Saturday, July 26, 2014

Brasil Injects $20 Billion Dollars Into The Banking Sector

Last updated: July 25, 2014 7:33 pm

Brazil injects $20bn into banking sector

This frame grab from Cadena Nacional shows Brazilian President Dilma Rousseff addressing the nation on radio and TV on June 10, 2014 in support of the FIFA World Cup Brazil 2014 which will start next June 12. AFP PHOTO/Cadena Nacional--/AFP/Getty Images©AFP
Brazil is freeing up more than $20bn in its banking system as Latin America’s largest economy struggles to escape the grip of “stagflation” ahead of presidential elections in October.
While economists say Brazil could end the year with inflation above the upper limit of the target for the first time in a decade, the country is expected to grow less than 1 per cent. Data next month may show the economy even slipped into recession in the first half of this year.


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With little leeway to change interest rates, the central bank announced a series of measures on Friday to ease banks’ reserve requirements, and changed the risk calculation for some loans, injecting an estimated total of R$45bn ($20.2bn) into the economy.
Under the new rules, banks will be allowed to use up to half of their reserve requirements on term deposits to boost credit operations or to purchase loan portfolios from eligible financial institutions.
The central bank also nearly tripled the number of institutions eligible under that programme to 134 from 58 previously and, in a separate announcement, adjusted minimal capital requirements for retail credit operations.
It said the move was designed to “improve the distribution of liquidity in the economy” and was largely seen by economists as a way to unwind the so-called macroprudential measures introduced from 2010 onwards to rein in the country’s credit boom.
After impressing investors with growth of 7.5 per cent in 2010 – the highest rate in more than two decades – Brazil has since struggled to outpace developed countries, with forecast growth this year of only 0.97 per cent.
While Brazilians have continued to enjoy rising wages and record low unemployment, recent data suggests the job market is finally starting to adjust to the country’s gloomy economic outlook, endangering President Dilma Rousseff’s chances of re-election.
The central bank’s rule changes were largely welcomed by banks themselves. In a rare statement from the chief executive of Itaú-Unibanco, the country’s largest non-government bank, Roberto Setubal said the rules would “create the conditions to boost credit in some sectors of the financial market where liquidity was more restricted”.
However, economists were less impressed. “The problem in Brazil is not funding or credit supply – both amply available from state-owned banks – it is low credit demand owing to the lack of business confidence,” said Tony Volpon, an economist at Nomura.
Investors in Brazil frequently complain about government meddling in industries such as oil and gas, sudden regulatory changes, and one of the world’s most time-consuming tax regimes.
Alberto Ramos, an economist at Goldman Sachs, also gave warning that the measures threatened to undermine the central bank’s own monetary policy and “the ongoing quest to disinflate the economy and realign inflation to the elusive 4.5 per cent target”.
Only last week, the central bank voted to keep interest rates steady at 11 per cent for the second consecutive meeting, despite 6.51 per cent annual inflation.

Monday, July 14, 2014

Brasil Investors Take World Cup Defeat To The Polls

July 14, 2014 9:22 am

Brazil investors take World Cup defeat to the polls

Following its shock 7-1 defeat against Germany last week in their World Cup semi-final, the market value of Brazil’s football squad has fallen nearly R$62m to R$1.3bn, according to a consultancy, Pluri.
By contrast, Brazil’s stock market has risen since the “derrota”, or defeat, with the benchmark Bovespa index ending last week up about 2 per cent to 54,785.93 points. The national team’s further 3-0 loss against The Netherlands on Saturday could add to Bovespa’s gains this week, analysts say.





The reason behind the market’s insensitivity to what was regarded in Brazil as a national tragedy, is speculation that the country’s humiliation on the football field will hurt the re-election bid of President Dilma Rousseff, whose interventionist policies are blamed for undermining the fortunes of key stocks, such as national oil company Petrobras.
“With the defeat of Tuesday, there is suddenly a sense in the market that there could be negative sentiment of the kind that happened in the World Cup of 1950 and this could . . . be reflected in votes,” says Karina Freitas, analyst at brokerage Concordia in São Paulo, referring to Brazil’s defeat in the World Cup final in 1950 to Uruguay on home soil, the memory of which still traumatises the country.
The Bovespa’s volatility comes as the market is bracing for what is expected to be a closely fought election in October between Ms Rousseff and her nearest rivals: Aecio Neves, leader of the PSDB, the main centre-right opposition party, and third-placed candidate Eduardo Campos.
Brazilian elections always coincide with World Cups and usually there is little correlation between one event and the other. But with this year’s tournament occurring on home soil for the first time in 64 years, there was speculation that any hiccups in its organisation could hurt Ms Rousseff’s chances of a second term.
Although until last year she was expected to be a shoo-in for re-election, Ms Rousseff`s popularity began steadily falling in the lead-up to the World Cup amid fears the tournament would be disrupted by protests and the late construction of the stadiums and infrastructure for the event.
With every fall in her popularity, the Bovespa rose a notch. It is now up more than 19 per cent over 12 months. This has been led by state-controlled stocks in which the government is perceived to have interfered the most, including Petrobras, which soared more than 26 per cent compared with a year earlier. Electricity groupEletrobrás is up more than 34 per cent, while bank Banco do Brasil is 38.5 per cent higher.
Instead, however, the tournament proceeded almost without a hitch, exceeding expectations. Ms Rousseff`s popularity rebounded slightly in the most recent Datafolha poll with 38 per cent of intentions to vote as of early July, up from 34 per cent a month earlier. This compares with 20 per cent for Mr Neves and 9 per cent for Mr Campos.

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Joe Leahy reports after the 7-1 thrashing in Belo Horizonte
Investors are now hoping that the historic defeat may be enough to neutralise this rebound in positive sentiment related to the World Cup and refocus the public’s attention on problems in Brazil’s economy and society as a whole.
“There has already been a growing dissatisfaction over the years with the government,” says Claudio Duhau, an analyst with brokerage Ativa Corretora in Rio de Janeiro.
On the economic front, there is certainly no shortage of bad news. Brazil’s Itau Unibanco has revised down its estimate for gross domestic product growth this year to 0.7 per cent from a previous forecast of 1 per cent and for 2015 to 1.5 per cent from 1.7 per cent.
Inflation, meanwhile, is expected to remain at the top of the central bank’s target range of 6.5 per cent for 2014 and 2015.
“Reports show lower sales in supermarkets and auto dealerships with a sharp decline in June, going back to levels seen in mid-2010,” Itau says. “Industrial production fell for a third consecutive month in May.”
If she wins this election, we could see an inverse movement in the stocks that have so far been responding positively to [Ms Rousseff’s falls in] the opinion polls
- Karina Freitas, analyst at Concordia in São Paulo
But markets may be overstating the belief that the weaker economy will translate into a defeat for Ms Rousseff, who remains popular among low-income earners for her government’s support for minimum wage increases and social benefits.
Unemployment remains close to record lows and despite the weakening economy is not expected to increase sharply ahead of the election because of a shrinking labour force, Itau says.
In addition, voters may place more importance on the successful holding of the World Cup when it comes to the election than the defeat of the national squad, says Ms Freitas of Concordia.
“If she wins this election, we could see an inverse movement in the stocks that have so far been responding positively to [Ms Rousseff’s falls in] the opinion polls.”
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Apologies for the corny footballing metaphor, but I think that, on balance, Brazilians still perceive their economy to be "winning" with Dilma as manager. Yes, as laid out repeatedly in the FT, there are various poor indicators coming in; and watching from the sidelines we can see the long-term folly of Dilma's failure to make the economic reforms the country needs. However for Dilma to be discredited in the eyes of the Brazilian electorate, they need to concede some economic "goals" that will be felt by the public now - specifically in terms of rises in inflation and unemployment.
The length of time between now and the election is probably sufficient to mitigate the impact of Brazil's footballing failure on Dilma's re-election prospects. One can only hope that it will also be  sufficient for at least some of Dilma's economic chickens to come home to roost.

Hi, Libertarian, I do agree: it is the conventional wisdom that the period of time between now and the October elections would mitigate whatever negative impact we would detect from the football failure. But, but, but, politics can have a unpredictable timing arising from its own process. There is a sense of "bad humour", "malaise", "impatience" which is hard to assess and evaluate. This is why I'd put a big question mark on your (and mine, to be sincere) assertion that time would work to mitigate bad impacts. Today I think that the "national"humiliation will sit deep in what we could call (no science, of course) "self esteem" of the electorate. Since Dilma is uncapable to connect, comunicate or articulate in emotional terms, which are important everywhere and even more so in Brazil, I think her party will have a difficult time trying to neutralize the astonishing events of last week.

Sunday, July 13, 2014

The World Cup of Prostitution: How the Soccer Tourney Is Affecting Brazil’s Sex Workers - The Daily Beast

The World Cup of Prostitution: How the Soccer Tourney Is Affecting Brazil’s Sex Workers - The Daily Beast:

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Argentina Will Win Today In Rio de Janeiro

Now I am going to make a prediction on the game tomorrow. Elena says it's a 60% chance that Germany will win and a 40% chance that Argentina will win. One can see predictions like this all over the world.

Truly Germany has the best team. They also have huge financial resources, etc. I am not that rabid soccer fan who pours over pages of statistics,player data, and sports history.

I rely on 65.5 years of life experience and study of history. The Argentina team shares something with the great military leader from long ago, Alexander the Great. The team has incredible tactical smarts and discipline. Alexander the Great defeated much larger forces by drawing them into traps and surrounding them. One can study other battles such as many the North Vietnamese fought against the French, the Americans, and later the Chinese. George Washington's masterful military skills are another example. Look for Argentina to show some brilliant tactical skills, great defense, and ferocious fighting that will carry them to victory.

This one could go to 0-0 right until the end. Get ready for a brilliant game that will be remembered for decades afterwards.

Argentina eye 'perfect match' | Sport24

Argentina eye 'perfect match' | Sport24:

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The World Cup-Brasil Showed What It Could Do!!!

Most of you know that I'm a loyal Brasil fan of almost 40 years. I was sad today when Brasil lost again.

I sat back and reflected on things. I decided that all of the people in Brasil have won a big victory. In the last month some 600,000 to 1,000,000 people have visited Brasil. No doubt that they spent a lot of money that helped the economy.

But more important is the personal experience of my wife. In her three weeks in Brasil everyone was wonderful to her. She had an unforgettable time. She now smiles when she talks about Brasil and considers it a beautiful country.

All of the visitors like her are talking to others and telling them about how wonderful Brasil and its people are.

Despite all of the pessimistic predictions before the games started, Brasil showed what it could do!

Saturday, July 12, 2014

Brasil After The World Cup

July 11, 2014 6:47 pm

Brazil after the World Cup

It was a splendid tournament. Now the real drama of the presidential election begins
In the end, Brazil did not get the golden outcome it had hoped for: a sixth World Cup victory. The national team’s drubbing by Germany in the semi-finals saw to that. For a football-mad country such as Brazil, the humiliating 7-1 defeat was a disaster.
Yet the sun, amazingly, still rose the next day. By Monday the tournament will also be over. Brazilians will then turn off their plasma screens, tidy up the beer cans and rise from a month of soccer stupor. The metro stations and airports will fill again. Traffic will return. Dilma Rousseff, the president, will host the sixth summit of Brics countries – with the Russian, Indian, Chinese and South African leaders in attendance – and campaigning will begin for October’s presidential election. Life in Brazil will return to what usually counts as normal.





While perhaps bleary and hungover, Brazilians have good reason to look back on the tournament and feel pleased with how it went. There were many moments of wonderful drama: from the exciting attacking games, to the number of goals (before this weekend’s final two matches, more than in any tournament in 16 years) as well as Luis Suárez’s extraordinary bite.
The tournament’s organisation also went smoother than many feared. There were no strikes or mass protests, as in the lead-up to the event. Brazil also opened itself to the world, and the world mostly loved what it saw. All this is cause for celebration. Indeed, 60 per cent of Brazilians now say they were proud to host the games versus just 45 per cent before the tournament began. With this under Brazil’s belt, the 2016 Rio Olympics should be a walk in the park.
Yet there were many unfortunate aspects as well. Foremost is the way Fifa hijacked a nation. The extent to which it can override national rules, such as a ban on beer sales in football stadiums, is absurd. Brazil also showed it could deliver spanking new stadiums and infrastructure on time, but at four times budgeted cost. Then there is the national team’s dispiriting collapse, which popped the illusion that Brazil is still the home ofjogo bonito , the beautiful game. Much the same can be said of another lingering illusion: that the boom times Brazil has grown accustomed to over the past decade will continue.
The conventional wisdom is that the World Cup will have no effect on Ms Rousseff’s chances in the election in three months’ time. History shows no correlation between winning or losing the tournament, and winning or losing the presidency. Nonetheless, during the tournament’s month-long “time out”, the economy continued to sag. Inflation rose above target, the current account deficit widened, consumer and business confidence fell, tax breaks to cosseted industries were extended, public accounts deteriorated, real wages slipped and growth forecasts fell. This year the economy is expected to grow just 1 per cent, the fourth year of sluggish growth. This is the lacklustre state of affairs that Brazilians return to now the entertainment is over. It is also Ms Rousseff’s biggest political threat.
She remains the favourite to win in October. Yet the opposition could still close the gap. Their calls for change could resonate with a population that, as last year’s mass street protests showed, is increasingly prepared to demand better government accountability and public services, with less corruption. Indeed, such civic engagement may prove to be the World Cup’s most hopeful legacy. Ironically it was a protest directed in part against the costs of the tournament that helped wake up the country and unite it. The next three months, therefore, could be as dramatic as the football itself.
This time, though, the contest will not be Brazil against another nation but within itself. So do not turn your attention away from the country just yet. The real drama is only beginning.
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By far the best Cup ever under all parameters - congratulations to all those who worked hard on delivering it, despite the usual doom and gloom of ignorant journalists and stray dog Brazilians.

And yes, let's hope the 7x1 blackout leads to some much-needed governance change in that private association called CBF..!
Hi Opinionator....that is very correct. 
Brazil's GDP grew by a trillion dollars since 2008, their unemployment came down from above 10% to 4% today and their currency is at same level as it was in 2008 which is 2.20. Whereas currencies of South Africa, India, Indonesia etc have plummeted, deficits increased and GDP plunged.
Debt in US, UK, Japan, EU has increased by gargantuan proportions with no discernible benefit except bailing the rich out. The debt bomb must explode (as it somewhat did in Portugal this week or Cyprus last year and Bulgarian bank runs last month) and will provide China a major entry point to buy whatever it does not already own worldwide.
While Brazil will remain stable and shall keep growing with billions being invested as FDI and whatever stability the Govt has provided reaping benefits for their population unlike the debt bombs of US, UK, Japan and EU!
Since 2008 Brazil grew its GDP, created millions of jobs and reduced poverty levels in an unprecedented manner, while the UK (its US cousin-economic system and other crony-capitalist countries) collapsed under the weight of a deeply corrupt financial system driving politics. Please do not forget these facts when babbling arrogantly about Brazil.