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

To: Hawkmoon who wrote (70338)	1/14/2011 3:43:47 AM
From: elmatador	1 Recommendation Respond to of 218084

Inflation root cause is the 2008 finance crisis. When crisis hit, trade finance was cut abruptly. Exports ground to a halt as Letter of Credits were not issued. Faced with prospects of slowing growth, China and Brazil put in place stimulus plans. I can explain Brazil's case: In Brazil case it kept the stimulus (low taxes in some goods cars and construction materials plus lower interest rates) longer than it was advisable. That because 2010 was an election year and economy was that elected Lula's successor. When international capital pulled money out of Brazil, it was just to cover holes elsewhere. It was not the past 'flight to quality'. The economic authorities of Brazil were schooled on these sudden pullouts of capital that in the past wrecked havoc with the economy. Brazil's economy is good enough for 4.5 to 5% GDP growth. Once it shoot up to 7.5 to 8% you have demand inflation. Capital cost in Brazil has always held back economy. Once crisis hit Brazil lower interest rates. With low interest rates, capital cost low economy shoot up.