Interesting article by an Indian Gold Bug.
http://news.goldseek.com/GoldSeek/1218812400.php
http://news.goldseek.com/GoldSeek/1218812400.php
BRIC+ News & comments
- Thread starter Billy T
- Start date
Thanks I tend to agree with his POV now, (but have little faith in charts, except to the extent that others who do, can make their strong predictions come true via their actions - sort of a "financial placbo effect.")
I have long owned BVM and via its minority stake part of same mines in Peru operated by NEM, which just this Friday at CoB dipped briefly low enough to touch off my long standing buy order (at $39.29/sh). I would never touch direct ownership of gold (a terrible long term investment, but perhaps a good one for a few years now) but they make it cheaply and many other minerals, including copper.
IMHO the developing world is "decoupling" from the first level world, which is about to fall into depression.
Many do not see this as the stock markets in the developing world have fallen more than the DOW etc has in 2008. One must look deeper to understand why this is true. In Brazil near 40% of the buying in recent years has been by foreigners (effectively I was one 6 years ago when getting out of dollars). Now with the credit crunch in the US & EU these foreigner have been taking their profits in BRIC etc countries - they are very hard press for cash and this is an easy source. The Brazilian domestic economy is booming. The Real so strong that many manufactures do not try hard to export -they can sell all they can make locally now as the lower classes 's purchasing power has surged up.
To control the demand / prevent inflation (now near the upper bound of 6.5% for the first time in the years of the Real) Brazil has begun to raise interest rates again. The central bank has more foreign currency reserves that the entire foreign debt - could pay it ALL OFF tomorrow if it wanted to. Brazil is not growing at China's rate but "booming on local demand" none the less. Yesterday the Brazilian auto industry made the 2,000,000th car in 2008 only slightly less than in any prior whole year ever! It will top 3 million for sure this year, as Spring sales begin.
SUMMARY: Brazil's economy is nearly decoupled from the US now, but not its stock markets. Same is true of China. I do not know about India, but doubt that is true there as so much is "back office" and other IT work for the US & EU firms, but many of them are pulling up stakes and going to India in person, not by internet now. - Recently CNN (or BBC?) had half hour feature on London's banking industry - big lay off like the US has had and the workers going to India, China and the Mid East (Dubai especially) where the action is rapidly expanding, not shrinking as in US and EU.
Tomorrow, after some months of delay, begins the "No dollars" trading between Brazil and Argentina. I.e. a Brazilian importer pays for the goods in Real, not dollars and conversely the Argentine buyer of Brazilian products pays in Pesos. President Lula was just there this week end to celebrate this step in the decoupling. NO businessman wants to get stuck holding a contract that will pay dollars to them in the future now, but the dollars being pulled out of the Brazilian stock market made the dollar buy 1.722 Real at CoB on Friday and it has been as low as 1.56 recently.
The "hand writing is on the wall" - but as much is in Arabic, Russian, Portuguese, or Chinese, many Americans still cannot read it. Not fully decoupled yet but rapidly getting there.
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If I recall, this was the intent of America for the past 25 years. Truthfully it looks like the nations America invested in are becoming thriving nations; ironically they all hate the US. Generally children and teenagers are usually a bunch of brats.
If I describe one of those "investment" perhaps this "Yankee go home" reaction will not be so surprising:
About 150 years ago an entire mountain made of high grade copper ore was discovered deep in the jungle of Peru. (I think that is the correct country but similar stories are common. - This one just a little more extreme than the typical "investments" made by the United Fruit Company, etc.)
Several thousand natives who lived by hunting and subsistence farming were rounded up at gun point if not seduced by promises of a better life to make road to the mountain and dig it up, bucket by bucket. To entirely remove the mountain took about three generations and those grandchildren of the original workers no longer knew how to hunt or farm, so when the company closed down, shut the communal kitchens, etc. they simply starved to death in the jungle.
What did Peru get out of this "investment?"
Answer:
A permanently scared spot in the jungle and a dirt road, which the jungle soon reclaimed.
A huge fortune of copper, worth at least 50 billion dollars today, was simply stolen.
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To mention just one more general fact about all of South and Central America:
The average caloric intake before the white man came of the Incas and Aztecs was sufficient to sustain healthy athletic bodies and fertile women with hunger unknown. Today, even after a lot of this "investment," the hunger pains in Peru and Bolivia's lower classes (more than half the populations) are so extreme that they chew coca leaves all day to ease the pain.
Be at least honest (or not so ignorant?) of why the Yankee Go Home attitude to US "investment" arose.
If you can find it, read the book The Shark and the Sardines. It starts with a long parable about a shark than "protected" and "helped" a school of sardines, but of course he had to eat some now and then. When it first came out about 60 years ago it out sold every book, except the Bible, for about a decade in all of South and Central America. It is not easy to find in the US for obvious reasons, but it has been translated into English - I read it long ago.
As has been true for most of human history - the natural wealth of a simple people is simply taken by a powerful one that wants it and can.
The US (or Israel now too)* is no exception, but you can call that "investment" if that make you feel better.
The reason why South America is now having success has little to due with this American "Investment" and much to due with the Vietnam War and US's need for oil as it own supply was exhausted.** The US was so busy with these and similar concern that it did not have time to continue its Monroe Doctrine domination South America.
In the early 1960s the US had friendly dictators installed in most South American countries who got extremely rich doing the bidding of US companies and helping to rape the populations of their natural wealth. Slowly almost all have been removed and the few still remaining, like Hugo Chavez, surived by becoming very anti-US to be popular with the masses (winning fair elections etc.). It is this new oppportunity for the populations to enjoy the fruit of their labors that has set them free to prosper. That is why it is happening now, not years ago, when the US was "investing."
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* For example, water is very limited resource in Israel but there is much still in the "Mountain Aquifer." That is why the "security wall" is at points more than 20Km expanding Israel into the best parts of the Mountain Aquifer.
**Thank God that quality oil was not discovered in Brazil until recently or the US friendly dictators would still be running Brazil. Starting with the Vietnam War, the US could no longer keep them well supplied with jeeps, guns, a few tanks, and many water canons for crowd control. The dictators were of course "anti-communistic" and lacking the regular supplies from the US began to round up all the left leaning they could. In Chile alone more than 50,000 were tortured to death and/or simply drugged and dropped alive into the sea from the US supplied helicopters to avoid any evidence remaining (and the cost of digging graves). The present Preseident of Chile's father died under torture in prison. Yes, there is now a tendency to be both anti-US and left leaning in South America.
Note it was not just Chile, but all of S.A. For example, the US coordinated "Operation Condor." Here is quote from WiKi on it:
"... Condor's key members were the right-wing military governments in Argentina, Chile, Uruguay, Paraguay, Bolivia and Brazil, with Ecuador and Peru joining later in more peripheral roles.[4] These nations were ruled by dictators such as Jorge Rafael Videla, Augusto Pinochet, Ernesto Geisel, Hugo Banzer, and Alfredo Stroessner. The operation was jointly conducted by the intelligence and security services of these nations during the mid-1970s with support* provided by the United States of America[5]. ..." Read more at:
http://en.wikipedia.org/wiki/Operation_Condor
What would you expect after this 200 year history of US capitalistic and corporate "investments?"
What do you expect will be the reaction of the Palenstinians to Israel building the "Security Wall" which is stealing the Mountain Aquifer water?
The powerful always take what they want from the weak, but you cannot expect the weak to thank them !!
Fortunately, the USSR collapsed so South Americans learned that capitalism is a better economic system. The Brazilian communistic party is very weak and does not even call itself "communistic" any more. - Thank God for that too. It was a very helpful example for S.A. that the USSR gave.
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*This not just "known" by everyone in South and Central America, but well documented in the US's own records, released years later:
"... A 1978 cable from the US ambassador to Paraguay, Robert White, to the Secretary of State Cyrus Vance, was published on March 6, 2001 by the New York Times. The document was released in November 2000 by the Clinton administration under the Chile Declassification Project. In the cable Ambassador White reported a conversation with General Alejandro Fretes Davalos, chief of staff of Paraguay's armed forces, who informed him that the South American intelligence chiefs involved in Condor "[kept] in touch with one another through a U.S. communications installation in the Panama Canal Zone which cover[ed] all of Latin America". -This quote is from the same Wiki link in the "U S involvement" section of that long and highly documented article in Wiki.
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Russia yesterday landed two of its most advanced long range jet bombers in Venezuela to participate with four of their warships off the Venezuelan coast in joint war game exercises. One will be the flagship of the Baltic fleet - the advanced nuclear-powered cruiser, Peter the Great. For more than a year, Russia has been selling arms to Venezeula, including dozens of helicopters and 30 very modern jet fighters/ bombers with Russian "advisers" who teach how to fly them, but mainly 10s of thousand of small arms that Hugo has given to the local guard to better resist any US invasion. (They are very loyal to him - Hugo took land from the rich land holders and gave it to them for new small, state-owned towns, each with its own school and clinic, staffed with Cuban doctors - first doctors most of them had ever seen.) US badly needs to stop funding its enemies with petro dollars. (More on that in footnote.) More data on Russia's help, intention at:
http://www.economist.com/world/americas/displaystory.cfm?story_id=12209136
Today Russia announced that the Georgian attack, which killed many of their citizens in the autonomous regions of Georgia, was their "9/11" and like the US's "9/11" changed their POV "forever." Now they will consider only their interest in trade and form military alliances of mutual self defense with anyone they like. In the middle of a public speech, Hugo took out his watch, looked at it and then gave the US ambassador 72 hours to leave the country. (The crowd loved it. - He does have a flair for this sort of thing.) - Personally, I think Russia wants to get its hands on a major part of the US's oil supply, just as they control the gas Europe needs. If GWB did, as Russia accuses, tell Georgia to attack (after 22 years of autonomous status) these two regions just to aid McCain's who was then trailing Obama badly, it will be one of his worst decisions if the end result is Russia contols the US oil supply.
Now for some more pleasant BRIC news:
"...The rate of formal job creation {in Brazil} is accelerating, with 40% more created in the year to this July than in the previous 12 months, which itself set a record. {better basic education} Together with cash transfers to poor families, this helps to explain why—in contrast with economic and social development in India or China—as Brazil’s middle class has grown, so the country’s income inequality has lessened. ..."
From current issue of the Economist:
http://www.economist.com/world/americas/displaystory.cfm?story_id=12208726
Not surprisingly, President Lula's approval rate in last year of second term, is 62% and ONLY 8% disapprove. For first time in Brazil's history, ALL social economic classes give him more than 50% approval rating, but the lower classes who have benefited most over whelmingly support him. - He was founder of the largest labor union and then very left leaning, but Lula is an intelligent natural leader, whose rational and conservative economic policies (once in power) combined with the global demand for commodities have made Brazil's reserves EXCEED the total of all its foreign debts, its inflation same as US, it GDP growing at >6% in first half of 2008 with rapid real growth of the worker's salaries! - Not bad for the child of illiterate parents, who got his first shoes at age 12!
Lula cannot run again, but for a modest fee,* Brazil will rent him to the US as you have desperate needs.
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*That "fee" would be ending the prohibitive import tariff on Brazilian alcohol and the 54 cents / gallon payment to producers who inefficiently make it from corn so Joe American cold pay less to drive his car, eat at less cost, and not need to send his son to fight a war against the Saudi oil financed and Saudi "religious school" trained terrorists.
US can keep the subsidy for growing corn, which is the largest of all farm subsidies, but killing that too, at least the grants to agro-giants like privately owned Cargill, would further lower Joe's taxes. But I digress from thread, so stop.
http://www.economist.com/world/americas/displaystory.cfm?story_id=12209136
Today Russia announced that the Georgian attack, which killed many of their citizens in the autonomous regions of Georgia, was their "9/11" and like the US's "9/11" changed their POV "forever." Now they will consider only their interest in trade and form military alliances of mutual self defense with anyone they like. In the middle of a public speech, Hugo took out his watch, looked at it and then gave the US ambassador 72 hours to leave the country. (The crowd loved it. - He does have a flair for this sort of thing.) - Personally, I think Russia wants to get its hands on a major part of the US's oil supply, just as they control the gas Europe needs. If GWB did, as Russia accuses, tell Georgia to attack (after 22 years of autonomous status) these two regions just to aid McCain's who was then trailing Obama badly, it will be one of his worst decisions if the end result is Russia contols the US oil supply.
Now for some more pleasant BRIC news:
"...The rate of formal job creation {in Brazil} is accelerating, with 40% more created in the year to this July than in the previous 12 months, which itself set a record. {better basic education} Together with cash transfers to poor families, this helps to explain why—in contrast with economic and social development in India or China—as Brazil’s middle class has grown, so the country’s income inequality has lessened. ..."
From current issue of the Economist:
http://www.economist.com/world/americas/displaystory.cfm?story_id=12208726
Not surprisingly, President Lula's approval rate in last year of second term, is 62% and ONLY 8% disapprove. For first time in Brazil's history, ALL social economic classes give him more than 50% approval rating, but the lower classes who have benefited most over whelmingly support him. - He was founder of the largest labor union and then very left leaning, but Lula is an intelligent natural leader, whose rational and conservative economic policies (once in power) combined with the global demand for commodities have made Brazil's reserves EXCEED the total of all its foreign debts, its inflation same as US, it GDP growing at >6% in first half of 2008 with rapid real growth of the worker's salaries! - Not bad for the child of illiterate parents, who got his first shoes at age 12!
Lula cannot run again, but for a modest fee,* Brazil will rent him to the US as you have desperate needs.
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*That "fee" would be ending the prohibitive import tariff on Brazilian alcohol and the 54 cents / gallon payment to producers who inefficiently make it from corn so Joe American cold pay less to drive his car, eat at less cost, and not need to send his son to fight a war against the Saudi oil financed and Saudi "religious school" trained terrorists.
US can keep the subsidy for growing corn, which is the largest of all farm subsidies, but killing that too, at least the grants to agro-giants like privately owned Cargill, would further lower Joe's taxes. But I digress from thread, so stop.
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Brazil (the government) does not now have one cent of debt in dollars and holds 207.9 billion dollars in reserves now. It does have 1.83 trillion Reais debt (the local currency) part of that caused by buying up dollars to increase the demand for dollars. (Without this demand the value of the dollar in Real would be even less i.e. the Brazilian real would be too strong and make it harder for Brazilian companies to export)
When the government buys dollars it does so paying for example some exporter who has earned dollars with Brazilian real. The exporter must have Real to pay his workers in the local currency. These new Real added to those already in circulation would make inflation, so the government removes them from circulation by borrowing them - issue and sells bonds in the local market. That is why part of the 1.83 trillion Reais debt came to be.
The dollar has grown stronger in the last month. Some no doubt is the old POV that in times of trouble the dollar is the safest investment (and it is surely true Uncle Sam will not follow Argentina's example and default - but the purchasing power of the dollars the bond holder gets when the bond mature has been less than the purchasing power of the dollar he lent to the US earlier, even with the recent recovery of the dollar. From my POV that is not a safe investment. However, the fact that the dollar now buys almost 1/3more real (2.04/$ instead of only 1.58/$) means that the 207.9 billion dollars the central bank holds can pay off more of the local debt. Thus Brazil's total debt is now only 40% of annual GDP (less than 5 months to pay off especially as GDP is growing at > 6% annually.)
The current US's GDP is 13.8 trillion but the debt of the US, in terms of bonds issued by the Treasury etc, and not including the un-funded promises like social security, Medicare etc. is now about 10.3 trillion. I.e. US debt is ~75% of GDP (9 months to pay off and the GDP is at best stagnate, if not shrinking.)
Brazil has a trade surplus and makes all the things China needs (energy, food stocks, minerals, fibers) and has growing volumes of exports of these basic materials to Asia. Brazil is self sufficient in liquid fuels, makes the most advance cars (more than 3 million in 2008, - more than the US on a per capita basis) and commercial airplanes in the world. The purchasing power of Brazilians is rapidly growing, especially in the two lowest economic groups (there are five groups). The gap between rich and poor in Brazil is shrinking, not growing as in the US. Brazil's banks are among the world's strongest and most profitable. The first part because they must deposit with the government 53% of all demand deposits they receive. (The US requires only 10%) The second part because they charge the highest rates to borrowers (and also pay depositors the world's highest real rates (about 1% real / month now but has been nearly 2%/ month at the peak a few years ago.) Thus Brazil has significant saving rate, but the lower classes do not understand how expensive it is to buy on credit - they were "financially educated" when Brazil had rapid inflation and are only concerned if they can pay next month’s bill. (Sellers must now tell the total that will be collected as well monthly charges and that total is often three times greater than prompt full payment, but still they buy on credit.)
Many of Brazil's lower classes are now enjoying their first refrigerator or motor cycle etc. Their demand is huge, and many manufactures do not bother to try to export. If there ever is any problem with slow down of the Brazilian economy, the government can easily stimulate it by reducing the compulsory percent of deposits by banks to say 40% instead of the current 53% and still have the banks roughly 4 times safer than those of the US.
It is not surprising that investors fleeing the insecurity of the US dollar are buying and investing in Brazil and India (but more in China and Dubai, etc.). There is no requirement that even one dollar that Paulson will give the banks for the toxic trash they made will remain in the USA. It will come to where the economies are growing. The GWB administration has been like a 4July fireworks show: A steady screwing of Joe American by growing the debt with a $700 billion "grand finale" at the end.
When the government buys dollars it does so paying for example some exporter who has earned dollars with Brazilian real. The exporter must have Real to pay his workers in the local currency. These new Real added to those already in circulation would make inflation, so the government removes them from circulation by borrowing them - issue and sells bonds in the local market. That is why part of the 1.83 trillion Reais debt came to be.
The dollar has grown stronger in the last month. Some no doubt is the old POV that in times of trouble the dollar is the safest investment (and it is surely true Uncle Sam will not follow Argentina's example and default - but the purchasing power of the dollars the bond holder gets when the bond mature has been less than the purchasing power of the dollar he lent to the US earlier, even with the recent recovery of the dollar. From my POV that is not a safe investment. However, the fact that the dollar now buys almost 1/3more real (2.04/$ instead of only 1.58/$) means that the 207.9 billion dollars the central bank holds can pay off more of the local debt. Thus Brazil's total debt is now only 40% of annual GDP (less than 5 months to pay off especially as GDP is growing at > 6% annually.)
The current US's GDP is 13.8 trillion but the debt of the US, in terms of bonds issued by the Treasury etc, and not including the un-funded promises like social security, Medicare etc. is now about 10.3 trillion. I.e. US debt is ~75% of GDP (9 months to pay off and the GDP is at best stagnate, if not shrinking.)
Brazil has a trade surplus and makes all the things China needs (energy, food stocks, minerals, fibers) and has growing volumes of exports of these basic materials to Asia. Brazil is self sufficient in liquid fuels, makes the most advance cars (more than 3 million in 2008, - more than the US on a per capita basis) and commercial airplanes in the world. The purchasing power of Brazilians is rapidly growing, especially in the two lowest economic groups (there are five groups). The gap between rich and poor in Brazil is shrinking, not growing as in the US. Brazil's banks are among the world's strongest and most profitable. The first part because they must deposit with the government 53% of all demand deposits they receive. (The US requires only 10%) The second part because they charge the highest rates to borrowers (and also pay depositors the world's highest real rates (about 1% real / month now but has been nearly 2%/ month at the peak a few years ago.) Thus Brazil has significant saving rate, but the lower classes do not understand how expensive it is to buy on credit - they were "financially educated" when Brazil had rapid inflation and are only concerned if they can pay next month’s bill. (Sellers must now tell the total that will be collected as well monthly charges and that total is often three times greater than prompt full payment, but still they buy on credit.)
Many of Brazil's lower classes are now enjoying their first refrigerator or motor cycle etc. Their demand is huge, and many manufactures do not bother to try to export. If there ever is any problem with slow down of the Brazilian economy, the government can easily stimulate it by reducing the compulsory percent of deposits by banks to say 40% instead of the current 53% and still have the banks roughly 4 times safer than those of the US.
It is not surprising that investors fleeing the insecurity of the US dollar are buying and investing in Brazil and India (but more in China and Dubai, etc.). There is no requirement that even one dollar that Paulson will give the banks for the toxic trash they made will remain in the USA. It will come to where the economies are growing. The GWB administration has been like a 4July fireworks show: A steady screwing of Joe American by growing the debt with a $700 billion "grand finale" at the end.
Petrobras has gone from $77.61 to $36.72 - down 53%.
That's not Bush's fault; that's Mr. Market's fault.
Unless you think Bush is omnipotent (he does have pretty big muscles).
That's not Bush's fault; that's Mr. Market's fault.
Unless you think Bush is omnipotent (he does have pretty big muscles).
Yes in some sense it is. But there were many other factors as well. I have followed Petrobras for a long time as have owned it for more than 5 years, but sold it recently. I keep a file on all my annual sales. I use it about now start to see what losses I need to tak for tax reasons: Here is when and how I got 100% out of petrobrass, from that file:
"Sold 1200 (old presplit 600) of PBR.A at $55.06 on 5/12/2008 (a day or two too soon as hit $58 when profits were released)"
Why did I sell? Answer:
Reason (1): Too many were too excited about all the new but deep fields of light oil that were being discovered almost every week back in April and May of this year. (They drove the share price up too much too fast.) I also thought the collapse of the US and EU was likely to come in the next few years (My long standing prediction was in the 6 year long "window"" starting 1Oct08.) This would mean that the demand for oil would be reduced very significantly before any significant production of the "pre-salt" trapped oil would exist and it minght be too costly to produce - one problem not so obvious is that it is so hot and cools as it come up thru the pipes that wax cplates out and blocks the pipes. There are many others with economic recovery of deep oil.
Reason (2): GWB caused the current financial crisis. I.e. Now banks will not lend even to each other, certainly not to the business man who must replace his refrigerated 18 wheeler truck etc. What can he do? Well many of them, like me, had large paper profits in ADRs of Brazil and India (some, but not me, also invested in China and Russia and had large gains there too.) As those ADRs were the only source of ready cash, they sold to realize some of their profits.
If you noticed, a few months ago it took only 1.5 Brazilian Real to buy a dollar (and less than 40 Rupies to buy one) As the hard pressed for cash Americans sold Brazilian assets they got first Brazilian Real but then immediately sold them to buy dollars. (You need dollars to buy a refrigerated truck in the USA.) This unusual demand for dollars is not really a sign that the dollar is strong. That is a common, but too simple and wrong POV. What it really means is that the US banking /financial system has ceased to work.
I forget the data, but more than 1/3 of all the activity in the Brazil's main stock market is now foreigners selling to raise cash they can not get from their banks. Petrobrass is the largests and most actively traded of all the Brazilian stocks. I saw this coming and got out in time.
I noted in another thread you were buying NOV so I started to follow it. - It is now at less than 50% of what it was when your recommened it. Who do you blame for that?
I think you can give GWB some credit for that too. Oil industry looks sevearal years ahead -tries to gestimate the demand. I think many agree with me that a depression is now a sure bet. Thus not going to be so much need of NOV's services. If not GWB who do you blame for your more than 50% loss?
I didn't realize Bear Stearns, Lehman Brothers, and AIG were all part of Bush's plan. God he is such a genius.
He did not get to that detailed level. - GWB only terminated Clinton's surpluses, doubled the US debt, started a needless war or two, pushed tax cuts for the rich, relaxed bank regulations, launched the corn to alcohol nonsense with it large inefficiency and need for protective tariffs and subsidies to not lose money, and most importantly not cut the oil imports from his main financial backers The Saudi Royal Family. GWB was also a "big picture man" not bothered with the minor details you site.
The last time I checked we have a Separation of Powers and Congress controls the purse strings. That Congress happens to be bipartisan.
I will not be replying more off thread to you but just note that this is only true in current Congress - GWB & Republicans controlled it when the problem was created. Can not expect the last bipartisan Congress to fix the seven years of economic mess creation that proceed in only half of one term. Also when GWB attacks a country that had nothing to do with 9/11 and send US troops there as Commander in Chief, Congress has little choice but to feed and arm them. The Democrates / Obama / are trying to end GWB's stupid wrong war ASAP. When Saddam was in charge, no terrorists lived in Iraq or even tried to organize there. (He killed all groups that might try to trouble him.) GWB is not known for intelligence - only for protection of the Saudi oil sales.
Now on thread (to show how US could excape from the grip of big oil):
"Sugar cane will overtake gasoline and become Brazil's main fuel for powering automobiles, accounting for some 80% of all liquid fuels consumed by light vehicles by 2017. Note inserted by Billy T : ~1% (definitely less than 2%) of Brazil's farm land is growing cane now. If 12% of Brazil's beef production / pasture were converted to growing cane, Brazil could met ALL its and ALL of the US's needs for liquid fuel* (Brazil has worlds largest cattle herd.)
"Brazilian demand for alcohol fuel will grow at an annual rate of 11.3% during 2008-17," surging to 14.1 billion gal from 5.4 billion gal in 10 years, the EPE report said.
To meet the demand, Brazil must expand its production capacity over the next 10 years by constructing 246 new sugar and distilling plants.
So far, the report said, 114 plants, or 46% of the total needed, have already been established or are now under construction. Part of the $700 billion will pay for these plants. There is NO restriction on what the money the banks receive for the "toxic trash" they created is used for. Much of it will buy banks in China and Dubai etc but some will be invested in growing BRIC economies, very little in stagnate ones like the US economy. This $700 billion was just the last opportunity in GWB's 8 years to screw Joe American the neocons had. The falling Dow shows that it will fail as I predicted.)
Brazil's investment plans for ethanol are firm and will not be adversely affected by the current global financial crisis, according to EPE director Mauricio Tolmasquim.
"There is no lack of investor interest; The crisis is not affecting these forecasts," Tolmasquim told journalists. "The prospects for demand are strong."
He said ethanol projects are profitable even if oil falls to $75/bbl from its current level of more than $100/bbl.
Brazil, the world's largest producer and No. 1 exporter of ethanol made from sugar cane, has foreign sales of nearly 396 million gal/year. ..."
From article by Eric Watkins, Editor of Oil Diplomacy For ful article see:
http://www.ogj.com/display_article/340982/7/ONART/none/Prong/1/Brazil-sees-$25-billion-investment-in-ethanol/
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*This assumes that US switches to more efficient cars, such as those make in Brazil or used in much of Europe.
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In Russia, stocks are up over 10% after trading was quickly halted following steep losses. The government said that it will soon start pumping cash into banks from the nearly $200 billion pledged by the government stem the crisis that has shaved almost 70% off the value of the market since May. Unlike the contagion in 1998, when the country had little cash, Russiaforeign reserves total $546 billion.
In Iceland, however, the situation remains dire after regulators took over the nation's largest bank and the prime minister warned of a national bankruptcy. Stock market operator Nasdaq OMX Iceland said trading on the exchange will be suspended until Monday. The nation's three-largest banks, whose assets total roughly 10 times the country's GDP, are now owned by the government.
Rusia may help Iceland with ~5 billion loan. Iceland has reached the stage the US is approaching, where printing more of the currency is counter-productive. I.e. drops the value of the existing so much that the total is worth less than before the printing presses made new.
GWB has contacted Brazil, leader of the G20 (with India?), for help. Who would have thought the US needed help from Brazil? The G20 will met to see what it can do to help, but probably not miuch as foreign investors are pulling assets out of Brazil (and other places that have large gains over the last few years) They buy dollars to take these gains home. This makes local currency fall in value. Yesterday, The Brazilain central bank sold some of it 207 billion dollars to keep the dollar less valuable. If it rises too much that hurts the importers, and lessen the competion in the domestic market, which tends to increase inflation. The stronger dollar WRT the Real of course helps the exporters, but they are doing OK and Brazil is very serious about control of inflation. The US has turned on the dollar printing presses, so a year from now or less The Real might be worth more than a dollar, which currently buys 2.2 Real. - Not a prediction, just a noted possibility.
Dubai, Home of world’s only seven star hotel and the world tallest building now well into construction with an estimated cost of US$ 4.1 billion,
(2,257 feet or 688 meters see photo at http://en.wikipedia.org/wiki/Burj_Dubai)
may have short lived fame as today Dubai luxury developer Nakheel PJSC unveiled plans for a tower that will stand a full kilometer (3,280 feet) tall! See its design at:
http://www.moneymorning.com/2008/10/08/dubai-2/
Also at that link you can read:
Nakheel is best known for constructing man-made islands that, when finished, will add more than 600 miles of coastline to Dubai. The first island, shaped like a palm tree and called Palm Jumeirah, will be home to private villas, mansions, luxury apartment towers, and a 60-story Trump hotel. Nakheel is also constructing two other palm-shaped islands, a 300-island archipelago called The World (shaped to mimic the continents), and more than a dozen other large-scale developments across Dubai. All of these developments are being populated with hotels, restaurants, and shopping malls that it will also manage.
Billy T comment: Sure was nice of Paulson and Joe American to create $700 billion from thin air and give it to the banks for toxic trash WITH NO RESTRICTION on how the banks receiving it can spend it. A lot of it will be invested in Dubai, making jobs there.
The Republican “Trickle Down” theory really does work. It makes factories in China, high rises & resorts for the rich in Dubai, etc.
In Iceland, however, the situation remains dire after regulators took over the nation's largest bank and the prime minister warned of a national bankruptcy. Stock market operator Nasdaq OMX Iceland said trading on the exchange will be suspended until Monday. The nation's three-largest banks, whose assets total roughly 10 times the country's GDP, are now owned by the government.
Rusia may help Iceland with ~5 billion loan. Iceland has reached the stage the US is approaching, where printing more of the currency is counter-productive. I.e. drops the value of the existing so much that the total is worth less than before the printing presses made new.
GWB has contacted Brazil, leader of the G20 (with India?), for help. Who would have thought the US needed help from Brazil? The G20 will met to see what it can do to help, but probably not miuch as foreign investors are pulling assets out of Brazil (and other places that have large gains over the last few years) They buy dollars to take these gains home. This makes local currency fall in value. Yesterday, The Brazilain central bank sold some of it 207 billion dollars to keep the dollar less valuable. If it rises too much that hurts the importers, and lessen the competion in the domestic market, which tends to increase inflation. The stronger dollar WRT the Real of course helps the exporters, but they are doing OK and Brazil is very serious about control of inflation. The US has turned on the dollar printing presses, so a year from now or less The Real might be worth more than a dollar, which currently buys 2.2 Real. - Not a prediction, just a noted possibility.
Dubai, Home of world’s only seven star hotel and the world tallest building now well into construction with an estimated cost of US$ 4.1 billion,
(2,257 feet or 688 meters see photo at http://en.wikipedia.org/wiki/Burj_Dubai)
may have short lived fame as today Dubai luxury developer Nakheel PJSC unveiled plans for a tower that will stand a full kilometer (3,280 feet) tall! See its design at:
http://www.moneymorning.com/2008/10/08/dubai-2/
Also at that link you can read:
Nakheel is best known for constructing man-made islands that, when finished, will add more than 600 miles of coastline to Dubai. The first island, shaped like a palm tree and called Palm Jumeirah, will be home to private villas, mansions, luxury apartment towers, and a 60-story Trump hotel. Nakheel is also constructing two other palm-shaped islands, a 300-island archipelago called The World (shaped to mimic the continents), and more than a dozen other large-scale developments across Dubai. All of these developments are being populated with hotels, restaurants, and shopping malls that it will also manage.
Billy T comment: Sure was nice of Paulson and Joe American to create $700 billion from thin air and give it to the banks for toxic trash WITH NO RESTRICTION on how the banks receiving it can spend it. A lot of it will be invested in Dubai, making jobs there.
The Republican “Trickle Down” theory really does work. It makes factories in China, high rises & resorts for the rich in Dubai, etc.
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What happened to the Democrats? They magically and miraculously disappeared?
To first be on thread: The Chinese economy is slowing -estimates are it will now take 8 years to double, instead of only 6 years. At rate things are going in the west, in 8 years the US may be back to where it was economically (GDP) 6 years ago.
GWB had white house for 8 years with Republicans in control of Congress for six of them. If the majoriy leader dose not like your bill, it will not be brought to a vote, and certainly not become law even if it were approved in vote if GWB did not like it.
From an annalysis by MorningStar:
"...Argentina, proposed the nationalization of the country's {10} private pension system. ... {Cristina Fernandez de Kirchner, president,} claims the takeover is needed to protect the people's retirement benefits. ...The government has $40 billion in debt due in the next two years and $150 billion in total debt. By taking over the private pensions it gains access to $29 billion in assets. About 55% of the pension assets are in Argentine government debt, and by owning, the assets can be canceled on the government's balance sheet. The pension funds also own about 27% of the publicly traded shares on the Buenos Aires stock exchange. ... may allow the government to operate the businesses to its own benefit.
The last time the government became directly involved with the pension funds was in 2001 ... The next year the country broke its peg to the dollar and defaulted on its debt. Taking full control of the pension assets is significantly more serious than the government's involvement in 2001. If past is prolog, this could be a signal that the government may once again choose to default on its debt. ..."
"...Argentina, proposed the nationalization of the country's {10} private pension system. ... {Cristina Fernandez de Kirchner, president,} claims the takeover is needed to protect the people's retirement benefits. ...The government has $40 billion in debt due in the next two years and $150 billion in total debt. By taking over the private pensions it gains access to $29 billion in assets. About 55% of the pension assets are in Argentine government debt, and by owning, the assets can be canceled on the government's balance sheet. The pension funds also own about 27% of the publicly traded shares on the Buenos Aires stock exchange. ... may allow the government to operate the businesses to its own benefit.
The last time the government became directly involved with the pension funds was in 2001 ... The next year the country broke its peg to the dollar and defaulted on its debt. Taking full control of the pension assets is significantly more serious than the government's involvement in 2001. If past is prolog, this could be a signal that the government may once again choose to default on its debt. ..."
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"...Fundamental View:
The enduring five-year commodities boom has brought a great influx of wealth into Brazil, making it now the world's largest emerging economy. Earlier this year, S&P raised its debt rating to investment grade, making it one of only 14 sovereign nations to earn such status. Blessed with an abundance of natural resources, Brazil is a major commodity exporter while remaining self-sufficient in terms of electric generation, fuel production, water availability, and agricultural output.
Perhaps the most impressive aspect of Brazil's remarkable turnaround has been the fiscal and monetary discipline exhibited by the current administration, which runs in stark contrast to generations of earlier mismanagement. External debt burdens, {of Brazilian companies only, not government},while still high, have been consistently falling and are under control. And while inflation remains high, {~6% but still with in the goal of 4.5+or- 2%} Brazil's central bank has maintained a forward-looking policy to ensure the pains of yesteryear are muted.
Let's not forget that inflation is currently a global concern. Historical precedent shows that emerging markets are particularly vulnerable, but the dynamics underlying inflation today point toward more acute pain in developed countries. U.S. citizens are being pummeled by falling wealth (declines in housing valuations and a deleveraging of the financial system) and rising costs for goods (mostly due to global commodities demand) and services, so individuals need to allocate investable assets appropriately to preserve future purchasing power. Taking an overweight position in the commodity-producing sectors that are delivering acute price pressure to U.S.-based consumers can offset rising cost concerns.
The perverse and often baffling global payment imbalances that have persisted over the past decade have left developed countries relatively more indebted to emerging economies such as Brazil. Developing countries have run persistent surpluses while developed economies continued to borrow, allowing those developing countries with an abundance and variety of commodities to continue prospering from a stronger currency and desirable exports. ..."
FROM:
http://quicktake.morningstar.com/etfnet/MorningstarAnalysis.aspx?Country=USA&Symbol=EWZ
Note not sure this is free - currently I have trial membership. Bold and two inserts added by Billy T.
The enduring five-year commodities boom has brought a great influx of wealth into Brazil, making it now the world's largest emerging economy. Earlier this year, S&P raised its debt rating to investment grade, making it one of only 14 sovereign nations to earn such status. Blessed with an abundance of natural resources, Brazil is a major commodity exporter while remaining self-sufficient in terms of electric generation, fuel production, water availability, and agricultural output.
Perhaps the most impressive aspect of Brazil's remarkable turnaround has been the fiscal and monetary discipline exhibited by the current administration, which runs in stark contrast to generations of earlier mismanagement. External debt burdens, {of Brazilian companies only, not government},while still high, have been consistently falling and are under control. And while inflation remains high, {~6% but still with in the goal of 4.5+or- 2%} Brazil's central bank has maintained a forward-looking policy to ensure the pains of yesteryear are muted.
Let's not forget that inflation is currently a global concern. Historical precedent shows that emerging markets are particularly vulnerable, but the dynamics underlying inflation today point toward more acute pain in developed countries. U.S. citizens are being pummeled by falling wealth (declines in housing valuations and a deleveraging of the financial system) and rising costs for goods (mostly due to global commodities demand) and services, so individuals need to allocate investable assets appropriately to preserve future purchasing power. Taking an overweight position in the commodity-producing sectors that are delivering acute price pressure to U.S.-based consumers can offset rising cost concerns.
The perverse and often baffling global payment imbalances that have persisted over the past decade have left developed countries relatively more indebted to emerging economies such as Brazil. Developing countries have run persistent surpluses while developed economies continued to borrow, allowing those developing countries with an abundance and variety of commodities to continue prospering from a stronger currency and desirable exports. ..."
FROM:
http://quicktake.morningstar.com/etfnet/MorningstarAnalysis.aspx?Country=USA&Symbol=EWZ
Note not sure this is free - currently I have trial membership. Bold and two inserts added by Billy T.
From Bloomberg today:
"In a new step to increase the availability of dollars in emerging markets, the Fed yesterday agreed to provide $120 billion to four counterparts. Brazil, Mexico, South Korea and Singapore get $30 billion each by signing the so-called currency swap lines. The U.S. already has unlimited agreements with the European Central Bank and Bank of England. ...
The swap lines are on top of six domestic loan programs created over the past year that channeled at least $700 billion in cash and collateral into money markets as of Oct. 22. ..."
Brazil has already $200 billion in reserves so 30 more on currency exchange is not very significant. Brazil probably will not even use this 30 billion according to official comments in today's newspaper. Brazil gave credit to US of ~66 billion Reais for US to use as part of the swap of currencies. I bet that serious inflation will return to US due to dollars being created. Above notes that on 22Oct08 the new dollars totaled 700billion. Add in the 125 billion just used to buy prefered shair is nine lagest banks and the 125 billion soon to go to smaller banks, plus the current fiscal deficit of more than 400 billion (and next years >1 trillion if McCain wins and almost a trillion if obama wins - See NYTime today for fact McCain's transfer to rich with no one taxed more makes greater deficit than Obama's plan) you are looking at 700 + 120 + 250 + 1000 = 2070 billion more "printing press" dollars pumped out by end of FY2009. And that does NOT include the remainder of the authorized 700 billion for Paulson (and next Sec. of Treasury) to spend (only 250 of it has been spent, but there are strong indications that part of the remainder will be used to reduce the monthly payments on some mortgages to prevent more foreclosures)
Paulson finnally seems to have realized that his original plan to buy toxic trash will not work. (Treated a symptom, not the cause, of problem.) He is moving closer to the plan I suggested but still has totally failed to help the US economy as buying prefered stock only dilutes the value of the existing stock and does not prevent the the cash influx to the banks from simply building more luxuray homes in Dubai, factories in China, etc. I.e. it will not "trickle down" to help US economy, but fund projects where the returns are greater. My plan was much better as never gave cash to the banks to use as they like. It only took ownership of properties with failing mortgage -giving real assets Uncle Sam could own and either re-finance for current occupant to stay in house or rent until could sell property at a profit.
"In a new step to increase the availability of dollars in emerging markets, the Fed yesterday agreed to provide $120 billion to four counterparts. Brazil, Mexico, South Korea and Singapore get $30 billion each by signing the so-called currency swap lines. The U.S. already has unlimited agreements with the European Central Bank and Bank of England. ...
The swap lines are on top of six domestic loan programs created over the past year that channeled at least $700 billion in cash and collateral into money markets as of Oct. 22. ..."
Brazil has already $200 billion in reserves so 30 more on currency exchange is not very significant. Brazil probably will not even use this 30 billion according to official comments in today's newspaper. Brazil gave credit to US of ~66 billion Reais for US to use as part of the swap of currencies. I bet that serious inflation will return to US due to dollars being created. Above notes that on 22Oct08 the new dollars totaled 700billion. Add in the 125 billion just used to buy prefered shair is nine lagest banks and the 125 billion soon to go to smaller banks, plus the current fiscal deficit of more than 400 billion (and next years >1 trillion if McCain wins and almost a trillion if obama wins - See NYTime today for fact McCain's transfer to rich with no one taxed more makes greater deficit than Obama's plan) you are looking at 700 + 120 + 250 + 1000 = 2070 billion more "printing press" dollars pumped out by end of FY2009. And that does NOT include the remainder of the authorized 700 billion for Paulson (and next Sec. of Treasury) to spend (only 250 of it has been spent, but there are strong indications that part of the remainder will be used to reduce the monthly payments on some mortgages to prevent more foreclosures)
Paulson finnally seems to have realized that his original plan to buy toxic trash will not work. (Treated a symptom, not the cause, of problem.) He is moving closer to the plan I suggested but still has totally failed to help the US economy as buying prefered stock only dilutes the value of the existing stock and does not prevent the the cash influx to the banks from simply building more luxuray homes in Dubai, factories in China, etc. I.e. it will not "trickle down" to help US economy, but fund projects where the returns are greater. My plan was much better as never gave cash to the banks to use as they like. It only took ownership of properties with failing mortgage -giving real assets Uncle Sam could own and either re-finance for current occupant to stay in house or rent until could sell property at a profit.
Not quite sure of your question, but drop in total market capitalization is a "paper loss." It is only real the those who have sold. The $2070 does not include the 50 billion that will be used to help reduce the number of home forclosures nor the expected second round of stimulation checks (probably to be issued in 1Q09.)