Should The US Default On Its Massive Foreign Debt?

A Brave Visionary Suggests That The US Default On Its National Debt!

Fri, 29 Jul 2011 at 5:59 am 

I am glad to see so many comments. Patrick I'm married to a wonderful Argentine lady. We lived through the sovereign default that took place in Argentina in 2001. When the default happened, it was a cataclysmic event. The Argentine peso crashed from 1 peso to the dollar to three pesos to the dollar. Unemployment shot up to Great Dperession evels of 25%-30%. Housing prices collapsed. My wife bought her condo in Buenos Aires in 1996 to $54,000 US. It collapsed to a value of $18,000 US in 2002. (This condo has now recovered in value to $100,000 US+)  In all of this turmoil fortunes were made by a lucky few who purchased the distressed real estate and businesses. The human misery was without equal. People literally starved to death. Since then Argentina has had a huge economic recovery. Economic growth last year was 8%. There is life after a sovereign default. But the poor suffer immensely.

Defaulting creates huge legal hassles. The creditors would be suing and freezing assets. It would get messy!

So why shoudn't we default?

By Fisk Wed, 27 Jul 2011, 9:43pm 1,146 views 55 comments Watch Quote Email Link Flag

Default essentially is a govt. bankruptcy. As we know, filing for bankruptcy generally benefits debtors financially as they can remove or reduce the debt payments. Which is why new bankruptcy laws had to be made a few years ago to limit this practice - that would hardly be needed had debtors not benefited from bankruptcy. Further, unavailability of significant loans over the next several years forces bankrupt into "balanced budget" and savings - a good habit that often continues even once the bankruptcy is deleted from the credit record and loans become available. Same happens with defaulted govts.



It is widely claimed that the US default would cause a "horrendous multidecade recession". Other defaulted countries show otherwise. The largest recent national defaults were Russia 1998 and Argentina 2001. Despite major differences between those countries and their economies, the course and outcome post-default were similar. First, a severe economic shock with abrupt drop of currency value by 3 - 4 times followed by rapid inflation led by imports and large spike of unemployment and corporate bankruptcies. The first year was rough indeed. However, by the middle of year 2 the economy stabilized and started growing, first hesitantly and then faster and faster. By year 6, the GDP and incomes (in foreign currency such as USD) have substantially exceeded the pre-default values and continued improving.



Why? First, the above effect of cancelled or reduced debt payments. But more important was dramatic currency depreciation that greatly reduced imports and increased exports. For example, if USD dropped 3 times vs. Euro or Yen, virtually all car imports would become utterly price-incompetitive and decrease by 80 - 90%. This would mean the demand for US-made autos growing ~3 times within months, plus a major gain in exports, a godsend for Detroit obviously. Typical Chinese or Indian salaries would kick from ~15% US to ~50% US, making outsourcing there immediately incompetitive, considering the productivity differential of ~3 times. Production would return to the US en masse, creating the "Mother of all economic booms". That's what happened in Russia, btw.



Of course, the import prices would also skyrocket, first of all oil. That would do in 3 yrs more for conservation (with proliferation of plug-in hybrids), nuclear energy, and public transportation/rail than 30 yrs of "fuel economy standards", tax rebates, and other govt. tinkering. Domestic energy exploration would instantly become hot over large swaths of the land, watch the ND and TX shale booms x 10.



Some say dishonoring debts is morally wrong when one can pay (aka "strategic default"). But curiously many here who see no problem with individual US homeowners defaulting and stiffing the US banks (and thus our govt. and investors) even when they could pay are aghast at us doing the same collectively to foreign bondholders. A mortgage loan is just a business deal involving risk for the lender, who did or should have considered the possibility of principal loss before lending, it is said. Then same is true for govt. debt - a lender certainly knew that govts. can and do default, and should have considered that when bying T-bills.

So let Chinese take "haircuts" - it's just business.

Jack's Africa: New Garage Door Installed

Jack's Africa: New Garage Door Installed: "Wednesday was another day of work on the house. Our roofers made progress. The carpentry team installed insulation and got the new room read..."

Selena Gomez-A Beautiful Latin Woman

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Evita Peron Died 59 Years Ago Yesterday

My Argentine wife Elena informed me last night that her brother Miguel's birthday is also the day in 1952 when Eva Peron died.

I was mystified. Anytime that I am in Buenos Aires, I can feel her spirit there.

Miguel Torello Is 49 Years Old Today

The man pictured with me on this blog is Miguel Torello. He is Elena's younger brother. Today he is 49 years ol. !Feliz Cumpleanos Miguel!

Travels North of the Amazon

By LIESL SCHILLINGER

Published: July 22, 2011

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Have you ever considered visiting the Guianas, that fabled South American realm of gold and sugar, home to, as the British travel writer John Gimlette reports,“head-crushing jaguars, strangling snakes, rivers of stingrays and electric eels,” not to mention giant otters, “half-puppy, half-torpedo,” that snack on piranhas? The region’s tangled green knot of jungle, rock and savannah — now home to the countries of Guyana, Suriname and French Guiana — crouches between Venezuela and Brazil, veined by thousands of turbulent rivers, mulchily recoiling from 900 miles of Atlantic coastline.

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From John Stedman’s “Expedition to Surinam”

“Mad, gaudy, toxic and exotic”: An 18th-century Dutch view of Suriname.

WILD COAST

Travels on South America’s Untamed Edge

By John Gimlette

Illustrated. 358 pp. Alfred A. Knopf. $28.95

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Excerpt: ‘Wild Coast’ (Google Books)

Sir Walter Ralegh set off a wave of European exploration of the territory in 1595 when he wrote in his prospectus “The Discoverie of the Large, Rich and Bewtiful Empyre of Guiana” that “there is no country which yieldeth more pleasure to the inhabitants.” Boasting, Gimlette tells us, of “diamond mountains, dog-headed mermen, weeklong drinking festivals and men with their eyes in their chests,” Ralegh also claimed the place sheltered a city of gold, El Dorado, a fiction that persists to this day.

But in the intervening centuries, the region’s reputation has suffered somewhat. In 1882, a visiting English yachtsman deemed it “a hopeless land of slime and fever, quite unfitted for man.” Evelyn Waugh, who passed through in 1933, denounced its society as “destructive and predatory” and leveled abuse at its “slatternly and ill-favored” women. He even deplored its taxidermy (“the worst stuffed animals I have seen anywhere”). A few decades later, both V. S. and Shiva Naipaul provided their own withering accounts.

Yet to the admirably (or alarmingly) fearless Gimlette, the Guianas remain a terrain of matchless allure, rippling with “mad, gaudy, toxic and exotic” life. In 2008, he spent several months burrowing into its rugged, bedeviled wilderness, digging for myth. Though he encountered neither a golden city nor dog-headed mermen, he saw sights so wondrous that, as he later told a BBC radio host, “if it was to be a novel it would be rejected as being improbable.” Luckily, Gimlette decided not to cast this account of his wanderings as fiction. Instead, he has written a spirited historical, political and personal travelogue guaranteed to arouse the adventurous reader’s wanderlust.

“Wild Coast” provides two valuable services. First, it offers a gorgeously vivid depiction of one of the last untamed places on the planet — “a beautiful world, luminously lush and drenchingly fecund” — and, second, it allows tourists seeking an easy-peasy exotic holiday to strike this destination from their itinerary. More hardened souls may, however, find themselves slavering to repeat Gimlette’s ordeals: to live among the Makushi forest people and sip their cassiri home-brew (made of fermented cassava, purple potatoes and human spit), which tastes of “whisky blended with cabbages and socks”; to visit the ruins of a plantation where slaves revolted against brutal owners in the 18th century and find shards of Delft china and “tufts” of smashed wine bottles still littering the grounds; to push through the “vicious vanguard of the forest,” with its “trees sprouting daggers and poison,” just to test their mettle.

Evidently, Gimlette wasn’t daunted by the challenges of his expedition. He marvels at the gauzy beauty of the colonial capital Georgetown, “built on canals and breezes, a city of stilts and clapboard, brilliant whites, fretwork, spindles and louvers.” He revels in the eccentricity of the local people, whether it’s the Scots-Carib- and Arawak-descended hunter Dango Allicock, who makes him a bow and arrows to take back to London (“Whenever you use them . . . you’ll think of us”) or the unnamed landlord in a lawless town who rents him a room with the assurance, “If I hear anyone, I’ll shoot them.” When Gimlette leaves what passes for civilization, he charges ecstatically into the rough, through the “gateway of a primordial world,” journeying with relish through “slicks of brilliant ooze, grass like green fire, liverish pools and succulent bogs rimmed with pink,” spotting “lilies so purple they looked like the work of an imperial hatter.” “Even the jabiru storks,” he notes, “seemed to belong to a long-lost age. They’d all stand around in their tatty coachman’s livery, stabbing at the frogs and then tossing them back like shots of gin.”

With the help of air travel, flatbed trucks and motorized canoes, today’s explorers have a decent chance of repeating Gimlette’s journey. So which of the region’s three countries would they like to visit first? How about Guyana, (formerly British Guiana), where the cult leader Jim Jones compelled more than 900 followers to drink a cyanide-laced fruit drink? Gimlette went to Jonestown, spoke with some survivors and found a sandal that belonged to one of the victims.

What about French Guiana, “the largest chunk of the European Union detached from the whole,” long home to an archipelago of penal colonies: Devil’s Island, Isle Royale and St. Joseph Island. Until 1946, the French sent thousands of criminals and undesirables there (most notably Alfred Dreyfus) to languish in the smothering heat. When Gimlette paid a visit, he packed a bottle of wine and a hammock and took a boat to Isle Royale, where he watched monkeys, agoutis and giant iguanas frisk amid the coconut palms before slinging his hammock in one of the defunct prison barracks. But he concedes that plenty of Frenchmen still call the place “l’enfer vert,” the “green hell.”

Then there’s Suriname, the former Dutch slave colony, now a popular Netherlandish tourist destination, which welcomes, by Gimlette’s estimation, 60,000 Dutch visitors a year. But my Texan cousin and his wife say, “No, no, no,” to Suriname. They lived there in 1999 and 2000, while serving in the Peace Corps. After leaving the capital, Paramaribo — “the perfect city,” Gimlette sighs, praising its plantations, its canals, its purple fortress “like a hat full of mansions” and even the alligator in the city pond — they jolted along a mud road for six hours, then hopped in a log canoe that bore them to a village of maroons (descendants of slaves who fled their Dutch overseers during bloody rebellions). The Texan cousin and his wife moved into a thatched hut infested with rats and giant spiders. They lasted six months, long after their project director had been medevacked back home with an “obscure jungle disease.” Yet even armed with this foreknowledge, after reading “Wild Coast,” I longed to fly to Paramaribo, charge into the interior (escorted, ideally, by a couple of bodyguards) and try to see what Gimlette saw.

“Other places may feel more magnificent than the Guianas,” he writes, “but nowhere feels quite so unconquered.” If would-be travelers take a cue from this observation and decide they’d like to follow Gimlette’s lead, he can hardly blame them. One of his own forebears, a “lawyer, poet, dilettante and layabout” named Robert Hayman, succumbed to the romance of the region in 1629. Hayman traveled by dugout canoe up the Oyapock River with, as Gimlette puts it, “no map, no medicine and no prospect of rescue.” Hayman died there, one of his friends reported, “in the said canoo of a burning fever and of the fluxe.” Such a fate might deter others from attempting a similar undertaking, but for Gimlette it was an enticement. Roughly four centuries on, he has proved that although this place can “exact a terrible price for its beauty,” sometimes a lucky visitor can depart from it both enriched and unscathed.

Liesl Schillinger is a regular contributor to the Book Review.

In Uruguay Prison Cells As Art Galleries

CENTRAL AND SOUTH AMERICA > URUGUAY > MONTEVIDEO

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In Uruguay, Prison Cells as Galleries

Horacio Paone for The New York Times

The Espacio de Arte Contemporáneo, one of a number of new or expanded museums in Montevideo,  Uruguay, is housed in an abandoned prison.

By MICHAEL T. LUONGO

Published: July 22, 2011

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IN 1811 Uruguay began the long process of winning independence. In this bicentennial year, Montevideo, the capital, has been adding new museums and expanding older ones as the country re-examinesart and history.

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The most striking addition is theEspacio de Arte Contemporáneo(Arenal Grande 1930; 598-2-929-2066; http://www.eac.gub.uy/), which opened in July 2010 in an abandoned 1888 prison occupying an entire city block between the Cordón and Aguada neighborhoods, an area with a post-industrial feel and unassuming working-class homes.

Planning by the Ministry of Education and Culture began in 2008, with work starting in 2009, aided by 700,000 euros (about $970,000) from Spain’s Agencia Española de Cooperación Internacional. According to Fernando Sicco, the museum’s director, “In reality it was very little time, and very little money.”

Mr. Sicco said the city hoped that the museum, which will eventually contain a cinema, a restaurant and resident artist spaces, would be a gentrifying force. “It will be more of an impact socially and with the development of the neighborhood,” he said.

Of the prison location, Mr. Sicco said, “We wanted to change the meaning of something, playing with the freedom to create, and having it in a jail.” Cells allow viewers to see modern art and installations from Uruguay and Latin America in isolation, but the prison setting isn’t for everyone. “People with claustrophobia have a hard time here,” Mr. Sicco said. But, he added, “In Uruguay, there are not many historical places left to renovate.” In one three-story wing, a glass wall offers a view onto an unrenovated part of the prison, where the long neglected spaces are still piled with rubble, and paint peels from the walls.

In Ciudad Vieja (Old City), near Montevideo’s cruise port, Museo Figari (Juan Carlos Gómez 1427; 598-2-915-7065; museofigari.blogspot.com) opened in February 2010 to house art by Pedro Figari (1861-1938), a Uruguayan folk modernist painter who produced more than 4,000 paintings and other works of art. (The art prize Premio Figari, financed by Banco Central de Uruguay, honors him.) Figari, a lawyer and politician, “only became famous after the third part of his life,” said the museum’s communications officer, Juan Carlos Ivanovich. Many of his paintings were on cardboard, difficult to restore and display.

Figari, whose art reflects his legal work with Uruguay’s poor, often depicted African-Uruguayans and slavery, gauchos and Indians and the early days of Uruguayan independence. Pointing to “Bailando,” a painting of dancing African-Uruguayans, Mr. Ivanovich said Figari “liked to show the dances, the parties, the rituals, the few times when they were very happy, rather than when they were working or in chains. It was something most people never saw in Montevideo.”

He also contrasted the poor and his own wealthy class. “Portraits of blacks have a movement,” Mr. Ivanovich said. “Those of whites show a rigidity. Everything is formal.”

The 1914 Belle Époque structure housing Museo Figari has only one floor open for exhibitions, while two upper floors are being renovated.

The Museo del Carnaval (Rambla 25 de Agosto de 1825, 218; 598-2-916-5493;museodelcarnaval.org), on the edge of the Ciudad Vieja, expanded during 2010, adding a larger main gallery with more comprehensive displays explaining the history of the festival in Montevideo and other parts of Uruguay.

The Museo Naval (Rambla Presidente Charles de Gaulle and Luis A. De Herrera; 598-2-622-1084), in the Pocitos neighborhood overlooking the Rio de la Plata, reordered and expanded its displays in 2009 and 2010, creating new temporary exhibition spaces, said Capt. Héctor Yori, the museum’s director. He added that the Museo Naval was a reminder to visitors that “the sea was the birthplace of Montevideo.”

A version of this article appeared in print on July 24, 2011, on page TR5 of the New York edition with the headline: In Montevideo, Prison Cells as Galleries.

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Rise Of Consumer Credit In Chile And Brasil Leads To Big Debts And Lender Abuses

Rise of Consumer Credit in Chile and Brazil Leads to Big Debts and Lender Abuses

Victor Ruiz Caballero for The New York Times

A worker enters the data of a man applying for credit at a department store in Santiago, Chile. Credit-fueled spending has driven economic growth.

By ALEXEI BARRIONUEVO

Published: July 23, 2011

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SANTIAGO, Chile — For Ana María Silva, what began as purchases of perfume and two pairs of shoes spiraled into a credit card nightmare, as her debt multiplied tenfold in five years — and not all because of her spending.

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Victor Ruiz Caballero for The New York Times

At the Santiago, Chile, offices of Dicom, a private, unregulated credit-rating agency owned by Equifax. A bad Dicom score can mean being rejected for jobs, mortgages and political office.

Ms. Silva was among 418,000 clients in Chile who fell behind on their payments and had their debts repackaged by the retailer La Polar, which raised interest rates and extended loan terms without their knowledge. In early June, it came to light that executives at La Polar had been unilaterally renegotiating clients’ debts for more than six years. The news stunned Chileans and has become one of the biggest financial scandals of Chile’s 20-year economic boom.

“I share blame in this, but this company should have been more honorable and transparent,” said Ms. Silva, 30. “They were targeting people with more modest means. This became a vicious cycle that was never going to end.”

The scandal has underscored how South American countries — including Chile and Brazil, two of the region’s healthiest economies — are going through growing pains as the use of credit grows. The credit-fueled spending has driven extensive economic growth. But it has also opened the door to abuses, as credit issuers have used predatory techniques to lure customers, particularly young and less affluent ones, in countries where regulation is scant, annual interest charges can top 220 percent and consumers cannot seek bankruptcy protection, economists and consumer defense groups say.

“They are learning every trick that was learned in the United States to make credit cards the most valuable part of the banking business,” said Lewis Mandell, a professor emeritus at the State University of New York at Buffalo, who wrote a book on the history of the credit card industry. “And unfortunately, the problems this caused in the United States are likely to repeat themselves in Latin America.”

As La Polar was dealing with the fallout over the disclosure of its lending practices in Chile, the federal prosecutor’s office in Rio de Janeiro filed suit this month against three of Brazil’s biggest banks, accusing them of imposing more than $300 million in illegal bank charges on clients from 2008 to 2010.

The cases reveal troubling undercurrents in the South American economic boom: indiscriminate lending, lax regulation and ballooning over-indebtedness of large parts of the population, especially those with lower incomes.

The widespread proliferation of credit has been both rapid and relatively recent, developing over the past decade and spurring a consumer revolution across South America. Retail chains like La Polar in Chile and Casas Bahia in Brazil, which sell electronics and housewares, have thrived by offering relatively low-priced goods and extending easy credit terms to entire classes of people who had never had access to it.

The household debt-to-income levels in Brazil and Chile still trail that in the United States, where it has hovered around 140 percent, largely because of high mortgage balances. But they are rising fast. In Brazil, it reached a record high of 40 percent in April, up from 22 percent in 2006, according to LCA Consultores, an economic consulting firm. In Chile, where consumer debt rose by 254 percent, to roughly $34 million, between 2001 and 2008, the debt-to-income level topped 70 percent at the end of 2010, according to theCentral Bank.

“We have turned ourselves into modern slaves,” said Osvaldo Oyarce, a filmmaker who is trying to make a movie about Chilean consumerism. National economic success, he said, has come at a cost: “A population that is highly indebted, with high levels of depression and frustration.”

A bank superintendent closely monitors bank-issued credit cards, but cards issued for in-store use by retailers like La Polar are subject to “much lighter” regulation, said Kevin Cowan, a director in the financial policy division of Chile’s Central Bank. Last year, the bank began to include a chapter focused on household indebtedness in its risk reports. “We recognize that ultimately household debt could become a serious source of financial risk,” he said.

In Brazil, where credit card interest rates above 220 percent are among the highest in the world, the Central Bank has been trying for months to rein in household consumption, which grew by 10.4 percent in the last quarter of 2010. To better evaluate the risks of the credit expansion, the Central Bank will begin monitoring credit operations of as little as 1,000 reals, or roughly $640.

In both the La Polar and Brazilian bank overcharging cases, the creditors were reluctant to compensate consumers fully.

In Brazil, the prosecutor’s office opted to file its lawsuit, seeking double the amount it said the banks improperly charged customers, only after the three banks — Santander, Itaú-Unibanco and HSBC — ignored its appeals to fully compensate consumers, it said.

Brazil’s Central Bank had also told the banks that the fees they were charging were illegal and that they must stop the practice.

HSBC and Santander declined to comment on the case. Itaú stopped charging clients a commission in late 2008 after the warning, and it agreed to pay enough restitution to satisfy the Central Bank, said Claudia Politanski, executive legal director at the bank. She added that Itaú considered the restitution demands as “not having backing in jurisprudence.”

Last year, Sernac, the Chilean government’s consumer defense agency, received hundreds of complaints from La Polar customers who had been getting threatening letters from collection agencies. Sernac said it tried quietly to negotiate a solution with La Polar, but the company would not stop. Sernac filed a class-action suit last month on behalf of about 2,000 people who said La Polar had defrauded them. The number has since grown to 20,000.

La Polar’s top executives have since resigned, and the company has fired 11 managers involved in the lending practices. The company, in a statement, said it was pursing criminal action against several former employees and against its auditing firm, Pricewaterhouse Coopers. A state regulatory agency filed related charges this month. With no personal bankruptcy law in Chile, when people fall behind or default, they face the prospect of being listed as a debtors or high-risk consumers in the Dicom, a private, unregulated credit-rating agency owned by Equifax. A bad Dicom credit score usually means being blacklisted for jobs, mortgages or political office.

“If you are in Dicom, if you are not in hell, you are on the way there,” said Stefan Larenas, president of the Organization of Consumers and Users of Chile, a consumer rights group. “It is a true social stigma here.”

Mr. Larenas said he has seen more cases of insolvency in his office. “Some people come here and cry; some say they want to kill themselves,” he said. “Some leave the country or escape to the south and live in an almost clandestine way for five years, waiting for their debts to clear.”

The customer abuses in the La Polar case doomed tens of thousands to Dicom purgatory after the repackaging of their debts geometrically increased what they owed through so-called acceleration clauses for late payers.

Manuel Céspedes said he received his La Polar card in 2007 when he was 19. He used it in the pharmacy and to buy a $1,000 laptop on a payment plan of $60 a month over 24 months. But in 2008, when he lost his job as a technical illustrator, he fell behind on the payments.

He said he later discovered that the retailer was repackaging his debt every three months. By the end of 2008, the roughly $430 he owed had tripled. By this March, it had topped $4,000.

“I couldn’t understand what was happening,” said Mr. Céspedes, now 23.

His poor Dicom rating has kept him from getting college loans and has made it hard to get a job to help pay his debt, he said.

Ms. Silva, a schoolteacher who stopped working when she had her first child in 2006, said she had been blacklisted with employers because of her credit problems stemming from her debt to La Polar, and she and her husband had been denied a mortgage.

“I don’t think everybody understands how these cards work,” she said. “It’s a temptation, and we all want a little more in our lives. I think the stores are counting on that.”

Pascale Bonnefoy and Aaron Nelsen contributed reporting.

A version of this article appeared in print on July 24, 2011, on page A6 of the New York edition with the headline: Rise of Consumer Credit in Chile and Brazil Leads to Big Debts and Lender Abuses.

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A Day Full Of Trials

A Day Full Of Trials

Yesterday was a beautiful day. I took Copernicus for a walk along the beach. As we started on the beach, the dog sighted a squirrel running among the rocks. A nanosecond later Copernicus sprung and killed the animal. He took it in his mouth as a trophy. He did not try to eat it. Perhaps he was not hungry. Other onlookers on the beach were fascinating by what was unfolding. Copernicus soon lost interest in the dead animal and left it on the trail. I had been taking photos with my mobile phone camera. I was not watching where I was going. I stepped in a hole. I had a nasty fall that twisted my right knee and bloodied both hands. Copernicus came to my side and was sicking me and trying to help me. I forced myself up. I was tempted to go home. I decided to continue my walk in hopes tha the walk would correct some of the pain.

I came home with the dog. The contractor was hard at work putting the roof on the replacement room in the house. We talked and he went back to work. He told me a few moments later that a UPS person was at the front door. I secured Copernicus.







I went out and talked to the UPS driver. He admitted that he was the driver who delivered my missing Omega Speedmaster watch. He told me that he was frightened of the dog. He admitted that he had thrown the package containing the watch on the porch. He did not mention that he never got my signature. He did an extensive search. We could not find the package. He offered to pay me $200 per month for the loss. It would have taken me over 8 months to collect. I rejected this suggestion. I told him that I was going to get the payment from the UPS insurance. He said that he believed that the package gad been stolen after it was delivered. He suggested that I call the police. He then left. I knew that his negligence caused theloss.







I then talked to State Fram Insurance. They set up a claim number and told me it was withithin my limit and I would not get any penalty for the claim. I was instructed to call the Pacifica Police.







I prepared a police report and called the Pacifica Police. I thought I could fax the report. Since the amount of the loss was grand theft, officers would have to come out and take a report. I gave the dispatcher my details. About an hour later Corporal V. Romero and Officer Munro showed up. They took a detailed report and a lot of documentation. They asked for pictures of the watch. I agreed to get those and bring them to the Pacifica Police headquarters.







I contacted Topper Jewelers. Robert Caplan sent me the full picture and serial number details. I printed this information. I took it over to the Pacifica Police Department.







I came home and took more calls on the loss including some of the contractors who were not happ because they were interviewed by the police.







A call came in from Stgate

Brazil: A Tale Of Two Middle Classes

July 20, 2011 3:40 pm

Brazil’s tale of two middle classes

By Joe Leahy in São Paulo

Speaking to Melissa Beeby, you would not know that Brazil is enjoying its most prosperous period since the “economic miracle” of the late 1960s – as the country’s last great boom is known.
Like other members of Brazil’s so-called “traditional” middle class, things have become harder for Ms Beeby in recent years. The prices of meat and petrol have doubled, highway tolls have risen and eating out or buying property have become prohibitively expensive.

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“The middle class basically is in debt. That’s how people manage,” says Ms Beeby, who runs the Bridge Restaurant at the British Centre in São Paulo. “People have more dinners at home and when they do go out, they go to simpler places.”
The story of Brazil’s success in lifting millions of people out of poverty over the past decade has really been a tale of two middle classes.
While headline economic growth has not been as spectacular in Brazil as in China and India, at an average of about 4 per cent a year between 2003 and 2010, the balance of income distribution has improved more rapidly in Latin America’s largest economy than in the other large emerging markets.

Social aspirations: slum dwellers in Rio de Janeiro, who stand to gain from programmes seeking to pull another 16m people out of absolute poverty

In Brazil, mean household income since 2003 rose by 1.8 percentage points a year above the rate of gross domestic product growth, helped by generous increases in the minimum wage and welfare handouts. In China, by contrast, the rise in household income trailed GDP growth by 2 percentage points a year.
On the winning side have been an estimated 33m people who since 2003 have risen to the ranks of the so-called “new middle classes” or above. Today, 105.5m Brazilians out of a total population of 190m are members of this group, who earn between R$1,200 ($767) and R$5,174 per household. Also better off are the rich, who have profited from a stock market, commodities export and consumption boom.
On the losing side, say sociologists, are the 20m or so people of the “traditional” middle classes who earn more than R$5,174 per household. Unlike in India, where the old middle class benefited from the creation of new industries, such as information technology outsourcing, many in the Brazilian middle class complain of rising prices, taxes, congested infrastructure and increased competition for jobs.
“In the past 10 years, the income of the poorest 50 per cent of the population grew 68 per cent in real per capita terms while the income of the richest 10 per cent grew by 10 per cent,” says Professor Marcelo Neri of the Getulio Vargas Foundation (FGV) and the co-ordinator of a large-scale study on Brazil’s new middle class.
Even more startlingly, the income of the average illiterate person rose 37 per cent between 2003 and 2009, while that of the person with at least an incomplete university degree fell 17 per cent. “It’s up side down,” says Prof. Neri.

The changes represent an historic rebalancing of wealth that has been pending since 1888, when Brazil became the last country in Europe and the Americas to abolish slavery, says Prof Neri.
“Incomes are growing more [quickly] in traditionally excluded groups of Brazilian society, such as non-whites, women, those living in the poor north-east, in favelas [slums] or in the outskirts of Brazilian cities,” said the FGV study.
The process has been driven partly by increasing access to education. The new middle class has flocked to private universities and technical colleges and begun competing for jobs with the traditional middle class.
Conscious of her support among the poor, President Dilma Rousseff recently launched a new social welfare programme, aimed at pulling another 16m people out of absolute poverty.
Such programmes will not win votes among traditional middle classes, however, who are concentrated in Brazil’s industrialised southern states, especially São Paulo. Some complain that the government helps the poor through benefits and wage rises and the rich through subsidised loans for their corporations. This flushes the economy with money, leading to inflation, which the central bank then tries to quell through higher interest rates, penalising the middle-class.
While many in Brazil’s traditional middle-class agree with wealth redistribution, they are afraid of how much it is costing them.
Ms Beeby says she is feeling the pressure from both sides – as a consumer and a small business owner. The high price of meat has forced her to raise the price of some dishes. “The people who eat here have felt the difference too. They complain a lot,” she said.

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