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Javier E

How Brazil's China-Driven Commodities Boom Went Bust - WSJ - 0 views

  • If the biggest economic story this century was China’s rise, Brazil was uniquely poised to benefit from it. Rich in iron ore, soybeans and beef, not to mention oil, Brazil was positioned as a supplier of many things China needed. Its annual trade with China, only around $2 billion in 2000, soared to $83 billion in 2013. China supplanted the U.S. as Brazil’s largest trading partner.
  • Brazil fell under what some economists call the “resource curse,” a theory describing how countries with abundant natural resources sometimes do worse than countries without them. The idea is that the money from commodity sales can lead to overvalued currencies and shortsighted policy-making, leaving such countries badly exposed when the resource boom finally ends.
  • “Unfortunately, the history is that commodity-dependent economies do not catch up with the U.S.,” said Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management. “Not just oil producers. More countries end up being poorer, compared with the U.S., after they find a commodity than catch up.” Using data going back to 1800, he said commodity-dependent economies typically grow for a decade, then spend as long as two decades wallowing or slipping back.
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  • Buoyed by China trade, nationalist-minded politicians launched a foreign policy meant to reduce the role of the U.S. in Latin America. Brazil blocked a U.S. free-trade initiative for the Americas. They teamed with Venezuela to create a regional security council to supplant one that included the U.S. The foreign minister worked from an office with a huge map of the world upside down, offering the message that the era of emerging markets was at hand. But the world wasn’t upside down. While Brazil tied itself more closely to anti-American governments like Venezuela, Argentina and Iran, some regional neighbors—Chile, Colombia and Peru—went around Brazil and cut individual free-trade deals with the U.S.
  • Anticipating commodity sales, the government spent increasingly heavily. Government banks supplied Brazilians with easy credit. Brazil subsidized energy bills, issued cheap loans to big companies with government ties and built stadiums to host global events such as the 2014 World Cup and the 2016 Olympics.
  • Meantime, Brazil produced far less oil than predicted. Production actually shrank in some years, as Petróleo Brasileiro SA, PBR 12.80 % known as Petrobras, struggled with the enormous task of developing oil fields in extremely deep water.
  • Commodities’ support of the economy allowed Brazilian leaders to put off addressing certain problems that had long bedeviled the nation, such as a political system that tended to breed corruption and a bureaucracy that stymied business innovation. “Brazil became complacent because of the intoxicating effects of China trade,”
Javier E

Brazil's European Dream - 0 views

  • The news that Brazil has overtaken Britain to become the world's sixth largest economic power is being touted as a sign that that the longtime "country of the future" has finally arrived.
  • In the past 20 years, Brazil has become well known for turning crisis situations into geopolitical opportunities, becoming a leading voice in international forums devoted to AIDS, poverty, and even the environment. And now, it is doing it again with a challenge that Brazilians understand all too well: a debt crisis.
  • The IMF contributions stem from Rousseff's intention to maintain a tradition that began under her predecessor, President Luiz Inácio Lula da Silva, of using foreign assistance as a means to strengthen Brazil's international reputation and influence. Yet another example is Brazil's annual contributions to the World Bank, which have averaged $253 million from 2004 to 2009. Brazil was the first nation to contribute -- $ 55 million -- to the World Bank's Haitian Reconstruction Fund. From 2003-2007, Brazil also gave approximately $340 million to fund the U.N.'s operations. Lula also increased Brazil's contribution to the U.N.'s World Food Program from $ 1 million in 2009 to $ 27 million in 2011.
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  • in 1998, it was the Brazilian government, under President Fernando H. Cardoso, that was running to the IMF for assistance. Brazil was trying to recover from a capital flight of roughly $30 billion dollars, triggered by a lack of foreign investor confidence due to exorbitant debt and recession. To help quell investor speculation that Brazil would default (like Russia did months earlier), the IMF provided a bailout package of $41 billion on the condition that Cardoso prune government expenditures by 20 percent and reform the pension system.
  • in 2001, after a steep decline in foreign investment, currency depreciation, and a debt crisis in neighboring Argentina, Brazil essentially begged the IMF to help avoid a default on its external debt. This time the government received $15 billion in exchange for reducing federal expenditures and maintaining a primary budget surplus of approximately 3.75 percent through 2005.
  • Rousseff also wants an expanded role for Brazil within the IMF, along with the other BRICS, mainly through increased quota shares and voting rights. She has joined her colleagues from China, India, Russia, and South Africa in emphasizing that the IMF needs to recognize the importance of the world's largest emerging economies
  • Rousseff's European strategy is a smart move. By providing financial support in time of need, Brazil can strengthen its partnership and economic relationship with several European countries, as well as with the IMF. And by lending a hand, Rousseff may be able to garner more European support as she strives to boost Brazil's influence within the U.N. system and the IMF. Through these calculated endeavors, Rousseff can signal that Brazil isn't just arriving on the international scene, it's here to stay.
Javier E

Is the U.S. ready for Brazil's latest new beginning? - 0 views

  • This new G9 is the core of the too big and unwieldy G20. It is the United States, China, Japan, Germany, France, the U.K., India, Brazil, and Russia. The countries whose combined economic, political, military, demographic, regional and global strengths set them apart from all others. The EU doesn't belong because it doesn't really have a coherent foreign policy. The other members of the G20 are only invited to show up at the meetings because the world is too embarrassed to ask them to stay home.)
  • Shannon recognizes that he is the U.S.'s first ambassador to Brazil for a new era -- one in which Brazil is no longer principally seen by the United States as a regional power but is instead acknowledged as a major global actor, one in which the U.S.'s relationship with Brazil is no longer the natural axis around which the hemisphere turns and that new axes, such as that between Brazil and China, its number one trade and investment partner, may become even more important. Work on a big Brazil-EU trade deal might -- combined with the United States' limited bandwidth due to domestic and other foreign concerns -- have a similar effect of reducing  U.S. influence on the other big player in the Americas.
  • many in the United States have yet to come to view Brazil as we do, say, countries like China, India or France... where we expect to have differences, some major, and to nonetheless continuing to work on progress where we can find it.
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  • Brazil deserves to be broken out of the Latin policy ghetto and, just as the United States has a China policy or Russia policy or India policy, perhaps it is time we really developed an independent, sufficiently complex and flexible, forward-looking, globally oriented, not-for-or-by-beginners Brazil policy.
Javier E

Insight-Batista's Brazilian Empire Was Sunk by More Than Hubris - NYTimes.com - 0 views

  • things have gotten worse for Batista. Hit by mounting debt, a series of project delays and a crisis of confidence, his six publicly listed companies have suffered one of the most spectacular corporate meltdowns in recent history.
  • He pumped billions into the group's companies even as share prices plunged by as much as 90 percent.
  • His own fortune - the world's seventh-biggest last year, according to Forbes - has declined by more than $25 billion over the past 18 months.
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  • His empire also fell victim to the sudden end of both the global commodities boom and a wild exuberance for emerging markets - two forces that attracted investors to Batista's vision.
  • A former Brazilian finance minister, a former energy minister and a former chief justice of Brazil's supreme court joined the OGX board, bolstering the credibility of the polyglot, European-educated "Brazilianaire".
  • When Batista raised $4.11 billion in OGX's initial public offering in June 2008, interest in Brazil was feverish. Petrobras had just made giant offshore oil discoveries and Brazil was expected to become one of the world's top five oil producers by 2020.
  • Record demand from China drove up the price of Brazilian soybeans, iron ore, coffee, sugar and other commodities. Oil rose to an all-time high. EBX had also just sold most of its first listed company, iron ore producer MMX Mineração e Metálicos SA, to Anglo American Plc for $6.65 billion, enriching Batista and his investors.
  • A lot of the people who invested with Batista were not fools, and his rise and fall has followed that of Brazil.
  • DeGolyer & MacNaughton (D&G), a Dallas-based certification company, estimated OGX's potential resources at 10.8 billion barrels of oil and natural gas equivalent. That would have been enough - if OGX could figure out how to get it out of the ground - to supply all U.S. oil needs for more than a year and a half.
  • OGX estimated it would produce 1.4 million barrels a day by 2019, equivalent to 70 percent of Brazil's output, or about half of the output of Venezuela, a founding member of OPEC.
  • Already Brazil's richest man, Batista bragged he would surpass Bill Gates, Warren Buffett and Mexico's Carlos Slim to become the world's wealthiest person. Today he does not even make Forbes' top 100 list.
  • The consequences of Tubarão Azul's failure quickly spread because of the close links between EBX Group companies. EBX shipbuilder OSX Brazil SA was formed to build and lease a fleet of offshore oil vessels for OGX. Power producer MPX Energia SA is developing gas fields with OGX in Brazil's northeast. Port operator LLX Logística SA is home to OSX's shipyard, a place to store and process OGX oil and to ship Anglo American's iron ore.
  • Batista may also have been hurt by Brazil's efforts to help his and other companies weather the 2008 U.S. financial crisis and the world economic slowdown that followed. As Brazilian stocks, currency and bonds plunged, EBX stocks briefly fell to levels that were only broken this year.
  • EBX was one of the main beneficiaries of cheap capital that Brazil's government pumped into the economy to fight the downturn.
  • In Batista, the government was pursuing its then-fashionable strategy of creating "national champions" while making up for delays in its own infrastructure projects. It encouraged Batista to speed up just as Brazil's boom was about to end.
  • Batista and Brazil, though, have struggled since. As China slows, commodity prices are falling. In the last year Brazil's Bovespa stock index was the worst performer among the world's 28 largest indexes and the only one to fall in the period.
Javier E

Brazil's Balancing Act - 0 views

  • A recent issue of the bimonthly Estudos Avançados, a journal associated with the University of São Paulo, sheds light upon the assumptions Brazil brings to the FTAA negotiating table and highlights the lively debate among Brazil's business community, government, and civil society over the merits of the regional trade pact.
  • the Catholic Church and organized labor groups in Brazil have been the most vocal in their opposition to the agreement; they cite loss of sovereignty and fear that Latin American countries will become subordinate to the interests of the United States. Moreover, some industries in Brazil -- such as the chemicals, electronics, and capital-goods sectors -- also worry that the FTAA could be a losing proposition.
  • most of the Brazilian business community prefers to forge ahead with the agreement rather than risk losing out on increased commerce in the Americas. Oliveira warns that if Brazil backs out of the negotiations, the United States will simply negotiate bilateral treaties throughout the region, which could pare Brazilian exports and divert foreign investment to other markets. While the far-left wing of the Lula government continues to fight the treaty, Oliveira believes that Lula and the moderates in his party understand that Brazil would pay a high price for isolation.
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  • a contrasting perspective, arguing that Brazil has much more to lose through the FTAA than it has to gain, and that the United States would be the treaty's primary beneficiary. In particular, Nogueira believes that Brazilian industries are unprepared to take on North American producers. High domestic interest rates, poor infrastructure, and excessive taxation leave Brazil's businesses at a disadvantage
Javier E

N.S.A. Said to Have Spied on Leaders of Brazil and Mexico - NYTimes.com - 0 views

  • a document dated June 2012 shows that Mexican President Enrique Pena Nieto's emails were being read. The document's date is a month before Pena Nieto was elected. The document on which Greenwald based the report includes communications from Pena Nieto indicating who he would like to name to some government posts among other information.
  • As for Brazil's leader, the June 2012 document "doesn't include any of Dilma's specific intercepted messages, the way it does for Nieto," Greenwald told The Associated Press in an email. "But it is clear in several ways that her communications were intercepted, including the use of DNI Presenter, which is a program used by NSA to open and read emails and online chats."
  • In July, Greenwald co-wrote articles in O Globo that said documents leaked by Snowden indicate Brazil was the largest target in Latin America for the NSA program, which collected data on billions of emails and calls flowing through Brazil.
Javier E

Global Climate Pact Gains Momentum as China, U.S. and Brazil Detail Plans - The New Yor... - 0 views

  • in the joint announcement by Brazil and the United States, the two nations committed to increasing the use of wind, solar and geothermal energy to make up 20 percent of each country’s electricity production by 2030, which would double power generation from renewable sources in Brazil and triple it in the United States. Brazil also pledged to restore about 30 million acres of Amazon rain forest, an area about the size of Pennsylvania.
  • Money is another major obstacle. In 2009, Secretary of State Hillary Rodham Clinton pledged that by 2020, developed economies would send $100 billion annually, from both public and private sources, to developing economies to help them adapt to the ravages of climate change. This year, the United Nations has sought to establish a $10 billion “Green Climate Fund” to help begin that fund-raising effort.Although Mr. Obama has pledged $3 billion — more than any other nation has offered — Republicans in Congress have blocked efforts to appropriate the money.Climate policy experts say that without the money from rich countries, developing economies will not be able to follow through on their pledges.
Javier E

Eduardo Galeano Disavows His Book 'The Open Veins' - NYTimes.com - 0 views

  • For more than 40 years, Eduardo Galeano’s “The Open Veins of Latin America” has been the canonical anti-colonialist, anti-capitalist and anti-American text in that region
  • now Mr. Galeano, a 73-year-old Uruguayan writer, has disavowed the book, saying that he was not qualified to tackle the subject and that it was badly written. Predictably, his remarks have set off a vigorous regional debate, with the right doing some “we told you so” gloating, and the left clinging to a dogged defensiveness.
  •  ‘Open Veins’ tried to be a book of political economy, but I didn’t yet have the necessary training or preparation,” Mr. Galeano said last month while answering questions at a book fair in Brazil, where he was being honored on the 43rd anniversary of the book’s publication. He added: “I wouldn’t be capable of reading this book again; I’d keel over. For me, this prose of the traditional left is extremely leaden, and my physique can’t tolerate it
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  • “If I were teaching this in a course,” said Merilee Grindle, president of the Latin American Studies Association and director of the David Rockefeller Center for Latin American Studies at Harvard, “I would take his comments, add them in and use them to generate a far more interesting discussion about how we see and interpret events at different points in time.” And that seems to be exactly what many professors plan to do.
  • “Open Veins” has been translated into more than a dozen languages and has sold more than a million copies. In its heyday, its influence extended throughout what was then called the third world, including Africa and Asia, until the economic rise of China and India and Brazil seemed to undercut parts of its thesis.In the United States, “Open Veins” has been widely taught on university campuses since the 1970s, in courses ranging from history and anthropology to economics and geography. But Mr. Galeano’s unexpected takedown of his own work has left scholars wondering how to deal with the book in class.
  • “Reality has changed a lot, and I have changed a lot,” he said in Brazil, adding: “Reality is much more complex precisely because the human condition is diverse. Some political sectors close to me thought such diversity was a heresy. Even today, there are some survivors of this type who think that all diversity is a threat. Fortunately, it is not.”
  • In the mid-1990s, three advocates of free-market policies — the Colombian writer and diplomat Plinio Apuleyo Mendoza, the exiled Cuban author Carlos Alberto Montaner and the Peruvian journalist and author Álvaro Vargas Llosa — reacted to Mr. Galeano with a polemic of their own, “Guide to the Perfect Latin American Idiot.” They dismissed “Open Veins” as “the idiot’s bible,” and reduced its thesis to a single sentence: “We’re poor; it’s their fault.”
  • Mr. Montaner responded to Mr. Galeano’s recent remarks with a blog post titled “Galeano Corrects Himself and the Idiots Lose Their Bible.” In Brazil, Rodrigo Constantino, the author of “The Caviar Left,” took an even harsher tone, blaming Mr. Galeano’s analysis and prescription for many of Latin America’s ills. “He should feel really guilty for the damage he caused,”
Javier E

Brazil Vote Highlights a Rift Linked to Economics - NYTimes.com - 0 views

  • “We’re emerging from an election that has revealed a rift between economic classes,” said Murillo de Aragão, the president of Arko Advice, a political consulting firm in Brasília. “The level of tension is remarkably high, accentuating a loss of confidence in the president among big economic interests.”
  • few changes are expected in the popular antipoverty programs that have shielded poorer Brazilians from an economic slowdown, with the unemployment rate remaining low even as the economy went into recession this year.
  • But Ms. Rousseff has signaled other changes, including the appointment of a new finance minister. That could open the way for a shift away from policies that have created ire in Brazil’s business establishment, like price controls on fuel in a bid to keep inflation from accelerating.
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  • In addition to the class tension, the election also exposed geographic fissures, reflected by the strong showing of the centrist challenger Mr. Neves in São Paulo and states in southern Brazil, compared with Ms. Rousseff’s sweep of states in the north and northeast, where recipients of social welfare programs broadly backed the incumbent.
Javier E

Brazil, Fortune and Fate Turn on Billionaire - NYTimes.com - 0 views

  • After years of economic expansion, the South American nation has begun to sputter. Inflation has become a major concern. Brazil’s stock market index has declined about 23 percent this year, the most of any large country. This month, Standard & Poor’s cut its outlook on Brazil’s credit rating to negative, citing slowing growth and weakening finances.
  • Mr. Batista’s conglomerate, as an emblem of the nation’s industrial mettle, ranked among the government priorities now being questioned, receiving more than $4 billion in loans and investments from the national development bank.
  • authorities channeled huge resources of the state to projects controlled by tycoons.
Javier E

Brazil's Red-Scare Nostalgia - NYTimes.com - 0 views

  • According to a recent poll by Datafolha, more Brazilians identify with right-wing ideas, like looser gun restrictions, than they did last year. Although 58 percent of Brazilians believe that poverty relates to a lack of opportunities, 37 percent insist that laziness is the main cause of it. This was a major point of debate during the election: One side argued for meritocracy and less government aid; the other, for more public spending to reduce inequality.
  • Corruption is not what the right wing fears most. Just as in the ’60s, the Brazilian middle and upper classes are intensely afraid of the Communist threat.
  • The truth is that Ms. Rousseff’s Workers Party has been in power for more than 11 years and has so far failed to establish even a hint of the dreaded dictatorship of the proletariat. On the contrary: The once radical party has come to look increasingly centrist, adopting many of the practices of its neoliberal rivals. It has employed orthodox economic policies in order to maintain market stability; it hasn’t nationalized any assets but rather favored the privatization of ports, highways and airports; and Ms. Rousseff’s new ministers include an ally of agribusiness and nemesis of environmentalists, Katia Abreu, as agriculture minister, and a fiscally conservative banker, Joaquim Levy, as finance minister. This year, the profits of Brazilian private banks increased 26.9 percent. According to the “Top 1,000 World Banks” survey, Brazil is ranked seventh in banking profits.
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  • In spite of that, lots of people keep on fearing the Communist boogeymen and are ready to take action on this matter, either through street rallies, pleas to the army, petitions to the United States or even by moving out of the country. “Brazilian people are feeling hopeless,” said an actor at an event a while ago. “Every day I see people wanting to move to Miami.”
mikecoons

Democracy to the rescue? | The Economist - 0 views

  • Thousands of middle-class Brazilians drowned her out by banging pots and pans, a traditional way to show dissent in neighbouring countries.
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    This article is about democracy in Brazil. The population showed dissatisfaction with their government through protests.
mikecoons

Democracy in Latin America is on the defensive | World | DW.COM | 05.09.2016 - 0 views

  • In Latin America, support and esteem for democracy have fallen to a historic low. The trend is most pronounced in Brazil, where President Dilma Rousseff was removed from office last week.
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    This article is about democracy in Latin America, and how it is on the defensive. It focuses on Brazil, but it is related to my topic of democracy in Antigua and Barbuda.
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