Macro
Seth Godin’s appearance in this talk show is constrained by the format: a talk show requires “controversial sound bites” and leaves little room for deep analysis of a given issue. That’s up to us, and the ideas he repeats here – “get ready for a ‘forever recession’ by reinventing yourself”, “learn by doing”, “go ahead and do it”, “take risks” – are worth considering during the weekend.
Very interesting Economist article on the roots of China’s success – and why China must change to achieve future prosperity. However, the “China Unbalanced” debate is far from over, and countless arguments have been laid out for each side of the debate. Why does it matter to us? Surely, as Brazilians, because of the undeniable impact of China in our economy. But more importantly, as global citizens and asset managers, because of the uncertainty that comes from such a wide range of possible outcomes.
Two recent stories in US newspapers highlight the huge per-capita spending of Brazilians in the US. While one piece focuses on tourists in NY and retail sales, the other focuses on Florida and also mentions Brazilians buying up real estate. The big point: the taxation making imports so expensive in Brazil as to justify, in some cases, the airfare and hotel expenses.
The Financial Times’ Beyond Brics blog has posted an article by PUC-Rio professor Marcio Garcia, and it’s a very sober look at what this country has been through in the years since it was included in the “BRICs” by Jim O’Neill. Much more importantly, however, is the warning about what we must still do if we are to succeed in the future.
Brazil’s efforts to influence its Latin America neighbors are not always well-received. That by itself isn’t a problem, at least not beyond the stated and unstated strategies and goals behind such initiatives. Reaction will always occur as one group or another feels threatened/ left behind. However, it is important to keep an eye on the trend. Much has been said about Brazil having “lessons to teach” other LatAm countries, and we have been skeptical given increased government spending and intervention in the economy – alongside rising inflation. Brazil has done well, no doubt, but let’s keep our minds open to our own problems before we try to “export solutions”.
Three recent stories with one theme in common: the rise of the middle class and the availability of credit. Looking at banks or diversified financials top-down is not our specialty and, as we’ve said in our Q3 2011 report, “is only of interest to us in order to gauge an important part of the risks”. Keeping this in mind, one of the articles is bullish and points to recent reports showing that credit here has actually accelerated in September, despite talks of banks – and financial authorities – reining in loan growth. The other two articles are also bullish but still reflect, in a way, the difficulties of sustaining such growth.
After depicting both sides of the Eurozone crisis – Greece on the one hand and Germany on the other – Michael Lewis now turns his attention to the USA and to where he might find trouble. That he does, and plenty of it, in California. Our usual cautionary notes – about great writers sometimes skimping over a bit too much evidence for the sake of an argument – apply.
Two very public comments by high-level Brazilian authorities regarding currency wars: one by the highest possible authority – our President herself, in an editorial piece in the Financial Times. Another by our finance minister, Guido Mantega. Regardless of what one thinks about the global financial crisis and the state of macroeconomic policies each country should follow amidst the turmoil, it’s hard to see what diplomatic, political or practical gains could be achieved through this kind of rhetoric via the global press vehicles.
We thought we had stumbled upon an older article when we saw this piece in the Financial Times a few days ago: “Get used to world without a risk-free rate”. We had published a Financial Times video pretty much on the same subject and using the same arguments – but yes, it’s a new article altogether. Given the timeless importance of the subject, let this be an excuse to bring it back to our attention.
As per our post on Monday, Buffett’s article on taxing the mega-rich caused a wave of reactions – favorable, negative and the personal-attack type. Since then he went to Charlie Rose and discussed the article – and the deficit debate – for +50 minutes. There were at least three new strong reactions against the article as well, highlighted here.
