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

To: THE ANT who wrote (40345)	9/25/2008 6:19:18 AM
From: elmatador	Respond to of 217651

If this was the past, BRL would have dropped to 3 to the USD in the past 13 months. The fact that it didn't, is a sign that it is not playing as per the past script. This is the first test of the new economic world order -the facto we have already one, it is just not yet formalized. Therefore I wouldn't be so positive to say 2.2 because the analyst is say that beased on the past reaction of the market. Today being a new situation, it will not play out as before.

To: THE ANT who wrote (40345)	9/25/2008 9:30:57 AM
From: elmatador	Respond to of 217651

Crisis is helping Brazil. Happened when the economy was too hot creating inflationary pressures and needed cooling. Also BRL was overvalued and needed a 20% drop. Economists believe GDP will slow from 5,4% this year to 3,5% 2009 - far better than the 1% estimated for the ret of the world but enough to bring inflation that overshoot 6% this year, to the center of the target of 4,5%. With that CB will also revise how many times will move the interest rates.

To: THE ANT who wrote (40345)	9/25/2008 1:36:18 PM
From: elmatador	Respond to of 217651

Brazil’s confidence stores up future problems By Jonathan Wheatley in São Paulo Published: September 25 2008 04:15 \| Last updated: September 25 2008 04:15 Leaders of the developed world, suffering the disdain and derision of voters as their economies stutter may be casting an envious eye this week at their colleague Luiz Inácio Lula da Silva of Brazil. In spite of the threat of global recession and the dent it might make in Brazil’s recent prosperity, Mr Lula da Silva is riding a wave of acclaim. An opinion poll this week put his personal popularity rating at 78 per cent. EDITOR’S CHOICE France reforms its Anglo-Saxon attitudes - Sep-22Lex: Measuring bank capital - Apr-16PM meets bank bosses to discuss crisis - Apr-15Banks warn Brown of mortgage market logjam - Apr-15Bankers see shift in PM’s grasp of crisis - Apr-15CBI warns of tough conditions - Apr-16“Lula has been really good for the poor,” says Adeilda Alves Costa, 31, a domestic servant who moved to São Paulo from the semi-arid sertão of the north-east. “Up in the sertão, the government has put an end to the people’s poverty,” she says. But critics say Mr Lula da Silva is also the luckiest president in Brazilian history. Just as Brazil benefited from the surge in global growth rates and credit markets in recent years, the sudden shift downwards in growth and credit might paradoxically turn out to be beneficial. The economy had in recent months looked at the risk of overheating, with inflation rising to more than 6 per cent – well ahead of the government’s 4.5 per cent target – on the back of a surge in consumer spending. Economists say the credit crisis might cool the economy without damping growth too far. “The effects [of the global financial crisis] will be much more benign here than in the developed world,” says the chief economist of a large foreign bank in São Paulo. “We expect growth to slow from 5.4 per cent this year to 3.5 per cent next year. Compared to global growth of about 1 per cent in 2009, that’s excellent.” Economists still worry that a disorganised change in circumstances might have unforeseeable consequences. “Nothing that comes as a surprise can be seen as positive,” says Giovanna Rocca Siniscalchi, an economist at Unibanco, a Brazilian bank. But Unibanco’s first reaction to the events of the past two weeks, along with many other institutions, has been to revise downward its expectation of interest rate rises. While most expect the current tightening cycle to continue (the benchmark Selic rate has risen from 11.25 per cent in June to 13.75 today), they believe it will stop at 14.75 per cent by year-end. Brazil can be credited with making a lot of its own luck. Augusto de la Torre, chief economist for Latin America and the Caribbean at the World Bank, says Brazil has in the past 15 years introduced three things that have allowed it to integrate safely with global capital markets: a significant strengthening of the central bank, a more flexible foreign exchange system and the development of local-currency debt markets. Early this decade, Brazil enjoyed an export boom born of surging global demand for its commodity and manufactured exports. Just as that demand began to lessen over the past two years, domestic demand has taken over. A decade of economic stability has resulted in job creation and cheaper credit, while well-targeted social policies have brought millions of the poor into the consumer market. “Things have got much better,” says Ernani Landi, who runs a fruit stall at a street market. “Our volume here has gone up a lot.” Even with foreign investors leaving Brazil’s stock market in droves to cover losses elsewhere – they have pulled out a net R$17.2bn ($9.3bn, €6.4bn, £5bn) this year – the country has maintained foreign reserves in excess of $200bn, enough to help it weather the storm. But just as Brazil has contributed to its own luck, it might also be storing up trouble. As inflation has crept up in recent months, keeping it under control has been left to the central bank. The role of fiscal policy, which continues to be highly expansionary, has been ignored. “The government doesn’t see public spending as a factor in inflation,” says Sérgio Vale, economist at MB Associados, a São Paulo consultancy. “It sees it as a contributor to growth.” Mr de la Torre says Brazil has been skilful in manoeuvring with public sector spending well above the regional average. But such high spending is “tempting bad things”. He warns: “If Brazil were to lose control of fiscal policy, it could end up undermining monetary policy. In the end, long-term inflation expectations are determined by fiscal policy, not monetary policy.” This is one in a series on the global ramifications of the financial crisis