Brazzil

- the Bovespa did not go up because of Lula ! Nooooo
- The World Stock Markets bottomed in March 2003. Since then ALL Stock Markets are up sharply and ALL Stock Markets from developing nations are BOOMING ! Therefore even if a goat would had been elected, the Bovespa would have gone up anyway !

Curious that the reporter starts from 1985, then nothing, on purpose, until 1999 !!!!
There is a big hole.....in between and big problems in Brazil ! Problems in your currencies....not in your actual currency....which did not exist ......yet !
In 1986 You issued a new currency : the Cruzado taking 3 zeroes from the previous currency, the (first) Cruzeiro Novo
In 1989 You issued the Cruzado Novo, taking 3 zeroes from the Cruzado
in 1990 You issued the Cruzeiro, but no change in value, just in the name
in 1993 You issued the Cruzeiro Real, taking 3 zeroes from the Cruzeiro
in 1994 You issued your actual Real, dividing by 2,75 the Crueziro Real

Therefore even starting with 1 currency unit in 1986 omitting what it replaced, it became the equivalent of 0,001 in 1989, then 0,000001 by 1993 and then 0,00000036 by 2004 !!!!!!
As you can see someone would need 2'750'000.- 1986 currency to have the equivalent of 1 actual Real ! Great isnt it ?

But still Worse : the actual Real currency was issued in 1994 at the exchange rate of 1 Real to 1 US$. By 1998 the Real started to loose value and went down to 0,25 US centsin 2002.
And by now it is 1 Reais per 0,47 US cents. Or still more than 50 % below what it was
at the time the Real was issued. The funny thing is that every Brazilian businessman now finds the Real overvalued despite it has been and still is a weak currency against the US$ currency....itself a weak currency since 2002 !!!!!! Laugh......laugh....laugh......

For the exercise, I remind you that BETWEEN 1942-1994 Brazil changed "only" 8 times their currency, and withdrew 3 zeroes FIVE TIMES AND DIVIDED IT ONCE BY A FACTOR OF 2,75 !
Conclusion : one would need hundreds of trillions (yessss....) of 1he 1941 currency named REIS to equal 1 actual Real !!!!!

Probably close to another world record !!!!!!!!!!!

Then guess why with so much inflation, multi national companies NEED to have a higher profit margin than in developped countries. For years....prices INCREASED DAILY IN BRAZIL ! YESSSSSS.....DAILY !

Inflation is caused by government policy. The end of the month is coming and we have to pay retirees, military, prefeituras, etc. etc., and we don´t have the money. So we print more. And next month there is so much more in circulation that the value drops.

Then one day the new finance dude says, "This is all wrong. Let´s handle the deficit like they do in the states". And the Exec says, "How do they do it in the states?" And the answer is, they roll it over. They sell instruments of the federal treasury to bring in enough to pay the bills. The shortfall is still there, but now instead of being paid for through inflation by those outside the financial system and thus unable to qualify for indexed bank accounts, it may someday be paid by children and grandchildren. Or not.

Of course, the average citizen has no idea of how they got a handle on inflation. Nor do younger people remember hyperinflation. The entire fortune of the Santos Dumont family was in the area of Dois Contos de MIlreis, which (I think) became two New Cruzeiros in the late sixties. Or about one US dollar.

So pipe in the haggis and celebrate the Bovespa!

I just invested in a vehicle called an ETF- Exchange Traded Fund.. ISHARES- Brazil has had tremendous returns over the past 2 years.
The small time investors like myself should not ignore Foreign Investments, especially in booming markets like Brasil.

James in Philly

I Agree with the article in some ways, The IMF and world bank predicted moderate growth in 2007. I also think the country should be cautious when foreign capital enters their country, it leaves them very vulnerable to capital flight. Internal grwoth is a policy Brazil and many countries should seek. Instead its the opposite we have foreign capital and export growth. Even with exports, every country is trying to drive their countries through export lead growth. A good example is China, we have just learned recently their reserves surpass 1 trillion, which is highly inflationary and deflationary.

1) to Rick :
- although the US budget deficit is huge, it is huge because it is the biggest economy.
But figure out the budget deficit of the US, Brazil, France, Germany and they ALL have a similar deficit of around 3 % of their GDP !
Dont foregt that Brazil, to show rosier numbers, provide their Budget surplus.....BEFORE INTERESTS ! Take in account the world highest interests rate after inflation that Brazil has, and you also end up with a Budget Deficit.....as said before !
And the USA never had inflation in the thousands of percents annually.......as Brazil had.... quite regularly in the past ! Therefore you make a strange and innacurate comparison ! In the early 90's some Brazilian states were so much indebted that some
went bankrupt Officially for some foreign debts. The Federal Government bailed them out for the rest and guaranteed their local debts ! Sao Paulo had the most debts. Even so much that they could not pay for months their civil servants ! They even were unable to borrow more !
- To Jim !
Eventually you will make money. But having invested after the Bovespa was multiplied by 4 times....since the 2002/2003 low at around 10'000.....it probably wont multiply AGAIN by 2 or 3 for the forseable future !
- and to Sam !
Make up your mind is it inflationary or deflationary....for China ? It cannot be both....by definition ! Smile

As to Brazil growth....Lula predicted a repeat of 2004 for 2005, he failed. Last November, HE GUARANTEED a special vintage for 2006 ...and he is again not delivering ! Just read his promises of last November...in this site ! Laugh
The Reality is that in 2005 the Brazilian growth was the lowest of ALL Latin America and Caribean countries.....just slightly better than Haïti ! Nothing to be proud of.....for his economic achievements and policies.

It looks like, that 2006 could be a repeat of 2005 !

Here is what Rato from the IMF said on September 15, ``One of the biggest challenges for Brazil's budgetary policy is its rigidity,'' de Rato said at a news conference in Singapore today, where the IMF and World Bank are holding their annual meetings.

Brazil has run annual deficits for more than five decades because the law forces the government to spend about $9 in every $10 of the budget on wages, pensions, education and health allowances. Last year, half the federal budget went to pay for salaries and pensions for 2 million government workers, while less than 5 percent was
funneled into new investment, according to Budget and Planning Ministry figures "