Well you know Bobby... Warren does give good lunch to his shareholders each year. I think it is free though I don't own a share of the world's most expensive stock I can't say for sure. Shouldn't you get a free lunch if you want to hold a $66 K share certificate?
I do think that G. Shilling is good on the nuts and bolts of Deflation and, also, on the historiagraphy (sp) of the Asian crisis.
An article today in the Times that goes into what is at risk in Brazil with the human consequences. Actually, beyond the news I know some old Bralilian hands who state and have stated for the last ten years.... that the possibility of massive civl strife in Brazil is a certainty and that all you need is a good monetary contraction to tip the country off the edge.
An excerpt from the article posted below..."Brazil's budget deficit, at 7.5 percent of gross national product, and its current account deficit, at $35 billion, threaten to swell further with the steep interest increases of recent weeks, despite announcements of drastic budget cuts.
Over the next two months, some $80 billion in Brazilian debt will come due. According to Merrill Lynch, U.S. banks had $27.2 billion at stake in Brazil at the end of March. In Russia they had only $6.8 billion tied up. Moody's and Standard & Poor's downgraded Brazil this month."
Diana Schemo is one of the bright writers at the Times.
For Private Use Only
(C) NY Times
By DIANA JEAN SCHEMO
AO PAULO, Brazil -- Until recently it seemed that Augusta Aparecida Pettinari's fortunes and the country's economic reform plan ran on parallel tracks, like twin locomotives taking the young receptionist and the modern currency toward a steadily more promising future.
As once-rampant inflation was brought down to negligible levels, Ms. Pettinari joined an emerging class of consumers, whose salaries for the first time maintained their purchasing power from one paycheck to the next. She smiles now as she remembers buying appliances, going to the movies and writing a check for a new dress.
"I was able to have a social life," she said.
The man Brazilians elected president four years ago in gratitude for taming inflation was Fernando Henrique Cardoso, the former finance minister. To back the new currency that gave his Real Plan its name, there was an array of proposed structural changes to attract foreign investment, privatize state industries and reform social security, the Civil Service and tax systems.
But now, two weeks before the Oct. 4 election, in which Cardoso is to seek another term in office, the financial tornado that has devastated parts of Asia and Russia has begun spinning toward Brazil.
In the last month, nearly $1 billion a day in foreign reserves has been flying out of the country, while the black-market rate for dollars has veered from 2 cents above the official rate to more than 30 cents.
Over the last seven trading days, the stock market has bounced from 15.8 percent losses one day to 18.7 percent gains the next, and then back down again last week after Alan Greenspan, the U.S. Federal Reserve Board chairman, ruled out lowering interest rates. The country has doubled the ceiling on interbank loan rates, to 49.75 percent from 24.75 percent.
And suddenly the train that Ms. Pettinari once thought was carrying her steadily upward toward prosperity feels more like a roller coaster. Come Oct. 5, the day after the election, the now-unemployed receptionist confesses, she has no notion at all where this wild ride will take her.
"If we stay along the same lines we've been on, we'll manage," said Ms. Pettinari, 28. Then she recalled her country's last economic crisis in 1990, when Fernando Collor de Mello began his presidency by freezing all personal bank accounts and allowing Brazilians access to only $50 each. "But who really knows what lunacy is coming?"
Brazil, the world's ninth-largest economy and the pace-setter for Latin America, is once again in danger of collapse, this time crippled by growing current account and fiscal deficits.
While Brazil does not have the threat of political instability or nuclear weaponry that makes a breakdown in Russia so fearsome, the opening of its markets has drawn billions of dollars in U.S. investment, and its fall would bring economic turbulence dangerously close to U.S. shores.
Brazil's budget deficit, at 7.5 percent of gross national product, and its current account deficit, at $35 billion, threaten to swell further with the steep interest increases of recent weeks, despite announcements of drastic budget cuts.
Over the next two months, some $80 billion in Brazilian debt will come due. According to Merrill Lynch, U.S. banks had $27.2 billion at stake in Brazil at the end of March. In Russia they had only $6.8 billion tied up. Moody's and Standard & Poor's downgraded Brazil this month.
For now, voters are holding fast to Cardoso, as the most responsible figure to face the looming crisis. In the most recent poll, 49 percent of those who responded supported him, a 27-point advantage over Luis Inacio Lula da Silva, a former autoworkers union president and three-time presidential candidate of the leftist Worker's Party.
"Lula would be very strong on social issues, but a president isn't only that," said Daniella Cristina Turri, a 20-year-old office worker who has been trying to find work for four months. "The most important thing is the economy. It's the basis for everything else."
Already months behind on her night school tuition, however, Ms. Turri is no longer sure that she will vote for Cardoso.
"Everything's getting worse for us," she said. "There are times when you think about leaving the country, because it doesn't give you any way to make a living." Unemployment in Sao Paulo, the financial and industrial heart of Brazil, is 19 percent, and is expected to worsen.
Though he is still well liked on Wall Street, Cardoso has lost credibility as investors battered by losses in Asia and Russia weigh his failure to deliver needed reforms. On his first presidential visit to the United States, in April 1995, Cardoso visited New York before Washington, underscoring the importance of investment to his country's future.
The president won fans in world financial capitals by removing exchange controls, opening markets and selling off state industries. Last year, with $17 billion coming in, Brazil became the world's third-largest market for direct foreign investment, following the United States and China.
But Cardoso proved less successful at getting the government to live by the same fiscal discipline forced on middle-class Brazilians. Politically costly overhauls were put off, as with tax reform, or fumbled, as with social security reform, or passed but not carried out, as with civil service reform. An assembly line of privatizations, however, helped offset soaring government costs.
Cardoso contends that Brazil's vulnerability is not his or the country's doing, but the product of outside forces, and he is calling for a new international monetary system for the global era.
The market reacts to every sign of outside backing for Brazil, in the form of reduced U.S. interest rates, a bailout by the International Monetary Fund, or an IMF line of credit. But so far, Brazil has not formally requested an IMF bailout and Cardoso is loath to embrace IMF conditions before election day.
The government had already announced cutbacks to raise a primary account surplus of 0.87 percent, but reports here say the IMF would demand a primary surplus closer to 3 percent next year as the price of its bailout. The primary account covers revenues less expenses, without interest on debts.
These days, Cardoso is walking a delicate line to election day, nudged by his politician's instincts that suggest that doomsday speeches about tax increases, unemployment and sacrifice are not the stuff of landslides, and by an international investment community clamoring for proof that Brazil will get its fiscal house in order soon.
"The only positive byproduct for Brazil is that he'll have to do these fiscal reforms," said Joel Korn, president of the American Chamber of Commerce in Rio de Janeiro.
Brazil's most likely initial steps will combine tax increases, import restrictions and cost-cutting measures. Investors are expecting Cardoso to push through reforms before the lame duck Congress dissolves at year's end.
The president has ruled out a devaluation, which would undoubtedly reignite inflation, but it is by no means certain, investment analysts say, that the country will not be forced into one. In recent days, the stream of reserves leaving Brazil has slowed to under $500 million a day, and the difference between official and black-market exchange rates has narrowed.
More than ever, it appears that Cardoso, who spent considerable time and political capital pushing a constitutional amendment through Congress allowing presidents to run for re-election, will win on the first round. But he has never stood closer to seeing his legacy crumble in his hands. His inauguration is expected to be not so much a coronation, as his rivals once feared, but the threshold of a new era of sacrifice.
Even those struggling through a shrinking economy, though, say they would prefer sacrifice over inflation. Ms. Pettinari has been watching the sandwich boards with job offerings on Barao de Parana Piacaba street since April, when she lost her last job.
She got married five months ago, but both she and her husband, who had been a bill-collector, are out of work, and have to live apart, he with his parents, she with hers.
"If it weren't for them, I'd go hungry," she said.
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