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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (81232)	7/12/2008 9:30:43 AM
From: THE ANT	Read Replies (2) \| Respond to of 116555

I think Brazil rates are so high for many reasons:like Germany they had hyperinflation and are now serious about inflation control,next easy money in Asia and US is forcing them to slow their growth to minimize the impact of world inflation,also there are many structural barriers in Brazil which limit the amount of growth without inflation,finally there is incredible pent up demand in Brazil as for years there was no credit at all-you paid cash or traded(ex-a car and club membership with an apt for a house)

To: Wyätt Gwyön who wrote (81232)	7/12/2008 3:41:11 PM
From: elmatador	Respond to of 116555

There are Micro and macro economic reasons behind Brazil's interest rates. One is klaser's 'fear of easing'. But the government spends too much and before this was financed by printing money. Now it rolls the public debt by paying higher interest rates. To solve that once and for all, structural reforms must be made. Structural reforms are only possible within the political process. That takes time. Previous government could not do it because it didn't have the support in Congress. Opposition turned situation, and Lula, kept the economic policies in place but had not attacked the structural problems. My personal opinion is that government wants to have a higher growth rate, which increases tax revenues, alleviates the public deficit and postpones structural reforms. But that it is to thread a fine line: Optimal growth rates keep government popularity high. If too much creates bottlenecks=>high interest rates=>lower growth=>lower popularity... Luckily, the country entered the demographic window, with or without government the country will grow. en.wikipedia.org Do not pat too much OECD countries on their backs; we know that it was their demographic window that created those economic "miracles" More luck was to have other countries entering THEIR demographic windows and entered the market economy: Asia. We don’t have to sell anything: they buy it from us. That is where we are today.