOTE]
    Postscript: Sao Paulo has 23 million people to serve energy to. Ever seen the endless stretch of high-rise apartment buildings, in every direction of the compass, when coming in for a landing at GRU??? What city in the US even comes close to that size and concentration of energy consumption???

  • #153697

    jeb2886
    Member

    You obviously have no idea what you’re talking about.
    http://en.wikipedia.org/wiki/List_of_countries_by_electricity_consumption
    United States3,872,598,000 Roughly 300 Million people.
    Brazil403,029,000 Roughly 200 Million people.
    Adjusted for population growth. Brazil would use up 600M watts per year at 300M people, while the US uses up 3,900M watts per year.
    Do you see the difference in consumption there?
    THAT is huge.
    Brazil is either going to start consuming to have the lifestyle of the west, or live at the levels they are at now. As GDP raises, people WILL consume more, WILL demand more. Those numbers will skyrocket.
    Not many countries share the water that Brazil has, therefore very few will be able to switch over to that as a full alternative source of energy. There really isn’t much left, that can supply the numbers they need.
    When food prices skyrocket through the roof, do you think farmers in Brazil will
    A) Sell it to Brazilians for $5/ton
    B) Sell it to the world for $500/ton
    Which would you choose? Just because Brazil has the ability to feed it’s people, doesn’t mean the farmers aren’t going to demand world prices for that food.
    Who do you think will be able to afford those prices? The people in the US. Not brazilians.
    You’ll have all this power, being used to produce food that will be sold to the US. Brazilians will pay through the nose for that food. It will hurt Brazil far more than the US, and guess what? Brazilians will still be screwed in the end by the super high food prices :)

  • #153699

    JK, you’re so full of hot air, the US doesn’t need to worry after all, what to do in an oil crisis. You could power the entire eastern seaboard all by yourself.
    I have to ask, what is your age? Your reading comprehension skills are obviously elementary. I was speaking about a city, a rather HUGE city by the way, probably 3rd largest on the planet, that meets the energy demands of a dense mass of humanity.
    What do you not understandabout energy demand, and type of fuel used to meet that demand, as being UNRELATED?!?
    I think someone already suggested this to you on the forum: “Interesting, but don’t quit your day job”.
    Chato de mais cara… vou descansar. Acabou. De novo, boa sorte….
    Gringo.Floripa2010-09-21 22:00:53

  • #153701

    [QUOTE=jkennedy]When food prices skyrocket through the roof, do you think farmers in Brazil will
    A) Sell it to Brazilians for $5/ton
    B) Sell it to the world for $500/ton
    Which would you choose? Just because Brazil has the ability to feed it’s people, doesn’t mean the farmers aren’t going to demand world prices for that food. Who do you think will be able to afford those prices? The people in the US. Not brazilians.
    You’ll have all this power, being used to produce food that will be sold to the US. Brazilians will pay through the nose for that food. It will hurt Brazil far more than the US, and guess what? Brazilians will still be screwed in the end by the super high food prices :) [/QUOTE]

    Nossa, sem vergonha. Espera, e vamos ver o que passa no final da historia….

  • #153702

    jeb2886
    Member

    So Brazil knows how to power a densely populated city, that doesn’t use much power. Here is the problem, Brazil currently uses 6.5X less energy per person, that 23M people turns into a MINI city of 3.5M people compared with a US city.
    You’re all over the board. First saying that the US is going to die like a tumor, yet it’s obvious that when power demands rise they will be able to afford the expensive power and food prices that will follow. It doesn’t matter how well off Brazil is when it comes to power, when world prices for food increase, Brazil will have to pay them, regardless of whether they are importing or making the food in Brazil, farmers will charge WORLD MARKET prices. That’s how it goes.
    I’m sorry, your ideas of what will happen are so far fetched. You believe that Brazil can power a city of 23M power, but the inhabitants use 6.5X less power than a typical American. You think food will be easy for people to have in Brazil while Americans will be starving because they won’t have power. As if one day oil will just stop, and all the lights will just turn off.
    You ideas are so far out there, that they’re based on sensationalism and nothing scientific. Your economic skills are sorely lacking.

  • #153703

    [QUOTE=jkennedy]So Brazil knows how to power a densely populated city, that doesn’t use much power. Here is the problem, Brazil currently uses 6.5X less energy per person, that 23M people turns into a MINI city of 3.5M people compared with a US city.
    You’re all over the board. First saying that the US is going to die like a tumor, yet it’s obvious that when power demands rise they will be able to afford the expensive power and food prices that will follow. It doesn’t matter how well off Brazil is when it comes to power, when world prices for food increase, Brazil will have to pay them, regardless of whether they are importing or making the food in Brazil, farmers will charge WORLD MARKET prices. That’s how it goes.
    I’m sorry, your ideas of what will happen are so far fetched. You believe that Brazil can power a city of 23M power, but the inhabitants use 6.5X less power than a typical American. You think food will be easy for people to have in Brazil while Americans will be starving because they won’t have power. As if one day oil will just stop, and all the lights will just turn off.
    You ideas are so far out there, that they’re based on sensationalism and nothing scientific. Your economic skills are sorely lacking.
    [/QUOTE]

    No comment. Just wanted to be sure your raving madness and lunacy was posted for posterity, and that it wasn’t edited/recanted later on.

    Gringo.Floripa2010-09-21 23:06:03

  • #153762

    jeb2886
    Member

    I don’t edit messages. I’m guessing you do this, and thus you’re worried others will to, so be it. In fact it looks like you edit a lot of your messages just based on this thread.
    Anyways, lets sum it up.
    Brazil has a lot of Hydroelectric power. It’s a cheap source of power, it always has been. Every country utilizes hydroelectric power to the maximum. When their needs go above this, they can’t simply demand more water. It’s a resource, so they need to look else where.
    Brazil uses 6.5X times less energy per person than in the US, therefore it’s energy needs are minuscule compared with the US. Combined that with 1/3 smaller population and it’s electrical needs are minor.
    Brazil relies heavily on one major dam. When that dam failed a few years ago, it took out a huge amount of power in Brazil. If water levels drop in that area, they will be in dire needs, as they’ve got so many eggs in that one basket. This isn’t necessarily reliable, or well thought out. The US energy system has had a similar issue, but it was due to a cascading effect and not due to a single power plant going off line, which happens all the time. They are taken offline for regular maintenance.
    Lets look at the power systems and how well diversified they are for each country. Hydro is good, but it’s not something new, it’s not something cutting edge and it’s not like Brazil is going out on a ledge developing new technologies. No, Hydro is one of the cheapest forms of power to build, and maintain. Only Nuclear is cheaper, but has huge upfront costs. That being said, every country has Hydro, *IF* it’s available to them. The simple reason, it’s cheap and easy.
    http://en.wikipedia.org/wiki/Electricity_sector_in_Brazil
    http://en.wikipedia.org/wiki/Electricity_sector_of_the_United_States
    So what is Brazil doing to prepare itself for oil disappearing? Is that how you think it will happen? I’m not really sure how you define oil dependency ending, but I see the US being the last ones effected by it, since they can afford to buy oil at higher rates, while others will have to give it up, therefore others should be quickly looking for solutions. Lets look at how quickly Brazil is trying to ramp things up. Small scale is easy. Large scale is another thing.
    http://en.wikipedia.org/wiki/Electricity_sector_in_Brazil
    http://en.wikipedia.org/wiki/Electricity_sector_of_the_United_States
    Biomass! Oh wow, look the US produces twice the energy from Biomass. That is ethanol. Bet you didn’t know that.
    Wind! Oh look, a cute 15 farms, producing 237mw. Wow! Very small and cute. The US has 341, producing 11000mw. While we only use 6.5x more power per person, in wind, we’re producing 46x times more energy. WOW! Guess the US is far ahead here too.
    Geothermal is a huge renewable and far more reliable than even hydro. How much effort has Brazil put into it? Oh none. The US has 215 plants.
    Solar! That is a big one, everyone talks about Solar. Brazil is way closer to the equator than the US, therefore tons of it, right? Oh none. Odd. The US has 31 plants.
    How about diversification, in case any one energy source is depleted? 7 vs 15.
    In the end, Brazil uses a lot less power, so therefore it can rely on Hydro. It isn’t investing in technology, nor relying on it for alternatives. They aren’t preparing for any oil problems of the future. They simply don’t use that much energy now, however as the population grows and as energy demands increase , as they always do as incomes increase, energy problems will be in worse shape the the US, as they aren’t expanding other technologies, or even testing them.
    Lets jump back to what happens when oil starts running out. The cost will increase. Only those with enough disposable income will be able to afford fuel, that being mostly western nations. Those countries that produce oil will sell the oil at MARKET rates, which will be set by whoever offers the most for the oil. As oil depletes MARKET rates will increase, and even if Brazil is oil independent, their rates will increase as well. Why would Petrobras sell to Brazilians for $50/barrel when they can get $200 on the open market? Brazilians will have to pay MARKET rate for oil. Just like everyone else. They will be priced out of the market. They already rarely drive, they already have small cars, they already have fuel efficient cars. What can they do to offset the pain? Nothing.
    What can the US do? Well, buy smaller cars, buy lighter cars, buy more fuel efficient cars, maybe carpool once in a blue moon. Maybe not drive every single day, maybe move a little closer to work. Each person can make their own choices, but they have choices.
    High fuel prices will force food prices through the roof as massive amounts of fuel are used to produce food. As food prices go up in one area of the world, they will go up everywhere. Again we’re dealing with MARKET prices. Brazil wil have to pay more for food.
    Who can afford higher prices on food? Well people in the US can give up that Guici purse, what can Brazilians give up? Not that much. How about countries like Africa where recent food prices have devastated the poor? This is a prime example of what is going to happen everywhere, including Brazil.
    Brazil is neither preparing, or prepared for oil shortages.
    While the US will have a tough time, it will be NOTHING compared to the sacrifices that people in other countries will be required to make, just to survive.
    There are options I can see where Brazil could keep their oil prices down. Just look to Venezuela. Their government artificially keeps prices down, forcing stores to only sell local. Setting prices. That could work in Brazil, and be a huge success, right? You would love living like that I bet!

  • #153771


    I edit messages to correct mistakes I may have initially made in grammar, vocabulary, punctuation, and occasionallyto expandon a thought (like I’m doing now), but not to change content.
    Save your speeches JK. You don’t impress me, and after reading back through some previous threads, I saw that the feeling is mutual for other forum members as well.
    If you’re content to continue living in a country that has no real plans to seriouslydevelop energy alternatives to oil, that’s your choice (and your problem). Yet to rant about how when/if “it’s necessary” to do something, the US will simply “buy” it’s way out of the situation, and then morbidly predict Brasil will suffer most from hunger because all the food they grow here will be sold to the highest bidder (being of course, the US), then you my friend, are not only the arrogant “ugly American”, the world has grown to despise, but you are also one sick puppy!
    Do us all a favor here in Brasil: cancel your upcoming trip, because your kind aren’t welcome here. Stay home, and go attend a Tea Party and/or Sarah Palin rally! (o que vcs acha, a gente daqui???)
    BTW… if you DO want to impress someone (but it won’t be me), do you think you could supply some links other wikipedia to back up your (boring) monologues. Virtually any term googled will supply that site as one of the first results. Dig deeper.
    Enfim… Give it a rest dude!!! Boa sorte, vai com Deus….

    Gringo.Floripa2010-09-22 19:03:12

  • #153774

    jeb2886
    Member

    Here is your argument, pretty much summed up:
    I hate the US. I want them to fail. Brazil is the best! Therefore, the US will fail, and Brazil will be the best. No evidence is necessary. My wishes are all that is required!
    I provided links. Now you’re complaining they aren’t diverse enough. Yet you back nothing up either. You just plug your ears and say it can’t be so.
    Energy prices skyrocketed in 2006, and food prices followed. The poor where massively effected by this, in many countries around the world. Go read up on the UN’s site about problems with raising prices of food and the poor.
    Read up on obesity levels in the US skyrocketing. The food prices didn’t effect the US, they effected the rest of the world.
    This isn’t wishful thinking, this is how it is.
    I’m not saying the US is prepared. I’m not saying they’re doing enough to prepare. However, there are no alternatives currently to the massive energy needs of the WORLD. There is not one country in this world with a large population who consumes energy at a 1st world pace, who has a backup strategy, or even plans in place that will provide for those citizens in the even of an energy crisis. Simply pricing power out of reach of most (like Brazil does) doesn’t constitute a solution. The energy consumption in Brazil is extremely low, but I bet if you removed the wealthy you would see a dramatic drop in energy usage! Further than the 6.5x that currently exists between the US and Brazil.
    There are a lot of things I wish weren’t true, but that doesn’t make them so.

  • #153775

    irishvan
    Member

    jk- I haven’t read through the entire thread, but a couple of your last statements did make me want to comment:

    What can the US do? Well, buy smaller cars, buy lighter cars, buy more fuel efficient cars, maybe carpool once in a blue moon. Maybe not drive every single day, maybe move a little closer to work. Each person can make their own choices, but they have choices.

    High fuel prices will force food prices through the roof as massive amounts of fuel are used to produce food. As food prices go up in one area of the world, they will go up everywhere. Again we’re dealing with MARKET prices. Brazil wil have to pay more for food.

    Who can afford higher prices on food? Well people in the US can give up that Guici purse, what can Brazilians give up? Not that much. How about countries like Africa where recent food prices have devastated the poor? This is a prime example of what is going to happen everywhere, including Brazil.

    Being an American in my fifties, I remember several times when oil went up in the US and people changed their buying habits. However, we were forced to. Long lines at the gas stations in teh 70’s are the first I remember. A gas shortage. But even then people didn’t give up their big cars and buy smaller ones. Americans didn’t/aren’t buying smaller ones now because of the gas prices…some of the middle to lower income Americans are trading the gas guzzlers for smaller because of rebalancing their budget because of layoffs, food prices, etc. Americans don’t tend to give up things until we are forced to. I lived in South Florida for 13 years where the roads have a specific lane for car pooling. It was a joke. No one did it to save money. Stats show that even in the rough economic times now, the richer side of the US aren’t giving up their ‘Guici purse’. Thats why the rich folk are also losing their homes and cars. While your argument looks good on paper, because of the wealth of the US and everything we have, in reality it doesn’t work the way you might expect. The free economic system of supply and demand isn’t foolproof as it is run by too many merged companies and large corporations. They control too much of what we buy in the US. Americans, in general, don’t give up things because they want to or because they need to. We only give up things when we are forced to…unfortunately. And the we kick and fight the system, complaining all the time, no matter what the reason is. Americans have choices, but I’ll be the first to admit we have been spoiled, will continue to be spoiled, and don’t tend to give up things by choice…as you might elude to. And in reality, I think Brazil is more prepared for oil shortages than the US, for many reason.s

  • #153778

    jeb2886
    Member

    Bingo! That was my first post @MovingSoon.
    Americans don’t have to make the changes. They won’t make them. They don’t want to make them. They will do it only when an emergency forces it upon them.
    But based on that, the people who can afford higher priced oil, will be the Americans. The people who can make changes, are the Americans. They might be unhappy about it and do it grudgingly, but there are options open to them.
    While Brazil TODAY is in a better position, with a growing population, and growing economy, energy needs will outstrip energy production quickly in Brazil. The problem is, the problems aren’t starting today, they’re starting in 15 years. Populations and energy demands are growing around the world, and upcoming economies are the ones with the most rapid growth.

  • #153781

    815
    Member

    [QUOTE=Gringo.Floripa]
    Save your speeches JK.

    [/QUOTE]
    Juscelino Kubitschek was a great orator from what I have read! Tongue

  • #153782

    [QUOTE=jkennedy]Here is your argument, pretty much summed up:
    I hate the US. I want them to fail. Brazil is the best! Therefore, the US will fail, and Brazil will be the best. No evidence is necessary. My wishes are all that is required!
    I provided links. Now you’re complaining they aren’t diverse enough. Yet you back nothing up either. You just plug your ears and say it can’t be so.[/QUOTE]
    Okay, here we go again….
    For the record JK: I don’t hate the US. Yet just like my European ancestors did (each side of my family from different regions of Europe), I saw what I believe to be greener pastures, and better opportunities, in the long term, in another country, rather the one I was born in. When they left their respective countries, it wasn’t because they hated their mother country. Due to the circumstances each country was facing at the time (at different points in history), their decision to leave was very sensible, even wise.
    There were other countries I considered moving to, but Brasil won out. The fact it’s a country of immigrants, just like the US, was one reason (among many others).
    I decided to move to Brasil, invest in Brasil, make a life in Brasil, WAAAY before the financial meltdowns of both 2006 and 2008. Yet those events have only confirmed my decision was a sound one. I need only look now at the divisiveness within the country, the glut of homes for sale, the amount of people unemployed and for the length they’ve been unemployed, and the frightening rhetoric of people like Sarah Palin as my evidence.
    And that’s just for starters….
    You get a gold star for providing links JK (finally). Yet interestingly, you never bothered to do so prior to my suggestion. My suggestion came after I read one particular post where you were tossing out percentages like party favors, yet no footnotes or links were provided to back up those numbers.
    There is quite a difference between one’s opinion, and the actual facts! Everyone is entitled to their own personal opinion, but not their own set of “facts”. If I make a factual statement, especially a statistic,I WILL provide a reference. If I’m merely stating my opinion, I believe the education level of mostof the users of this forum comprehend that, hence no “reference” is required. What
    I’m suggesting now, is if you want people to take you as being somewhatcredulous, when you spout out all these facts and figures, you might consider providing a bit more than any third grader could find in less than one minute via Google. Can you do that?
    I admit, you occasionally do have some valid points, but your opinionated arrogance taints them. Bottom line: YOU’RE A BORE!!!
    Now, if you want to have the final word, be my guest. But make it just that: FINAL.


    Gringo.Floripa2010-09-22 19:58:27

  • #153788

    Deleted User
    Moderator

    For every opinion or belief that someone may hold, there may be another party who just as strongly oppose that idea. Both sides usually claim to sit with the best arguments, the real facts and the correct world view and, ironically, both sides regard the other as being indoctrinated, blind to the obvious and outright stupid. Most people only expose themselves to information that matches their own world view; it is uncomfortable to do otherwise.

  • #153801

    celso
    Member

    [QUOTE=Gringo.Floripa] [QUOTE=jkennedy]Here is your argument, pretty much summed up:

    I hate the US. I want them to fail. Brazil is the best! Therefore, the US will fail, and Brazil will be the best. No evidence is necessary. My wishes are all that is required!

    I provided links. Now you’re complaining they aren’t diverse enough. Yet you back nothing up either. You just plug your ears and say it can’t be so.[/QUOTE]

    I decided to move to Brasil, invest in Brasil, make a life in Brasil, WAAAY before the financial meltdowns of both 2006 and 2008. Yet those events have only confirmed my decision was a sound one. I need only look now at the divisiveness within the country, the glut of homes for sale, the amount of people unemployed and for the length they’ve been unemployed, and the frightening rhetoric of people like Sarah Palin as my evidence.And that’s just for starters….

    [/QUOTE] Gringo Floripa: You are confusing the long term with the short term. Yes the US has hit a rough spot, but after housing reprices, things will be fine. In fact the US is light years ahead of Brazil in so many areas and always will be. Take a look at patents issued. Look at the rail system, 10x bigger. In fact people in the States earn more and their money buys good stuff. Here Brazilians earn less than half and their money has half the buying power due to high taxes. My brother teaches high school math in California and makes nearly a hundred thousand dollars a year, easily 20x what a teacher in Bahia makes. Not to mention the horrible public schools, corrupt judiciary, corrupt politicos. Perhaps in the Floripa, the European part of Brazil, things are different. A few days ago a Globo or Record reporter was in Newark New Jersey, interviewing various Brazileiros who left Brazil and now live permanently in the States. One guy arrive twelve years ago with fifty dollars in his pocket. The reporter asked him, “Why did you leave Brazil.” He replied that his father was a reporter in Rondonia for a radio station and was murdered. His family was getting constant death threats. He had to leave. He was only about 20 when he arrived in the States. He now has a huge car dealership is a US citizen. Another person interviewed was a lady who cleans houses for 80-200 bucks depending on the house. She cleans three houses a day. The female interviewer was shocked. The house cleaner owns a great house and told the interviewer she only returns to Brazil to visit as she could never have the same quality of life in Brazil. The Brazilian Embassy estimates there are about three million Brazilians in the States. Most arrived with tourist visas and stayed. Some are now returning to Brazil. So about a thousand Brazilians leave for each Gringo coming in. Brazil with Lula has become China’s lapdog. China is calling the shots and will force Brazil to become the next dumping ground of Chinese crap as has clearly happened under Lula. China is now forcing Argentina to take more of their garbage. Brazil is next. I wish you luck as you have chosen a path less followed. GreatBallsoFire2010-09-23 09:28:21

  • #153803

    Deleted User
    Moderator

    In the grand scale of things we occupy buy a small envelope of time. Selfishly, the problems that the future likely holds are someone else’s to solve, not ours. Of course we want the best for the future generations however, if history has proved anything, it has proved that Man has been at one end of the court batting the balls played to Him by providence. Technological developments have been exponential during the past fifty years to a degree hitherto unimagined possibilities.

    Debacles such as the current financial crisis are but the result of a failed experiment in capitalism and social development. The continuous evolution of the global economies is resetting trading balances that is lifting the larger section of the populations out of relative poverty and is testing the advanced economies to failure point; we are witnessing global economic war, the net result of which will not see an unassailable dominance by any single economy; instead evolving into a symbiotic if not competitive harmony.

    Within my time envelope spent in Brazil I have benefited greatly, notwithstanding the valid criticisms that impinge on the quality of life. However, to make comparisons with North and South America is to discuss, apart from taste, the writing qualities of chalk and cheese.

  • #153805

    sven van ‘t Veer
    Participant

    [QUOTE=Gringo.Floripa] ¬† Everyone is entitled to their own personal opinion, but not their own set of “facts”.¬† [/QUOTE]
    Could you please try to teach this to brazilian politicians?

  • #153806

    sven van ‘t Veer
    Participant

    [QUOTE=jkennedy] So Brazil knows how to power a densely populated city, that doesn’t use much power.¬† Here is the problem, Brazil currently uses 6.5X less energy per person, that 23M people turns into a MINI city of 3.5M people compared with a US city.¬†
    [/QUOTE]
    Now that’s something to be proud of. Americans are the biggest wasters of energy. The average american household uses twice the power of a european household!
    Way to go!
    I just love to edit my posts:
    [QUOTE=jkennedy]
    Brazil uses 6.5X times less energy per person than in the US, therefore it’s energy needs are minuscule compared with the US. Combined that with 1/3 smaller population and it’s electrical needs are minor.[/QUOTE]
    So you’re saying it’s ok to pollute. The US is responsable for 20% of CO2 emissions while Brazil is only responsable for 1.26%.
    Way to go US We have a winner. 20% of CO2 emissions, or, 4.5 % of the world population are responsable for 20% of the total pollution.
    Even if brazilians used the same amount of energy (6.5 times you say), the emissions would still only be about half of the US emissions
    Something seems not right here
    Yup, they may be ahead of brasil regarding the use of renewable energy sources, but then agian, they should. they are the worlds biggest polluters per capita.
    [QUOTE=jkennedy]
    Americans don’t have to make the changes. They won’t make them. They don’t want to make them. They will do it only when an emergency forces it upon them. [/QUOTE]
    YeeeHaawwwww!
    And F*&# Everyone else!
    sven2010-09-23 10:14:49

  • #153808

    Max
    Member

    Normal0falsefalsefalseMicrosoftInternetExplorer4

    Wow -that was some pissing contest lads. Nothing much to do with the topic, but agood read in parts.

    In my view JK is actually stating a lot of ugly truths about Americans and theUSofA, but he states it in a very clinical fashion. I did not read this as ayee-hah commentary, but you can correct me if I am wrong JK.

    JK ispointing out the human nature of things, and for the most part I agree. Stuffgets done when the hammer is hitting. Oil will not stop for quite a few yearsto come, and oil prices are pretty cheap right now, especially in the States.The best thing that can happen for new technologies is to have oil at $200 abarrel, as then change really will be in play. People really will embracechange. But until then, new technologies will be advancing from the edges only.

    I don’tthink it right to shoot the messenger, and JK is giving us his insight into howmany Americans act, react and think, which is not a pretty picture, but I wouldsuggest it‚Äôs pretty accurate.

    During the last years of oil, the price will increase dramatically, and a lotof what JK says will play out in a free market system, unless governments takecontrol of their food, water and oil supplies, and limit what they sendoffshore, giving priority to domestic needs.

    If theworld really is not ready for when the end of oil comes upon us, internationaltrade will become secondary to the self sufficiency of nation states, withsovereign governments controlling the flow valves.

    So I donot agree with the premise that the USA being wealthy will mean itspeople and its government will be able to simply buy its way through to theother side. The free market system will be well and truly in the back seat bythat stage of proceedings, unless of course alternate supplies are coming closeto meeting the world’s needs by the time we reach the last years of oil, inwhich case its just business as usual, and those countries that are sitting onthe raw materials required by these new technologies will take centre stage.
    I did not read this thread as JK saying the USA is a more moral system thanelsewhere, more so that it is a greedy nation, wasteful, and that American’sare prone to not want to give up their luxuries unless they really have to, butthat’s mankind for the most part.
    And GF, this is just my opinion, hence the lack of hyper-link threads! Now whatabout that exchange rate.

  • #153811

    celso
    Member

    Right freinds, back to the over valued Real.

    I believe that once Dilma gets elected she and her buddies will force interest rates down in Brazil, so instead of spending 37% of tax revenues to service the debt, she will have more money for her social projects and infrastrusture. A lower real also helps the exporters and creates jobs. So in a year we are back at the 2.20-2.40 to the dollar and in China cracks, we see 3.0.PetroBras pulls a BP in deep water wasting the beaches of Rio to Floripa, 3-4.5 in a flash.

  • #153818

    jeb2886
    Member

    @GreatBallsoFire
    I’m glad you understood what I was saying. I would say every human will take what they can. As we see with politicans, the wealthy and anyone in between. It’s just the the US has more people in this position. Canada uses more power then the US, due to climate issues and heating. A smaller population, huge swaths of land and hydro allow it to export power, even to California! Countries will eventually change their ways as oil prices go up, but they won’t see it coming. Even now, countries are reeling from the high prices of food staples! There isn’t a lot many of them can do. We have our “own” issues to deal with right now, let alone figuring out how to help out future generations.
    I could see interest rates dropping, that would be interesting. Is there a lot of evidence this will take place? I believe it will make it harder for Brazil to get loans. Exports will be up, and China will essentially be cut off. China got in there, due to the high price of the Real. Before we see 2.20-2.40, we’ll likely see 3 though, because investors who were enjoying high yield interest rates will swamp the market with sell orders.
    Lets see who will prosper from this.
    This will be a huge boon to anyone who has purchased property recently, as interest rates fall, the amount of money a person can borrow and repay greatly increases. Housing prices will likely take a leap forward.
    Exporters could benefits, but they will first need to ramp up production and sales to take advantage of this situation, and they will probably want to make sure the Real is stable before doing any major investments. Nothing like ramping up everything, only to find the Real back at 1.8 levels again!
    Borrowing costs for the government might not change that much, at least not in the short term. Since their debt is likely in 5 or 10 year notes (?), each year they will see between 10%-20% roll over into lower rates. This doesn’t seem like it will be a huge boom to the government. It might heat up the economy though, which could push up inflation. Inflation is good for land owners, debt holders and businesses in general as they turn over quickly and often hold debt themselves. It’s bad for anyone saving, or living pay check to pay check, or anyone doing the lending (banks). It could also push up social security payments greatly.
    Is there any talk of what they would like to lower the interest rates too? I’m guessing there won’t be much room to move them without causing problems in the economy.

  • #153820

    Finrudd
    Participant

    I would have to agree with RichardV that JK makes some valid points, and I don’t see this as deserving of the reactions he gets. It has become all too easy and perhaps fashionable to be anti-American, which is rather tiresome given there are far more objectionable nations in the world in my opinion – I’m British, by the way.
    I think that there is also a slightly misplaced surge in Nationalism in Brazil right now – yes, the economy is doing well and China’s growth is fuelling that economic surge, but there are storm clouds growing on the horizon in being too dependent on China, which simply doesn’t have the population to support its continued growth (imo). But Brazil, take a look around you – there is a long, long way to go before you can consider yourself in the same league as countries like the US on so many levels. I love Brazil dearly, but I don’t fall for the empty rhetoric spouted by the politicians here, and I don’t cover my eyes to the desperate poverty, the lack of basic services, infrastructure, low levels of literacy, and high levels of child mortality, to name but a few of the challenges we all face here.
    So, JK makes some clear points – he does not say he condones the power consumption in the US – to accuse him of this is misreading his post. He is making a comparison between the energy production and consumption of two countries, and highlighting that the US has a more diverse ability to generate power, even if they consume comparatively more of it right now. I think one of his well made points is that if there is an energy crisis (above what we see now) then the US can and will adapt, but right now, they don’t feel the need to. Brazil’s energy consumption is, I imagine, on an upwards trend which comes part and parcel of development. Therefore I would also argue that it will be much harder for Brazil to fall back on lower consumption when this crisis hits.
    As for currency predictions – I expect to be able to buy more BRL for my GBP in 12 months time than I can today.

  • #153823

    jeb2886
    Member

    I’m not American either, I’m Canadian, married to a Brazilian.
    I think the Real will come down off these highs as well. If not for political reasons, then because it’s at a high. If there is a direction for it to flow, it’s likely backwards from here, just because that would be the easiest direction to go. Anything higher than it’s current standing will cut off even more exports and allow far too much Chinese goods to replace Brazilian.
    The key is, will interest rates in Brazil make it worth more to keep your money in Brazil or move it to GBP. I’m guessing British banks are offering about the same as US banks, which is about 0%. If the Real goes from 1.80 to 2.00 in the next year, it’s probably a wash. Your GBP might buy more, but if it had been in Brazil, it would have grown enough to cover this difference as well.

  • #153830

    Deleted User
    Moderator

    In my limited understanding of interest rates I see two things at play: The central bank rate governing the interbank base rate and the cost of credit in general. This rate’s dual primary purpose is the balance of controlling the cost of borrowing conducive to internal growth while holding back inflation in the economy to the government’s target of 4.5%.

    The interest rate applied to government borrowing is significantly different and is not dictated by the borrower rather it is a rate that is attractive to buyers at debt auction; market forces. Currently countries like the US and the European countries quake with fear when their AAA credit ratings are mentioned in the media and particularly when put on negative watch or down-graded. These AAA countries are fetching between 4 & 5% over ten year terms in recent auctions. Brazil’s credit rating is significantly, if not desperately lower, and listed as BBB- by S&P and Baa3 by Moody’s; that’s nine places down from the triple A gold standard. In fact these ratings are just one place up from junk status. We’ll all be ice skating in hell when Brazil can borrow at an interest rate as low as those of the first world countries mentioned. I suspect that financial institutions such as pension providers and insurance companies have, by mandate, very limited percentage funds for high risk investment below AAA ratings. In order to reduce the cost of government borrowing, Brazil must first get its act together and work on those credit ratings that are of paramount importance to investors.

  • #153850

    celso
    Member

    [QUOTE=Esprit]

    In my limited understanding of interest rates I see two things at play: The central bank rate governing the interbank base rate and the cost of credit in general. This rate’s dual primary purpose is the balance of controlling the cost of borrowing conducive to internal growth while holding back inflation in the economy to the government’s target of 4.5%.

    The interest rate applied to government borrowing is significantly different and is not dictated by the borrower rather it is a rate that is attractive to buyers at debt auction; market forces. Currently countries like the US and the European countries quake with fear when their AAA credit ratings are mentioned in the media and particularly when put on negative watch or down-graded. These AAA countries are fetching between 4 & 5% over ten year terms in recent auctions. Brazil’s credit rating is significantly, if not desperately lower, and listed as BBB- by S&P and Baa3 by Moody’s; that’s nine places down from the triple A gold standard. In fact these ratings are just one place up from junk status. We’ll all be ice skating in hell when Brazil can borrow at an interest rate as low as those of the first world countries mentioned. I suspect that financial institutions such as pension providers and insurance companies have, by mandate, very limited percentage funds for high risk investment below AAA ratings. In order to reduce the cost of government borrowing, Brazil must first get its act together and work on those credit ratings that are of paramount importance to investors.

    [/QUOTE] Dilma really doesn’t give a damn about what the elite can buy with reais abroad. She wants job growth and the China is proof that a soft currency creates exports and jobs. She will replace the farts at the Central Bank, redece interest rates, and allow the real to drift lower. She will have more money to fund her projects and damn the exchange rate.

  • #153852

    jeb2886
    Member

    There are other consequences to just lowering interest rates. She won’t actually see much of the gains for several years, as old debt rolls off and is replaced with new debt. If she drops it too far, inflation will take off. When it comes time to roll the debt, people will decide not to buy up the government bonds and instead vest in the market, company bonds and further heating up the markets.
    It’s not a simple switch you flip and it’s all good stuff flowing, it’s good and bad. It’s not just the buying power of the elite, its the government being able to raise money when it becomes necessary. Its the fact that they won’t see real gains from lower interest rates for years.

  • #153855

    Deleted User
    Moderator

    [QUOTE=GreatBallsoFire] Dilma really doesn’t give a damn about what the elite can buy with reais abroad. She wants job growth and the China is proof that a soft currency creates exports and jobs. She will replace the farts at the Central Bank, redece interest rates, and allow the real to drift lower. She will have more money to fund her projects and damn the exchange rate.[/QUOTE]

    Maybe I missing some point here about the minutia that is the elite buying goods abroad; what is that all about? But let me say that the existing Brazilian government debt has interest rates that are locked in tablets of stone, and upon checking today, the debt issue with the longest term runs to the year 2041 in a split mix of dollar and Real terms of repayment; with a very heavy bias toward dollar denominated debt. A strong Real therefore helps government debt repayment significantly when made in dollars. e.g. If you borrow at an exchange rate of say, 4 Reais to the dollar, you repay at 1.7. Conversely a period like today would be a bad time to borrow dollars as it is very unlikely that the exchange rate will improve in the Real’s favour.

    When the government borrows, it borrows in dollars. The Real is rarely if ever used rather its prevailing exchange rate in dollars. The winners here are those that have taken initial exchange rate risk and have bought Real denominated bonds; particularly foreign investors that have seen both the initial investment and repayments improve by anything up to 60% when converted into their local currency; dependant of course on when the debt was purchased and the exchange rate at that time. In short, a strong Real diminishes existing government debt.

    Incidentally, the farts at central bank have already announced that they will not serve under Dilma. As to the Chinese wanting a soft Real well, eh, yeah, doh! Of course it’s true that a strong Real impinges on Brazilian exports in general, albeit relatively small in term of GDP, but with exception to exports of vital materials with strong market values; materials that China desperately needs to import in order to grow its economy; advantage Brazil.

  • #153861

    majazac
    Member

    [QUOTE=Esprit]

    and Baa3 by Moody’s; [/QUOTE]

    Ba1! I’m not sure ratings are a accurate or a good measure to ascertain economic outlook though – look at what Lehmans, Bear Sterns, etc, etc were rated at in July 2008! Here’s a recent quick and simple Brazilian economic overview: http://www.edc.ca/english/docs/gbrazil_e.pdfBubbles2010-09-24 04:36:23

  • #153876

    Deleted User
    Moderator

    [QUOTE=Bubbles] …I’m not sure ratings are a accurate or a good measure to ascertain economic outlook though – look at what Lehmans, Bear Sterns, etc, etc were rated at in July 2008!… [/QUOTE]

    Well of course this was the biggest eye-opener when it all hit the fan. It’s worth highlighting one of the major global players, Mr. Warren Buffet, a majority shareholder in one of the big three credit agencies, Moody’s. As we know, credit agencies voice is feared when it’s suggested that an entire country can have its credit rating downgraded accompanied by panic in the streets.

    Mr. Buffett was subpoenaed against his will by the American Congress to answer questions about Moody’s high rating of what proved to be the very, very dodgy mortgage securities that almost brought down the entire financial system. In effect Warren just shrugged and replied that like everyone else, he was shocked. That’s it? He was shocked? Didn’t look at the figures? Nope, couldn’t see a thing. Millions of investors rely on credit agency’s ratings and now we see that when they get it wrong we are landed with the old shuffle, a smile and have a nice day; power without responsibility. Has there been a national inquiry about this outrage? No. Why? Credit agencies are paid high fees for their ratings and it would appear that not only are they incompetent but also corruptible by the corrupt. The only alternative scenario is that they are stupid.

    Meanwhile, Ireland suffering up to its eyebrows in doo doo, enjoys a rating of Aa2, Portugal, a sad sack, is rated A- and the clincher, Greece, is rated like Brazil BBB- Go figure!

  • #153886

    majazac
    Member

    Unlike Brazil, Ireland, Portugal and Greece will be bailed out by other EU countries I guess?

  • #153887

    Deleted User
    Moderator

    [QUOTE=Bubbles]

    Unlike Brazil, Ireland, Portugal and Greece will be bailed out by other EU countries I guess?

    [/QUOTE]

    Well the Gods of Europe, the purveyors of the dream that the Euro could begin to rival the almighty dollar, didn’t take into account the cultures of the mongrel nations that were invited to join the club. The dress code was dinner jacket but the Irish, the Portuguese and, particularly the Greeks turned up in t-shirt and flip flops.

    The future of the Euro is in the balance and an awful lot depends on a rapid turnaround in the respective economies; which at the present time seem dubious. Greece will fail by 2013/4 on the present course as they need a growth rate of 6% to avoid disaster. Certainly there isn’t enough money available to bailout all of the troubled countries. Brazil, on the other hand, has no need of a bailout nor will it require one given its current path. You will have noticed that yesterday all records were broken with the Petrobras share issue indicating to the global confidence that currently exists.

  • #153888

    majazac
    Member

    [QUOTE=Esprit]Well the Gods of Europe, the purveyors of the dream that the Euro could begin to rival the almighty dollar, didn‚Äôt take into account the cultures of the mongrel nations that were invited to join the club. The dress code was dinner jacket but the Irish, the Portuguese and, particularly the Greeks turned up in t-shirt and flip flops. [/QUOTE] What did the English wear to this party? They didn’t join the club, but more than likely will have to participate in any bailout….

  • #153889

    micko
    Member

    [QUOTE=Esprit]… with the Petrobras share issue indicating to the global confidence that currently exists. [/QUOTE]I read a short article on FinancialTimes.com where they referred to that ‘confidence’ as “the feel good factor”.

  • #153899

    Deleted User
    Moderator

    [QUOTE=Bubbles][QUOTE=Esprit]Well the Gods of Europe, the purveyors of the dream that the Euro could begin to rival the almighty dollar, didn‚Äôt take into account the cultures of the mongrel nations that were invited to join the club. The dress code was dinner jacket but the Irish, the Portuguese and, particularly the Greeks turned up in t-shirt and flip flops. [/QUOTE] What did the English wear to this party? They didn’t join the club, but more than likely will have to participate in any bailout…. [/QUOTE]

    They hired a tuxedo of course; albeit their underwear was a little soiled. Definitely no bailout for those socialist spendthrifts because they already pay through the nose in club fees.

  • #153900

    Deleted User
    Moderator

    [QUOTE=DUNGA] [QUOTE=Esprit]… with the Petrobras share issue indicating to the global confidence that currently exists. [/QUOTE]I read a short article on FinancialTimes.com where they referred to that ‘confidence’ as “the feel good factor”.
    [/QUOTE]

    That comment sounds more than a little like sour grapes, or is it that they were rekindling fond memories of that short-lived little puddle of oil in the North Sea; a short-lived feel good factor.

  • #153910

    jeb2886
    Member

    Credit rating might be questionable, but when everyone uses it, it’s important. Perhaps you wouldn’t use it, but you’re not a huge investor with billions to invest. Those players do use this system.
    Credit risk doesn’t mean that the people at the bottom WILL default, and the people at the top WON’T, it simply means in a risk/reward scenario, these people are less likely, and these more likely. If your odds of losing a 1/100 vs 1/20 for a lower rating, it doesn’t mean the 1/100 will never lose, it will, just far more infrequently.
    Warren Buffet made it clear that it wasn’t illegal what happened, it wasn’t necessary unethical either, people had to realize that if someone is selling something, then someone is on the other side buying it. Buyer beware, due diligence. Greed took over, investors simply didn’t care how these things were put together, they wanted them regardless because they were making money hand over fist. The good, and bad were making them a killing. When the bad blew up, they all of a sudden cared what they have bought.
    This is greed + stupidity on the buyer side. This was a short term bonus to people like GS, but GS basically sold all it’s goodwill, credibility, and reputation by doing this. It wasn’t illegal, but it was definitely not done with the best of faith either. Short term gain, but it cost them big.
    Until the credit moves away from near junk status, it’s going to cost a lot to borrow. Whether you believe it’s justified or not, others do, and they’re the big lenders….

  • #153919

    Deleted User
    Moderator

    The questionability of credit agencies has rarely if ever been at issue prior to the financial meltdown; hitherto they have been the holy grail of investor confidence. Further, the question of default risk applies to any sum invested, large or small, and it’s nonsense to argue otherwise.

    The whole point of the credit agencies is that while an investor doesn’t have access to the intimate financial status and potential for long term stability of a company in the case of Corporate bonds, a State in the case of Municipals or Sovereign in the case of countries, it is of critical importance that an investor have a trustworthy risk assessment to enable confidence, and that is the prime purpose of the agencies. Otherwise, laudable enterprises would be starved of investor finance. Indeed, the risk assessment is or should be enhanced because there are three such agencies that are supposed to be independent of each other: Moody’s, Standard & Poor and Fitch each having a scale of twenty categories into which risk can be assessed and compared.

    But of course Warren Buffet said that nothing illegal transpired. A credit agency cannot act as a guarantor against any losses made resulting from a default despite the defaulter having a good rating. The fees charged for such ratings don’t amount to the extent of any liabilities; in other words they are not insurance companies. All of which is beside the point. Mr. Buffet should have explained beyond the principals of indemnity to the principals of integrity in exercising due diligence when appraising these investments; there was a duty of care present.

    It is quite obvious that the agencies did not probe too deeply into the actual content of packaged mortgage securities and their asset base. At the heart of this issue one can point to the relationship between an agency and its client; the client pays the agency for this service and this payment is crucial for the economic wellbeing of the agency. It could be argued that such a relationship is open to coercion and, as things have transpired, these agencies had given their top rating to investments that were not worth the paper they were written on; a value therefore less than toilet tissue. The scope for the coercion and the corruption that, in my opinion, took place should be eliminated from this scenario; everybody can be corrupted despite arguing about the price.The world of finance and investment, despite the Gucci shoes and Lamborghini imagery, is not unlike any other business in that it chases profit. If profit is greed then let us agree that we are all greedy. Such profit should have a social benefit as a by-product, and in the case of the mortgage backed securities one could argue the social benefit of it being an intrinsic part, almost 70% of the US economy. Housing with appreciating value for the people; borrowing against the equity of appreciation, spending it on everything and anything to grease the wheels of commerce and all of it funded by more lending and packaging to all and sundry until this Ponzi scheme crashed and burned. Like the Wall Street and City of London boys, we all go about our daily lives like the chickens; head down tail feathers up while foraging for a living; oblivious to the world at large an unaware of the consequences or dangers that lie ahead. Fortunately we have laws and regulations in place to help prevent accidental disasters but with exception of those creative financial houses that have caused this hitherto unthinkable debacle. Apart from the lack of financial regulation, the blame for all of this can be fairly placed on everyone‚Äôs shoulders because we all went along for the ride. What‚Äôs my house worth…can I sell it for a profit? And where can I invest the cash? Who do we think pays for all of this? In the absence of ET; who apparently went home, it is us, we pay and are doing so right now.

  • #153922

    jeb2886
    Member

    I also would lay blame just on financial institutions. There was a *HUGE* number of people involved in this debacle.
    From the lowly person looking at mortgage, to a Realtor pushing a house they should know is too expensive, to the person accepting the loan, to the home appraiser, to the person involved in reviewing these mortgages, to the banks who allowed these things to happen, to the government who didn’t push far enough into the inner workings… There are dozens of parties involved in buying a house. At any stage, someone could have stood up and said WTF is going on.
    In general, everyone was making money and when people are making money they all seem to ignore the basics.

  • #153932

    majazac
    Member

    [QUOTE=jkennedy]I also would lay blame just on financial institutions. There was a *HUGE* number of people involved in this debacle.
    [/QUOTE]

    You could more than justifiably blame the Bank’s auditors. Their role is to assess what assets a Bank has, and make an independent valuation before signing off the PL sheet. Institutions will always artificially inflate profits for numerous reasons, but auditors should be able to spot disparagies as that is their job, and they receive large fees for doing so. I worked for one particluar Bank during 2008….they were valuing illiquid bonds (there was no B’berg or Reuters quote) at par even though the issuer had a low credit rating and the coupon had been ‘knocked-out’. So whilst this position’s value was artificially inflated by the Banks Middle Office, the ‘independent’ auditors should have picked this up, but didn’t. I’m sure similar scenarios were replicated by many other banks globally…I guess that some positions were so complicatedly entangled that the auditors, rather than rocking the boat and pushing for realistic valuations by unravelling the mess, just signed off whatever was put in front of them.
    Bubbles2010-09-26 07:42:46

  • #153934

    jeb2886
    Member

    I think the problem is more complex. There are regulations and programs to help out people. There are various laws they need to follow. Then there are varying degrees of loans they can make. They want X number of great ones, Y number of riskier, higher return ones, etc. With so many variables, it would be pretty hard for anyone to realize they were actually part of the problem. They might know there is a problem, but never be able to identify some of the small discrepancies at their job level.
    Everyone could see there was a bubble forming. But who was causing it? What was causing it? Did people really feel they were causing the bubble? Probably not.

  • #153936

    jeb2886
    Member

    Since it appears that Brazil has very long term debt, tied to USD, it’s pretty unlikely interest rates will budge by much. Which means this value of Real is likely to stay for awhile.
    I don’t see it getting much stronger, or much weaker. I’m going to guess that +-5% for this year, and probably +-10-15% over the next year. Since it’s fairly obvious who will win the elections and how they’re likely to proceed after the elections, it’s likely that investors have priced all these factors in.
    Higher oil exports + higher oil prices could influence the Real to go to new highs, but the amount of oil would have to increase drastically. Since imports and exports aren’t huge within Brazil, it’s likely not going to be a driving factor for the currency. Internal job growth will be necessary to push the country forward.
    As many have pointed out, even highly educated people within Brazil have a hard time finding a job. Adding more education to the mix probably won’t help, the need to create more highly paid jobs is necessary to first drain the currently pool of educated workers.
    Job creation and hiring happens best when employers aren’t choked by regulation and red tape. Hiring someone is never a problem, give them a shot, see if they help the company. It’s the firing them when they’re useless and/or dealing with red tape, that is a huge problem. This is one area that the government could clean up.

  • #153989

    majazac
    Member

    [QUOTE=jkennedy]I don’t see it getting much stronger, or much weaker. I’m going to guess that +-5% for this year, and probably +-10-15% over the next year. [/QUOTE] I pretty much agree with this….and stated the same in earlier posts to this thread ie I’m not jumping on JK’s bandwagon!

  • #154091

    majazac
    Member

    And one more article from today (Reuters): http://uk.reuters.com/article/idUKLNE68R00720100928

  • #154102

    Deleted User
    Moderator

    The single and inextricable fact is the massive increase in the money supply that has taken place with the major currencies; quantitative easing in all its forms that have served to dilute and diminish values. At some future time the full impact of this dilution will inevitably have its effects and a prerequisite of this may be the FX rates seen today before the avalanche of inflation gives the final kick in the pants. The dollar, in particular and despite its unique position of being the benchmark currency, it the most vulnerable in this regard – but hell, what do I know!

  • #154141

    jeb2886
    Member

    The dollar is still the safe haven for investors. Basically, if you’re in the boat with everyone else and everything is sinking, you’re all working together to save each other. The end result is that everyone rich will be in the same position when the dust settles. Perhaps it’s a worse off position, perhaps it a decent position. Who knows, the one thing you know, is that everyone else Rich is in the same position. If your neighbor has the same buying power as you do when it’s all over, then things are probably ok for you. It’s not about gains, it’s about preserving capital. At least for the very the rich and investment firms.
    If the world goes to an all our currency war, everyone is going to pull back to the USD and hunker down, pushing it up.
    Inflation in the US is necessary to basically “undo” all of this deficit spending that has been going on. It will hurt everyone, but will also wipe the slate clean. They will have to give it a small push to get it going though.
    I think it’s safe to say that the Brazilian government can’t let the Real get any stronger without really starting to feel some financial pain. Imports will shoot up, as goods from other countries compete easily, exports down, internal manufacturing will come under pressure from imports. It also can’t let it get too weak, without killing itself in debt repayments.

  • #154148

    Eliana FB
    Member

    I dont believe how you lot are completely missing the plot here.
    +/- 5 % my hairy fat arse.
    Cant you see the real is seriously over valued. As soon as this election is over you will see drastic measures to devalue it.
    I can see the Real going to over 2.0 to the $.
    Mark my words. March 2011 you will se I am right.

  • #154150

    jeb2886
    Member

    The Real might be overvalued, but the debt repayments are in dollars. The government unlikely wants to see a fall. Debt is “cheap” right now. Decreasing the Real, will drastically increase debt repayment obligations.

  • #154151

    celso
    Member

    [QUOTE=jkennedy]The Real might be overvalued, but the debt repayments are in dollars. The government unlikely wants to see a fall. Debt is “cheap” right now. Decreasing the Real, will drastically increase debt repayment obligations.
    [/QUOTE] No, The Lula Gov internalized the debt so it is in real and has doulbled. If the real goes down it is in the favor of the Gov to buy cheap reais with dollars to make interest payments. So Dilma has a safety valve of getting the Central Bank to bring down interest rates, allowing more money for social projects, and a lower Real.

  • #154153

    jeb2886
    Member

    So far, I’ve seen between 20-40% is held in USD.
    Drop the real to 3.40:1 and the increase in debt repayments is around 10-20%. That would require really ramping up exports to create the necessary gains to make up the difference there. It’s possible that the reduction in imports, along with extra manufacturing and taxes collected on all of that might make up the difference. However, a rocky currency like that will scare off investors and make it more difficult the next year to sell in Real denominated debt.
    There won’t be more money, it will likely be a wash at best.

  • #154178

    I submit this article simply to stoke JK’s fire, and (hopefully) raise his blood pressure….
    http://www.escapefromamerica.com/2010/09/insulate-yourself-from-the-coming-economic-collapse/

  • #154180

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa]
    I submit this article simply to stoke JK’s fire, and (hopefully) raise his blood pressure….

    http://www.escapefromamerica.com/2010/09/insulate-yourself-from-the-coming-economic-collapse/[/QUOTE]

    I was with this guy 100% until item number 4 at which point he went a little apocalyptic with his assumption that the powers that be would ignore everything; the perilous cracks in the dam and every possible warning sign that should and would trigger preventative action and save the day by all means possible. Yet no sooner did I dismiss this apocalyptic doomsday vision, that I reconsidered at which point a shiver ran down my spine.

    I began to think of it this way: we all know about disasters, both natural and manmade. Yet in knowing about them we also know that they strike with little warning; earthquakes, tsunamis, the Great Depression, Bhopal and 9/11. And then, sweet Jesus, in December 2007 the men is suits came running to the White House in a blind panic. They didn’t splutter anything about a clear and present danger; the financial crisis wasn’t just coming, it had already arrived and was ravaging the financial core of civilisation.

    The unthinkable had happened. Trillions upon trillions of dollars had disappeared into the ether and this disappearance is, even today, being nursed from public view by the wielders of smoke and mirrors that understandably attempt to restore confidence in spite of the evidence of chronic and exponential growth in debt. Every last bullet in the arsenal has been fired at the beast; interest rates at near zero, presses at maximum capacity printing money. What to do next?

    We all hold opinions, be they informed or ill-informed; wishful thinking or refusal to think. Open denial or blind faith in God. Is it at all possible that any system contrived my Man is too big to fail? I sometimes imagine the ghost of that naval architect desperately attempting to whisper from the grave, Nothing is unsinkable. It would be prudent to explore one’s own thoughts and give serious, if not academic, consideration to the proposition; What if the guy is right.

  • #154225

    jeb2886
    Member

    @esprit
    There are key points missing here. That guy is just a wacko. If you think you’re going to be growing your own food and holding the hordes of starving people back with a gun, you’re as crazy as him. The hordes will have guns and likely some of them will be trained on how to take you out from a mile away, while you try and tend your garden. If jobs are going away en masse, then having multiple jobs isn’t going to help you. You’ll simply lose your job more than once. All his other comments are equally uses in the apocalypse he’s suggesting.
    The best thing (and what will happen) to the US is decent and strong inflation for a few years, not probably 6-8%. That will erase all external debt, and will essentially erase all internal debt as well. It will be a fresh start for the next generation. Essentially a firestorm that will start everything over for everyone. The US would still have one of the strongest economies in the world, because 70% of it’s economy comes from consumer demand. Money is only a transitional between barter, so as long as there is enough demand for that money internally, it will work. Look at Brazil, it went through a few currency problems. Look at argentina, or any of those other countries. That is worse case scenario because everyone could stand back and watch them implode without getting their feet wet. Everyone will take a hit if the US implodes, everyone. We trade with everyone, bilaterally, that would all essentially stop. Everyone will be hurt to some degree. Brazil had very little to do with the financial crisis but everyone wanted to dump the Real as soon as it happened and the government stepped in to stop it. It took collateral damage, on something fairly minor.
    When the financial crisis hit, the government took action and very strong action. Extreme if you’re in economics. And it stopped the momentum behind the crisis, which was it’s goal. It will continue to do so. It will get very aggressive if it has to.
    However, here is what you should be looking at (ok here are stock tips as well)
    – Banks need to recover first, when they start recovering it’s because they’re giving out loans and making money again. This has happened. Stocks took off in 2008-209 for banks. This more or less has already taken place.
    – Things need to be built. Even though we’re over built, most of the construction took places in specific housing areas. Florida, Las Vegas, and inland California. We need 1.6M homes a year for new immigrants, families, and because buildings need replacement. We’ve been building about 600K/year in the last 2 years, which means we’ve already starting to fall behind. Within 1-2 more years homes will be needed for sure. We’ll see construction returning. This will start to occur over the next couple of years. Even though there is a glut, the glut is in the wrong places and the glut with millions of homes, and we’re currently “consuming” about 1M of those per year, which means we will eat through that inventory shortly. Builders are going to be coming back next.
    In the news, we saw companies laying off en masse and missing their financial goals. For the last year or so, earning reports have been coming in, all meeting their lowered predictions and more importantly showing a profit in almost every sector! Profit means they’re stable. Profit means they have found a position in this new economy where they can survive. While large companies aren’t the backbone of the US, they do show that things have stabilized. We also don’t see job reports with 700K net losses anymore. We don’t see gains either, but things are decently stable there, which shows that smaller businesses have found their position.
    The stock market has a multiple of about 21X right now, in 2008 it hit a low of 13, for the last 100 years, it has been around 20.6. When Warren Buffet came out and said every stock was currently undervalued, he meant it. And the market returned from 7K to 10K. A pretty hefty increase (if you were buying, like most of us where.) What does this also predict? That with little or no growth in the US, we’ll see the market hover around 10500, going up and down between 9800 and 11500. I’ve done pretty well in the last year using these numbers. Since nothing major has changed, we’ll probably see more of the same next year. A grind sideways.
    For those that say the market is overvalued, well historically it’s right at where it should be for the current economic output. For those that say it should be at 3000, well they have no financial background and no understanding of what the numbers are actually saying. For those that claim the dow will jump to 15000, they again have no idea what they’re talking about. No growth = no growth. We’re going to grind away here, but neither making big jumps up or down.
    There are still lots of financial challenges ahead. A decent foreclosure market is still out there, with many more to come. However there are investors out there, who realize that they can make a decent profit by buying and renting out these homes at these values.
    Before, we were in a firestorm. We were hit with a housing bubble, housing glut, banks collapsing, banks not having any money to lend, a recession (caused by the above), a global scale meltdown and a lot of other unknowns. Now that the momentum has stopped, we’re left with housing. Banks are shored up, they have money to lend to investors again. They might not be lending it as freely, but it is there. Home values are stable because prices have dropped enough that investors are now looking at them. For them to drop further will simply bring more investors out of the woodwork.
    While the foreclosure numbers look large, it is important to realize that the average was about 2% before, now it’s about 5%. WAY WAY UP. But still only a small number of homes.
    None of this is doom and gloom. None of this shows great recovery either. The numbers we see now are just stable numbers. The news and “professionals” trump things up, but the big picture: No major lay offs, Everyone meeting their numbers, Everyone making a profit to some degree, Jobs aren’t being lost en masse (not gained, not really lost), Stock market is at a 100 year historic multiple.

  • #154227

    agri2001
    Participant

    What`s your point???

  • #154229

    Max
    Member

    Normal0falsefalsefalseMicrosoftInternetExplorer4

    I thought it was a pretty interesting article, and infact, I am doing a lot of these things already. I have bought my land next to afresh water lagoon in the north east of Brasil, and in a few years, aftercashing out from the UK,I plan to build a home and a lifestyle there for my family.

    Normal0falsefalsefalseMicrosoftInternetExplorer4

    We will be as self sufficient as possible, and way offgrid. It will be a return to basics, and I like that idea. I like the idea ofmy kids having an outdoor life, and learning about self sufficiency andconservation, skills which will become much more highly regarded as we movefurther into the 21stcentury.

    Normal0falsefalsefalseMicrosoftInternetExplorer4

    I am not doing this because I think the sky isfalling, and I will not be building a huge warehouse to store mynon-perishables!

    Normal0falsefalsefalseMicrosoftInternetExplorer4

    But the world is certainly changing. I think it’squite possible that the music will stop, that eventually governments will haveto admit defeat, and capitalism will be left to purge, cleanse and cure itself.That will not be the time to be stuck in a city with no job, no income, nosavings and no options.

    Normal0falsefalsefalseMicrosoftInternetExplorer4

    JK says it’s all going to grind away, not getting anyworse and slowly getting better. Maybe, but I think the option for selfsufficiency and self determination issomething I want to have in my back pocket. Just in case JK!

    Normal0falsefalsefalseMicrosoftInternetExplorer4Normal0falsefalsefalseMicrosoftInternetExplorer4

  • #154230

    jeb2886
    Member

    It’s always wise to have diversification in income and assets. It’s not wise to give up quality of life though. It sounds like you’re not trading quality, but you might be just changing your asset allocation from UK->City to Brazil->Rural, without gaining any diversification.
    If City burns down, you reap HUGE rewards in your Rural bet. If City takes off, and your Rural lifestyle plummets (you’re income will be based on Rural income, vs City income), then you lose big time. It’s almost an all or nothing bet.
    If everything burns down in the US, people aren’t going to go with out jobs. There will always be SOME jobs. It will get uncomfortable for awhile, but there are many jobs that we must have, regardless of the economy. While people burn through their credit cards, and rich spend as they always do, and people will jobs buy consumables as they must, things will return to normal. If you want a worst case scenario, look at Zimbabwe. Yes it’s horrible, but it’s not end of the world horrible. People figure it out, trade, avoid the currency, or find other currencies to use. The country goes on. That is even with the government making things worse, instead of looking to improve things!
    While the rich want to stay rich, they also don’t want to live around poverty. If they wanted to be rich beyond belief, they would move to India/Africa/Poor Country and live off their US income. However, they don’t want to live in a society like that. People don’t want to live like kings, while their servants eek out a living and die in the streets. So the US won’t fall into that type of country no matter what. They will completely dismantle the currency and start over if that is the case — they still have their land, which will ensure future wealth.

  • #154235

    Deleted User
    Moderator

    This is a really big eye opener:

    Dependant on who’s doing the talking, America has between 80 and 123 trillion dollars of unfunded liabilities. Take a look at this link and then multiply it by 80 or 123. I doubt that there’s a warehouse big enough to hold it all. http://www.pagetutor.com/trillion/index.html

    Impressive, isn’t it. Now go to the bottom of the page and take a look at America’s national debt.

    Esprit2010-09-29 15:51:16

  • #154238

    jeb2886
    Member

    Create 8% inflation for 12 years, and the GDP massively increases by nearly 150%, along with natural growth, probably a total of 250%. Debt basically ends up where it was when Clinton started. Compounding large numbers, with a little growth does amazing things.
    Then there is the whole unfunded liabilities thing. But whatever, I’m sure we’re all headed towards mad max living. Nothing we can do about it, and those far off Brazilian farms will be the only places where people survive. Everyone else will starve.
    Sensational apocalyptic style endings are pretty common for us!

  • #154239

    Max
    Member

    People will survive a full scale collapse of the capitalist market JK, its more about how you survive it, and I would not fancy being an out of work urbanite if that eventuality ever hits the deck.
    That said, I am amazed that a bit of inflation is the magic syrup to cure this ill. I guess Helicopter Ben should just bring it on.

  • #154241

    jeb2886
    Member

    Would you fancy being a small time farmer, without the ability to buy supplies for your farm? or an urbanite with years worth of credit card debt at their disposal? When it’s said and done, that credit card debt will be nullified anyways. There will always be high demand for a good portion of the economy as well. Worst case would be say 50% unemployment. Horrendous yes, but it still leaves a lot of people with jobs. Those people will keep the circulation and economy moving. The government will be forced to take action if that ever happened to ensure housing and food, so you wouldn’t be any better off on a farm.
    Inflation is not a cure, it’s a firestorm. It will destroy the capitalist system and restart everyone with a fresh start. Deflation and what we’re currently doing will slowly bleed off tech and jobs to other countries. None of that will come back. If we burn down and start new, we start from where we are today essentially, but without financial mess. The inflation firestorm will allow people to live normally and prosper while everything else is “reset” around them.
    This isn’t Zimbabwe inflation. Just high inflation, like Brazil has had in the past.

  • #154243

    Deleted User
    Moderator

    Certainly inflation is on the cards for the US. You can dilute the dollar to hell and back but in doing so you also decrease its value relative to other currencies. China would be most impressed should they see the American debt that they are holding evaporate before their eyes. They would cease lending and dump the dollar super quick; wouldn’t you? The Arabs would be screaming in their diamond encrusted tents should they see the dollar priced oil plummet along with the substantial part of America that they already own lock, stock and barrel. Meanwhile everyone else will be talking about creating another global benchmark currency. Inflation is bad, very bad. Bye, bye American safe haven.

  • #154244

    jeb2886
    Member

    China would likely try and spend everything they had over here, on assets over here. That would be the smart thing to do. If you own a house that is worth 1M and the currency devalues, disappears or turns over, your house will be worth the “same” in the new currency. Whether is 100M or 1new dollar, it will be relatively the same.
    If china tried that, it would decimate the dollar before they could do anything. They lose either way. The important thing for them is internal country growth. The money is nice, but bringing your country out of poverty to a world power is far more useful than a few trillion USD. They would eat it, and hope that they could keep selling and growing based off the US.
    Arabs would be pissed, but the Euro isn’t a stable currency, and isn’t fully supported either, as seen by the Greece debacle. If X state goes belly up in the US, the US will automatically help it out, do what’s necessary to make it work. The EU had a “state” go belly up and they sat on the side lines bickering, then they didn’t do what was necessary (allowing greece to default) but allowed them to borrow more, which is just creating a further disaster for Greece, but it means the other countries don’t have to do anything painful like write off debt, or lose valuation in the Euro.
    As America inflates, it’s going to cause problems around the world. No where will be safe. The safest place will be America still. Basically it’s all bad, whats the least bad? Probably America.
    Inflation is bad because it essentially erases debt and wealth and starts everyone over. Normally yes. Of course, this is what is needed to pull the US out of this massive amount of debt.

  • #154245

    Deleted User
    Moderator

    Now we know that America is an economic force to be reckoned with, representing say, 25% of the global economy, and whilst its apocalyptic demise would be most unfortunate it wouldn‚Äôt necessarily destroy the capitalistic system. It‚Äôs big…but not that big. As the actress said to the bishop.

    And a point about all that credit card debt that would be written off; oh no it wouldn’t. Inflation brings into play the prime weapon, interest rates. Credit card debt would escalate beyond the present levels of anything up to 30% to 60% or even 80% Banks ain’t stupid, contrary to popular belief.

  • #154247

    jeb2886
    Member

    The US may only represent 25% of the world economy, but it’s likely much higher than that once you factor in things like oil, and countries pegged to the USD,and countries who use the USD as their primary currency.
    Credit card debt will be wiped off as those people realize they’re in trouble and just default on it. That is where they will come clean.
    Banks will be the ones hurt the most by this. They have lent you money that when paid back will be worthless to them. If they lend you money with 10% interest, and when you’re done you’ve paid them back 2X the loan, but your house has gone up 10X, the next time they go to loan that money out, they will need to pony up 5X more to the next person. That is a huge loss for them.

  • #154248

    Deleted User
    Moderator

    [QUOTE=jkennedy]China would likely try and spend everything they had over here, on assets over here. That would be the smart thing to do. If you own a house that is worth 1M and the currency devalues, disappears or turns over, your house will be worth the “same” in the new currency. Whether is 100M or 1new dollar, it will be relatively the same.

    If china tried that, it would decimate the dollar before they could do anything. They lose either way. The important thing for them is internal country growth. The money is nice, but bringing your country out of poverty to a world power is far more useful than a few trillion USD. They would eat it, and hope that they could keep selling and growing based off the US.

    Arabs would be pissed, but the Euro isn’t a stable currency, and isn’t fully supported either, as seen by the Greece debacle. If X state goes belly up in the US, the US will automatically help it out, do what’s necessary to make it work. The EU had a “state” go belly up and they sat on the side lines bickering, then they didn’t do what was necessary (allowing greece to default) but allowed them to borrow more, which is just creating a further disaster for Greece, but it means the other countries don’t have to do anything painful like write off debt, or lose valuation in the Euro.

    As America inflates, it’s going to cause problems around the world. No where will be safe. The safest place will be America still. Basically it’s all bad, whats the least bad? Probably America.

    Inflation is bad because it essentially erases debt and wealth and starts everyone over. Normally yes. Of course, this is what is needed to pull the US out of this massive amount of debt.
    [/QUOTE]

    I have the sneakiest feeling that your rose tinted glasses were made in China. Let’s be clear, China has been and continues to be playing a game with America. It maintains its currency at an artificially low level thereby not only swamping its exports goods but, and more importantly, sucking the life blood out of its industrial and manufacturing base; in other words, it’s taking the jobs. Sure, it lends America money and at a cost that bleeds yet more money out of the treasury every month. Those communists are doing more damage than anything ever feared during the Cold War. They recognised that democracy fields up the biggest bunch of numb nuts this side of the black stump; the latest being Mr. YesWeCan. They are playing capitalism, freedom and justice for all like a party game.

    China is not necessarily thinking of buying any more American assets but rather buying up the global ingredients with which to build a new and shining example of how communism is better than democracy. The new and improved China; a country with more history and culture than that ever dreamed in the American dream. There are times when I would agree with that when considering how the collective idiot, the electorate, vote for these corrupt elitist toss pots in our so-called democracies. Give everybody an IQ test before giving em a vote!

    And please don’t mention Greece as comparative example of the woes within Europe. More than half of the American States are either bankrupt [California] or verging on technical bankruptcy. The US government is inextricable conjoined with the States whose taxpayers cannot bailout the cost of the other bailouts. America may be safe, but is it safe from itself.

  • #154250

    jeb2886
    Member

    Partly true.
    China understands it will never get this money back. That it’s losing battle. They’re buying jobs, and they’re buying a future. They’re giving away their goods to do this. You are correct there.
    Say China does bleed the US dry, then what? Then who do they sell to? Where do those jobs go then? It’s simple. They are building up their own internal consumer based society. So the US gets beat down right now, but when it’s all said and done, the world gets a whole new massive economy to sell into as well, and trade with. End result is good for the world. Next up, Africa.
    No, Greece and the states are exactly alike. You’re correct, there are many states in trouble, and guess what? The government transfers wealth around to help them out. *THAT* is the difference. Greece has been strung out to die on it’s own. It was just given more rope to kill itself. Nothing was done to BETTER the country. The measures put in place will choke off development, make lending even harder, cause less consumer spending and essentially put them into a death spiral. The US transfers wealth around, helping out states in problems No so in Europe.
    PS California is nothing but a political debacle. Raising taxes moderately will close up the budget, some cuts, and increased revenue as the economy returns. California has a 1.8T GDP, larger than Brazils, yet only 1/2 the yearly deficit.

  • #154262

    An article from 2005

    http://mises.org/freemarket_detail.aspx?control=526
    For those who know of the Mises Institute, they are not an “apocalyptic” organization.

    Gringo.Floripa2010-09-29 22:28:30

  • #154263

    [QUOTE=Esprit]

    I began to think of it this way: we all know about disasters, both natural and man-made. Yet in knowing about them we also know that they strike with little warning; earthquakes, tsunamis, the Great Depression, Bhopal and 9/11. And then, sweet Jesus, in December 2007 the men is suits came running to the White House in a blind panic. They didn’t splutter anything about a clear and present danger; the financial crisis wasn’t just coming, it had already arrived and was ravaging the financial core of civilization./QUOTE]

    If you haven’t read it yet, I highly recommend The Shock Doctrine by Naomi Klein.

  • #154264

    [QUOTE=Richard V]I thought it was a pretty interesting article, and infact, I am doing a lot of these things already. I have bought my land next to afresh water lagoon in the north east of Brasil, and in a few years, aftercashing out from the UK,I plan to build a home and a lifestyle there for my family.Normal0falsefalsefalseMicrosoftInternetExplorer4

    We will be as self sufficient as possible, and way offgrid. It will be a return to basics, and I like that idea. I like the idea ofmy kids having an outdoor life, and learning about self sufficiency andconservation, skills which will become much more highly regarded as we movefurther into the 21stcentury. I am not doing this because I think the sky isfalling….Normal0falsefalsefalseMicrosoftInternetExplorer4Normal0falsefalsefalseMicrosoftInternetExplorer4[/QUOTE]

    But if it does fall, YOU are prepared! If it doesn’t, you are still waaay ahead of almost everyone else!

    I’d like to recommend for you Richard V (if you haven’t read it already), the book Eaarthby Bill McKibben.

    PS – I’m trying to find a source for reasonably pricedPV (photovoltaic) panels in Brasil. The majority are manufactured in China, so one would think, they would be available (for a “reasonable” price), considering the ties between the two countries, but so far, só caro. If you happen to come across a source here in BR, plz let me know, and I’ll do the same. Grato!

    Gringo.Floripa2010-09-29 21:54:15

  • #154266

    [QUOTE=jkennedy]
    However, here is what you should be looking at (ok here are stock tips as well)[/QUOTE]
    Ahhh, NOW it’s very clear who this guy is, and what he’s about…. He’s a broker, A PIMP for the stock market!!!
    Cuidado gente!

  • #154268

    [QUOTE=jkennedy]There are key points missing here. That guy is just a wacko. If you think you’re going to be growing your own food and holding the hordes of starving people back with a gun, you’re as crazy as him. The hordes will have guns and likely some of them will be trained on how to take you out from a mile away, while you try and tend your garden.
    [/QUOTE]
    I’m not sure, but was JK referring to an all but broken Nazi Germany??? Or maybe it was the all but broken USSR a few decades later? There are certainly other references/countries/governments, but what he cited are indeed scenarios that actually took place recently.Those are but a few examples of the historical phenomenon that empires rise, and empires fall. Heck, even the Brits in this forum can attest to that fact (the sun never sets on…)
    If you’d like, we can jump back a few millennium: Egypt, Persia, Greece, Rome…. To believe the US, or for that matter, ANY other “empire” will endure forever, and is somehow immuneto the fate of all other “super powers”, is more wacko than the desire to become independent as much as possible where food, water, shelter, and energy are concerned.
    Gringo.Floripa2010-09-29 22:59:00

  • #154272

    Deleted User
    Moderator

    money-supply

    This dramatic chart illustrates that the dollar is in unchartered waters; there be monsters here!

    For the life of me I can never understand the self-destructive stampeding lemmings or the counter intuitive stampede of investors toward a bottomless precipice that is perceived as a safe haven rather than the gates of hell. Uncle Sam‚Äôs receptionist is greeting them with a cheery grin saying, Thank you Sir…your dollars will be available in a few minutes once the ink is dry…next! And in the background a printer is heard yelling, Ben, we need more green ink!

  • #154273

    jeb2886
    Member

    I never said the US would stay in power forever. For the next decade for sure. 10-20 years I’m not sure. In 30-60, it will be a shared economy the world over.
    Spending time preparing for something that won’t happen doesn’t put you ahead of others, it puts you at a disadvantage as your resources are tied up in non productive or under performing commodities and/or resources. So it is detrimental to prepare.
    You guys think safe haven means “safe, we’re going to make lots of money” Perhaps that your mis understanding. When the markets go bad, you conserve capital. If your best place to put it is still in a losing position, it’s still better to put it there, than put it into an even more dangerous position. If the power houses of the world have their money in US currency, then you can be sure that they will ensure it survives. Power houses are governments, kings, extremely rich families, etc.
    I look at realistic scenarios and what is the likelihood of them coming to be. Then base my decisions on that. A scenario that requires everyone to have starved to death and me living on a farm somewhere with my little safe haven is not realistic.

  • #154274

    Max
    Member

    Normal0falsefalsefalseMicrosoftInternetExplorer4

    What’s with this starving to death routine you keep talking about JK. No-oneis talking about starving to death other than you.

    You mention 50% unemployment being doable. What do you think wouldhappen to the fabric of western society, especially in the cities, with 50%unemployment? What does that world look like? Would I rather be in that world, or living on a lagoon, being selfsufficient for the most part. Umm, let me think about those options!

    If AIG had of been left to roll over, along with the banks, where wouldwe all be right now? If another financial disaster comes along in the near future, governments don’t have a shot left in the locker to artificially prop up thesystem. It will collapse. Something will replace it, and no JK, mad max need nottake centre stage, but it won‚Äôt be a ton of fun out there either.

    I think only a fool would be saying its all ok, that was a close call butwe are all ok now. And who are you to say what’s not gong to happen. Let‚Äôs see what happens when your inflation kicksin, which perhaps becomes hyper-inflation, when governments have zeroability left to hold interest rates down, and a whole new round of unemployed, or underemployed peoplecannot pay their mortgages.

    Wanting to have a decent option to be able to see out a very possible implosion does not make you some nutjob JK who wants a rifle, a front porch and a cupboard full of beans.

  • #154275

    jeb2886
    Member

    The whole article was about having food, and water supplies to survive off of. If society doesn’t have water, it doesn’t matter where you’re hiding, you’re going to lose your water and food too. Society will come to you and strip you of it.
    Your comment about AIG is correct. IF we do nothing…. yes bad things will happen.. IF we let AIG roll over, bad things would have happen. IF we let hyper inflation kick in bad things would happen. Your comments are on the extreme side. Your comments are based on the fact that we’re doing something to block these events, but if we did nothing, it would be horrendous. Well the point is, we block them all the time, bad things happen all the time and we keep on moving along and it’s not that painful.
    By hedging your bets by moving to isolation, you’re essentially committing all of your resources to that model of life style and again putting all of your eggs in that basket.
    If another financial disaster hits in the near future, they will work out something. Don’t forget, it wasn’t just a financial disaster, it was many things all put together, including housing, construction, mortgage problems, banking problems, global problems, along with a financial disaster which tipped things over. That’s a lot of problems that needed to be lined up to create a mess.

  • #154276

    micko
    Member

    [QUOTE=Richard V]You mention 50% unemployment being doable. What do you think wouldhappen to the fabric of western society, especially in the cities, with 50%unemployment? What does that world look like? [/QUOTE]It would probably look like where I live in the interior of Brazil. Where less than 50% of the population has employment com carteira assinada. Is selling churasquinhoson the street corner considered a job outside Brazil?

  • #154283

    Deleted User
    Moderator

    [QUOTE=jkennedy]

    …You guys think safe haven means “safe, we’re going to make lots of money” Perhaps that your mis understanding. When the markets go bad, you conserve capital. If your best place to put it is still in a losing position, it’s still better to put it there, than put it into an even more dangerous position. If the power houses of the world have their money in US currency, then you can be sure that they will ensure it survives…

    [/QUOTE]

    I’m certain that what is meant by safe haven is not considered a place where one can make lots of money, rather it is a place where it is secure from losses and preferably earning sufficient to keep pace with any inflation. When such money shifts into the dollar it can manifest itself in the equities market or more typically treasury paper in the form of government securities. The idea being that if all else fails, one’s cash is secure in the hands of the biggest economic power the world has ever seen; good ol Uncle Sam. Any investor will tell you that making lots of money is commensurate with risk where high returns compensate risk taking. Uncle Sam is offering just peanuts, a promise and a prayer. Hence the little motto on the currency, In God we trust.

    Despite this inward flow of foreign money, the US government, with its insatiable need of billions of new borrowed money every month, has taken it upon itself to buy its own debt. It prints its own money [quantitative easing] then borrows it from itself to pay its running costs while paying interest to itself on the investment by printing yet more money. At this point I should mention the definition of madness as being the continuance of trying the same thing over and over while expecting a different result each time. Little wonder why the chairman of the Federal Reserve, Ben Bernanke, has deserved the nickname Helicopter Ben as his unbelievable increases in the money supply have been likened to distributing the cash as if thrown out of a helicopter for all to grab. The dollar is over valued.

    Having faith in the assumption when things get really bad, the point when the fan becomes totally clogged and stopped by the sheer volume of this flying excrement that they will do something about is just blind faith. It is naive because it is they who are throwing all this crap in the first instance. Methinks they have run out of ideas. Be ready for the warning shout, Incoming!

  • #154316

    Deleted User
    Moderator

    Dollar/Real exchange rate this afternoon 1.68. I hope they remember the rule: One one thousand, two one thousand, three one thousand – PULL! Weeeeee. I can see my house from here!

  • #154333

    [QUOTE=jkennedy]The whole article was about having food, and water supplies to survive off of. If society doesn’t have water, it doesn’t matter where you’re hiding, you’re going to lose your water and food too.[/QUOTE]
    Do you think the people who live in rural Vermont experienced this chaos? And what was the event that triggered such panic? A mere break in the water main. Now if we extrapolate that to something more severe….
    You keep saying “can’t happen!” These videos show it already did.
    http://www.youtube.com/watch?v=1PlV-LveDnQ

    http://www.youtube.com/watch?v=m8NEdEl_3lA
    Yet you’re right JK, it doesn’t matter where you’re “hiding”, but it could make quite a difference for those of us who see the wisdom in choosing locations not reliant on the local Wal-Mart, Costco, or Mark’s & Spencer, for their drinking water, when the tap water is not drinkable, for whateverreason…. Not to mention food, shelter, and energy.
    And you know what, just to show you I’m a decent human being, if you find yourself holed up somewhere, with no supplies, send me a PM, and I’ll give you the location of where you can food, drink, shelter, and
    alternative forms of energy that will, at minimum, power light for you to read by (in Brasil, of course). I just hope you won’t object bedding down with my four-legged friends. LOL
    Yet I think the objection might be from them… LOLLOLLOL
    PS – Has anyone seen this film? I’d like to know if it’s worth purchasing on Amazon. Grato!

    http://www.youtube.com/watch?v=LGd9D4J0lag
    Gringo.Floripa2010-10-03 21:33:28

  • #154334

    [QUOTE=jkennedy]I never said the US would stay in power forever. For the next decade for sure.[/QUOTE]
    Could you please supply some links/resources to back up your certainty?

  • #154341
  • #154348

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa]

    Someone has to say it (since JK won’t)….

    http://seekingalpha.com/article/134820-the-worst-case-scenario-someone-has-to-say-it
    [/QUOTE] Wow and double wow! This dramatic list of predictions should be developed into a screen play. The movie should be directed in a collaborative effort by both Steven Spielberg and of course the main man for this kind of art, Quinton Tarantino. The star and anti-hero should be played by a blacked-up Bruce Willis. Movie title: Obamarama Apocalypse or Everything you wanted to know about capitalism but were afraid to ask.

  • #154350

    An excerpt from the Seeking Alphaarticle:
    “Instead of a recovery as the mainstream envisions it, what if Americapermanently bankrupts, impoverishes, and marginalizes itself? What ifits cherished institutions fail across the board?
    For example, whathappens when the police realize that their under-funded pension planscannot support a decent retirement? Will they stay honest, or will theyopt to survive by any means necessary?
    These are questions that themainstream does not even begin to contemplate.”
    From tonight’s breaking headline news:
    http://edition.cnn.com/2010/WORLD/americas/09/30/ecuador.violence/index.html
    http://edition.cnn.com/2010/WORLD/americas/09/30/ecuador.unrest/

    Gringo.Floripa2010-10-03 21:48:13

  • #154363
  • #154373

    While interesting to banter back and forth all the possibilities, to me it is like discussing what color the leaves are on a tree, or whether they will grow or fall off but not looking at the roots to see what is the actual cause of the changes. One politician has stood out in his efforts to educate a mostly ignorant US population about the origins of the “Federal Reserve” and it’s role in the demise of the dollar, inflation and the continual eroding of the economic foundation it oversees.
    http://www.nysun.com/editorials/4000-gold/87099/
    New in Paperback:
    End The Fed
    by Ron Paul
    When Rep. Ron Paul (R-TX) ran for president in 2008, his supporters burned dollar bills while chanting “End the Fed!” His book by the same name proposes that the U.S. abolish its central bank and return to a private banking system based on the gold standard in order to avoid inflationary monetary policy and what Paul characterizes as the excesses of Fed Chairman Ben Bernanke. End the Fed reached a high of No.6 on the New York Times best-seller list.
    224 pages, $14.99, Grand Central Publishing
    I read “The Creature from Jekyll Island” almost 30 years ago and began to understand the real forces at play behind the veil. Few knew that JFK saw the Fed as a real threat and put into circulation Non Federal Reserve notes in 1963: http://newsblaze.com/story/20100906083909zzzz.nb/topstory.html
    One insightful overview was written in 99 about the Origins of the Fed if you also want to peer down into the root of the problems the dollar faces today no less the American way of life:
    http://mises.org/daily/3823
    Like the Marketwatch article makes the case above, the problem is not Republican/Democrat, it is systemic and has been enabled by both parties. That this illusionary monetary system can tank the global economy along with the US’s is an unfortunate possibility.
    In the meantime when has being prepared the best one can for natural or man made disasters been a bad idea?

  • #154378

    Deleted User
    Moderator

    [QUOTE=ParaibaDouglas]While interesting to banter back and forth all the possibilities, to me it is like discussing what color the leaves are on a tree, or whether they will grow or fall off but not looking at the roots to see what is the actual cause of the changes. One politician has stood out in his efforts to educate a mostly ignorant US population about the origins of the “Federal Reserve” and it’s role in the demise of the dollar, inflation and the continual eroding of the economic foundation it oversees.

    http://www.nysun.com/editorials/4000-gold/87099/

    New in Paperback:

    End The Fed

    by Ron Paul

    When Rep. Ron Paul (R-TX) ran for president in 2008, his supporters burned dollar bills while chanting “End the Fed!” His book by the same name proposes that the U.S. abolish its central bank and return to a private banking system based on the gold standard in order to avoid inflationary monetary policy and what Paul characterizes as the excesses of Fed Chairman Ben Bernanke…
    [/QUOTE]

    How men can change destiny. Imagine Ron Paul not having his diminutive and ageing appearance or his uninspiring rapid way of speaking with his quirky little voice or his seeming lack of ability to sell air conditioners in a desert. Instead, imagine Ron Paul a tall, dark, handsome man with the oratory skills of Obama and you imagine America’s saviour. Alas, the electorate will forever be the collective idiot hooked on the best imagery and oratory that money can buy.

  • #154390

    Espirit, point well taken, I had written elsewhere that if only Ron had Mitt Romney’s looks there might be a chance…. but let’s leave our minds open to be pleasantly surprised by maybe what those he has helped open their eyes can do that are more “sellable” candidates. Or that even after being sold image and fluff for so long that the message actually becomes more important than the messenger.ParaibaDouglas2010-10-02 11:10:25

  • #154433

    [QUOTE=Esprit]How men can change destiny. Imagine Ron Paul not having his diminutive and ageing appearance or his uninspiring rapid way of speaking with his quirky little voice or his seeming lack of ability to sell air conditioners in a desert. Instead, imagine Ron Paul a tall, dark, handsome man with the oratory skills of Obama and you imagine America’s saviour. Alas, the electorate will forever be the collective idiot hooked on the best imagery and oratory that money can buy.[/QUOTE]
    The same could be said about Ross Perot. Yet ever since Nixon appeared unshaven, and sweaty, in his televised debate with JFK (tall, dark, and handsome with oratory skills), politics is now all about Image. As for content? Just look at Palin at how far “content” has fallen off the radar. Yet you have to admit, she has “image”. If she had short legs, an obese figure, flat chest, and bad hair, do you think she’d be getting the play she receives now? Closer to home, compare Dilma’s image/stage presence with Marina’s. Serra, who has a proventrack record in politics, always appearstired and fatigued.
    The Republicans truly screwed up by not nominating Ron Paul as their candidate. Yet even if RP had run as an Independent, his “image”, as Esprit pointed out, would have been no match for the glowing aura of handpicked and prepped Barak Obama. The “powers that be”, the “men behind the curtain“, certainly have refined “image” into an exact science, haven’t they?
    Give me an “ugly” Abe Lincoln, any day!
    BTW… Ron Paul’s book The Revolution: A Manifestois highly recommended as well!
    Gringo.Floripa2010-10-03 22:06:25

  • #154438

    The stars lined up for Obama to win, over anyone most likely. The same for Dilma. President having never been in elected office before? A one term Senator? The web is decentralizing big businesses (banks) control of the media and is the single greatest hope for change to occur from the bottom up with bright people like Ron Paul who actually has values and character that can’t be bought.

  • #154450

    Deleted User
    Moderator

    One current issue that has relevance to both exchange rates and the dubious quality of politician’s rhetoric is of course the latest overwhelming vote in the House of Representatives to impose punitive tariffs on all Chinese imports to the US; the idea being to punish China for refusing to revalue its currency. These inept politicians, seemingly so detached from reality, appear not to have thought this one through.

    Raising tariffs not only scores an own goal by raising prices in the US by as much as 30% to 60% in an faltering economy that is 70% consumer spending led but also, and more importantly, a more valuable Yuan/dollar rate makes everything cheaper for the Chinese and opens the flood gates for them to focus on everything and anything that is priced in dollars on the global commodities market including oil and gold. And given that China’s oil consumption is rapidly accelerating, it can afford to buy all of the world’s excess capacity thereby opening the doors to massive increases in the price of oil for everyone else; just what the doctor ordered as some countries struggle to re-start their economies.

    Of course this proposal has to pass the Senate before becoming law and if one is to take a cynical look at all this, it may not be unconnected with the upcoming mid-term elections. This pitiful act may just be a vote catching ploy to show the millions of unemployed Americans that their elected representatives are trying to contain China’s dominance in manufacturing. I think these guys should be careful not to poke a sharp stick into the Chinese tiger’s ribs to often lest it extends its financial claws and either dumps its dollars or stops funding part of America’s deficit altogether. It is of great concern when we see politicians running to mommy and complaining about the other kids in the playground.

  • #154490

    US-China split would be a catastrophe
    Gringo.Floripa2010-10-03 20:45:16

  • #154491

    [QUOTE=ParaibaDouglas]The stars lined up for Obama to win, over anyone most likely. The same for Dilma. President having never been in elected office before? A one term Senator? The web is decentralizing big businesses (banks) control of the media and is the single greatest hope for change to occur from the bottom up with bright people like Ron Paul who actually has values and character that can’t be bought. [/QUOTE]
    I partially agree PD. Unfortunately, “the masses” don’t use the web for their source of news and information; they are spoon-fed what they “know” by television. The tv media is all-powerful, and owned lock, stock, and barrel by “Big Business”. I can only speak of US politics, not Brasil. NO ONE, in this day and age (in the US) becomes elected President, without having been picked, groomed, and indoctrinated by the one’s who actually call the shots: families and individuals of obscene wealth and power. The only stars that aligned for Obama’s win (and I voted for him) were Trilateralones (and perhaps Sirius)….
    While I would love to entertain the notion that someone like Ron Paul could make a difference if given the chance for a higher office, it will never happen. And if by some weird quirk he did make it, and he continued to beat the same drum he beats now, his time would be cut short, just like JFK, RFK, and MLK. If you listen to the speechesthat each of those men gave the last few yearsof their lives, even the last few months, they were unanimously denouncing the “military-industrial complex”, which President Eisenhower warned about. Just to refresh our memories, Eisenhower was a 5-star General in the US Army, prior to being elected President. Therefore, he certainly knew what he was talking about….
    Gringo.Floripa2010-10-03 22:47:08

  • #154499

    Deleted User
    Moderator

    “Recovery won’t happen overnight, and it’s likely that things will get worse before they get better. [Obama 2009] Although not the most insightful prediction, the passage of time has proved this to be correct; things have gotten at lot worse.

    In the midst of the crisis the President demonstrated his lack of business acumen by focusing on personal goals that were perceived to be his future legacy; the move toward universal healthcare and yet another Wall Street dream, Cap & Trade under the guise of making the world a green and pleasant place.

    Now that Obama has sated his kid in a candy store appetite for his messiah projects, the real job of getting America back to work appears to elude him. Having a background that is totally lacking in any business experience one cannot avoid the conclusion that he stands on the sidelines, helpless and hoping for change. The credit card is well and truly maxed out as are ideas about what to do next; America, swamped in ever increasing debt and seemingly blind to its problems, is no longer proactive and is simply stagnating in its reactive stance in the global economy movements.

    As things continue to get worse, cash rich China is exploiting the yawn gap and taking every opportunity to secure its future by locking in its energy requirements from which everything is based. Such circumstances and events do not bode well for the dollar.

  • #154510

    A couple of articles perhaps to be of interest.
    Dangers of US Debt in Foreign Hands

    Two Myths About the US Dollar

    The second link has the actual article available as a pdf download. It’s over a dozen pages, and a bit over my head, but I think some of you guys on this particular forum will comprehend it quite well.

    “Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.”
    ~ Henry Kissinger ~

  • #154516

    jeb2886
    Member

    Ok this has gotten way off topic but here goes a couple of summaries here.
    Obama takes the information he is given through his staff and implements them. He does not need to know every aspect of the American market, only the highlights and guide it based on that. The presidents primary job is to take congress and senate bills and ensure they are implemented after acting as a 3rd party in the checks and balances. Every economist, democrate and rebpulican have stated that the stimulus projects were necessary at one time or another, aside from when they want to try and slander and/or gain some news time.
    As far as the chinese go, they have been under pressure since Clinton days to re-evaluate their currency and have been threatened many times that they would have tariffs imposed if they didn’t do something. They have so far avoided this problem.
    The chinese do not have the US over a barrel, as the article you posted even stated. There are possible issues, but the reverse is actually true. A devalued dollar will help exports, and hurt imports. Overall, it will be hard on the US economically and will possibly put pressure on the world to stop using the USD as the primary currency, however, that is unlikely as there are no alternatives. The USD still represents the best global currency out there. Lots of people have come out and discussed possible alternatives, but none have been practical.
    The chinese on the other hand have a very very very serious issue. They still have 800 MILLION people living in rural areas that want into the city, and want these fantastic manufacturing jobs that pay 25 cents an hour or whatever they pay. It would be a huge step up, and they’ve been promised these jobs for 15-20 years now. The promise is that they are slowly being allowed into the cities as jobs open up (Remember, this is china. A communist country, they aren’t allowed to just move into the cities, the must be given permission). The chinese government *MUST* have it double digit expansion per year to keep people appeased. They fully understand that they are barely containing a huge revolt. If their country slows down at all, that is what they will be dealing with, a full scale revolt as those 800M people realize they will never get into the cities and out of the paddy fields. This is the main pressure point they have been using on the US to allow the yuan to stay under valued. They fully understand that if they pulled out of the US that they would
    1) Cause the USD to fall (although the government would print money to keep it up and solvent, introducing a few inflationary issues), but the rate for the yuan to USD would skyrocket. The largest export china has would suddenly find it’s product not attractive and a huge amount of manufacturing jobs would be lost (see above why this would be bad)
    2) The drop in USD would make US based product globally very competitive ensuring that exports would skyrocket AND possibly even go head to head with chinese based goods! Now the chinese have lost a partner and now possibly competing with them! (Reminder: The US is the *LARGEST* manufacture in the world).
    The risk of a full revolt in china is very real and something they take very seriously. This is of course never spoken of in china because doing so would be undermining the true control the government has.
    When the yuan is allowed to float, what will likely happen is that it will go up against the USD, slowing it’s imports and allowing more US exports to chian an d the world. They must do this slowly to appease the US who has been very patient with them. In effect the US has been able to spend money it didn’t have. When it comes time to pay it back, the devaluation will significantly hurt the payback amount. 2% interest rates, with a yuan 30-50% undervalued is going to really reduce what they see coming back to them.

  • #154523

    You did get one part right JK, I only posted the articles, not write them. Yet there were more than one, and they each had the same theme and warning. BTW… in case you didn’t notice, the last two were from the web site of the CFR, which is probably one of THE largest “think tanks” on the planet, meaning, only the most brilliant minds are permitted to contribute. Personally, I’m quite suspect of their actual agenda, but I always like to read what they’re “putting out there”.
    So I’m faced with a dilemma… do I choose to believe them, or JK? Do I choose to believe the CNN interview with Chinese Prime Minister Wen Jiabao, or JK? As I’ve said previously… the US does not need to invest inalternative energy programs… as long as they have JK’s hot air.

  • #154524

    jeb2886
    Member

    Based on your current understanding, I would tell you to stick to surfing, you’re just going to be wiped out in the markets.

  • #154525

    Finrudd
    Participant

    Well, to fan the flames somewhat, Dunga posted a good article on another thread that is quite relevant here:
    http://www.prudentbear.com/index.php/thebearslairview?art_id=10445
    Make of it what you will, but I can’t help but wonder if there is a bubble forming here in Brazil, that will leave a few with headaches when it bursts..

  • #154526

    jeb2886
    Member

    Probably one the better articles posted here, showing what many fear will happen when Dilma tries to push her agenda.
    I’m hoping it’s a little extreme on the downside risk, and that she will quickly realize that many of her projects will lead to catastrophic failure for Brazil. Building up foreign investor relations takes a long time, but only a second for them to flee. If she tries anything too spectacular, I’m guessing many will step in and block her. Many people were worried about Lulas positions before he took office, however he quickly learned what he could and couldn’t do and lead the country through many prosperous years. I think Dilma will similarly realize she can’t do many of the things she wants, without scaring off foreign investors. Quacks will say they are needed, but they have no understanding of their importance to a country like Brazil, the sheer number of jobs they offer and the number of business contacts in other countries where they can drum up business.
    Net/net, I’m guessing Dilma will have to make a couple of bad steps before truly understanding what her actions are likely to do the country.
    I’m sitting on the side lines, the strengths of the economy are many, but if she scares investors they will flee fast and furious until she corrects herself. If this happens I’ll start buying up properties in Brazil while the exchange rate is highly in my favor. If she doesn’t recover and pushes the country into a real bind, the properties will still hold their value and I’ll be purchasing during the time when the currency hasn’t had a chance to effect housing values, so I should get a decent investment out of it.

  • #154527

    [QUOTE=jkennedy]Based on your current understanding, I would tell you to stick to surfing, you’re just going to be wiped out in the markets.[/QUOTE]
    Thank you for your advice. Yet I did quite well in the market JK, very well actually, and then picked up (most) of my chips and walked away from the table while ahead. Now that chunk of change is sitting in a boring (but safe) CDB earning 10%. But I’m still holding on to my ABV, ABX, BBD, EWZ, and PBR; I purchased all of those equities in 2004, or a bit before. You can probably tell from those holdings, I’m bullish on Brasil (and gold too). However, I’m not a trader, but a buy & hold type of guy. And I buy only what I know. That’s (one reason) why I’m able to surf more and work less.
    What exactly do you spend your timedoing Mon-Fri? I’d be glad to compare assets and balance sheets with you anytime you’d like hotshot! House: paid for. Rental property: paid for. Cars: paid for. Liabilities/debts: ZERO. Can you say the same? BTW… I’m not afraid of wipe outs. You just paddle back out, and wait for the next wave. Wink
    “He who knows he has enough, is rich.” ~ Lao-Tzu ~
    Gringo.Floripa2010-10-05 16:08:05

  • #154528

    [QUOTE=jkennedy]Net/net, I’m guessing Dilma will have to make a couple of bad steps before truly understanding what her actions are likely to do the country.[/QUOTE]
    Net/net: She hasn’t won (yet). There will be a run-off at the end of the month. Much can happen between now, and then….

  • #154529

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa]
    A couple of articles perhaps to be of interest.

    Dangers of US Debt in Foreign Hands

    Two Myths About the US Dollar

    The second link has the actual article available as a pdf download. It’s over a dozen pages, and a bit over my head, but I think some of you guys on this particular forum will comprehend it quite well.

    “Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.”

    ~ Henry Kissinger ~
    [/QUOTE]

    Having waded through this report that tries to, as it were, interpret or explain US borrowing, it fails to reach a conclusive analysis or punch line. I was particularly interested in the concept that America’s offshore investments were balancing equal if not profiting relative to its borrowing. Although an explanation was absent, it did elude to the fact that such profit could not be identified and that any calculation was not immediately possible. This aspect smacked of smoke & mirrors; not by the authors of the report but by the data they has access to.

    One thing that did raise an eyebrow was the following: This year, it is eminently plausible that the bulk of the reported increase in (presumably private) UK holdings of U.S. Treasury bonds is neither from the United Kingdom nor from private investors, but rather from the Chinese state.Oh really? Why I wonder would the Chinese, having just dumped a whole lot, attempt to disguise their getting back in again and lending money in the form of purchasing US Treasury bonds by buying them through London? When China dumps Treasury bonds, people should pay attention; the unwinding of its Treasury bill position, in contrast, seems quite natural. Moreover, while it is not known what China has done with the funds unlocked by reducing their holdings of Treasury bills, one possibility is that they have been buying Treasury bonds through London intermediaries.Sure, it may be a possibility, but why do it in this way? My feeling is that this anonymous buyer is none other than the Fed itself buying its own bonds in a doubling down desperation and creating a new and improved method of quantitative easing.

  • #154535

    Galtere International’s view is that commodity-based, resource-rich economies that are fiscally responsible should do very well. Among them: Brazil‚Äîwhere there are 4% to 5% real yields currently‚ÄîCanada, Turkey and Southeast Asian nations like Indonesia. Haugerud likes currencies and longer-term bonds in these countries, and predicts a continued U.S. dollar depreciation of 20% to 40% over the next decade: “It won’t be a formal dollar devaluation. It will be a broad-based natural devaluation against all currencies.”
    http://online.barrons.com/article/SB50001424052970204404704575506030247972448.html?mod=BOL_twm_col

  • #154538

    Deleted User
    Moderator

    This is worth a read because it will not only make you smile or spit blood when it gives a simplified glimpse into what those geniuses on Wall Street have been up to: http://dandelionsalad.wordpress.com/2009/02/18/exclusive-derivatives-for-dummies-by-the-other-katherine-harris/

  • #154546

    Below that excellent article by “the other” Katherine Harris, are links to a few definitely worth reading as well….
    How the US Economy was Lost

    The Looming Collapse of the American Empire

    Gringo.Floripa2010-10-05 07:56:36

  • #154581

    It seems the IMF is going to stick their nose in it! You can expect a real mess now, some blood-letting, and perhaps even a window of opportunity.
    Reuters
    FT
    WSJ
    And a side note: Three ETFs to Watch During the Great Currency War of 2010
    Don’t you just love the the headline “Great Currency War of 2010”?!? Fasten your seat belts, there could be turbulence ahead!



    Gringo.Floripa2010-10-06 08:10:23

  • #154585

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa] It seems the IMF is going to stick their nose in it! You can expect a real mess now, some blood-letting, and perhaps even a window of opportunity.

    Reuters

    FT

    WSJ

    And a side note: Three ETFs to Watch During the Great Currency War of 2010

    Don’t you just love the the headline “Great Currency War of 2010”?!? Fasten your seat belts, there could be turbulence ahead!
    [/QUOTE]

    The following extract will be of interest to those is denial about the fall in the Dollar relative to the value of the Real:

    “Thanks to massive capital inflows due to the enormous sale of PetroBras shares, the Brazilian real has been on a tear as of late. However, it is not just the recent equity offering that has been propelling the Brazilian currency; solid growth, in-demand exports and moderating inflation levels over the past year have pushed many investors into the currency, which has surged by more than 40% against the dollar since the start of 2009. In response, the Brazilian government has begun buying massive amounts of dollars- close to $1 billion a day‚Äì to help to stem the rising real tide. We‚Äôre in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness, said Guido Mantega, Brazil‚Äôs finance minister underscoring just how widespread the fears are over an increasingly strong real and concerns over further weakness in the dollar.

    One ETF to keep an eye on here is BZF, which seeks to achieve total returns reflective of both money market rates in Brazilavailable to foreign investors and changes in value of the Brazilian Real relative to the U.S. dollar. The fund has surged by close to 12% over the past 52 weeks and has posted gains of 7% over the last three months. Should Brazil‚Äôs intervention in the markets fail to take hold, look for this upward trend to continue well into the future.”

  • #154588

    Deleted User
    Moderator

    There have been times when, during this long winter past, the grey skies and rain had such a dampening effect on the spirits. Without the forgiving sunshine one sees the shabbiness of Brazil and its inglorious infrastructure; roads breaking up into massive potholes, transformers exploding and the resultant power cuts, hazardous, often impassable pavements that have leg breaking potential, haphazard nonsensical business signage that turn streets into pizza toppings that are laced together by a spaghetti tangle of electricity and telephone cables while all around the evidence of decay and corrosion assaults the senses. Adding to this quagmire and lack of civic pride are the slovenly bank clerks, the ignorant bureaucrats and the overall tolerance of inefficiencies. In complete contrast there is the explosive construction boom: high rise structures and shopping malls bursting from the ground like mushrooms in a seeming total lack of planning. The leafy lanes of Britain beckon as does a decent pint of Guinness.

    But what has this to do with the topic in hand? Well it‚Äôs the exchange rate, in‚Äôit! Having made 74% gains since investing in Brazil, the UK now seems to offer more bang for the buck. And yet now that spring is upon this crazy land, again bathed in sunshine, things don’t look so bad. Hold me down; perhaps I should wait awhile yet?

  • #154596

    [QUOTE=Esprit]And yet now that spring is upon this crazy land, again bathed in sunshine, things don’t look so bad. Hold me down; perhaps I should wait awhile yet?[/QUOTE]

    Sem duvidas… espera ai!

  • #155362

    Hi all, I know most are talking about the USD and the real, but I would like to know what are your thoughts on the Euro with the real and were do you see it going in the next few months? Today it is bouncing about at R$1,00 = $2,36 Euros.

  • #155367

    aagrin
    Member

    I’m sure you mean 1Euro is R$2,36’s Wink

  • #155393

    [QUOTE=tomjo]I’m sure you mean 1Euro is R$2,36’s Wink
    [/QUOTE] Yes indeed, I was rushingLOLanyway any ideas from all you experts what the future of the real has with the Euro as I have some and want to change into Reais? I was told wait till after the election or untill the end of this year, would that be about right?

  • #155395

    jeb2886
    Member

    The way to look at the situation is “Can the Real get any stronger?” Probably not. The government has already stepped in to try and block it by adding a few taxes to foreign investors.
    The upside for the Real is fairly limited. It’s already considered to be over valued right now, by some estimates up to 50%. It’s at essentially a high now. More good news isn’t going to drive it even lower.
    The downside has quite a potential. Bad news could easily drive it lower. The government doesn’t want it this strong, but also doesn’t want it dropping 50% either. It’s likely to remain stable from here, or go up.
    I would recommend bringing the money over as you need it. You aren’t likely to see higher rates, you’re more likely to see stable rates, but in the unlikely event that it starts dropping in value, you’ll be in a better position. Put in % I would say 5% chance of getting much strong from here, and by only a few % points. Probably 80% chance of remaining stable. 15% change of it devaluing.

  • #155417

    [QUOTE=jkennedy]The way to look at the situation is “Can the Real get any stronger?” Probably not. The government has already stepped in to try and block it by adding a few taxes to foreign investors.

    The upside for the Real is fairly limited. It’s already considered to be over valued right now, by some estimates up to 50%. It’s at essentially a high now. More good news isn’t going to drive it even lower.

    The downside has quite a potential. Bad news could easily drive it lower. The government doesn’t want it this strong, but also doesn’t want it dropping 50% either. It’s likely to remain stable from here, or go up.

    I would recommend bringing the money over as you need it. You aren’t likely to see higher rates, you’re more likely to see stable rates, but in the unlikely event that it starts dropping in value, you’ll be in a better position. Put in % I would say 5% chance of getting much strong from here, and by only a few % points. Probably 80% chance of remaining stable. 15% change of it devaluing.

    [/QUOTE] Thanks for your advice, but could you see it going to R$2,50 for $1,00 Euro before Christmas this year????

  • #155422

    jeb2886
    Member

    I can’t give that kind of prediction. It will probably get a little weaker against the USD, but the USD will probably gain some strength as well, so the Euro will slip a bit. Net/net I would say nothing major is going to happen. Again, it’s risk/reward. If you don’t need it, don’t risk converting it right now.

  • #155426

    JKennedy, I’m in the same boat except with pounds, which is about the same as a Euro anyway right LOL. Anyhow, I’m waiting until the day after the election before I take the plunge, the real seems to be closing a bit lower as of recent times and the U.K economy experts keep telling of good news as far as the U.K is coping with the reccesion so I can’t see it hurting me anymore to wait until after the election.
    The best I see happening is ¬£1 = R$2.8, anymore and I’ll rejoice but I wont hold my breath, Brazil’s got too much going for it to have the elections radically lower the value of the Real right now.

  • #155427

    Plus once I have my money in Reias that’s where it’s staying for years to come so a strong real is all good for me, I’d just like it to devalue for a few days whilst I transfer my money (please Guido Wink)….

  • #155430

    [QUOTE=jkennedy]I can’t give that kind of prediction. It will probably get a little weaker against the USD, but the USD will probably gain some strength as well, so the Euro will slip a bit. Net/net I would say nothing major is going to happen. Again, it’s risk/reward. If you don’t need it, don’t risk converting it right now. [/QUOTE] I will wait as i have a few Euros to change. Many thanks for your input.

  • #155434

    jeb2886
    Member

    If you’re going to transfer the money down for years to come, why not just wait it out?
    The government has already stated that growth can’t close the deficit so they’re going to rely on inflation. They’ve also stated they’re going to try and bring down the interest rates. Both of those things will cause the Real to devalue. How far they can bring them down is another question…. If the new government makes a bold step, investors will pack up and temporarily flee. That will cause a run on the Real in the reverse direction.
    There isn’t much to cause a run up in the value of the Real. So just bide your time and purchase when it’s most favorable.

  • #155435

    [QUOTE=jkennedy]If you’re going to transfer the money down for years to come, why not just wait it out?

    The government has already stated that growth can’t close the deficit so they’re going to rely on inflation. They’ve also stated they’re going to try and bring down the interest rates. Both of those things will cause the Real to devalue. How far they can bring them down is another question…. If the new government makes a bold step, investors will pack up and temporarily flee. That will cause a run on the Real in the reverse direction.

    There isn’t much to cause a run up in the value of the Real. So just bide your time and purchase when it’s most favorable.

    Thanks again for your help, but I have a plot of land in a condo I want to pay-off and start to build my house with my family so the sooner the real gets weaker against the Euro the better for me. I would take R$2,50 for $1 Euro now and be happy, but some of my friends are saying wait a bit longer as it will go higher.

    [/QUOTE]

  • #155436

    jeb2886
    Member

    When many people are stating that the Real is 50% over valued, and when world markets state there is a currency war going on, it only makes sense.
    Personally, I am waiting to do something similar, and I figure at some point within the next year, a rumor, or new law will come into play and yank the currency in some wild direction, over correcting itself for a brief time. That is when I plan to transfer money.
    During the financial crisis, it went from 1.60ish to 2.60ish over night. Then it slowly moved back down. While that was an extraordinary event, it shows how quickly the currency can be yanked around and how much pressure investors can put on it.

  • #155437

    [QUOTE=jkennedy]When many people are stating that the Real is 50% over valued, and when world markets state there is a currency war going on, it only makes sense.

    Personally, I am waiting to do something similar, and I figure at some point within the next year, a rumor, or new law will come into play and yank the currency in some wild direction, over correcting itself for a brief time. That is when I plan to transfer money.

    During the financial crisis, it went from 1.60ish to 2.60ish over night. Then it slowly moved back down. While that was an extraordinary event, it shows how quickly the currency can be yanked around and how much pressure investors can put on it.
    [/QUOTE] I know what you mean as I have seen in the past couple of months it went from R$2,18 for $1 Euro to today R$2,37 ….19 cents is alot if your changing alot of Euros. I have noticed it(Euro) climbing slowly over the past two weeks and hope it will climb more in the next few weeks/Months. Much appreciated your input on this matter and thanks alot jKennedy…off to watch a movie mate, cheers

  • #155458

    Max
    Member

    After 31 pages of this topic, it seems the only sure thing is that while interest rates are 0.5% in the UK, and 10% in Brasil, the GBP will stay sitting at an all time low against the Real, so best to wait to see if this changes where considerations of investing your UK dosh (or Euros) in Brasil is concerned.
    Intesrest rates will start going up in the UK, and they will start going down in Brasil after Dilma gets a little time in her Presidential chair. I dont think too many will disagree with this, and when its starts happening from both ends, the GBP will start moving north again, pretty quickly I reckon, and it will get back to over 3:1.
    Its already been down to around 2.55, then back up over 3, then back down to the low 2.6 numbers since I started this topic, less than 12 months ago, so it moves around pretty fast and furious at times, and it does not need tons of energy to get it started in either direction.
    I have no idea what the worlds mid term prospects are. Maybe there will be a crash in the $US, maybe there will be another global economic meltdown, maybe hyper-inflation will kick in, maybe the rural poor in China will band together and begin to rise up, maybe none of the above and it will all just be a slow but improving grind for the US, Europe and the UK over the next 5-10 years.
    I was reading a newsletter the other day from this guy who calls himself soverignman, and he says this (in the context of the coming collapse of the $US as he sees it):
    We can see the signs of the long-term trend… and if you haven’t done so already, you should be taking steps to preserve the value of your capital. Consider holding stronger currencies in a foreign bank account, buying precious metals, or purchasing well-located foreign property.
    Maybe this is not bad advice. You can do allof these things from Brasil.
    I was already reading a little about hyper-inflation, and it seems to me that hyper-inflation is the result of people trying to protect the value of their capital (exactly as soverignman is urging his readers to do) meaning once people have lost faith in the paper that usually stores their capital, and look to find ways to hold it in other forms, that paper loses relevance in terms of how people perceive it, so it’s not just about hyper-inflation being caused by governments increasing the money supply with no solid suporting fundamentals in place to do so. It’s also largely about us, we the people, and how we perceieve cold hard cash.
    If there is a collapse in confidence of our cash – and a rush for alternative stores of capital, it’s hello hyper-inflation and goodbye, farewell and amen to life as most of us in the Western World have known it.
    At that stage, none of us will be much worried about exchange rate predictions, only what we did with our cash while it was worth something.

  • #155464

    One only need to pull up on Google Finance “USDBRL” (or GBPBRL/EURBRL)to see a historical graph, which illustrates brief “blips” ofopportunity in the FX for us Gringoes wanting to buy reais. If thegraph went even further than 2004, you would see a “blip” that occurredin 2000, and a significant one in 2002. There WILL BE another blip,but when and why, no one can truly predict, only guess.
    As someone has already recommended here, if you don’t NEED the moneyjust yet (to transfer), hang tight. If you’re hoping to invest inproperty (in Brasil), which is presently overpriced, both in thelocal valuations and the exchange rate “purchase price”, it’s time toget liquid NOW in your USD/GBP/EUR positions (or whatever is your coin oftrade). Because when the blip does occur, you’ll want to moveswiftly. Depending what kind of blip it is, if there is too muchcapital fleeing, say, the US, currency controls could beimplemented.
    It would be a serious event for that to happen, buthistory is full of such scenarios that came to pass (and themajority were caught unprepared). Also, when the blip occurs, property prices will remain as they are for a very short period. You should already have a “shopping list” prepared of potential properties, including your own homework on the documentation (escritura publica or posse; IPTU payments current; negative credit issues of the present owner, etc.) Keep that list revised at least four times a year. I’ve watched properties come and go, but something else interesting always pops up.
    While others may disagree, I concur with Richard that the advice in the newsletter he quoted is not bad advice. Actually, it’s very good advice! Hope for the best, plan for the worst, has always been my mantra. While the left-brained thinkers of this forum can toss around numbers, percentages, and mathematical probabilities, even declaring with confidence what will or won’t happen in the various global economies, I think us right-brained thinkers sense with our intuition that there is change in the wind, and that wind could easily sweep away every and any economic theory, along with the confidence that supported such theories. Of the three items recommended in the newsletter quote (holding stronger currencies in a foreign bank account, buying precious metals, or purchasing well-located foreign property), I believe the latter will prove to be the most wise and prudent.
    Gringo.Floripa2010-10-23 18:25:29

  • #155472

    Max
    Member

    I had not seen that graph before GF, as I have not really had any reason to follow the GBPBRL until this past 12 months, but blimey, it’s eye watering. You gringoes who were here in 2005 when you were getting close to six Reals for the Pound – what I (we all) could do with a rate like that now.
    But to address the over priced property prices that GF mentions above, I guess these historical exchange rates are part of the reason that the nicest coastal areas to invest in here in Brasil, are so over inflated now. Gringoes who ploughed in five years ago are sitting pretty on a big pile, not wanting, or needing to drop their asking price, even though locals wont pay those prices, and new arival gringoes can’t afford them at current exchange rates.
    Jericoacoara is a case in point. Plenty of houses for sale at massively inflated prices, all owned by Italians who can’t sell them to Brasilians because the Brasilians know the asking price is ridiculous, but can’t find Europeanas to buy them now either.
    I suspect many old school gringoes are waiting for their sucker boy newbie gringo to walk in the door, ply them with rum, regale them with tales of the lifestyle, the returns and the women, and then hope to off-load to them. Might I suggest that perhaps the most dangerous person to buy any property or land from in Brasil right now, is our own kind!
    All that aside – these longer term graphs show that things can move very fast without rhyme nor reason where the Real is concerned. We can all say whatever we like about the future, but none of us knows what lies ahead. What is clear is that if there is a move for the Brasilian emergency exit, it quickly becomes a stampede, and the Real drops like a lead balloon. But the same may happen yet to the mighty $US.
    I plan to wait and see what happens, and to be ready if the negative trend against the Real kicks in. I have begun to acquire some large chunks of land here in the north east of Brasil but I don’t plan to build on them yet, and I will also find alternative stores for my capital in the meantime that I can liquidate quickly if need be, steering me towards precious metals in 2011.

  • #155477

    I’ve posted the following article before, either in this particular forum, or one similar. Though the exchange rates are dated, the premise is still relevant.
    BuyingSmart

  • #155478

    jeb2886
    Member

    Buying foreign property as a hedge is a dangerous bet. Holding foreign currency is a dangerous bet. Precious metals have been a horrible position to hold. Gold after inflation has only recently (after this huge run up) achieved it’s pricing in early 80’s.
    If you look further back on the Real you’ll see varying currencies and hyper inflation. They are counting on inflation currently to keep the debt manageable, which means the Real is going to have to get a lot stronger to maintain even it’s current position.
    The concept of buying foreign property could wipe a person out and is dangerous advice, unless you know what you’re doing. It isn’t a safe place to put money, it’s a dangerous place to put money. It’s a great place to reap large rewards. High risk, high reward. It’s best to invest locally, where the changes in currency might not generate huge gains, but will keep your money safe and keep you in the same boat as everyone else.
    If you invested in Australia for example, and the country toppled over, you lose everything, or would need to possibly wait decades for a recovery. If you lived in Australia, you still have the land and you are in the same boat as everyone else. The value of the land relative to your expenses and income will remain closely matched. If you lived in the UK, you all of a sudden have nothing and you’re living expenses remain the same!
    GP your advice on safe investing is horrible at best, and extremely dangerous to others who might think it’s a safe way to protect their assets.

  • #155484

    Max
    Member

    Buying property anywhere could wipe a person out JK, so why do you use the word (foreign), to define your parameters?
    Regards toppling over, the US should have toppled over two years ago. It is well and truly sitting within the just might topple over class of countries.
    Personally I think precious metals will be a safe haven and a reasonable return for the next few years, and precious metals do not have to be limited to gold. I would be looking at other precious metal options as well. Precious metals can also be liquidated fairly quickly.
    So I do not think any of this is horrible advice JK, but perhaps an alternate view to yours. I am not really understanding why your view is so linear, and why anything slightly off your path, is a horrible option.
    What exactly would you be doing JK seeing as how you have trashed the ideas of holding foreign currency or investing in foreign property and precious metals?
    It seems to be that your world view is contingent on the good ship USofA staying afloat, and not going down. It’s a brave man who makes that assumption when deciding how to protect his hard earned store of wealth in my view. And if it all goes to hell in a hay cart, better to have a way of life already on the sidelines, than stand there, dumbstruck, watching the deckchairs vanish under the waves.
    Commentators talk about the fear that the Chinese leaders have of their rural poor rising up, rising up against a totalatarian, military state no less, hence their need for 10% growth and the transition of these rural poor into urban settings where they will need jobs. If you believe the commentators, and if the Chinese leaders truly are worried about this, I would suggest that the US establishment should be well concerned about what happens when their entire working and middle classes realise they have no jobs, no prospects, massively reduced value in the (local) property that they paid too much for, and not much value in the little cash they might be holding thanks to rampant inflation.
    If totalatarian regimes can come down, and they do, then so too can a first world capitalist democracy. Even the biggest one of all.

  • #155487

    [QUOTE=jkennedy]Buying foreign property as a hedge is a dangerous bet. The concept ofbuying foreign property could wipe a person out and is dangerousadvice, unless you know what you’re doing. It isn’t a safe place toput money, it’s a dangerous place to put money. It’s a great place toreap large rewards. High risk, high reward. It’s best to investlocally, where the changes in currency might not generate huge gains,but will keep your money safe and keep you in the same boat as everyoneelse.
    GF your advice on safe investing is horrible at best, andextremely dangerous to others who might think it’s a safe way toprotect their assets.[/QUOTE]
    Invest “locally”, like in one of the funds or equities you push in yourday job as a Wall Street pimp, is that what you’re recommending JK? Yet maybe you’ve been embedded on this site as an agent for the Treasury Department, and are attemptingto stem the continual outflowof US dollars into hard assets outside your reach….
    “Keep your money safe and keep you in the same boat as everyone else”is your recommendation?! And if the unsinkable Titanic-USA happens tohit another unseen economic iceberg?!? No thanks, I prefer thesunny shores of Brasil, rather than to drown like a rat following thePied-Piper JK….
    If one invests ALL of their assets into one piece of property, or one stock, or one precious metal, or one dozen eggs from Australia for that matter, then yes, thisperson might eventuallylose ALL their assets! OR… it may have beenthe smartest decision they ever made. That’s for them to decide. If I only had 10k to invest, and used all of it to buy AAPL just seven years ago, where would I be today?! To diversify isusually best; don’t put all of your eggs in one basket, as the saying goes. But when one basket has a huge hole in the bottom….
    I only speak from my ownpersonal experience. I have never regretted my dive, head-first, intoBrasil. True, life here is not the same as the US, there arefrustrations and many inconveniences,but if someone offered me back my previous house, my previous occupation, my previous life, my responsewould be a polite but firm: “No thank you!”
    BTW… I’m not providing anyone with “advice” on how to protect their assets. And where, oh where, did I state an investment in real estate (in ANY country) would be “safe”??? Being wise and prudent is not always a “safe” (no-risk) option. I’m simply expressing my (experienced-based) opinion on the benefits ofinvesting in real estate in Brasil (when the timing is right), as wellas providing links to assorted articles by various authors that expand on this idea. Let the reader decide on their own. Brasil is not the only option, but THAT COUNTRY is the focus of THIS site, and it’s various forums. Get it?!?
    And if buying foreign property is such a “dangerous bet” (lions, and tigers, and bears! oh my!!!), why do youstate in earlier posts that you personallyhope to cash in on buying property inBrasil, when the next Forex blip occurs?! Which is it?!? Invest in theUS, or invest in Brasil?! I suggest you invest in the US. Someoneneeds to stay behind to turn out the lights….

    “Two roads diverged in a wood, and I
    I took the one less traveled by,
    And that has made all the difference.”
    ~ Robert Frost~
    The Road Not Taken


    Gringo.Floripa2010-10-24 07:37:59

  • #155491

    jeb2886
    Member

    Hardly my position at all. Holding a strong balance of real estate and other investments is the way to go. But most people can’t afford to pick up multiple houses in many countries and manage them around the world. If you’re putting more than 10% of your assets in one location you’re putting yourself into a dangerous position. Because a house is a huge investment, it often becomes the single largest position someone has.
    Now there is a huge difference between investing, speculative buying, and what YOU are talking about which is protection of capital (which is the way to go). Foreign real estate investments, unless done on a massive scale is speculation and investment only and has HIGH risk HIGH reward payments. This is NOT protection of capital, this is the complete reversal of it. Do you understand the difference? You’re offering up the right basic idea followed by the absolute worst advice possible.
    You’re trying to say you’re offering up diversity and protection, while you’re giving those up in reality and buying about the most risky investments possible. Now if you LIVE in Brazil with citizenship, with pensions there, and what not, then Brazil is your locality and foreign investment would be the UK. If you keep the UK as a home base, with money, pensions and what not, then you’re base should be considered the UK.
    I am clearly stating that I’m investing. The property could be used as local holdings in the future as well, so I’m hedging it as a possible foreign investment today, with the possibility of using as a residence in the future. I’m backing up a risky investment with alternative uses and prospects by hedging this investment with future residence.
    If you’re going to diversify, buy no more than 5%-10% of any one asset class. There are a lot of them. Generally don’t have a huge amount of speculative assets either (foreign property, metals, foreign stocks).
    The issue of putting yourself in the same boat as others, is very realistic. The idea is to preserve your living standard. By investing locally, if globally you become poor, you’ll still be in the same situation as everyone else locally, thus maintaining the same living standards. If you lost all of your money in Brazil and everyone else in Brazil still had their money, you’re poor and in trouble. If everyone loses, then the $1 you have left over is still worth something, and still able to buy what you need, even though it’s a small sum now, it’s relatively similar to everyone else.
    Don’t confuse “safe” as USA either. Safe should be locally to yourself and/or tied to your life/residence/retirement.
    As far as the unemployment comment about the US vs China, it’s obviously not a serious comment, but I’ll reply for those that might not understand. China has 1B people, with 800M in rural areas. Currently only 200M are in jobs, with most of those being manufacturing and other supremely low paying jobs. Or put another way, 80% unemployment with 18% working at McDonalds and 2% living blue collar/white collar life styles. Or for all of the Brazilians, take everyone out of the cities, move them to the slums, and everyone in the slums moves to an even worse existence. Let them know they’ll have a “chance” of returning within 10-20 years. Now take that chance away. The people in the slums aren’t happy, the people who are now worse off than in the slums are really unhappy.. That’s a huge difference than the life style of people living in the US. There are possibilities in the US, there are none in China. If the entire economy collapsed, and no one wanted to trade with the US, the people would still have a first class life style compared with the Chinese. The Chinese are in a very tough spot and they’ve even stated that they are and that any slow down in their economy could spell disaster for the whole government.
    PS your comment about Robert Frost is a prime example of speculation, NOT of preservation. Speculation is good, fun, and lots of possible rewards but don’t fool yourself thinking you’re setting yourself up with a safe investment! It’s funny that you would post that at the end of your message though! Heh!

  • #155492

    [QUOTE=jkennedy]… most people can’t afford to pick up multiple houses in many countriesand manage them around the world. If you’re putting more than 10% of your assets in one location you’re putting yourself into a dangerous position.
    PS your comment about Robert Frost is a prime example of speculation, NOT of preservation. Speculation is good, fun, and lots of possible rewards but don’t fool yourself thinking you’re setting yourself up with a safe investment[/QUOTE]
    I take it then, you only have 10% of your assets invested in the US. Do tell, enlighten us JK, where do you have the remaining 90% allocated???
    Who on here is talking about buying “multiple houses in many countries”?! I’ve not read that anywhere (except from you). There is only one country we’re discussing buying property in: Brasil.
    To arrive at the threshold of having something worth preserving, one has to speculate, in order to “accumulate” (unless the assets were received as an inheritance). Virtually all investing is some form of speculation. I have yet to read a prospectus which states “You are 100% guaranteedto make money on this investment”.
    I must disagree about the Robert Frost poem. At the fork in the road, there was no guarantee as to what awaited ateither end. According to your view, the traveler should have just stayed at the fork, and not ventured any further. The traveler would have preservedhis energy, preserveddrinking water, preservedthe soles of his shoes from further wear.
    I think us Gringoes, who are already residing in Brasil, or intend to do so soon, are adventurers, trailblazers, and we do realize some risk is going to be taken in leaving behind the familiar for the unknown. We undertake that risk precisely because we don’t wantto be in the “same boat” with everyone else! Thus, we tend to choose the road less traveled , and THAT has made all the difference. At least it has in my life.
    Vou pra praia. Tem um bom dia….

    “Wide diversification is only required when investors do not understand what they are doing.”
    ~Warren Buffet on diversification~


    Gringo.Floripa2010-10-24 16:42:50

  • #155493

    Another perspective on the “Farewell America” conversation:
    http://www.aca.ch/joomla/images/pdfs/wegelin.pdf
    WEGELIN & CO. PRIVATE BANKERS PARTNERS BRUDERER, HUMMLER, TOLLE & CO.

  • #155495

    Max
    Member

    It was not an unemployment comment regards the Chinese rural poor JK, it was a comment about the fear that the leaders of the biggest nation on earth have about their populous rising up. Rising up because they are not satisfied with the way life is. And this is a leadership who will also shoot there own people, run over them with tanks, and their own people know that, yet these leaders are still afraid. It’s because the Chinese understand what revolt is, and Americans will eventually remember.
    I find it amazing JK that you expect that the disenfranchised of Amercia will just suck it up while watching their rich getting richer. They won’t. Another financial meltdown which may come in many various forms, will tip the scales in my view, and if it does come, much of what you have written here will mean nothing.
    If that happens, if we have another meltdown, I suggest it’s not a bad option to have an alternate way of life, other than being broke, unemployed, without your house, and without your cash in the USA. I don’t understand why you always outright reject this.
    Regards investing in foreign property, I am glad you clarified your positon, but most of the people who are on this forum for longer than their backpacking swing through Brasil do live here, and do either invest, or think about investing in property here. And most of us will probably live in the houses we either buy or build. I don’t know why you would have assumed otherwise.
    Sorry JK, no offence, but listening to you talk about how to invest makes my eyes glaze over, and I am reminded why I never listened to any of the financial planners in the UK who use to call me in and ask what I was going to do with my cash, hoping I would hand it over to them to invest wisely. I didn’t, and I am pretty glad I didn’t, as this was 2007 – 2008 pre the GFC – so by not listening to them, I managed to save my savings.
    To be fair, I am not an investor. The idea of monitoring my investments and having to do the work to even know what I am investing in, that just bores me senseless. I believe in building things, being a producer, generating wealth through actual production, and investing my own wealth in that pursuit. All I really want to do is find a realtively safe passage through these uncertain times, protecting what I have, and building something new for the future, eventually, here in Brasil.
    To that end, waiting for the exchange to swing back in my favour, planting some building blocks here for the future and finding a safe store for my capital (that I can liquidate quickly) are not horrible options JK, and when you tell people they are, it brings into question any of the good points you might actually be making.
    I look at the big picture JK, and consider lifestyle choices that are not dictated to only by investment returns. Maybe your advice is good in parts, but it’s souless, and without soul, it’s not that interesting – to me at least.

  • #155515

    Just posted this story in another forum, but since we’ve recently beendiscussing purchasing real estate in this one, thought some might findthis story to not only be of interest, but amazing as well! I recallpaying my “earnest money” in cash (20 and 50 cédula denominations, the100 was still in limited circulation at that time). I felt like a drugdealer sitting at the table, counting it out. Yet to pay the ENTIREpurchase amount in paper money?! NFW!!!
    Buenos Aires – Where Cash is Still King

  • #155621

    Anyone care to buy my debt… for the next fifty years? If so, please sign on the dotted line!
    If I could only run my personal finances in such a manner.

    Debt sales highlight abnormal conditions

  • #159221

    brazilipino
    Member

    Forex, Anyone interested in swapping $R for USD? I have $R and need USD. Ideally we move the money electronically at the spot rate. So, if the fx is 1.70 and you have $1000 USD that you want $R, then I’d move $R1700 into your Brazilian account from my Brazilian account. And you move $1000 USD from your US account to my US account. Basically, I’m moving out of Brazil and need to get my money out. I’m not into make a single cent in profit on this deal, just don’t want to hassle with the government on moving funds out of the country. Cheers, JR

  • #159224

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa]Anyone care to buy my debt… for the next fifty years? If so, please sign on the dotted line!

    If I could only run my personal finances in such a manner.

    Debt sales highlight abnormal conditions

    [/QUOTE]

    Given the unprecedented levels of QE, the idea of buying Tips may not be as crazy as it sounds; no one can doubt the high levels of inflation that will hit during the lifetime of a 50 year bond.

  • #163043

    Isos
    Participant

    Since this thread was started just over a year ago I wanted to refresh my memory on what some of the thoughts/hopes were for the future exchange rates. On the USD side, rather than going up to the 2+:1 ratio it’s still floating close to the 52 week low at 1.6..:1. Here hoping for a better exchange rate at some point this year.

  • #163045

    micko
    Member

    The government is trying to get it to go that way, but slowly. They aren’t having any luck because they are scared to death of inflation and just raised interest rates to that end, but that hasn’t been as effective as they hoped … not yet at least.
    The exchange rate is on the back burner for now if they can keep held where it is now using reverse swaps and buying dollars on the spot market.
    Or at least that is how I see it.

  • #163048

    But are we going to see R$2 reais for 1 USD this year? and what about the Euro? Today is at $2,30 to R$1 real, would like to see this change a bit aswell.

  • #163051

    majazac
    Member

    [QUOTE=latinboy]But are we going to see R$2 reais for 1 USD this year? and what about the Euro? Today is at $2,30 to R$1 real, would like to see this change a bit aswell.[/QUOTE] Unless USD interest rates at least double and there is a major fix for the Eurozone debts….so probably not, or even close.

  • #163055

    Deleted User
    Moderator

    The response is as the song suggests; the answer is blowing in the wind. We know that the dollar is currently on an unsustainable one way track of deficit and debt that is described by both economists and mathematicians alike as, flawed and untenable. Frankly, I don’t pretend to understand the intricacies of smoke & mirror economics or the importance of Wall Street or the City of London and their non-contributory, self-serving activities within the socio-political spectrum. As I see it, nobody is at the helm in a leaking ship where some are profiting by making the hole bigger while others are bailing out just to keep the game going for a little longer in the fond hope that the global economy will evolve into balance; a balance that inevitably means dilution and redistribution of the wealth. The white man‚Äôs magic is being exposed as not magic, but illusion. Time for that beer!

  • #163061

    I’ll drink to that!!! Thumbs%20Up

  • #164896

    Deleted User
    Moderator

    The Real seems to be stuck in the R$ 1.60s for the past few months reflecting a fall in the dollar’s value of a little over 9% from this time last year.

  • #164910

    Anonymous

    [QUOTE=latinboy] But are we going to see R$2 reais for 1 USD this year? and what about the Euro? Today is at $2,30 to R$1 real, would like to see this change a bit aswell.[/QUOTE]
    I don’t think so. Maximum 1,72-1,74. Weak dollar and imminent withdrawal of dollar as the international reserve currency by IMF won’t let it happen.Dom Pedro2011-02-14 10:45:34

  • #164920

    micko
    Member

    [QUOTE=Esprit]

    The Real seems to be stuck in the R$ 1.60s for the past few months reflecting a fall in the dollar’s value of a little over 9% from this time last year.[/QUOTE]

    12/02/2010 11/02/2011
    USD 1.86 1.67 = -0.19 /1.86= 10%
    GBP 2.92 2.67 = -0.25 /2.92= 9%
    EUR 2.54 2.26 = -0.28 /2.54= 11%
    CNY .272 .253 = -.019 /.273= 7%

    What’s the BigMac at?

    ref. http://finance.yahoo.com/currency-converter/#from=EUR;to=BRL;amt=1

  • #164924

    jeb2886
    Member

    We can call that currency whatever we want. Then each currency sets their currency, generally based on whatever their major trade partners use. Lets take Japan, who could they base theirs off of? Hmm and Germany? France? UK? Canada? Mexico? China?
    The system will be completely free of the US, except everyone will ensure their currencies are valued accordingly to the USD.
    And if the US prints off 50% more money, so will they, to devalue their money, because if they don’t they’ll lose in exports. So in essence, we’ll have a new global currency, with every country basing their currency off the value of the USD. We can coin this global currency anything we want, I like the term dollar though.
    Brazil has raised it’s interest rates, which reflects in the strength of the Real due to foreign investors wanting those returns.
    Did anyone catch the Chinese/US trade deficit? 6.5B. Wow!

  • #164939

    Deleted User
    Moderator

    [QUOTE=DUNGA] [QUOTE=Esprit]

    The Real seems to be stuck in the R$ 1.60s for the past few months reflecting a fall in the dollar’s value of a little over 9% from this time last year.[/QUOTE]

    12/02/2010 11/02/2011
    USD 1.86 1.67 = -0.19 /1.86= 10%
    GBP 2.92 2.67 = -0.25 /2.92= 9%
    EUR 2.54 2.26 = -0.28 /2.54= 11%
    CNY .272 .253 = -.019 /.273= 7%

    What’s the BigMac at?

    ref. http://finance.yahoo.com/currency-converter/#from=EUR;to=BRL;amt=1

    [/QUOTE]

    Looking at the 2010 index it’s hard to fathom any sense or hard conclusion reached by this index. If this tasteless piece of processed bird droppings served between two pieces of re-cycled cardboard has a cost price of a few cents, the margins and market forces dictate the retail price.

    In the US it was $3.75 while in China is was $1.95. In Argentina, $3.56 and Russia $2.33. In Brazil, $4.91 and Switzerland $6.19. In the Ukraine £3.88 and Sri Lanka $1.86 while Singapore it was $1.13. Did you want fries with that? LOL

  • #165535

    We’re well past 2010, so I suppose this particular thread title is now irrelevant. Nonetheless, thought I’d give it another bump into the current discussions.
    Since much/most of the Real forex is influenced by the USD (for now), relevant news about the Dollar is always of interest (for now).
    Wall Street and the U.S. government statisticians seem to have very different views on the state of the economy.

  • #165549

    Deleted User
    Moderator

    The Reuters article states the obvious about the disconnect between the stock market and the US domestic economy. On one hand we have this huge industrial giant enjoying over 90% employment with a workforce that has seen its real standard of living/wages falling during past years in response to global competiveness, while the US companies that have outsourced rake in profits; the sick patient is in the intensive care unit but improving. All would bode well were it not for the fact that the doctors on Pennsylvania Avenue continue to administer leeches that suck the lifeblood out of the dollar; unsustainable debt and continuing deficit.

    The article mentions a reconsideration of purchasing another $600 billion of toxic assets as if this would be an affordable option. I wonder if these dipsticks appreciate that such a sum of money represents more than the entire gross domestic product of Switzerland. Perhaps they think only of the cost of ink and paper to print this staggering amount of money. Meanwhile the ugly face of inflation lurks in the background and the only tool to prevent it breaking into a trot, interest rates, is currently not available in the toolbox.

    Regardless of US industrial performance, and I wish it good fortune, there still remains the problem of insurmountable debt, continuing high deficit and crippling interest payments. Devaluation by whatever means seems to be the only viable or normal way forward – but then the dollar is not a normal currency. We watch and wait. Stern%20Smile

  • #166239

    agri2001
    Participant
  • #166244

    Deleted User
    Moderator

    [QUOTE=agri2001]Could this be the start of the slide of the Real to normalcy? One can only hope.
    http://news.yahoo.com/s/ap/20110302/ap_on_bi_ge/as_emerging_markets_funk;_ylt=Arqt4EGMn71PittjsxaIcDsUewgF;_ylu=X3oDMTNjamVwOXUzBGFzc2V0A2FwLzIwMTEwMzAyL2FzX2VtZXJnaW5nX21hcmtldHNfZnVuawRjY29kZQNtcF9lY184XzEwBGNwb3MDNgRwb3MDNgRzZWMDeW5fdG9wX3N0b3JpZXMEc2xrA2ludmVzdG9yc3B1bA–

    [/QUOTE]

    Regrettably that news item appears to have expired but then such items are penned by self-appointed gurus on the hour every hour. In passing I would observe a curiosity about the reference to the term normalcy. Since the creation of the Real when it had brief parity with the USD, the exchange rate has behaved like a defective firework or, topically, Charlie Sheen’s personality: all over the place; up and down until recently when its trajectory has been reasonably horizontal. Those who are invested in Brazil should harbour no wish that the Real should follow the dollar on its path of decline, instead to hope that it stands on its own merits within the global economic community. Reality should be favoured over the artificial currency manipulations that are attempted by the FX trading journalists that like to get the simple minded to run in and out of currencies like Charlie Sheen lemmings in the hope of clipping a few points.

  • #166273

    jeb2886
    Member

    A strong currency isn’t necessarily in the best interests of Brazil. Exports will dwindle while imports will explode. The explosion would be tantamount to the Japanese dumping product in the uS in the 80’s to force competition under, then to raise the prices, except this would be legal dumping.
    With imports coming in, the competition between local manufactures and other manufactures will become fierce. It would only take a solid 3-6 month window for the damage to be done. The local manufactures would either need to sell at losses, or handle massive cuts in orders.
    A currency shouldn’t be based off the US dollar, it should be based off it’s competing countries, which in this case base their currency off the US dollar. Until then, the Real should try and follow the US as closely as possible to keep it’s competitive place in the world, much like every other country is doing in the world to prevent the above from happening.
    As far as the middle east creating problems for the currency, they will only be temporary as people pull back to the US dollar for security. With the market possibly entering a short term correction, people will want to stay out of foreign markets for a few weeks. Aside from that, it should rebound. The only thing that will permanently change the currencies direction is intervention from the government in either a positive or negative manner.

  • #166275

    Deleted User
    Moderator

    I prefer to think that an even higher tax regime on imports would encourage Brazilian manufacturers to step up to the plate rather than to play along with the US as it tries to debase its currency.

  • #166276

    jeb2886
    Member

    Well you’ve got a good idea of how quickly business change their strategies in Brazil. Think they could change their entire business model and become 30-40% more efficient within 1-2 months?
    If yes, why haven’t they done so now? Why aren’t they being driven to make those changes now?
    The whole concept of Capitalism destroying that which isn’t efficient and replacing it with more efficient designs isn’t bad when it happens to a couple of businesses here and there, but when it happens not because a market is changing but because the entire currency is changing, thats a different story. That is a huge disaster waiting to happen.

  • #166293

    Deleted User
    Moderator

    [QUOTE=jkennedy]Well you’ve got a good idea of how quickly business change their strategies in Brazil. Think they could change their entire business model and become 30-40% more efficient within 1-2 months?

    If yes, why haven’t they done so now? Why aren’t they being driven to make those changes now?

    The whole concept of Capitalism destroying that which isn’t efficient and replacing it with more efficient designs isn’t bad when it happens to a couple of businesses here and there, but when it happens not because a market is changing but because the entire currency is changing, thats a different story. That is a huge disaster waiting to happen.
    [/QUOTE]

    Any business can change an entire business strategy in the time frame of a board meeting; implementing such radical change takes a little longer. Whilst one can imagine some small business types changing and becoming up to 40% more efficient within a two month period, I would venture to suggest that such a business had been chronically managed prior to that change. Such hypothetical businesses with that potential for such radical change during that period are also likely to go under within the same time frame and the likely reason why they haven‚Äôt changed is because they don’t know what they‚Äôre doing. Why in the name of sanity are you mentioning such change within this time frame in the context of this thread?

  • #166295

    An interesting article, especially coming from the conservative Rupert Murdoch owned WSJ: Why the Dollar’s Reign Is Near an End
    EDIT: forgot an apostrophe….
    Gringo.Floripa2011-03-02 19:58:13

  • #166565

    Deleted User
    Moderator

    Predicting the exchange rate trends of this teenage currency may prove elusive given its rollercoaster ride during the past sixteen years and now in the first quarter of its seventeenth year of its existence. During its first three years from 1995 through 1997 it was on steroids when it was stronger than the mighty dollar. 1998 was still a good year for average rates however during 1999 its strength was sapped as its value began to slip to a momentum that gathered speed that saw its value plummet to a third of its original value when a dollar would get you three Reais during 2003; WTF!

    Since that time to date the strength of the Real has gained ground when today’s rate is quoted at a touch below 1.65. For what it’s worth, the average exchange rate during its existence has been 1.91. The pound exchange rate followed a similar pattern and the average rate during the same period has been 3.26 to date where the rate is quoted at a touch under 2.67.

    So which horse to bet on in this ever changing complex game? Wacko

  • #166579

    majazac
    Member

    [QUOTE=jkennedy]A strong currency isn’t necessarily in the best interests of Brazil. Exports will dwindle while imports will explode. The explosion would be tantamount to the Japanese dumping product in the uS in the 80’s to force competition under, then to raise the prices, except this would be legal dumping.

    With imports coming in, the competition between local manufactures and other manufactures will become fierce. It would only take a solid 3-6 month window for the damage to be done. The local manufactures would either need to sell at losses, or handle massive cuts in orders.

    A currency shouldn’t be based off the US dollar, it should be based off it’s competing countries, which in this case base their currency off the US dollar. Until then, the Real should try and follow the US as closely as possible to keep it’s competitive place in the world, much like every other country is doing in the world to prevent the above from happening.
    [/QUOTE] Unfortunately FX rates aren’t determined by politicians or economists but the big money makers ie Banks and Hedge Funds. Regardless of what the US or BRL govt’s do, the only way the FX rate will be effected is if the return on investment in holding that ccy increases/decreases relative to other currencies.

  • #166583

    Deleted User
    Moderator

    [QUOTE=Bubbles] Unfortunately FX rates aren’t determined by politicians or economists but the big money makers ie Banks and Hedge Funds. Regardless of what the US or BRL govt’s do, the only way the FX rate will be effected is if the return on investment in holding that ccy increases/decreases relative to other currencies. [/QUOTE]

    Then of course we have the FX couch traders attempting to make a living and hoping to pay the rent on a good week. If hundreds of thousands of them could harmonise with each other they could possibly get a billion dollar trading pendulum going in a profitable buy/sell pattern.

  • #166591

    [QUOTE=Esprit]Then of course we have the FX couch traders attempting to make a living and hoping to pay the rent on a good week. If hundreds of thousands of them could harmonise with each other they could possibly get a billion dollar trading pendulum going in a profitable buy/sell pattern.[/QUOTE]
    Okay, I’m up off the sofa, and now harmonically converging with my Gringo brethren. I’m visualizing a rate of 3.0, but just for 30-60 days, nothing permanent or too damaging. Then a settled rate of 2.25 Who’s with me?! Is that too much to hope for?! Wink
    Gringo.Floripa2011-03-08 12:09:15

  • #166595

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa] [QUOTE=Esprit]Then of course we have the FX couch traders attempting to make a living and hoping to pay the rent on a good week. If hundreds of thousands of them could harmonise with each other they could possibly get a billion dollar trading pendulum going in a profitable buy/sell pattern.[/QUOTE]

    Okay, I’m up off the sofa, and now harmonically converging with my Gringo brethren. I’m visualizing a rate of 3.0, but just for 30-60 days, nothing permanent or too damaging. Then a settled rate of 2.25 Who’s with me?! Is that too much to hope for?! Wink

    [/QUOTE] It would be more realistic to imagine Dilma as a pole dancer or Lula’s finger growing back. Tongue

  • #166596

    jeb2886
    Member

    FX trading is a zero sum game. They need to harmonize buyers and sellers on the other side willing to lose.

  • #166812

    majazac
    Member

    [QUOTE=Gringo.Floripa] [QUOTE=Esprit]Then of course we have the FX couch traders attempting to make a living and hoping to pay the rent on a good week. If hundreds of thousands of them could harmonise with each other they could possibly get a billion dollar trading pendulum going in a profitable buy/sell pattern.[/QUOTE]

    Okay, I’m up off the sofa, and now harmonically converging with my Gringo brethren. I’m visualizing a rate of 3.0, but just for 30-60 days, nothing permanent or too damaging. Then a settled rate of 2.25 Who’s with me?! Is that too much to hope for?! Wink

    [/QUOTE] Simpl economics unfortunately will scupper this before it gets anywhere near 2, let alone 2.25…. You need to increase the risk factor. If you (we?) could somehow encourage Banco do Brasil to invest heavily in Libyan and or Eqyptian Government Bonds, then send regular mercenary squads to continuously incite civil war over the next 10 years you might get somewhere….

  • #166827

    [QUOTE=Bubbles]You need to increase the risk factor. If you (we?) could somehow encourage Banco do Brasil to invest heavily in Libyan and or Eqyptian Government Bonds, then send regular mercenary squads to continuously incite civil war over the next 10 years you might get somewhere….[/QUOTE]
    Well, Dilma was once a guerrilla, né? Wink

  • #166897

    celso
    Member

    I think the Real will implode as the internal debt is huge, Brazilians are spending like crazy abroad, and the Real is way over valued at this point, as the carry forward speculator buy the real and lock in the high interest rates, but as the trade unravels they all go for the door at the same time and yes the dollar returns to 2.25 after a spike to 2.75.

  • #166921

    [QUOTE=GreatBallsoFire]… but as the trade unravels they all go for the door at the same time and yes the dollar returns to 2.25 after a spike to 2.75.[/QUOTE]
    I’m going to harmonically converge on this ALL weekend!!! Thumbs%20Up

  • #167872

    This thread has been alive for quite awhile, but became redundant when the new year passed. Yet when one reads backwards, there is mention, of something, somewhere (internally within Brasil, OR externally) which could provide a “brief blip” in the forex.
    While certainly people all across the globe are imprinted with the sadness and even horror experienced by the citizenry of Japan this past week, there is (unfortunately) a situation brewing in that country which may result in some radical swings in the forex.
    Please don’t flame me with accusations of being a vulture, or an ambulance-chaser! I’m speaking objectively here, not subjectively. Leave emotion out of this. Let’s look at the facts. Should the Fukushima nuclear facility actually have a “runaway chain reaction into the nuclear fuel” this will be a a double whammy on Japan, which presently has the third largest economy on the planet!
    I’m not a nuclear physicist, and though I’ve been hearing “no real threat” in the press, I do know enough that “chain reaction of nuclear fuel” = BOOM!(?) Mushroom cloud rising a short distance from Tokyo?!
    If this unthinkable event happens (should I also mention possible immediate military intervention in Libya?!?), I think we could easily see panic/euphoria in the markets (and maybe a significant blip up in the forex USD:BRL). Those who follow the market swings know, that when the SHTF, the “electronic herd” stampedes back into US dollars as a safe harbor (for the time being).
    For those who have been looking for an opportunity to invest in Brasil, be it simply to buy a house or apartment, or maybe launch a business, the time may SOON be approaching for you to do so!
    I certainly don’t hope for this disaster in Japan, or cheer for it (though I would like Gaddafi to eat a tomahawk missile for breakfast), yet if any of this does happen, I’m nonetheless preparing for it. Are you?
    If you can’t read between the lines: Consider converting (some of) your investments into liquid assets, so you can then move quickly when a window opens. For if it does, it may be a brief opening.
    *The above is only the personal opinion of one gringo. It is not to be construed as financial advice!
    Gringo.Floripa2011-03-19 20:35:26

  • #167873

    jeb2886
    Member

    There won’t be any huge nuclear problems like you’re suggesting. However, it has gotten far further out of control than I ever expected! No nuclear explosions will happen. There is some radiation but it’s half life is pretty short for the most part as seen by the huge radiation spikes and then nothing a few hours later. They still have a long ways to go before they simply close the whole thing down and bury it.
    That being said, the yen is going to be under a lot of pressure to get stronger. The japanese debt is huge, and they’re going to have to increase it by a lot to rebuild. The Japanese need to buy a lot of materials to get going again, and a very high yen will help that process, but hurt local businesses because exports will become expensive.
    To get a decent BRL:USD pop, something has to start in Brazil. Either something true, or a rumor that foreign investors are about to get screwed. It needs to be semi-significant because small changes will only make Brazil slightly less attractive, but still more attractive than most options.

  • #167876

    Deleted User
    Moderator

    I tend to agree with jkennedy’s appraisal of this. The G7 are already rallying to support Japan in its plight because despite the constant healthy competition that exists between the countries of the world, most realise the interdependence or symbiosis in trade that must not and cannot be interrupted. A lesser country than Japan would remain on its knees much longer than this indomitable race of people.

  • #167946

    [QUOTE=jkennedy]To get a decent BRL:USD pop, something has to start in Brazil. Either something true, or a rumor that foreign investors are about to get screwed.
    [/QUOTE]
    My first time in Brasil was early 1998. The Real was still pegged to the USD. In August of 1998, Russia defaulted on their debt (which was partly brought about by the financial crisis in Asia the year before, which started in Thailand). By the end of 1998, skittish investors began withdrawing their money from other emerging markets, including Brasil. At one point, over 300 million dollars per daywas flowing out of the country. In January 1999, FHC’s administration made the decision to detach the BRL from the USD, to stem this flight of capital.
    I clearly remember a restaurant I frequented in Leblon. Even at a peg of 1:1 the menu was quite reasonable. Grilled chicken breast, with rice, fries, salad, and a couple of beers was about ten reais. When the rate then jumped to 2:1, well, it was almost embarrassing to have a complete dinner for under $5. It took a couple of months, but prices on the menu were eventually adjusted. Today, in Floripa, a pizza and a modest bottle of wine can easily run R$100 (including gratuity).
    So it doesn’t necessarily have to be an event inside Brasil, which triggers a blip in the forex. Of course, we all probably recall the amazing devaluation which occurred just prior to Lula being elected to his first term. That was no doubt an internal event, which triggered such a huge jump in the fx rate; investors who were worried about a possible “Socialist” president panicked. Internal events will certainly produce a greater devaluation of any country’s currency, than some external contagion. It should be noted the window of the highest peak of the devaluation in 2002 was only a few months.
    As the graph below illustrates, after the 2002 devaluation, the next significant event was the near total collapse of major US banks and Wall Street firms in 2008, an external event. Ditto for the “window of opportunity” to exchange at a higher rate: it was a mere 3-4 months.
    The Central Banks, the G7 nations, can throw as much money as they want at any problem, in any country, including Japan (Fortunately, it seems that today, from some reports, the threat of a “chain reaction” at the Fukushima nuclear facility is not as serious as it was yesterday. How true this is, remains to be seen) Yet should investors decide it is time to head for the exit, for whatever reason, there’s little these financial and gov’t entities can do to stop the stampede of the herd. They can only attempt to control further damage afterward. The Real has had three significant devaluations, two caused by external circumstances, one internal. Perhaps we’re due for an internal “event”. Who knows?
    I make no pretense of being a financial expert, yet whatever, wherever, whenever, given the precedents above, we’ll have a three, maybe four month window, when the next event occurs, before things return to “normal” (and internal prices are readjusted). Therefore, for anyone looking to invest in real estate, or start a business in Brasil, using foreign funds, you won’t have much time to act.

    Gringo.Floripa2011-03-19 18:57:40

  • #167949

    jeb2886
    Member

    All three events were internal really, or global in nature as the bank industry one was. Unlinking a currency from the USD will cause people to run for the doors. A global problem where the only place money is considered safe is the US is going to create a run on the currency. It’s very unlikely anything happening in Japan will effect Brazil, no matter what. If anything, brazils raw material exports and oil should hold the currency where it is, because those materials will be needed to rebuild Japan as well (if not directly, as a global commodity, it’s going to push up prices everywhere).
    If necessary, any of these large governments can flood the market with enough currencies to absorb investors panicking. It might seem unreasonable for them to do so, but they can, and as we’ve seen, they will. That 600B the US did in quantive easing part 2, was equivalent to the economy producing 6T, or almost half of the US GDP in one shot was injecting into the economy. The 600B is unimaginable, but the fact that organizations would have to essentially create 6T in production to create that 600B in savings is amazing.

  • #167950

    [QUOTE=jkennedy] That 600B the US did in quantive easing part 2, was equivalent to the economy producing 6T, or almost half of the US GDP in one shot was injecting into the economy. The 600B is unimaginable, but the fact that organizations would have to essentially create 6T in production to create that 600B in savings is amazing.
    [/QUOTE]
    Yes, it IS amazing what can be done with high quality laser printers these days! LOL

  • #167957

    Deleted User
    Moderator

    The supposed reality about the dollar being a safe haven is fast becoming a myth as is evidenced by a massive recent hedge fund dumping of US government bonds. Money that was deemed safe was in fact losing value by low interest being turned negative by inflation along with a sliding exchange rate. More particularly, the word is out about Bernanke’s conviction that the only way to protect the US economy and its debt is to obliterate the value of the dollar; hence the rise in gold & silver. The continuing and escalating deficit and its cost combined with quantitative easing are not only diluting confidence in America’s administration, but also the dollar, day by day.

    Adding to this pathetic performance we now face the political unrest in Libya and Japan’s misfortune. We can but hope that the political unrest will not stretch and over reach itself into a major problem in Iran or particularly, Saudi Arabia, when we would arrive at a globally critical episode in the energy sector; should that happen then all games are off because the West would be confounded by its hypocrisy concerning freedom and democracy verses the Royals in Saudi. I dare say that in such a scenario, China would raise its head above its hitherto shy parapet and start to shout, Bug out America! Deprive China of oil and kiss the Brazilian economy goodbye if not global peace. Forget history – this time it’s different. We live in interesting times.

  • #167962

    jeb2886
    Member

    You clearly don’t understand what the rich want when it comes to their investments. They want to stay rich. If you have 1B US dollars, you know what you can buy with it. If you have 1B pesos equivalent they could go up or down, you could lose a lot here. If you had 1B Zimbabwe dollars, well you lost it all. Now say you’ve got 1B US and the currency dives to 10% of it’s value against a peso, what has happened?
    People with Pesos are making out like bandits. Good for them.
    People with US are all at the same level of wealth. They’ve protected themselves.
    Both sides win in this scenario. The people in the US can still buy the same goods and services that they could before, because the currency might have dipped and dived, but it’s still the currency that everyone else uses around them, and guess what, all THOSE people just went through what you went through.
    Now if you had invested in the Peso and it dropped like a rock, what happens. You’ve lost everything. The people in the US haven’t gained anything, and they haven’t lost anything.
    It doesn’t matter whether the currency goes up or down, it only matters how your buying power goes up or down compared with others in the same social class as yours.
    It doesn’t matter WHAT currency is used, people will peg their currency to a country that matters to THEM. When they say the US will lose it’s dominance, it doesn’t mean that it won’t control the world, it means OTHER people might accept the euro or yuan as a stability currency, but those currencies will still be directly tied to the USD. Other countries might tie their currency to the yuan, but the yuan would be tied to the euro/usd most likely. the euro would be tied to the yuan and the usd, and the usd would be tied to the yuan and euro. The yen would likewise be tied in similarly. Other countries could either choose to allow their currency to go up or down, but in reality it’s going to be tied to the eur/usd/yen/yuan combo, because NONE of those countries are going to allow the others to get the upper hand.
    You write as if you think the USD will become some 3rd world currency, when in reality what it really means is other countries will have 3-4 choices to make when they want to run and hide. Or that the US might not be able to just print off money in the future, but they will. Other countries will just follow suit in an attempt to keep THEIR currencies at a consistent level.

  • #167965

    [QUOTE=jkennedy] Or that the US might not be able to just print off money in the future, but they will.
    [/QUOTE]
    Rather than peak oil, maybe what we need is a peak ink cartridge crisis?!? Confused
    Off topic, but speaking of those who have billionsand what they can buy with it: Rigging the System (Chevron vs Ecuador)
    Advisory: Will raise your blood pressure and maybe even make you kick your dog (but plz don’t).

  • #167968

    Deleted User
    Moderator

    [QUOTE=jkennedy]You clearly don’t understand what the rich want when it comes to their investments. They want to stay rich. If you have 1B US dollars, you know what you can buy with it. If you have 1B pesos equivalent they could go up or down, you could lose a lot here. If you had 1B Zimbabwe dollars, well you lost it all. Now say you’ve got 1B US and the currency dives to 10% of it’s value against a peso, what has happened?

    People with Pesos are making out like bandits. Good for them.
    People with US are all at the same level of wealth. They’ve protected themselves.

    Both sides win in this scenario. The people in the US can still buy the same goods and services that they could before, because the currency might have dipped and dived, but it’s still the currency that everyone else uses around them, and guess what, all THOSE people just went through what you went through.

    Now if you had invested in the Peso and it dropped like a rock, what happens. You’ve lost everything. The people in the US haven’t gained anything, and they haven’t lost anything.

    It doesn’t matter whether the currency goes up or down, it only matters how your buying power goes up or down compared with others in the same social class as yours.

    It doesn’t matter WHAT currency is used, people will peg their currency to a country that matters to THEM. When they say the US will lose it’s dominance, it doesn’t mean that it won’t control the world, it means OTHER people might accept the euro or yuan as a stability currency, but those currencies will still be directly tied to the USD. Other countries might tie their currency to the yuan, but the yuan would be tied to the euro/usd most likely. the euro would be tied to the yuan and the usd, and the usd would be tied to the yuan and euro. The yen would likewise be tied in similarly. Other countries could either choose to allow their currency to go up or down, but in reality it’s going to be tied to the eur/usd/yen/yuan combo, because NONE of those countries are going to allow the others to get the upper hand.

    You write as if you think the USD will become some 3rd world currency, when in reality what it really means is other countries will have 3-4 choices to make when they want to run and hide. Or that the US might not be able to just print off money in the future, but they will. Other countries will just follow suit in an attempt to keep THEIR currencies at a consistent level.
    [/QUOTE]

    In the first instance my gratitude for helping me to understand that the rich want to stay rich; a fascinating insight for which I’m eternally grateful. I take great comfort from the knowledge that even if my currency drops in value relative to other currencies, my purchasing power remains undiminished relative to my fellow currency holders; I’m in excellent company with my social peers and in the same boat, so to speak.

    The further good news for me is that I don’t have to pay more for my goods or services, however I remain puzzled by the increased costs of imported commodities, goods and services; perhaps these are caused by something unrelated to tied currency values that I hitherto thought were floating exchange rates. Finally, is the Bernanke medicine a prescribed medication or is it freely available over the counter.

  • #167970

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa] [QUOTE=jkennedy] Or that the US might not be able to just print off money in the future, but they will.
    [/QUOTE]

    Rather than peak oil, maybe what we need is a peak ink cartridge crisis?!? Confused

    Off topic, but speaking of those who have billionsand what they can buy with it: Rigging the System (Chevron vs Ecuador)

    Advisory: Will raise your blood pressure and maybe even make you kick your dog (but plz don’t).
    [/QUOTE]

    Money, money, money. One would have thought that a principled Ecuadorian government should have stepped in with its voice and privately threatened privatisation or else. Yet I suppose that the oil revenues sustain this little country and in particular its politicians. Everything and everybody has a price.

  • #167977

    [QUOTE=Esprit]Finally, is the Bernanke medicine a prescribed medication or is it freely available over the counter. [/QUOTE]
    It’s a Schedule 2-Controlled Substance*
    *may have a high potential for abuse, and may lead to severe psychological or physical dependency


    Gringo.Floripa2011-03-19 23:15:54

  • #167978

    jeb2886
    Member

    Put simply the rich aren’t worried about the cost of goods, they’re worried about their wealth. They aren’t rich because they spend 80-90% of their wealth per year on goods, they’re wealthy because the spend 1%, if that raises to 1.1% or 2% they still remain wealthy. However, if their wealth drops to 20% or 10% hat’s a whole different ball game.

  • #167990

    Deleted User
    Moderator

    [QUOTE=jkennedy]Put simply the rich aren’t worried about the cost of goods, they’re worried about their wealth. They aren’t rich because they spend 80-90% of their wealth per year on goods, they’re wealthy because the spend 1%, if that raises to 1.1% or 2% they still remain wealthy. However, if their wealth drops to 20% or 10% hat’s a whole different ball game.
    [/QUOTE] I bet that those 10% that can reasonably be described as rich are delighted with this situation. Incidentally, I wonder just how much of their wealth is located in US investments?

  • #168004

    jeb2886
    Member

    The top 400 richest people in america have more than than the lowest 50%. I believe the top 1% now own 90% of the wealth in America, it apparently moved from 10% owned 90% to 1% own 90% from 1980 until now, due to tax law changes. I haven’t only heard this number passed along though, and haven’t seen it really written down anywhere to reference. But the top 400 was posted just recently. So the super wealthy are super wealthy, and most don’t try and accumulate more wealth, they are simply trying to hold onto what they have. It gets to a point where simply maintaining wealth is a lofty goal. Ask the saudi princes and other mega wealthy. They simply aim to maintain wealth, not grow it. That is in fact their goal in most cases. Therefore, investing in risky growth based countries isn’t for them. If they have any money there, they pull it out when it gets iffy.
    I think it’s safe to say enough wealthy pull their money back to the USD to cause actual ripples in the economy. Not everyone needs to do this, only a portion large enough to cause the effect, then others will jump in making it turn to waves as they don’t want to be caught in a bad situation, even if the likely hood something bad happening is small, it’s not worth the risk. This is likely to continue on for a long time, even with multiple currencies that can be used instead of the US currency. It will in all likelihood simply make THOSE currencies more stable, not any other countries.

  • #168017

    celso
    Member

    [QUOTE=jkennedy]Put simply the rich aren’t worried about the cost of goods, they’re worried about their wealth. They aren’t rich because they spend 80-90% of their wealth per year on goods, they’re wealthy because the spend 1%, if that raises to 1.1% or 2% they still remain wealthy. However, if their wealth drops to 20% or 10% hat’s a whole different ball game.
    [/QUOTE] In Brazil the rich worry about personal safety. Kidnapping is a big business and often ends up with people getting killed. That’s why you see walls 20-30 feet tall in SP Jardins, concertina wire, barbed wire, the place looks like a giant prison camp. They also worry about politicos leaning left like Chavez who will grab their farms, businesses, television, radio, newspapers, for “national safety.” The rich is Brazil like to keep some safe money out of the country. There is a flood of rich Brazilians buyning Miami real estate right now. Follow the money….

  • #168019

    jeb2886
    Member

    We’re talking wealth people, not rich people. People with billions, like the top 1% of the wealth in the world.
    Rich who are buying up homes, just have money, not enough to make the markets move.

  • #168059

    Deleted User
    Moderator

    jkennedy РOne has a strong suspicion that the readers on this forum are not the in the mega wealthy league hoping for insight into the likely future fluctuations of the exchange rate; such folk have armies of professionals attending to such mundane tasks to titillate cerebral matters while the nubile peal their grapes and attend to matters below the navel. Yet if one were to ask a dollar multi-billionaire if there is any concern about the value of the dollar, the reply, in between belches wafting of caviar, would be a resounding yes. A loss of 0.0001% would represent more than the average American can accumulate after a lifetime’s hard work. Let us therefore not worry about the mega rich and concern ourselves with the salt of the earth.

    To say that, It doesn’t matter whether the currency goes up or down, it only matters how your buying power goes up or down compared with others in the same social class as yours.is akin to the unfortunate passengers on the Titanic before they perished. Devaluation has an immediate and negative effect. Your comment is identical to that made in 1967 by the then Prime Minister who infamously said following a14% devaluation: This does not affect the Pound in your pocket or bank. Doh! Of course it affected imported food and all kinds of other imported goods; cars, electrical products etc. to the tune of 14%. A devaluation that occurs deliberately like the not so subtle shenanigans of Ben Bernanke or through the FX market has the same affect on costs for the American consumer as it did for the British consumer; they became poorer.

    In simplified terms, the US owes an unimaginable amount of money on which it is paying massive interest that is compounded by annual deficits that are forecasted to continue way into the future. It’s like some crazy guy with a wallet full of maxed out credit cards and borrowings from friends and family; desperation! Bernanke must find a way out of this and a devalued dollar is, apparently, his only plan.

  • #168067

    jeb2886
    Member

    Correct, the mega wealthy aren’t reading here. That wasn’t the point. The point is, that a currency that the mega wealthy flood to is the USD. Maybe in the future, they’ll include Euro/Yuan as well, maybe not. They will be the ones that decide if another currency needs to be held or not. Large money transfers during troubling times to a stronger currency is only natural, and if they decide they can trust another countries currency as well as the USD they will, but that doesn’t mean the USD is going anywhere in the top position, it might just share that position with a few others, but they won’t dictate how currencies are traded or not, because the big countries will all ensure they’re competitive with one another, regardless of who is considered #1. Just like the US tried to run it’s currency down, all other countries tried to run theirs down as well, to ensure they stayed competitive, they didn’t care about what the US was doing, only how it would effect them in the trading world in large.

  • #168075

    Deleted User
    Moderator

    [QUOTE=jkennedy]Correct, the mega wealthy aren’t reading here. That wasn’t the point. The point is, that a currency that the mega wealthy flood to is the USD. Maybe in the future, they’ll include Euro/Yuan as well, maybe not. They will be the ones that decide if another currency needs to be held or not. Large money transfers during troubling times to a stronger currency is only natural, and if they decide they can trust another countries currency as well as the USD they will, but that doesn’t mean the USD is going anywhere in the top position, it might just share that position with a few others, but they won’t dictate how currencies are traded or not, because the big countries will all ensure they’re competitive with one another, regardless of who is considered #1. Just like the US tried to run it’s currency down, all other countries tried to run theirs down as well, to ensure they stayed competitive, they didn’t care about what the US was doing, only how it would effect them in the trading world in large.

    [/QUOTE]

    Just to summarise all of this waffle, is it reasonable to assume that you consider the scale of quantitative easing combined with debt and deficit, the portfolio of toxic assets and projected unfunded liabilities to be irrelevant to the existing and future value of the dollar? And is it your opinion that should the dollar continue to lose value that other currencies will be deliberately depreciated to keep pace with the dollar’s decline?

  • #168143

    [QUOTE=Esprit]

    In simplified terms, the US owes an unimaginable amount of money on which it is paying massive interest that is compounded by annual deficits that are forecasted to continue way into the future. It’s like some crazy guy with a wallet full of maxed out credit cards and borrowings from friends and family; desperation! Bernanke must find a way out of this and a devalued dollar is, apparently, his only plan.[/QUOTE]

    [QUOTE=Esprit]Just to summarise all of this waffle, is it reasonable to assume that you consider the scale of quantitative easing combined with debt and deficit, the portfolio of toxic assets and projected unfunded liabilities to be irrelevant to the existing and future value of the dollar? And is it your opinion that should the dollar continue to lose value that other currencies will be deliberately depreciated to keep pace with the dollar’s decline?[/QUOTE]

    And it’s all the result of Imperial overreach. Big Ben’s tonic for economic health is the same brew of hemlock other imperial powers drank in the past….

    Gringo.Floripa2011-03-21 11:50:07

  • #168156

    jeb2886
    Member

    It will have an impact. But don’t forget, almost everyone (countries/people with money) uses the dollar for something. So these actions hurt everyone a little bit, and devalued everyone a little bit everywhere. Will they want to do it in the future? Hard to say. Could they jump on the Euro instead? No, because the Euro is part and parcel of the USD, printed off by someone else. Germans aren’t going to allow the USD to go to 5:1, and ruin their manufacturing. The Chinese/Japanese aren’t either. 10-30% drop? Some might handle that, but it’ll be re accounted for in inflation, if not currency devaluation.
    Currency wars aren’t about “Hey you’re doing crappy things with your currency that aren’t fair to us!” it’s about “Crap, they’re going to destroy our economy, block it.” They might hate the USD and wish for the US to fall into the ocean, but they aren’t going to sink with it, which means ensuring they’re competitive against US goods in the market. End result, love it, hate it, everyone will be in lock step.

  • #168166

    An interesting article: Defendant Convicted of Minting His Own Currency
    Quote taken from the article: Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism, U.S. Attorney Tompkins said in announcing the verdict. While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country, she added. We are determined to meet these threats through infiltration, disruption, and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.
    So then, what does this make Bernanke to be?!?

  • #168171

    Deleted User
    Moderator

    Bernanke treats the dollar like a tin of Campbell’s condensed soup; keep on adding more water until it is completely diluted, tasteless and unwanted. Nobody wants a diluted [devalued] dollar in repayment of a debt or to see their dollar reserves and investments abused in this way. It’s unethical and betrays trust and confidence – the world will remember.

  • #168174

    jeb2886
    Member

    Ok so what? The world will forget, look how quickly it forgets about politics and wars. Give it 1-3 years and it’s GONE.
    So you think the world will say “We don’t want your stinky dollars, we’ll just let you devalue your currency to nothing, and let you destroy our entire economy instead! We’ll show you! We’ll give you every manufacturing job this country has, but we won’t devalue our currency!”
    Uh huh. Good luck there!
    You think about unethical. This isn’t unethical. If the world thought “Unethical” Saudi. Iran, Iraq, and Venezuela would be bankrupt because everyone would be driving electric cars and riding bikes, and Wallmart would be banished from the world everywhere due to their purchasing from a country that has poor labor laws.
    Sorry! People aren’t giving up their jobs because America is under valuing their currency, they’re going to undervalue just as fast. What’s important to them is their life style, and if that means under valuing their currency so be it.

  • #168195

    I’ve said it before, and I’ll say it again, I want some of whatever it is JK is smoking!! Must be a special stash he gets from his friends of wealth and power. Confused

  • #168198

    Deleted User
    Moderator

    Maybe you’re right about all this; maybe the American people will forget about their diminished 401 accounts, forget about their plans for a comfortable retirement, forget about the nice home they had before foreclosure, forget about the time when they had value in their property, when they were in employment with dignity and had pride in the American banking system, forget about the hope for change and forget about the time when the dollar would buy a good foreign vacation or an affordable tank of gas. Time heals all wounds yet the scars will remain and the lesson will be learnt that a country cannot run the arrogance of a trillion dollar deficit indefinitely; it’s a mathematical impossibility outside Zimbabwe.

  • #168201

    jeb2886
    Member

    Where was the stock market before this mess? Do you remember? It was 14K, we’re at 12K now. Is that decimated in your books? Completely wiped out? Gone? Forever, no way of retiring off that now?
    How about home values. A home isn’t an ATM machine. It’s an investment, in 30 years, they’ll own the home at whatever price it ends up being. When they retire they won’t have a mortgage payment, it doesn’t matter what they paid for the house, it only matters what their retirement costs will be. Until they sell, they haven’t gained anything, or lost anything either.
    Gas? Who is paying less for gas these days? Are you paying less? Think the Chinese are paying less? Europeans? Who is going to get cheaper gas, when it’s a commodity that more people are buying. Americans can buy a more fuel efficient car and drop these costs if they wanted. It’s their choice. How about in Brazil, got a car that you could get 5x the mileage on? Go from a 11mpg to 60mpg in a prius? Oh no, you don’t. Because the cars there are already efficient, there is no where to go with them. Maybe you could “car pool” oh wait, that’s already done.
    Can’t run that kind of deficit? Hm. Better go tell the Japanese that, they’ve been running a 2T deficit since ’95 when compared with their income/gdp and what not.
    What you wish would happen, clearly isn’t going to happen :) Wishing is a little different from reality.

  • #168208

    Deleted User
    Moderator

    [QUOTE=jkennedy]Where was the stock market before this mess? Do you remember? It was 14K, we’re at 12K now. Is that decimated in your books? Completely wiped out? Gone? Forever, no way of retiring off that now?

    How about home values. A home isn’t an ATM machine. It’s an investment, in 30 years, they’ll own the home at whatever price it ends up being. When they retire they won’t have a mortgage payment, it doesn’t matter what they paid for the house, it only matters what their retirement costs will be. Until they sell, they haven’t gained anything, or lost anything either.

    Gas? Who is paying less for gas these days? Are you paying less? Think the Chinese are paying less? Europeans? Who is going to get cheaper gas, when it’s a commodity that more people are buying. Americans can buy a more fuel efficient car and drop these costs if they wanted. It’s their choice. How about in Brazil, got a car that you could get 5x the mileage on? Go from a 11mpg to 60mpg in a prius? Oh no, you don’t. Because the cars there are already efficient, there is no where to go with them. Maybe you could “car pool” oh wait, that’s already done.

    Can’t run that kind of deficit? Hm. Better go tell the Japanese that, they’ve been running a 2T deficit since ’95 when compared with their income/gdp and what not.

    What you wish would happen, clearly isn’t going to happen :) Wishing is a little different from reality.

    [/QUOTE]

    Where was the stock market ten years ago relative to today? The market is at its current level because of quantitative easing. Check it out, every time Ben’s Sikorsky flew over Wall Street, asset values increased. When the fat pigs gobbled that up, asset values declined; that’s why Ben is going to do it again – throw more dollars into the trough buying time and hoping for the best; he’s gone way passed the point of no return and should fall on his sword.

    And what about the poor guys who wanted to retire recently that were wiped out? Given that 70% of the US economy was consumer based, that ATM machine, home equity, was providing at lot of that cash for consumption; where’s it all gone and where is it coming from in future to stimulate so-called growth? A hell of a lot of that consumption cost is now what is affectionately known as toxic assets held by government and paid for by the taxpayer who is going to be bitten in the ass by this folly. Who do you imagine is going to pay for all this excess?

    Who is paying less for gas? Well gas [oil] is priced in dollars. The dollar ain’t what it used to be so more dollars are needed. The Royals in Saudi know a thing or two about camel trading and Campbell’s condensed soup; if it’s watered down they want more.

    I detect that you feel this discussion is about Brazil verses the US – it’s not, but if it were we could talk about organic derived fuels. America’s clumsy attempts to get alcohol out of corn did nothing more than increase the cost of global food stuffs because the price of corn when crazy, doh! And what about electric cars? How does the US generate its electricity?

    Finally, if the US economic game plan it to be based on the Japanese model, an economy stagnant for the past ten years and recently overtaken by China, well so be it. Trouble is that the American way will have to undergo a major overhaul.

  • #168212

    jeb2886
    Member

    Anyone who retired on their 401k that was decimated had a couple of options.
    First, when they retire, they don’t simply say hand me over a check for my 401k, I’ll deposit it in my savings account now!! No, they pull out what they need each year. Well that first year would have pulled out 2x what they normally would have pulled out. When the market dropped 50%. The next year would have pulled out like 1.5X and now it’s probably closer to like 1.2X. Big deal, they weren’t wiped out. During any recession a 401K plan will dip, and people will pull more % wise out of it, than they normally would.
    Oil is in US dollars, sure. Other countries are paying more for it as well, the US is paying extra because of the dollar going down, but others have seen prices rise as well. The current electrical grid can handle 85% of the US cars if they all magically turned into electric over night. Most power comes from hydro/coal/natural gas, less than 1% comes from petroleum based products, and most of that is recycled oil being burned off in generators.
    Do you think Europeans are going to get more fuel efficient cars? They already pay like $8/g. I think at those prices they’ve eeked out saving money by having an entire family driving an SUV. Same with China, they currently have an average of 35mpg for their cars. How much higher can they get? double it maybe? Not too likely they’ll double their average fuel. The US can double theirs and double it again.
    What you seem to think is that countries like Europe will willingly drop the USD and say forget it! We’re devaluing your currency into the ground because it’s only worth 5 cents per euro! And so will the Japanese! Maybe the chinese will do it too!
    What then? What happens if you took the Real and put it up to 5R:1USD. #1 Every manufacturing job in Brazil is destroyed. Food is cheaper to import than grow locally. No job will be competitive with any other country. Is that what you think Europe will do? Maybe Japan? China? Just laugh away at how much their money can buy from the US?
    No. Those countries know a thing or two about world trade. They will price their goods on a competitive level with the US, and that has to do with productivity output of US companies vs local companies. It’s as simple as that.
    If the US can build a widget for $1 and they can build theirs for $3 well then they want a 3:1 valuation with their currency, regardless of it’s “value”.
    Local economy first.

  • #168213

    Deleted User
    Moderator

    You’re giving me a headache with this nonsense. Stern%20Smile

  • #168214

    jeb2886
    Member

    Sorry I don’t believe the countries of the world will destroy their currencies on ethical guide lines to devalue the US dollar to prove a point! Heh
    Just like when I look at the Real vs USD. I look at the stores and say “Too many Chinese goods are pouring in with aggressive pricing, a manufacturing based economy can’t have their products undercut like this.
    jkennedy2011-03-21 18:26:31

  • #168215

    Anyway…. As I was saying the other day/last week, the three significant devaluations of the Real (essentially, the topic of this thread) were triggered twice by external events, once by an internal one. Granted, the clout Japan has as the third largest economy on the planet, will buy them cooperation from the financial powers that pull the strings worldwide. Nonetheless (and I’m just going to step out on a limb here and make a prediction, not based on economic theory, but simply a hunch, and a view of past historic events) the tragedy which recently occurred in Japan, and the inescapable financial implications/burden could well be the initial contagionthat may affect (infect) other markets in the near future. What lies just around the bend for some other national economy? Exchange rates will move, sooner or later. Thailand 1997/Russia 1998/Brasil 1999; it was all a ripple effect.
    A year ago, who among us could have imagined such a tragedy as Japan has experienced?! A year ago, who among us could have imagined two, soon to be three, North African nations of principally Islamic citizenry would have broken the decades long hold of their dictatorial rulers in a period of more or less three months?!! A year from now, what will be the events we will be saying, “Who could’ve imagined?!?”
    Unlike another poster, I believe it is foolish, even blind arrogance to say “This will neverhappen”. Never say “never”….
    Gringo.Floripa2011-03-21 18:41:05

  • #168217

    jeb2886
    Member

    Generally I would say there are varying degrees of never, and it’s based on context. There are nevers that will never impact us, such as the sun will never burn out. That never is not true, but for all intense purposes, it is for dealing with any calculations that involve life planning. We can toss that out.
    Now I’ve seen some calculations based on the industries, land and population effected by the earthquake. They work out to a net impact of about 2% GDP will be lost. It will cost them a pretty penny to rebuild, which will be spread out over many years, it will create new jobs as well, and many people will face the burden of buying new cars themselves, or rebuilding themselves. Infrastructure will be the burden of the government though. It’s massive in it’s scales, but when put into perspective, isn’t that horrific.

  • #168218

    Esprit, pass the aspirin please, and a shot of cachaça to wash it down!

  • #168227

    Deleted User
    Moderator

    [QUOTE=jkennedy]Generally I would say there are varying degrees of never, and it’s based on context. There are nevers that will never impact us, such as the sun will never burn out. That never is not true, but for all intense purposes, it is for dealing with any calculations that involve life planning. We can toss that out.

    Now I’ve seen some calculations based on the industries, land and population effected by the earthquake. They work out to a net impact of about 2% GDP will be lost. It will cost them a pretty penny to rebuild, which will be spread out over many years, it will create new jobs as well, and many people will face the burden of buying new cars themselves, or rebuilding themselves. Infrastructure will be the burden of the government though. It’s massive in it’s scales, but when put into perspective, isn’t that horrific.

    [/QUOTE]

    Yes, setting aside the tragic loss of up to 12000 lives, nuclear contamination, losses of something in the region of $250 billion dollars in infrastructure [Ben could print that much over a long weekend] disrupted industrial production, thousands of homeless, unknown levels of food contamination and years of struggle and strife ahead, disrupted car production and lay-offs in America, I suppose that when put into your perspective, it’s not that horrific. [WTF!]

    Well of course should the sun actually burn out, America would have to intensify production of low energy light bulbs, space heating and UV systems to ensure the continued growth of crops and sun tanning saloons. Meanwhile all of the third world countries would be in the dark when, with the aid of high tech night vision goggles, the oil companies could steal all the oil thus making gas prices low again when we would see the long awaited return of the muscle cars. Illegal immigration from Mexico would at last come to an end because nobody could find their way to the border in the darkness; all this along with none of the cheap imports that have dissimilated US industry because container ships wouldn’t be able to find America’s shores. Every cloud has a silver lining.

  • #168229

    jeb2886
    Member

    Yeah it worked out to about 2% of GDP lost through disruptions and lost manufacturing/production.
    Do you understand the nuclear contamination, half life of the material released? What’s entailed in cleanup or anything actual useful or just garbage from BBC? Nuclear mess yes. Nuclear disaster destroying the area? Not too likely. Messy yes.
    The rebuilding will also create tax paying jobs, and through taxes they’ll collect back some of that money as well. It’ll cost something large, but 250B isn’t an insurmountable number either. This won’t be a new orleans money pit either. This will be a rebuilding like after the SF earthquakes or the LA earthquakes. Many things will be replaced, repaired and back in action pretty quickly.
    You consider everything a deadly mess that’s going to destroy the world. If your views came true just once, we would be living a mad max life style. However, oddly, they don’t. But we can’t say never now! You could be right one day……

  • #168230

    [QUOTE=jkennedy] But we can’t say never now! You could be right one day……
    [/QUOTE]
    LOLLOLLOLLOLLOLLMFAO!!!

  • #168236

    Deleted User
    Moderator

    News flash: It’s just been reported that lady Gaga’s hair is falling out. Concerns have been voiced about possible causes that include contamination by quarter-life radiation from imported Lexus limos.

  • #168353

    leonardo.m
    Participant

    [QUOTE=jkennedy] You consider everything a deadly mess that’s going to destroy the world.¬† If your views came true just once, we would be living a mad max life style.¬† However, oddly, they don’t.¬† But we can’t say never now! You could be right one day……
    [/QUOTE]
    ….never say never…thus saieth the black swan…

  • #168354

    Deleted User
    Moderator

    I shouldn’t have blinked in surprised when I read in the FT that last year China had displaced America as the largest manufacturer in the world; the top dog has lost the position that it has held during the past 110 years. Seemingly President Obama has likened China’s rise to the Soviet Union’s launch of the Sputnik and one can’t be blamed for thinking that this is not the change he’d hoped for when he said, Yes we can! CEO of the Council on Competitiveness said that the US should be worried and the country needs to compete. Sure it does, but it can’t compete against Chinese wages and a controlled currency unless the standard of living drops for the American workers and the dollar devalues. The inscrutable Ben Bernanke – you sly old dog you.

  • #168357

    [QUOTE=Esprit]

    The inscrutable Ben Bernanke – you sly old dog you.[/QUOTE]

    My dog would rip my throat out while I was sleeping, if I tried this….

    LOVE the t-shirt though! LOL

  • #168367

    Deleted User
    Moderator

    ClapClap

  • #168491

    Deleted User
    Moderator

    The almighty dollar, that bright shining star in the firmament of currencies, continues on its decaying orbit toward a scorching when it could enter the atmosphere of reality. Already it has lost 37% of its value against the other stars in the currency basket index during the past eight years. Mr. can print, will print Bernanke continues with his specific aim to devalue the currency to enable debt repayment. The dollar is skidding on the reality atmosphere and getting its bum cheeks roasted. The USD/BRL seems stuck on the 1.66 average during 2011. If after June when QE11 ends, helicopter Ben may be ordering yet more green ink for QE111. Still, following 2.1 trillion, what’s another 600 billion? The last straw?

  • #168492

    jeb2886
    Member

    The dollar was over valued in the prior years before that for all intense purposes. Stuck at 1.66 while inflation is much higher in Brazil? It should be headed down to like 1.4 by now just through inflation.

  • #168499

    Deleted User
    Moderator

    [QUOTE=jkennedy]The dollar was over valued in the prior years before that for all intense purposes. Stuck at 1.66 while inflation is much higher in Brazil? It should be headed down to like 1.4 by now just through inflation.
    [/QUOTE]

    I agree that it would appear to have been overvalued in the past; history confirms that it’s lost 98% of its purchasing power since the Federal Reserve was formed in 1913.LOL

    I take your point about inflation but we mustn’t forget about growth.

  • #168504

    jeb2886
    Member

    So if Brazil isn’t keeping up with the US in terms of Inflation, that must mean no growth is taking place either, putting pressure on the USD? If there is growth + inflation, and the currency is sitting at the same place.. then something is devaluing :)
    Inflation is good. It’s the one true tax on the rich they haven’t been able to get rid of. It forces them to invest and re-invest, otherwise they lose ground each year. The fed was introduced because banks had a habbit of going belly up and wrecking havoc. Banks have been pretty stable until they were degulated in the 80’s and then again, creating the housing boom. People seem to have forgotten how wild west banks were prior to the fed. They see the bad side to it, but forget all the good it’s done in it’s place as well.
    Or do you like to listen to the rich people espousing about how bad the fed is? Drop the taxes on the rich, increase them on the middle class and uh.. you’ll do MUCH better…. much better…

  • #168511

    Deleted User
    Moderator

    Let’s appreciate that growth in Brazilian GDP is different to the US printing money and throwing it into the economy; one signifies health and the other disease.

    If inflation is good insofar that it taxes the rich, why is the gap between rich and poor widening?

    If the Fed was introduced to moderate and control banks than it’s done a truly abysmal job throughout its history, particularly recent history when the collective of banks foolhardiness very nearly collapsed the global economy. One rarely sees such incompetence and yet we watch and wait for their next calamity. The performance is indefensible.

  • #168525

    jeb2886
    Member

    When was the last time the currency was swapped out? When did it get replaced? When was it changed out for something new? It’s done pretty well.
    So the US is printing off money, Brazil has growth and inflation and the currency has moved much. Hmm.. says something about that dwindling and horrendously weak US economy doesn’t it?
    Lots of reasons why the rich get richer. We’re talking white collar vs blue collar when we say the rich are getting richer. We’re talking professionals vs McDondals/Manufacturer works, etc. Some people think it’s the billionaires are getting richer, and they are. Blue collar works are competing around the world for their jobs now. Anyone can make a gadget. White collar workers don’t have this problem, most of these communist countries need white collar workers in their countries. Managers, accountants (who needed an account in a communist country?), etc. White collar are moving away from blue collar, I’ve been making more and more every year, while I know my blue collar friends have been stagnant.
    Ceo’s make more, but companies are also larger. In general their pay has been tied to a % of a company, but todays companies are MASSIVE. Pre computers, it was much harder to create companies with millions of employees. Their pay is out of control really, but if they weren’t paid that money they would open up their own private companies and make it that way. It’s basically “Don’t work for yourself, work for ME!” and for them to give up making millions for themselves, they expect millions. A lot of them are useless, a lot have no idea what they’re doing, a lot of worth every penny they are paid.
    As far as why rich are getting richer, another aspect is dwindling taxes. Reduce the taxes on the rich, and their savings greatly increases. Take 100K employee. 30K in taxes, 60K living, 10K savings. Take 100M person. 30M in taxes, 10M in living, 60K in savings. Decrease their taxes now. 20K in taxes, 70K living, 10K savings. Take 100M person 20M in taxes, 10M in living, 70M in savings.
    When did you ever get a raise and say “Wow look at my savings GROW!” — Probably never. You simply grow into it. Inflation is their only enemy.
    Banks like a flat inflation rate because it helps them make long term loans. a 30 year fixed loan is easy to make if you can figure out the approximate inflation rate. Before the fed inflation was a little messy, banks printed off their own currencies. How does the government deal with taxes that were paid in WellsFargo dollars, only to find out WellsFargo went belly up? It’s not a good situation for anyone. Banks were notorious for going belly up and causing problems.
    The US has had two major banking issues, the 80’s debacle, and then this most recent one. Both from deregulation. Before regulation, debacles all the time. After, nothing until some deregulation. Regulation is good for banks. It keeps them from going nuts.
    Banks need to survive LONG TERM – 100 years+. Bank employees with 4 year bonuses have a different view on things.
    Same with the Fed. They look at 10,20 or 30 years out. How about the president? He’s looking 2-4 years out MAX. If he’s in the second term, he’s got thousands of senators, mayors, congressmen saying “help me in 2years-4years!”
    I was actually really surprised, but Allen Greenspans book was very very interesting, and shed some light on how the fed operates, what exactly their job is (basically controlling inflation, that’s it) and what people think their job is – everything under the sun.

  • #168679

    jeb2886
    Member

    Actually I made a major mistake in stating that inflation should have pushed the price down, it obviously would push the currency value of the USD up in that case. Inflation pushing up, growth pushing down, it’s sort of balanced out right now.
    The Euro gained about 4% on the USD, while the BRL gained about 9% since last march. Not too bad, just putting money in a savings account yields about 15% gains a year, of course that’s hedging one currency against the other. Brazilians in general probably saw their savings drop due to inflation.
    From here on out, I don’t think it will get much stronger, because it will make the country uncompetitive in the world markets. Regardless of how other countries perform.

  • #168693

    Deleted User
    Moderator

    Well if the Real is 9% stronger and made better by savings growth of 15% [I doubt] and the overall gains reduced by say 5% inflation, then a saver’s money has done very nicely against the dollar. Whereas the dollar saver has been shown the rear exit of this casino, poorer and chastened; buddy can you spare a dime.

  • #168700

    jeb2886
    Member

    No, if you were in the US and held the Real in a savings account, you would have seen 9% + 6% savings (15%) approximately.
    If you were in the US you would have seen about 3% on longer term investments.
    If you were in Brazil you would have seen 6% (NOT the 9% USD increase) and you would have been hit by 6% inflation, if you believe that is the true inflation rate.
    Who did better? Neither US or Brazil living within their respective countries, they didn’t do any better than inflation. The only person who did better was someone who was in the US and used the Brazilian currency/savings rates to increase their wealth relative to the country they were living in.
    Considering how much is purchased by the average Brazilian with USD, the currency rate makes little difference to them. Only while traveling or buying expensive electronics from the US. But they spend way more on Transport/Food/Housing/Commodity goods/Etc in Brazil than they ever gain from the USD/BRL changes.

  • #168701

    Deleted User
    Moderator

    Now I’m gonna say something really controversial: black is black and white is white.

  • #168704

    jeb2886
    Member

    Pretty much. I was trying to avoid saying something like that :)
    And just in case someone gets all huffy, I’m definitely not (and pretty sure esprit isn’t either) saying the difference is due to anything other than how wealth was passed down, along with educational differences and opportunities which is unfair but statistically it shows in all of the colonies to have a huge impact. CKLousis does a much better job explaining it.

  • #169225

    Deleted User
    Moderator

    I see that the dollar was in the barbershop today taking a haircut. R$1.624. Embarrassed

  • #169226

    celso
    Member

    [QUOTE=Esprit]

    I see that the dollar was in the barbershop today taking a haircut. R$1.624. Embarrassed

    [/QUOTE] The dollar is a sreaming buy now as Brazilians spend billions abroad at about 1/3 the price they pay in Brazil…

  • #169228

    jeb2886
    Member

    Which reminds me, I wanted to transfer my Reals out. I don’t expect the country to allow the Real to drop much more. Both downside and upside are pretty limited.
    If the country comes on strong again this year, it could continue putting pressure on the USD/Euro. However, buying goods at 1/3 the is going to put some serious pressure to keep it from dropping too much.
    That leaves the downside risk, which I think is much higher. Being able to buy at 1/3rd the local prices says something about the currency. The chances of a hiccup this year are decent enough, meaning I could re transfer money down there. Risk reward is basically 1:1 with downside possible hiccup.
    Anyways, what ways have people used to transfer money out (legally), and of course without paying huge % premiums. I tried to wire transfer money down there once, while I was in Brazil and they just looked at me funny. I was in a southern town at HSBC. I found it odd they didn’t know what I was talking about. What is the typical method for withdrawal?

  • #169263

    Deleted User
    Moderator

    One-thousand, two-thousand, three-thousand! Would somebody please tell the dollar to pull the ripcord on its parachute! R$ 1.618. Shocked

  • #169326

    jeb2886
    Member

    Or short brazil local manufacturing stocks and buy brazil commodities.
    The big unknown is oil. Oil might hold the currency and/or even make it stronger this year. If it does, retailers will do well as super cheap electronics and other goods become available. Manufacturing will be slaughtered as it becomes less and less competitive.

  • #169327

    [QUOTE=Esprit]

    One-thousand, two-thousand, three-thousand! Would somebody please tell the dollar to pull the ripcord on its parachute! R$ 1.618.[/QUOTE]

    I may pull the ripcord over my neck if this slide continues! Dead

    However, today closed a tad higher (1.64). Yet in 2008 we saw like 1.55 (Aug), then two months later, thanks to the smoke and mirror tricks of Wall Street evaporating and shattering, we had a blip to 2.50!

    So we should probably be asking ourselves, what’s being hidden this time around in the financial markets?!

    Not time to panic (yet). Confused

  • #169328

    jeb2886
    Member

    We had a pretty decent perfect storm last time with the financial, housing, credit, global markets, recession and other factors all hitting at the same time and causing an instant global grid lock.
    Financial companies might be hiding things, but the whole system is designed to take care of itself if one or two things blow up. There will be winners and losers each time, but normally it doesn’t require so much intervention from so many groups, and governments to get things back in order.
    When I heard about BOA being told it couldn’t pay dividends, I nearly died laughing. Those guys always drive me crazy whenever I have to deal with them.
    This is how I see the government memo being read:
    Wells Fargo: Ok, we have 6 months to clean up our act and then we can reinstate dividends
    BOA: Ok we have to wait 6 months to reinstate dividends.

  • #169329

    [QUOTE=jkennedy]
    This is how I see the government memo being read:
    Wells Fargo: Ok, we have 6 months to clean up our act and then we can reinstate dividends
    BOA: Ok we have to wait 6 months to reinstate dividends.
    [/QUOTE]
    As I said, we should probably be asking ourselves, what’s being hiddenthis time around?!?

  • #169330

    jeb2886
    Member

    What’s hidden isn’t that important. There are problems in every sector of the world. Whats important is when multiple things happen at once, and effect the markets ability to absorb them without major impact.
    Earthquake in Japan? Not much of an impact over all. Their markets are 10-15% down, but already recovering in some areas. Within 3-6 months, markets will be recovered from that. Their plants are already reopened, albeit there are still some issues. The big part is that the majority of the country is firing on all cylinders, clean up effort is under way, rebuilding, work arounds to their power, general employees are back at work.
    Lybia/Egypt/Yemen/Others exploded, nothing much happened there. Oil went up, but over all nothing major is coming out of there.
    We have major events all the time. A single event does nothing. 2 or 3 events does nothing either. 10+ good sized events happening does.

  • #169331

    [QUOTE=jkennedy]We had a pretty decent perfect storm last time with the financial, housing, credit, global markets, recession and other factors all hitting at the same time and causing an instant global grid lock.[/QUOTE]
    If I’m not mistaken, it was housing first (late 2006), then credit, then financials (late 2008), which affected global markets, which then brought recession. They didn’t all occur simultaneously.
    To put it in more real terms, an earthquake brings on the tsunami, and a tsunami leaves behind the greater amount of debris….

  • #169362

    Eliana FB
    Member

    As someone who is looking to transfer $ to Brazil this year to build a house on land already purchased I am horrified by events.
    If we have a blip to 2.50 as you mention above I would be very relieved. But it looks totally unlikely.
    Everyone must be buying Real (as they slowly realise their escape from Europe/North America) this year and so pushing it down like this.

  • #169365

    micko
    Member

    [QUOTE=playedwell]Everyone must be buying Real (as they slowly realise their escape from Europe/North America) this year and so pushing it down like this.[/QUOTE]
    There aren’t that many idiots in the world. The flow is caused to a large extent by Brazilian corporations and banks borrowing money (large sums) at the next to nothing interest rates in North America and Europe.

  • #169370

    jeb2886
    Member

    No, people aren’t doing that. People couldn’t transfer enough money to do anything but cause a short term blip. They would transfer and then it would be over.
    People want Brazil’s oil, Brazil could end up with whats referred to as the dutch disease. People buy it, and force the currency down.
    The other thing investors want are the high yield bonds/treasuries that Brazil offers. They’re willing to pay a premium for them (thus reducing the interest rates to them by a bit) to get them. All bond markets are over bought. I believe they’re starting to sell though, as the market looks firmer and investing in stocks becomes more appealing to many.
    Brazil isn’t poised to topple over any time soon, so they have plenty of time to collect low risk, high reward rates. IF Brazil looks iffy they’ll dump them quickly, and 2008 2.4’s will be seen again for a short time, until people calm down and starting buying again.

  • #169377

    micko
    Member

    “Finance Minister Guido Mantega said this week that Brazil banks borrowed 215% more in dollars so far this year, with Brazilian companies dollar borrowing up 60%. As a result, dollar inflows have risen 140% this year, at a time when the country is trying to curb inflation and keep the real from getting out of hand.” … and on to confirm what jkennedy said.
    – yesterday, Forbes Blog

  • #169379

    jeb2886
    Member

    The article is interesting. Ignoring exports to curb inflation makes sense. As long as they can curb imports, perhaps raising the import taxes from 50%.
    What is scary is that these companies are borrowing dollars right now! That is a dangerous game to play. Investors coming to Brazil and buying up Reals to buy bonds is one thing, businesses selling US denominational bonds is another! If the currency is pushed up to even 1.75, they’re looking at paying almost 10% increase in Real + 10% interest on those bonds.

  • #169381

    micko
    Member

    [QUOTE=jkennedy] … + 10% interest on those bonds.[/QUOTE]
    My impression was that the banks and large corporations can borrow at next to nothing rates (maybe Libor?) in the exterior and leave Brazilian small business and the consumer paying 11.5% (or whatever) in Brazil.

  • #169382

    jeb2886
    Member

    Bonds aren’t bank loans, so they’re set with market rates. Banks can loan at less, but sometimes they expect too much in return, or feel the company isn’t stable enough and so companies go with bonds instead.
    Anything bought with another currency has the possibility of juicing up the returns of that company, or doing some serious damage. If you loan out money at 12%, and the currency drops 10% a year, then as you’re paying it back, each year you’re paying back 10% less. If it goes the other way, you’re paying back 10% more.

  • #169383

    micko
    Member

    [QUOTE=jkennedy]Ignoring exports to curb inflation makes sense. [/QUOTE]
    This seems to be the consensus opinion of what I have read today, ie:
    “Brasil vai tolerar real mais forte por ora, dizem fontes”
    – today, O Estadão
    Also, February manufacturing numbers were up.

  • #169385

    jeb2886
    Member

    Lower exports doesn’t preclude higher manufacturing jobs right now. However, if the currency continues to gain strength, then importing will possibly eat away at manufacturing.

  • #169386

    micko
    Member

    [QUOTE=jkennedy]Bonds aren’t bank loans, so they’re set with market rates. Banks can loan at less, … [/QUOTE]
    I think the banks and corporations mentioned in the referenced link are borrowing at low rates, not issuing bonds. The article does however discuss Brazilian government issued bonds as a different matter.
    I am not sure that the Brazilian public likes to hear that Vale can borrow at 1.5% and that they must pay 11.5%.

  • #169708

    Deleted User
    Moderator

    The exchange tonight is dabbling at the R$1.60 rate and tempting deeper waters to where the Bernanke siren beckons.

  • #169725

    agri2001
    Participant

    Devaluation of the real is the only way out.

  • #169728

    Eliana FB
    Member

    I am seriously considering putting off transferring the dollar equivalent of 100,000 reals to Brazil. This is ridiculous.

  • #169730

    Deleted User
    Moderator

    [QUOTE=playedwell]I am seriously considering putting off transferring the dollar equivalent of 100,000 reals to Brazil. This is ridiculous.[/QUOTE]

    I can sympathise with this problem. On the one hand we have the Dollar that is being sabotaged by serious dilution caused by quantitative easing and on the other, the benefits of an emerging economy that has sustained a substantial growth rate. There can be no doubt that the Dollar will continue to lose value because of its home-grown and deliberate onslaught while the Real is suffering too because of domestic inflation; both currencies continue to suffer from diminishing purchasing power. We can but watch and wait to see if the Brazilian economic bubble will explode.

  • #169749

    jeb2886
    Member

    When you say the dollar, you should just say the rest of the world. Because everyone ties their currency to the USD, while the USD tries to devalue itself, all of it’s competitors try to do the same thing. Hence the global currency war. So it’s Brazil’s currency going up, vs everyone else pushing theirs down as fast as they can as well. No major country in the world is trying to keep it’s currency value high right now. They’re all aiming low. Your posts seem to suggest it’s only the US doing these things, while it’s basically every major country in the world playing the same game.
    China buys up USD to try and sabotage it’s currency. The Japanese are in a world of hurt economically, and in terms of national debt, whew! massive hurt. Yet they continue to borrow and buy USD to sabotage their currency. Europe has a bunch of countries sabotaging the currency.
    Currency valuations are about how you can trade with the rest of the world and your competitiveness. For years, Clinton allowed for a super duper high rate. It was great for buyers, not exporters or manufactures. But it allowed the US to get so much “free” stuff. The chinese sold to the US knowing the currency was over valued, but it was more important to build their economy than worry about profits. They simply wanted a huge economy of their own, and the power that goes with it, NOT the money. As they say, it’s far better to have power than money.
    Oil could really put the hurt on this country, if exports continue to grow and oil stays at these prices, the competition for Reals is going to get fierce. Dutch disease has a real possibility of taking hold, but both oil exports and oil prices need to support it. I still see the currency flipping at some point.
    Worst case, wait for the currency to temporarily pull back. If you look at it’s graph over the last 10 years, it’s got a really good trend with, but has several times when it severally pulls back (like 2008), or just pulls back 5-10% for a short period of time.

  • #169752

    Deleted User
    Moderator

    When I say the Dollar I mean the Dollar. The Dollar is rotting and its decay is the cause of the big global currency stink. US spending and debt continues unattended and out of control while it abuses its dominant position of overwhelming liquidity. This unique position allows the printing of money out of thin air thereby diluting its value. I have yet to read any credible argument or evidence from any economist that doesn’t agree with the obvious US plan to devalue the Dollar in order to save the US economy and diminish its debt with other countries.

    Again, because of the Dollar’s position as the benchmark currency, very many countries hold Dollar reserves that facilitate convenient and confident global trade not only with the US but with each other and these reserves are being eroded by the US and its incompetent if not catastrophic policies. Certainly, other countries attempt to devalue their domestic currencies to protect their trade yet in doing so evoke Newton’s Third Law. The Federal Reserve in the form of Bernanke is the drowning man and he is willing to drag everything and anything down with him. Some countries are already swimming away from this desperate situation and are beginning to trade outside the scope of the Dollar’s deadly grasp, e.g. Brazil and China.

    Trends that are described in graphs require additional annotation to explain movement and your mention of 2008 represents what? The US blowing a gasket of such magnitude that it revealed the Mickey Mouse house of cards that is the US economy; the cause of the global financial crisis. The crisis is all about the Dollar being too big to fail ‚Äì for the time being…

  • #169753

    jeb2886
    Member

    Really? You think China is increasing the value of the yuan because it thinks it’s “good” for the country and not because every other country is saying “stop intentionally devaluing your currency to drop goods onto the market below market value”? You think they’re increasing it for their own good? Interesting. It must be a ruse when every government goes over there and tells them to stop it and they say it’s fairly valued. Hm!
    If the Euro is linked to the US, and the yen is linked to the US, then China must have no problems increasing it’s prices to many of it’s trading partners??? It shouldn’t be a problem for them to really jack it up against the USD and get good value for it’s currency, right?
    Your argument is that the USD is crap. Therefore others will destroy their economies to show that the USD is crap. WRONG. They will do whatever they can to protect their economies, because in the grand scheme of things, what the dollar is worth means nothing to them.
    The largest debt holder in the US is social security and individuals. Stop the garbage about others holding lots of this currency. They don’t hold it because it’s a global currency, because it’s good for them. They hold it to DEVALUE their currency. Why do you think the Japanese hold as much as China does in treassure bonds? They do it to make their products appealing in other countries, and the best way to do that is to create a shortage of their currency.
    You get very confused between what the USD might be worth and how other countries view it. Until all the major countries in the world feel they can compete with the USD and give up *ALL* their exports, and fight against cheap US imports, they aren’t going to let the dollar get out of control. Not Europe, for SURE not china!!!, not Japan, none of the largest economies in the world will do it.

  • #169757

    Deleted User
    Moderator

    Try, if you can, to take a detached and clinical view rather than beat Uncle Sam’s drum. It’s not un-American to see things as they really are. Then you will see the truth and the truth shall set you free. LOL

  • #169758

    jeb2886
    Member

    I am, you aren’t.
    Who cares what the US does with it’s currency. Who cares how the government is run. No one, except you.
    Do those people care about the US, oh yes. Here is why, their jobs depend on it. They don’t care if the USD is big pile of crap like you’re promoting. They only thing they care about is the effective competitiveness between the US and them.
    Do you think Germany is going to stand up and say, we are unhappy with the USD, we are going to devalue that currency into the ground. And meanwhile, we’re going to set up massive camps for all the unemployeed we’re about to create, because the US is about to start shipping over goods like we’ve never seen before. They’re going to do more damage than anything china has ever done to our markets, but we’re going to stand our ground. USD is crap, and we’re willing to let every employee in
    manufacture in Germany to prove a point!
    To prove a point, we will accept no jobs! YES!
    That is how you see the world reacting to the USD. The rest of the world is saying “we don’t care what the US does, as long as they aren’t going to kill our jobs”.
    Do you see the difference? People like their jobs and understand what will happen, you’re an idealist who doesn’t care what happens to a countries manufacturing.

  • #169759

    [QUOTE=agri2001] Devaluation of the real is the only way out.
    [/QUOTE]
    Enlighten me Agri, how do you devalue the currency in a free market system? Do you decree the new value? Please, I would really like to know!
    Ed

  • #169760

    jeb2886
    Member

    Peg your currency like the Yuan is, or many other currencies around the world.
    Buy up other currencies to flood the world with your currency (Japanese do it, China does it, many others)
    Print off money like the US has been doing, trying to make the dollar look less attractive to get people to run to other currencies, thus devaluing the US currency and making imports/exports more beneficial.
    Create inflation within your country by increasing the speed of which money is being turned around, and make it so that money starts chasing goods. Inflation will push your currency down in general.
    The world has been in a world currency war for awhile now, with every country trying to devalue it’s currency, using different methods available to them. They all want the exports, which creates jobs locally.

  • #169762

    Deleted User
    Moderator

    [QUOTE=jkennedy]I am, you aren’t.

    Who cares what the US does with it’s currency. Who cares how the government is run. No one, except you.

    Do those people care about the US, oh yes. Here is why, their jobs depend on it. They don’t care if the USD is big pile of crap like you’re promoting. They only thing they care about is the effective competitiveness between the US and them.

    Do you think Germany is going to stand up and say, we are unhappy with the USD, we are going to devalue that currency into the ground. And meanwhile, we’re going to set up massive camps for all the unemployeed we’re about to create, because the US is about to start shipping over goods like we’ve never seen before. They’re going to do more damage than anything china has ever done to our markets, but we’re going to stand our ground. USD is crap, and we’re willing to let every employee in
    manufacture in Germany to prove a point!

    To prove a point, we will accept no jobs! YES!

    That is how you see the world reacting to the USD. The rest of the world is saying “we don’t care what the US does, as long as they aren’t going to kill our jobs”.

    Do you see the difference? People like their jobs and understand what will happen, you’re an idealist who doesn’t care what happens to a countries manufacturing.
    [/QUOTE]

    Em, I think you’ll find that the German Finance Minister departed from the norm of diplomatic polite speak when he described American policy as crazy. Where have you been!

    And I can’t agree with you that nobody cares about what the US does with its currency or how its government is run. Look around you, read, listen and discover. You appear to suffer from an arrogance derived from denial.

  • #169764

    jeb2886
    Member

    Oh the german finance minister said it was crazy? Why would he care what happens to the USD. Oh because it’ll RUIN the germany economy if the USD is allowed to slide into nothing.
    Huge difference between people saying the US is crazy, and ALLOWING the US to actually execute it’s plans. HUGE difference.
    You appear to suffer from easy media manipulation. You seem to think because a country is ruining it’s currency, that others will let it go unchecked.

  • #169765

    Deleted User
    Moderator

    [QUOTE=jkennedy]Oh the german finance minister said it was crazy? Why would he care what happens to the USD. Oh because it’ll RUIN the germany economy if the USD is allowed to slide into nothing.

    Huge difference between people saying the US is crazy, and ALLOWING the US to actually execute it’s plans. HUGE difference.

    You appear to suffer from easy media manipulation. You seem to think because a country is ruining it’s currency, that others will let it go unchecked.
    [/QUOTE]

    Well I’m glad that you finally agree that the country is ruining its currency and that others are trying desperately not to let it go unchecked. We have to remember in all this that America is of vital importance to the world; were this not the case we’d be laughing at it in the same way we laugh at that other crazy guy in Zimbabwe. As to media manipulation and its myriad of half truths and outright lies, let’s concern ourselves with the reality of the exchange rates; hard cash!

  • #169770

    jeb2886
    Member

    There are really 2 currency rates as I see them. The value which a government can get for it’s currency and the value that other countries won’t let it slip below.
    During the Clinton years, he let it rise and just go wild. Higher the better for him. Other countries weren’t going to do anything — this helped them.
    Bush wanted more manufacturing and a lower rate. He didn’t push for the same currency values.
    Obama is with Bush, pushing it lower and lower in hopes of gaining manufacturing and other benefits from a lower dollar. However, other countries don’t like this.
    Now there is a point where currencies cross over into a dangerous zone, and put real hurt on other countries. We’re at that rate now. That is why there is a currency war happening.
    If the US can produce a widget for $10 global currency
    If Germany can produce the same widget for $50 global currency
    There is a problem. It’s clear to us. There is *nothing* that German company can do to compete, and with a 5:1 ratio, he can’t win. He’s going out of business. This part of the currency has to do with production. How many widgets can you make, and what does it cost to make over there. The currency should then even things out. We’re at that point. Other countries are trying to even things out to prevent real financial issues in their countries.
    I believe Brazil is at that point too. If their currency gains any more strength, their widget production costs, even with the high tariffs in place, just won’t compete with goods coming from a country that is devaluing it’s currency. Brazil has a huge amount of manufacturing. If China and others can devalue their currencies enough, or elevate the Real high enough, then they can under cut any manufacturer in Brazil, regardless of their productivity. Brazil can’t let this happen.
    From my standpoint, the shelves of Brazils stores are fillling with Chinese goods at a rate that is just too fast. It’s because they’re playing on an uneven field. Since Chinas currency is locked to the USD, Brazil has to force their currency down, in order to protect their country.
    The alternative is that the country will start faltering, won’t buy as much and it will push it’s currency down by itself as it enters a recession.

  • #169771

    Tedichi
    Member

    How can the US get back on track with its unrestricted spending, sure they have a plan, and that plan is a world currency. I see the next 5 years of emerging countries (EU aside) gaining stronger value within their own economies, that will be the make or break point. The media is trying to heard everyone into “It’s alright to spend again and crash again”. All of which the next crash will be harder and the common media viewer will be too out to lunch to do anything.

    Invest in something hard in emerging markets and regject the world currency!

  • #169794

    agri2001
    Participant

    Here`s Mantega, again, talking through both sides of his mouth.
    Seems to me he has been saying the same song and dance for the last 5 years that I can remember.
    http://www.bloomberg.com/news/2011-04-07/brazil-has-array-of-tools-to-stem-currency-gains-mantega-says.html

  • #169796

    micko
    Member
  • #169840

    micko
    Member

    Apparently Brazilian CEOs know what to do with all their dollars.
    Brazil’s Cash Rich Companies Look Abroad for Acquisitions

  • #169842

    Deleted User
    Moderator

    [QUOTE=DUNGA]Uh-Oh!
    Barclays: Brazil’s Currency Powering to 1.50

    [/QUOTE] Now look what you’ve done! Now the rate is 1.58 ShockedShockedShocked

  • #169843

    jeb2886
    Member

    Acquisitions right now are a great way to lock in your currency profits.
    Lots of companies are hoarding money and have stock piles of it. We’ll probably see some good M&A over the next year or two. Why invest in an unknown company, when you can buy another company cheaply that is already succeeding?
    Like wise, if the currency flips for any short time, I would drop money into Brazil and buy property before other markets have a chance to adjust.

  • #169844

    Deleted User
    Moderator

    Now that the Dollar is collapsing, let’s all chip in and buy Oklahoma Рjust to upset jkennedy. LOL

  • #169845

    jeb2886
    Member

    No, based on your predictions, you shouldn’t do anything. Just wait until it goes to $0.
    Based on what others are doing, they’re buying while things are good because of some unknown reason.. not sure why they would buy now, if they could buy in 3 6 or 9 months for less.
    But you keep watching the news! The news is giving you all the low down on what to do! These fools with all this money, all these financial advisors, all these companies investing billions without understanding the dollar is going to really tumble, they’re missing out! The fools they must be!
    You’re one up on them with! You know better than them :)

  • #169851

    Deleted User
    Moderator

    [QUOTE=jkennedy]No, based on your predictions, you shouldn’t do anything. Just wait until it goes to $0.

    Based on what others are doing, they’re buying while things are good because of some unknown reason.. not sure why they would buy now, if they could buy in 3 6 or 9 months for less.

    But you keep watching the news! The news is giving you all the low down on what to do! These fools with all this money, all these financial advisors, all these companies investing billions without understanding the dollar is going to really tumble, they’re missing out! The fools they must be!

    You’re one up on them with! You know better than them :)
    [/QUOTE] Well we know that it’s never going to go to zero; that’s a fantasy too far. Yet you have a point in so much that if investors wait until the Dollar drops further, they could buy cheaper. But it doesn’t operate like that is all cases. Say you borrow some of Bernanke’s flaky money at 2% and buy some hard value assets with this loan; you’re then not standing still and waiting but rather producing wealth with the asset. Meanwhile should the Dollar continue its fall so does the value of the loan thus playing Bernanke at his own game.

  • #169854

    Tedichi
    Member

    I like this discussion it’s very epic!

  • #169855

    jeb2886
    Member

    Of course, but you should invest where you expect the best returns. Which would be in the Real for the time being, allow the USD to really tank from here. Unless you have information that this might be about it, and you’re acting on it.
    I prefer to do as other companies do, and not do as they say.
    Media is a great place to get convinced to do as they say, while they sell you their shares or products.

  • #169858

    micko
    Member

    Just for the record, the dollar may have closed 1.73% lower against the real today, but the pound sterling and euro did worse.

  • #169860

    Deleted User
    Moderator

    [QUOTE=DUNGA]Just for the record, the dollar may have closed 1.73% lower against the real today, but the pound sterling and euro did worse. [/QUOTE]

    1.585 Against the Dollar. 2.627 against the Euro and 2.587 against the Pound.

    Commiserations are offered to those reliant upon any or all of those currencies for income in Brazil. Adding insult to injury the Brazilian inflation rate of 6% is compounding the effect. Time for some to repatriate? Cry

    Esprit2011-04-07 19:06:23

  • #169861

    micko
    Member

    [QUOTE=jkennedy]I prefer to do as other companies do, and not do as they say.
    Media is a great place to get convinced to do as they say, while they sell you their shares or products.[/QUOTE]
    I agree. It is interesting to understand how the point spread works on the sports betting line. It is not a prediction of the end score, but a device to even up the betting so the ‘bank’ won’t suffer large loses. When reading the news/press releases of the FX traders it is important to know that they are taking the opposite bet of whatever they sell you.

  • #169862

    Wellington
    Member

    [QUOTE=Esprit]

    Time for some to repatriate? Cry

    [/QUOTE]
    I think anyone who arrived from the UK in 2005 when the real was 4.5 to the Pound, and bought a few apartments that have now tripled in value, could do a lot worse than to repatriate that money to the UK now that the Pound is at 2.5. I’ll think about it!
    man of leisure2011-04-07 20:05:03

  • #169864

    A few articles perhaps to be of interest…

    “Extend and Pretend”: The Severe Ramifications of Wall Street’s Game

    Would A Government Shutdown Boost the Market?

    Yankees-Red Sox: Boston Rough Start Good News for Wall Street?
    The drop to 1.58 sucks, but it’s been lower. Aug 2008 1.55, then two months later, 2.45. I have no basis for this prediction, other than my own personal investment history, but the month of May always seems to bring some sort of swing, be it up, or down. Anyone care to wager on a (brief) swing up?!? Wink
    Gringo.Floripa2011-04-07 20:25:12

  • #169865

    Deleted User
    Moderator

    [QUOTE=man of leisure] [QUOTE=Esprit]

    Time for some to repatriate? Cry

    [/QUOTE]
    I think anyone who arrived from the UK in 2005 when the real was 4.5 to the Pound, and bought a few apartments that have now tripled in value, could do a lot worse than to repatriate that money to the UK now that the Pound is at 2.5. I’ll think about it!
    [/QUOTE]

    Well I think about it all the while; nostalgia I suppose. I miss the white man’s magic of it all. The problem with repatriation is, of course, the climate and the misery of recession, cutbacks and the inevitable refresher course on all of the UK’s woes; perceived or otherwise. One could regard repatriation as bringing in the harvest, yet future crops need to be replanted and the UK is, for the time being, barren soil.

  • #169884

    [QUOTE=Esprit]

    The problem with repatriation is, of course, the climate and the misery of recession, cutbacks and the inevitable refresher course on all of the UK’s woes; perceived or otherwise. One could regard repatriation as bringing in the harvest, yet future crops need to be replanted and the UK is, for the time being, barren soil. [/QUOTE]

    The same is certainly true for the US. I suppose I could cash in my chips, buy a sweet multi-level condo in Miami, and live amongst all the Brasilians who are doing just that, so still feel quite at home. Yet not only with a possible double-dip recession on the near horizon, but the specter of a Tea Party president taking office, NO WAY José!

    And as I was following the story of the tragic school shooting which occurred in Rio, I could not help but be stunned by this headline: Arizona House passes law allowing guns on campuses

    Such a brilliant idea Arizona! ConfusedIt’s said children learn best by example. Gee, I wonder where this misguided Rio youth got the idea to begin with, to do what he did…?

    I think I’ll let the dice roll, and hold on to my chips here, even if the dollar slides to fifty cents.

    Gringo.Floripa2011-04-08 06:26:44

  • #169897

    majazac
    Member

    [QUOTE=Gringo.Floripa]The drop to 1.58 sucks, but it’s been lower. Aug 2008 1.55, then two months later, 2.45.[/QUOTE] True, but the trigger for the upswing 3 years ago were rumours of a pending global economic crisis, culminating in a prestige bank (Lehmans) going bust, and various others on the brink. The chances of that scenario reoccuring now, although not impossible are much reduced…..

  • #169903

    Deleted User
    Moderator

    [QUOTE=Bubbles][QUOTE=Gringo.Floripa]The drop to 1.58 sucks, but it’s been lower. Aug 2008 1.55, then two months later, 2.45.[/QUOTE] True, but the trigger for the upswing 3 years ago were rumours of a pending global economic crisis, culminating in a prestige bank (Lehmans) going bust, and various others on the brink. The chances of that scenario reoccuring now, although not impossible are much reduced….. [/QUOTE] 1.56 as I post.

  • #169905

    [QUOTE=Esprit]

    1.56 as I post. [/QUOTE]
    CryCryCry
    I’m telling ya, this drop signals something’s in the wind…. The Big Money, who alwayshas inside information, are positioning themselves for the kill. Buying dollars today at 1.56, and then sell same to repurchase reais next month at 2.25. Wink

  • #169909

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa] [QUOTE=Esprit] 1.56 as I post. [/QUOTE]

    CryCryCry

    I’m telling ya, this drop signals something’s in the wind…. The Big Money, who alwayshas inside information, are positioning themselves for the kill. Buying dollars today at 1.56, and then sell same to repurchase reais next month at 2.25. Wink
    [/QUOTE]

    The US is in focus today as politicians battle to avoid a government shutdown because they’ve reached the ceiling of spending limits. Both sides of the House have been posturing over spending cuts to the Federal Budget currently trying to pass through Congress. Maybe the big money knows something about the likely outcome?

  • #169916

    Anonymous

    Ceiling on spending limits…ok, so they are having meetings to raise the limits? Look thru history – they have a limit, they reach it and raise the limit…so, when history repeats itself, the debt will only increase in the US. I just hope that conversion factor gets better – guess it was good I sent some at 1.78 (which I thought was low then!)…I saw 1.5714 now, but still very low!

  • #169920

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa] ]

    …The same is certainly true for the US. I suppose I could cash in my chips, buy a sweet multi-level condo in Miami, and live amongst all the Brasilians who are doing just that, so still feel quite at home. Yet not only with a possible double-dip recession on the near horizon, but the specter of a Tea Party president taking office, NO WAY José!…
    [/QUOTE]

    That raised a smile. By Tea party President you may have implied Sarah Palin into office? As a creationist I read somewhere that she believes the world is only 4000 years old and when asked to explain dinosaur fossils she said that God put them there to test our beliefs in the bible. If that’s true I’m beginning to like God and Sarah more and more.

    Putting her little oddities aside there is a chance that she could break the mould and bring a breath of fresh air into what is already a ludicrous political arena that is threatening the demise of the greatest country on the planet; Monty Python goes to the White House. LOLLOL

  • #169921

    Deleted User
    Moderator

    [QUOTE=Gringo.Floripa] …And as I was following the story of the tragic school shooting which occurred in Rio, I could not help but be stunned by this headline: Arizona House passes law allowing guns on campuses

    Such a brilliant idea Arizona! ConfusedIt’s said children learn best by example. Gee, I wonder where this misguided Rio youth got the idea to begin with, to do what he did…?…
    [/QUOTE]

    You’ve gotta love the Americans. You can carry firearms on the streets and roadways on campus but not within any buildings. I’m reminded of a movie when all the cowboys coming into town were obliged to hand their guns in at sheriff’s office; by order from Wyatt Earp. But sheriff, I need ma gun to kill critters n snakes n hostile varmints!

  • #169924

    jeb2886
    Member

    Bill Clinton asked Senator Kennedy about politics in todays world, expecting him to reminisce about the old days. His response: There is so much less politics in todays politics. The government is far less shady, and everyones actions are under scrutiny, you could never get away with what we were doing back then, in todays environment.
    So while we all think that politics is just off it’s rocker, the people involved believe it’s far better today than it was in the past. That I find interesting.
    As far as fire arms, I’m pretty sure you can bring weapons into a building. You can only NOT bring in weapons if there is a sign posted that says so. Although each state has it’s own laws regarding these things.
    If that person in rio had pulled that event in arizona, he would be dead right now with far fewer casualties. I definitely don’t subscribe to gun ownership and/or think two wrongs make a right. This persons intentions were to come into the school and start killing, from what I’ve read so far. Pretending to be there for a speech or something.
    I’ve met some gun nuts, and they’re scary. I’ve met some Texans and they’re a breed of their own, but as far as gun toting, they aren’t scary. They all learn at an early age what a gun is, how to use it, the dangers, etc. They also understand you don’t use a gun as a threat, it’s be used for the intention of killing only. Strange yes, scary less so.

  • #170928

    Deleted User
    Moderator

    Opps! The credit agency, Standard & Poor’s have fired a shot across the bows of the good ship USA and placed its AAA rating on negative watch. Should this negative watch change to even the most subtle of downward grades all hell would descend on US asset values and of course the dollar.

    There is a 33% chance of a downgrade within the next two years according to S&P because of US debt escalation and this message is being delivered to the government that apparently is incapable of moderating its spending habits. Obama’s recent pronouncement of debt reduction has a much longer phase than that recommended by otherwise sane and sensible people. If the government won’t or can’t reduce the debt levels then outside influences will temper their arrogance by downgrading their credit rating. How is this possible? Simple. Pension funds and investment trusts are bound by covenants to invest in only AAA rated debt and it follows that should the US rating get downgraded such investments would have to be sold and that would cause a run on assets and the dollar.

  • #170932

    jeb2886
    Member

    Perhaps the government would intervene? Nah, they’d let doomsday scenario espirt take over. Heh.
    We can only hope though! If what you say is correct, it’ll put every country in the world on an economic hurt list. All exports stop to the US, US starts exporting enmasse. Stock market will just take off like nothing we’ve see before as trillions pour into the market, because stocks are the best hedge against inflation and if bonds are being sold, woo-wee! We’ll be in for a ride up!
    Lets only hope esprit! Because it would turn debtors into millionaires over night and bankrupt banks as their investments essentially go belly up. Meanwhile other stock markets will crash like there is no tomorrow as their companies can no longer compete on a global market.. It’s going be fantastic to be an investor.
    Unless you’re green, because all the “rules” you’ve learned will be useless, and the people who can learn the new rules of the game will be the ones to reap the rewards.
    We can only hope though! Americans won’t feel the pain, they’re buying in USD, and earning in USD and if inflation takes off, their personal debts will be “zero’d” out. Jobs will be so plentiful as manufacturing takes off, and exports skyrocket. The rest of the world won’t know what hit them.

  • #170936

    Deleted User
    Moderator

    [QUOTE=jkennedy]Perhaps the government would intervene? Nah, they’d let doomsday scenario espirt take over. Heh.

    We can only hope though! If what you say is correct, it’ll put every country in the world on an economic hurt list. All exports stop to the US, US starts exporting enmasse. Stock market will just take off like nothing we’ve see before as trillions pour into the market, because stocks are the best hedge against inflation and if bonds are being sold, woo-wee! We’ll be in for a ride up!

    Lets only hope esprit! Because it would turn debtors into millionaires over night and bankrupt banks as their investments essentially go belly up. Meanwhile other stock markets will crash like there is no tomorrow as their companies can no longer compete on a global market.. It’s going be fantastic to be an investor.

    Unless you’re green, because all the “rules” you’ve learned will be useless, and the people who can learn the new rules of the game will be the ones to reap the rewards.

    We can only hope though! Americans won’t feel the pain, they’re buying in USD, and earning in USD and if inflation takes off, their personal debts will be “zero’d” out. Jobs will be so plentiful as manufacturing takes off, and exports skyrocket. The rest of the world won’t know what hit them.

    [/QUOTE]

    Well there we have it; concise and in a nutshell. If the dollar busts, this is good for America. If the dollar booms, this is good for America. If the dollar gets caught in the waste disposal or run over by a truck, this is good for America. If a meteor strikes the planet, this is good for America.

    Oh, say, can you see, by the dawn’s early light,
    What so proudly we hailed at the twilight’s last gleaming?

  • #170938

    jeb2886
    Member

    Pretty much! If it busts, it losses the global dominance and then take off on it’s own course, wreaking havoc through the world. Jobs will be created, debt wiped out, inflation will hurt banks and the ultra rich.
    The US keeps it’s dominance and it can keep racking up debt, which means free stuff basically for all. The debt holders are the ones that will eventually be burned.
    Other countries have far more to lose if the US changes it’s global status either, or if it continues on the same path.
    Amazing how that works out? :)

  • #170939

    Deleted User
    Moderator

    [QUOTE=jkennedy]Pretty much! If it busts, it losses the global dominance and then take off on it’s own course, wreaking havoc through the world. Jobs will be created, debt wiped out, inflation will hurt banks and the ultra rich.

    The US keeps it’s dominance and it can keep racking up debt, which means free stuff basically for all. The debt holders are the ones that will eventually be burned.

    Other countries have far more to lose if the US changes it’s global status either, or if it continues on the same path.

    Amazing how that works out? :)
    [/QUOTE]

    The sociopath has a lot to learn from this economic theory. Burn the debt holders; the people who put their trust in the America way. My, my, the ethics dazzle. And of course, just like Oliver Twist, they’ll all come back for more of the same. How the proud will stand tall and announce, I’m an american,

  • #171437

    Deleted User
    Moderator

    Well, with the Euro at 2.27 I’m off on my grand, 2 month, European tour. Take good care of Brazil while I gone. Hug

  • #171449

    Don’t hold out on us Esprit! Tell us how you were able to snag an invite to the royal wedding!!! Wink
    Boa viagem!

  • #171503

    majazac
    Member

    [QUOTE=Esprit]Well, with the Euro at 2.27 I’m off on my grand, 2 month, European tour. Take good care of Brazil while I gone. Hug[/QUOTE] I just came back from a long weekend in Munich – it was ridiculous the number of Brazilians I met (and heard) there who were on vacation compared to other nationalities… Bubbles2011-04-26 07:34:53

  • #171775

    Certainly not news to any of the regulars on this site, but posting this for the sake of posterity….
    EMERGING MARKETS – Latin American Forex close April (2011) near 2008 highs

    US dollar index at 3-year low

    (I predict a blip coming in May, or even June, short-lived. On your marks, get set, ready….) Wink

  • #16058

    Hansman1960
    Member
  • #153875

    Deleted User
    Moderator

    [QUOTE=Bubbles][QUOTE=Esprit]

    and Baa3 by Moody’s; [/QUOTE]

    Ba1! I’m not sure ratings are a accurate or a good measure to ascertain economic outlook though – look at what Lehmans, Bear Sterns, etc, etc were rated at in July 2008! Here’s a recent quick and simple Brazilian economic overview: http://www.edc.ca/english/docs/gbrazil_e.pdf[/QUOTE]

    As of yesterday’s date the price list shown is what the market is offering on a sample of existing sovereign debt in dollar denominated bonds; note the credit ratings.

    <TD style="BORDER-BOTTOM: #ece9d8; BORD

    Brazil – US$

    Price

    Yield

    Sovereign Debt

    S&P

    Moodys

    Rate

    Type

    Freq.

    Offer

    YTM

    GLOBAL 10

    Government

    BBB-

    Baa3

    9.250%

    FIXED

    Semi-Annual

    22/10/2010

    100.940

    -5.15

    T+

    -529

    10

    1

    GLOBAL 11

    Government

    BBB-

    Baa3

    10.000%

    FIXED

    Semi-Annual

    07/08/2011

    108.750

    -0.21

    T+

    -43

    10

    1

    GLOBAL 12

    Government

    BBB-

    Baa3

    11.000%

    FIXED

    Semi-Annual

    11/01/2012

    114.300

    -0.13

    T+

    -42

    10

    1

    GLOBAL 13

    Government

    BBB-

    Baa3

    10.250%

    FIXED

    Semi-Annual

    17/06/2013

    125.300

    0.81

    T+

    24

    10

    1

    GLOBAL 14

    Government

    BBB-

    Baa3

    10.500%

    FIXED

    Semi-Annual

    14/07/2014

    131.000

    1.97

    T+

    110

    10

    1

    GLOBAL 15

    Government

    BBB-

    Baa3

    7.875%

    FIXED

    Semi-Annual

    07/03/2015

    123.400

    2.30

    T+

    122

    10

    1

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