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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: THE ANT who wrote (12343)	12/12/2006 5:49:23 AM
From: elmatador	Respond to of 219929

"they have to cut rates faster." But they cannot and already signaled It May Slow the Pace of Rate Cuts. Brazil's economy, in the state it is now, cannot absorb the capital thrown at it. To avoid inflation, i.e., bringing USD a plenty, and print Reais to buy them, it is impossible. Inflation will creep in again and Brazilians LOVE inflation. It is like scratching. You just need to start. Sectors that are overflowing with USD don't have anything to do with the money and send it to Canada USD17 billion to buy a nickel company. Or send it to the UK to buy Corus. Why are CVRD and CSN buying companies elsewhere when there is the lack of capital in here? ANSWER: The economy cannot absorb that capital without triggering inflation. OR CSN and CVRD expect Real to collapse and prefer to keep their money out there? Brazil doesn't have competent people in the Central Bank. These economists only understand economics under the inflation perspective. That because they studied it and lived through it, and they have a mindset shaped by it. Perhaps their teachers at the university only understood inflation and how to deal with it (the matemagic, as we called during hyper-inflationary times pre 1994) and only taught that since these were the skills necessary to succeed in the hyper inflationary job market of 15 years go. There we are: at the mercy of economists that know how to solve only the past problems but not the present ones. Thus no growth! But it is worse! They don't want to touch reforms. Because they are economists and reforms are the province of the politicians. Thus no solution. Do you really think Brazils potential growth rate is only this when Argentina is growing 9%? Who would have said the US could be getting away with our policies without inflation showing up? ELMAT: US has a open market and can import anything cheap, thus keeping inflation at bay. Brazil is not an open economy as the US is. It is good that Brazil is being pressured to reform prior to growth kicking in, otherwise they would do what they do best: put off difficult decisions. ELMAT: FHC didn't reforms because it was blocked by the opposition. Lula tried but and it was discovered they were buying the votes to approve its solutions. This may be part of a campaign to speed up reforms.We will see. ELMAT: The problems that were created over 50 years will be solved in how many years? 50, I guess. But by then the demographic window will be closed and the opportunity was missed.