South America has been a special part of my life for four decades. I have lived many years in Brasil and Peru. I am married to an incredible lady from Argentina. I want to share South America with you.
Forget political earthquakes in Brazil – Ecuador got the real thing last weekend: its worst quake since 1949. It killed 570 and will cost so much to repair the devastation that US-educated populist Rafael Correa came up with a new plan: tax the rich.
“This is how a modern society responds to this kind of disaster,” said Mr Correa – or at least how a small oil economy already hammered by crude price falls, and on course to shrink by 4.5 per cent even before the quake and its several strong aftershocks, plans to try. The state will deduct five days’ salary from wages over $5,000 a month (the levy is one day for salaries of $1,000) and VAT is going up two points to 14 per cent for a year as well.
Original financial schemes used to be the hallmark of Argentina (remember how it used to allow companies to import only if they matched the value of their purchases with exports to the same value?). But Mauricio Macri has pulled off quite a coup: as the Lex column put it: the hottest ticket in global bond markets this week turned out to be an offering from a serial defaulter with at least 30 per cent inflation whose main money-spinners are commodities that have been ravaged by price falls – aka, Argentina.
Talking of coups, Brazil’s vice president, who only last week was rehearsing his acceptance speech, told the FT in a rare interview that he was absolutely not conspiring against President Dilma Rousseff, as she has alleged. Samba, the Brazilian national dance, puts your feet through set steps but can suddenly speed up very fast: Brazil's politicians are dancing the impeachment shuffle samba now, each side with their own predictable moves, but watch out, the tempo is set to rise.
It’s enough to drive you to drink. But upscale tequila makers in Mexico reckon they are getting slammed by a levy that is more than double the tax on beer. Mexico looks unlikely to bow to pressure to change the tax regime though – indeed, it needs all the revenue it can get after bailing out Pemex, the troubled state energy company, to the tune of $4.2bn.
Quote of the week
“I am very upset … The same leaders and the same reforms . . . Am I supposed to wait till I’m their age to see some real change? Young people are not even listening, they have their minds set on leaving the country” – Julia Martínez, 52, a secretary, who asked that her real name not be used, on five-yearly communist party congress.