BRIC+ News & comments

Discussion in 'Business & Economics' started by Billy T, Aug 10, 2008.

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Wiki has long articles on recent news items too. Here is start of one on China:

    "The economy of the People's Republic of China is the second largest in the world after the U.S with a GDP of $7.1 trillion (2007) when measured on a purchasing power parity (PPP) basis. It is the third largest in the world after the U.S and Japan with a nominal GDP of US$3.5 trillion (2007) when measured in exchange-rate terms.[5] China has been the fastest-growing major nation for the past quarter of a century with an average annual GDP growth rate above 10% ..."

    Full article, with lots of sublinks at:'s_Republic_of_China#cite_note-5
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    It is just a rumor, but Yoon Jeung-hyun may go down in history as the man who started the run on the dollar. He replaces South Korea's just sacked Minister of “Strategy and Finances.” He is known to think that S. Korea should not hold so many US Treasury bonds.

    Obviously now that Treasury bonds are with historically low interest rates (highest sales values) it would be a good time for S. Korea to unload its holdings of Treasuries. That will drive the price down or force Ben Bernanke to buy more than he wants to. - Increasing the “printing press dollars” in circulation, with little stimulus effect in the USA. Either way it is bad for the dollar as both factors undermine confidence in the dollar.

    But, again it is only a rumor that S. Korea is about to dump it Treasuries.
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  5. S.A.M. uniquely dreadful Valued Senior Member

    Not anymore
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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Brazil (and some on China):

    There are certain advantages, in times like the present to a system where government owns and controls the basics elements of the economy, if the invisible hand of Adam Smyth is free enough to prevent the mistakes of a state planned economy. For example, much of the Chinese banking and basic infrastructure industry is market oriented but government owned (at least > 50% owned for full control).

    Brazil’s largest company, Petrobras, is more than 50% owned by the government and has just decided to increase investments by 56% more than planed a month ago.
    See full details (in English) at:
    Brazil’s Internal development lending bank (can get funds from the government), BNDES, has just received authority to aid companies with 100 billion Reais (about 45billion dollars) more than its original budget. The receiving companies will have restraints that include making it harder for them to fire workers. Also certain taxes on commerce and industry are being suspended. Brazil has also just cut the basic interest rate from 13.75 to 12.75% yet still has the highest real rate in the world (~7.8% after inflation). Unlike the US, which has now essentially zero rate and thus no longer any monetary stimulus tools, Brazil has a strong monetary tool left if more stimulus is needed – no danger of recession in Brazil as GDP will be about +3% in 2009.*

    As I mentioned in some prior posts, Brazil’s lower (mainly rural) classes have had their lives greatly improved by “Bolsa Familia”- a program that gives money to the poor for each child who is under 18 and stays in school and gets his free vaccinations. (This has been a fantastic success; all agree and nearly pays for itself even in the short term as the grants are small, but significant to the poor, via the increased economic activity induced** and the multiplier effect on it.)

    Well today's newspaper tells that one collector for the last ten months, also called Billy, never when to get his vaccinations, so a public heath worker called on the family. It turned out that Billy was the family cat. Then the entire tiny village getting Bolas Familia funds (couple of hundred collectors) had to defend their claims. It turned out Billy was the only one ineligible. I guess it is back to mice and table scraps for Billy. – no more canned tuna!

    *Brazil has also learned from the US's under regulation mistakes: "The Brazilian Securities Commission, or CVM, has ordered eleven companies to republish their third quarter financial statements in order to provide more details on derivatives operations." Read more at:

    **Part of the reason why Brazil has had to keep interest rates so high (to control inflation) is that Bolas Familia has made commercial demand increase so rapidly. – People who were cooking on wood stoves now have a bottled gas stove and a TV, clothes with few patches***, etc. for the first time in their lives. Brazil’s President Lula has really made a difference for them. – He no doubt remembers well being one of them. – Lula got his first shoes at age 12. Etc.

    ***No car yet, but many are thinking of selling their horse and buying a motor bike now that they can afford a little gas for it each week.
    Last edited by a moderator: Jan 24, 2009
  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member


    "...There are already 100 million middle class Chinese, and by 2010, that number is predicted to double. Chinese consumption is estimated to increase by 18 percent a year over the next decade. {Billy T insert: In 2008 it increased by 22%, but is possilby growing by only 16% in 2009} Technologically savvy, the avaricious young shoppers in this rising tide are even making purchasing decisions for their parents. Unlike their parents, this generation has known only relative stability and economic prosperity. ...

    There are 400 million mobile phone users in China, and on average, they change their mobile phone every 3 to 6 months. Nowadays, Chinese consumers have 900 choices of mobile phone types, while there are only 80 in America. {Billy T: at least one Chinese model sprays perfume from a refillable reservor, when desired.} Mobile phone advertisements can be seen all around China. []

    Many companies, such as Adidas, have products specially designed for the Chinese market. Adidas just set up their Asian design and development center in Shanghai to cater to Asian consumers. China's youth now pay more attention to the brands they buy. Haagen-Dazs is regarded as the top brand of ice cream in China and its shops are always packed with families, but very few buy pints to take home. Starbucks, which has 66 outlets in Shanghai alone, projects an image of being a fashionable place for trendsetters to meet.

    According to a survey by a US investment bank, China accounted for only one percent of consumers of top grade {hand} bags worldwide five years ago. This figure has increased to 12 percent, after top consumers the United States and Japan. It is predicted that in the coming 10 years, China will become the number one consumer of luxury goods. ..."

    which is basically a reprint of a U.S. News & World Report article published in late 2006, so some facts may have changed* but the trend for China to domimant global buying of luxury goods is stronger than ever with recessions** in the West. As I have noted earlier:
    Some Chinese are much more equal than others.
    *E.g. Starbucks may have closed some of the 66 stores in Shanghai, etc.

    ** Yesterday 75,000 more job reductions were announced by US companies. (a one day record)
    Last edited by a moderator: Jan 27, 2009
  9. 2inquisitive The Devil is in the details Registered Senior Member

    More recent, Billy:
    Here's more, from a Latin American prospective:
  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    To 2inqusitive

    There is a great deal of pessimistic projection, especially in your second article about Latin American economies. I have never said much about L.A. as a whole, but agree Brazil’s economy will slightly contract as the global economy slows, but not fall into recession. Brazil will still have positive GDP growth in 2009 and the foreseeable future. (Most projections around 2% but some are 3% projections for GDP growth, but the government’s 4% is not expected by independent estimates.) Here are some FACTS from today’s newspaper (not projections or estimates by some writer of your quotes):

    2008 closed with primary (interest payments not included) government income surplus of 4.00% percent of GDP. (The goal was 3.8%) Brazil’s public debt as percent of GDP at end of 2008 was 37% vs. 42% at end of 2007. (US’s is well over 50% AND RAPIDLY CLIMBING as tax collections and GDP fall and expenditure rise.) Not mentioned in today’s paper, but recall Brazil is a net creditor nation and USA is world’s greatest debtor nation. Brazil has a basic interest rate of 12.75% vs. US’s essentially zero interest rate, so there is lots of ability for monetary stimulation by Brazil’s “FED” if that should be required.

    2008’s FDI into Brazil was 45.060 billion US dollars and the profits etc transferred to the exterior from Brazil were $33.875 billion. (In 2006 these were 18.822 & 16.369 respectively – Brazil still very rapid growing.)

    The State of Sao Paulo (which has about half of all of Brazil’s non-tourist economy) lost 130,000 jobs in December, but for the full year 2008, only 7,000 jobs were lost. During the last quarter of 2008, 174,000 industrial jobs were lost.

    Billy T notes: Employment in Brazil is also contracting rapidly now, but even on a per capita basis much less rapidly than in the US.) A large part of the December job losses were related to the near collapse of auto sales as credit for buying cars became very tight and there were strikes with street parade protests by auto workers when some workers were fired. I strongly doubt that 650,000 jobs were lost in December in Brazil, but if it is true, a large part is a reflection that American and European Tourist cannot afford to vacation in Brazil now. I.e. bell hops in hotels, waiters in restaurants etc. are being fired but even with the dramatic drop in December’s car production, 3 million cars were made in 2008. - A record! (and more per capita than the US.)

    Agreed, industry is now contracting in Brazil (E.g. 380 of the 20,000 jobs now being terminated by Caterpillar are jobs in Brazil) but US is now losing jobs at the 600,000 / month rate.

    Here are main newly announced losses yesterday but not all will be in US as these are global companies:
    20,000 Caterpillar; 19,000 Pfizer; 8,000 Sprint Nextel; 7,000 Home depot; 7,000 ING; 6,000 Philips; 3,500 Corus; 3,400 Texas Instruments; GM 2,000 (a tiny block more). In January 2008, 15 OTHER major companies have already announced 175,000 job terminations, but small business is making most of the 600,000 job losses in the US in January.

    Petrobras will invest 111billion dollars in the development of the pre-salt layer oil by 2020 (28 billion by 2013) and is now considering building a third fertilizer factory*. Currently is producing 1.85 billion barrels/ day but this will climb to 5.7 billion / day by 2020; 3.9 of which will come from Brazilian fields. (I think these numbers include some gas, converted to oil equivalent.) Yesterday also announced new gas field in only 214 m of water, 210km SE from port of Santos. Oil will be a major income source for Brazil in the not distant future.

    China has stepped up buying of soy, at least from Brazil and US soy production has unexpectedly dropped (I think). Anyway the price per sack has climbed to US$18 from only $11, just 40 days ago.

    Only “bad economic news” in today’s paper is that the commercial balance has turned negative during the period 1 to 25 Jan08 for the first time in years. Imports (US dollars) were 8.18e6 and exports were 7.55e6. I am just guessing but probably this is in part because of the December strikes in the auto industry and the rapid rise in the price of soy had not yet been realized in exports.

    SUMMARY (a prediction): Thanks to Asian demand for food stocks, minerals and energy, Brazil will not experience the depression coming to the US and EU with increasing rapidity. IMHO, it is unlikely Brazil will even have a recession as the interal unsatisfied demand is so large - why Brazil needs the world's highest real interest rates (7.8%) to keep inflation under control. Also Brazil's "FED" has lots of room to cut interest rates, should one even threaten.
    *Not from today’s Folio de Sao Paulo newspaper but from:
    New factory is designed to produce about 1 million metric tons of fertilizer annually.
    Last edited by a moderator: Jan 27, 2009
  11. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    An added note on Brazilian oil:

    Brazil's Pre-salt oil is light and more valuable than the heavy oil it has exported for years to earn funds to buy the lighter oil it needs. Petrobras is building two refineries to process the heavier oil, one in Brazil and one in Venezuela (I forget but think they are funded and owned 60% by the country they are in.)

    Brazil's pre salt oil is huge - no one knows how much. Some estimates are that it is more than Saudi Arabia has. Every exploratory well has hit commercial deposits (19 for 19, last I heard) so Brazil has decided to adopt the Norwegian plan for commercialization (not sell concessions to companies to explore as in the past, with them ending up as owners of the oil recovered and only paying taxes etc. as income to Brazil. However the main company holding more than 50% of these concessions was PetroBras which is more than 50% owned by Brazil)

    In the Norwegian plan, a 100% state owned oil company negotiates with potential PARTNERS to develop the oil, each putting up their fraction of the cost to drill and takes same percentage ownership of the recovered oil. As the risk of a dry hole seems to be very low, Brazil is willing to drill wells with no guarantee of any oil to sell. Brazil wants to benefit from the long term increase in the price of oil as other oil fields are exhausted. (Mexico's Gulf oil field is already in decline as probably is Saudi Arabia's.) The Brazilian pre-salt oil will probably delay global "peak -oil" but do not expect oil to be cheap for long. - The pre-salt oil is deep and difficult to recover. Pertobras thinks it will cost at least $37/ barrel to produce - much more than the less than $10 / barrel that the Saudi fields have had as production cost.
    If you doubt my infro / translations from my local paper, etc. here is some just released English comment from Jim Jubak, one of he best finacial commentators, IMHO:

    "... Petrobras, the Brazilian national oil company, is steaming full speed ahead with plans to invest $174 billion through 2013 to develop its new oil finds. The recently announced capital budget is a big increase from the $112 billion in the 2008-12 plan. {The 174billion is news to me and to the local paper's financial writer who said 111billion and more slowly spent - I do not know who is correct, but probably JJ is as he notes it was 112billion in the 2008 plan.}

    The new budget also is the first to include big bucks -- about $28 billion -- to develop what are called the "pre-salt" fields, discovered in 2007 under miles of seawater, rock and salt in the South Atlantic. One, the Tupi field, holds estimated reserves of 5 billion to 8 billion barrels, and another, Iara, holds an estimated 2 billion to 4 billion. That's enough to almost double -- at the upper end of estimates -- Brazil's proven reserves of 14 billion barrels. Estimates for the ultimate size of the reserve have climbed as high as 100 billion barrels, but that estimate has more politics than geology in it.

    The company's 2009-13 budget is based on $42 a barrel for benchmark Brent crude, which recently traded at $47 a barrel for November delivery. Most of the capital budget is covered by company cash flow, and the rest seems within reach. Petrobras announced that it had already arranged $16.9 billion of the $18.1 billion in financing it needs for 2009, but it still needs to arrange $10 billion more in financing for 2010. The company projects that production will climb to 5.1 million barrels a day by 2020 from 2.2 million barrels a day in 2008.

    Still hanging over the company and its stock are unresolved talks in Brasilia about how revenue and ownership of these new fields should be divided up between Petrobras and a possible new Brazil oil company. The collapse in oil prices and the company's huge investment needs may, in that context, be a plus since limiting the cash flow at Petrobras would make it much harder for the company to raise the capital it needs. ..."
    Read more at:
    While true the options for developement of the pre-salt oil are still not "set in stone" - I am 99% sure it will be the Norwegian model which is used.
    Last edited by a moderator: Jan 27, 2009
  12. 2inquisitive The Devil is in the details Registered Senior Member

    OK, I'll make a few comments too, Billy.

    Billy T,
    Billy, writers write newspaper articles. My links were to (1) an article by Ambrose Evans-Pritchard, the International Business Editor of the Daily Telegraph in the UK, hardly an unknown. The article in the second link was by Prof. James Petras, with Global Research, a Canadian non-profit organization that is leftest oriented, with pages in Portuguese and Arabic among other languages. Who was your article written by?

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    Since when do you get to exclude interest payments on your national debt to claim a "surplus"? Fact. Brazil increased its national debt last year.
    Are you sure you understand what foreign reserves are? It is a accumulation of foreign moneys, mostly dollars, due to trading surpluses conducted in that currency. The 200 billion dollars (or at least it used to be that amount) is not a "profit", Brazil's government had to print over 400 billion Reals to distribute to the private sector to pay for their exports. So, even though the government is 'holding' 200 billion dollars, the money has already been spent through an increase in the number of Reals in circulation. Ever wonder why the real has been loosing value on the world exchanges? There is your answer, it is inflating internally within Brazil.
    I knew you would doubt the numbers

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    Well, actually other sources state 654,000 and 655,000 jobs lost. I'll see if I can come up with some quick, but creditable, links:
    The economy lost 655,000 jobs in December, the biggest fall in a decade. A 6.2 percent yearly drop in industrial output in November was the worst since 2001, and double-digit plunges in Asian countries' factory output underscore how the crisis has spread from the United States and Europe to most of the world.


    "Latin America has taken a dramatic turn and what initially was expected to be a mild deceleration is becoming a much more severe one," said Mauricio Cardenas, director of the Latin American Initiative at Washington's Brookings Institute.

    Sorry, I hit the enter key to begin a new paragraph and my post posted prematurely. I just stop for now.
    Last edited: Jan 28, 2009
  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    I will give more supporting data from the IIF in separate post but they project GDP growths for 2009 of Brazil +0.8%, global drop in GDP of -1.1% and in USA -2.1% The International Institute for(or of?) Finances is an organization (called a "Union" in my paper) of 380 banks, and widely respected. They released their data at Davos yesterday. PriceWaterhouseCooper surveyed almost all the CEOs at Davos with the question (somewhat compressed and back translated into English again.): "What is your level of confidence that your revenue will increase in 2009?" Only 13% of US CEOs were expecting their company to make as much as it did in 2008 but 33% of the Brazilian CEO expected their corporate income to grow YoY.

    Yes, I am always amazed at how much emphases is placed on the "primary" balance. It has to do with the fact that if it is not a positive percent of GDP then clearly even if the interest payment were zero the debt to GDP ratio would become worse. Almost all governments, Brazil included, have more expenses than income but based on their scheduled interest payments they can compute how positive the primary balance must be to make the debt to GDP ratio not increase. (I think that was how the 3.8% goal for primary balance was set.) Anyway Brazil closed out 2008 with a 5% DROP in the debt to GDP ratio (from 42 down to 37%). I do not have data for the US, but bet it is nearly a 5% increase in that ratio. Brazil is much healthier than the US economically.

    Yes, I know what reserves are. I posted some years ago when Brazil started to buy dollars (with locally borrowed Reais) that it was foolish to pay the high local interest to get >200 billion dollars in reserves as that is much more than Brazil's economy needs to prevent a speculative run against the Real. (Like Soares did to the BoE some years back.) What really annoyed me was the central bank would not admit that the reason they were buying dollars was to keep the Dollar stronger / Real weaker for the benefit of the high labor cost exporters, like makers of shoes, etc. They claimed it was only an effort to build reserves - to "bullet proof" Brazil. China is buying dollars for the same trade reasons. I am in general opposed to governments trying to "manage" the exchange rates - they almost always fail in the end and waste a lot of their economic resources in the failed effort. I bet this we agree on.

    I do not agree with your reason why the dollar has had some recent strength (which seem to reversing now). The main reason IMHO has little to do with the health of the developing world countries but a lot to do with the lack of credit in the rich countries. Some business in us MUST replace a broken truck or restock shelves and the only way they can now get the cash for that is to sell some of their investment, made years earlier in places like Brazil, where they may still even had a profit (due to fact that these non-US investment did increase much more rapidly for several years than US investments did.) When these non-US investments are sold they get the local currency and must sell it to get the dollars or Euros they need. This IMHO is why the main reason why ALL of the developing country currencies have fallen wrt the dollar during the last 6 or so months.

    Based on this understanding I will predict: When credit is restored in US the dollar will fall wrt to almost all of the of the developing country currencies – In Brazil’s case I will make this prediction quantitative: Just now* it takes 2.3182 R$ to buy a dollar. Recently it took 2.54R$ to buy a dollar, but the dollar has already started to fall. Before the end of 2009, I predict it will again take less than 2R$ to buy a dollar. In addition to the alternative reason I have just offered, I think part of the dollar’s strength was due to the still (foolish, MHO) belief that the dollar is a safe store of value that some Brazilians and others in developing countries have as a “hangover” from periods when their local currencies were with “run-a-way” inflation.

    If you are correct that the troubles in the US are spilling over to make even greater troubles in the developing world, then my prediction will not come true (assuming that the US economy has not improved. – I.e. the “spillover will still exist” and the dollar will continue to be strong wrt to the R$, etc.) I bet time proves my reason for the strong dollar is correct and my prediction comes true. – Let’s wait and see who has the true reason for the dollar’s recent strength.

    I did not say your 650,000 jobs lost in Brazil in December was wrong, only that that must include many non-industrial jobs, if true. In addition to the hotel bell hops, restuarant waiters, etc. not needed as US and EU tourists were "no shows" for Christmas vaccations this year. (They are tightening their belts - avoiding even distant vacations within the US & EU now.) the rapid mechanization of the sugar cane harvest is killing jobs in Brazil. and the high cost of fertilizer, etc. plus the drop in commodity prices has reduced the planting of several crops. BTW, the increase of soy from 11 to 18 dollars a sack in the last 40 days is due slightly to this as well as the increased orders from China. Also important is fact that Argentina's goververment is at war with its farmers and they have planted less and had some problems with drought. (To keep domestic food prices low the Argentina government has made new large export taxes - more stupidity by government IMHO. Some farmers have burned their crops and most are making demonstrations in the cities. Argentina is a mess, very different from Brazil.)

    *I have a free download from that in full screen mode will display 12 windows of graphs of any stocks or currency relatioships you want to track and automatically updates them evey 15 minutes or so. I keep it normally in the reduced mode as a line only about 4mm tall across the bottom of my screen. Then it shows only four, My four are The Euro, the pound the Yen and of course the Real and they flip between red and green as changes occur. My other 8 windows are stocks I am considering trading, so I do open it full screen ocasionally. I have no interest in the company but bet you may want to download it and try it also.
    Last edited by a moderator: Jan 28, 2009
  14. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    IIF projections for GDP growth in 2009 by countries (YoY just released at Davos yesterday.):

    Total world ... -1.1% (world in recession)
    India ............+5.0%
    Brazil ............+0.8%
    Mexico ..........-0.5%
    € zone ..........-2.1%
    USA .............-2.1%

    International Institute for(or of?) Finances is an organization (called a "Union" in my local paper) of 380 banks, and widely respected.
    See more of the PriceWaterhouseCooper survey reslts at:

    General POV at Davos is "2009 is lookig bad" but most are not yet predicting the depression in US and EU I have been say is now unavoidalble - it would be irreponsible for them to - but I can as few listen to me.

    Next day by edit:
    Here are the IMF's just released projections (a little more optimistic than the IIF but a big drop from thier own November 08 projections.):

    Total world ... +0.5%
    India ............+5.1%
    Brazil ............+1.8% (more than double that of the IIF)
    Mexico ..........-0.3%
    Russia............-0.7% (less than half as bad as IIF. The IMF must be expecting oil prices to rise significantly in 2009.)
    € zone ..........-2.0%
    USA .............-1.6% (Probably some of this improvement WRT IIF's is due to fact USA controls the IMF still.)
    Last edited by a moderator: Jan 29, 2009
  15. 2inquisitive The Devil is in the details Registered Senior Member

    Billy T,
    I have made no comment on the US in this 'BRIC' thread, or the dollar's recent worldwide strength. I did make a comment what foreign reserves represent. Brazil, China, Japan, Korea, etc. holding huge amounts of US dollars out of circulation increases the value of the dollar, while simultanously decreases the value of their respective currency. In fact, you make the same observation with this comment on the dollar's strength; "What really annoyed me was the central bank would not admit that the reason they were buying dollars was to keep the Dollar stronger / Real weaker for the benefit of the high labor cost exporters, like makers of shoes, etc." So why do you state you do not agree with me in the very next paragraph??
    You then come up with this line as if I had stated the strength of the dollar was due to the financial health of the US. I said no such thing. *EDIT* Sorry, I mis-read what you wrote.
    OK, when an investor in the Brazilian stock market sells a position, he removes Real from the economy. When the same investor exchanges those Reals for dollars, it adds the exact same number of Reals back into the Brazilian economy. The investor has not affected the number of Reals in circulation at all. What he has done is remove foreign investment in the Brazilian economy. Remember those foreign reserves the Brazilian government is 'holding'? The Brazilian government is holding that lost investment in the form of 'foreign reserves'. The true value of those foreign reserves evaporated with the loss of the foreign investment. It is much the same as a 'paper loss' on a stock, the Brazilian economy being synonymous with a stock.
    Billy, when credit is restored in the US, it will set off a buying spree for cheap real properties, stocks, etc. because everyone expects inflation to be the result when dollars are circulating again. As the deflated write-to-market securities the banks are holding begin to inflate again, that will also add more available credit and more money to the US economy. The wealthy that are holding cash and cash-like securities such as treasuries will also have to re-enter the stock market or buy real properties such as real estate to prevent inflation from sucking the value out of their cash. That will be a period of high inflation rates, but is much different than your hyper-inflation. Hyper-inflation is caused by a government 'running the printing presses' during an inflationary period. A government MUST shut down the printing press when inflation is getting out of control and soak up excess liquidity. Brazil did not shut down the printing presses, Zimbabwe has not shut down the printing presses, instead printing money in ever increasing denominations. Did you know you can buy a real $100,000,000,000 Zimbabwean bill for $5.99 on ebay? I am thinking of buying one so I can claim to be a multi-billionaire.

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    The bills are in the English language and are denominated in dollars.
    I saw this comment yesterday and ment to address it before my computer problem. First off, I don't know what a 'sack of soy' is. Soybeans are priced per bushel, around $9.75 per bushel yesterday when I checked the price. In late November, they were around $9.00 per bushel, both prices much below the all-time high of $13.40 per bushel during the commodity bubble last July. Soybean oil is around $.33 per pound. Soybean meal (the left-over product usually used for animal feed after the oil is crushed out) was about $3.04 per sack. Perhaps you mis-translated the Portugese paper?? You mentioned that China was presently buying more from Brazil than the US, that US production seemed to be down at present. Of course production is 'down' in the US at present, it is late winter in the US, the early crop is being harvested in Brazil.
    Of course, more evidence that the 'de-coupling theory' was bunk.

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    Last edited: Jan 29, 2009
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Sorry if I misunderstood your following statement:

    "... Brazil's government had to print over 400 billion Reals to distribute to the private sector to pay for their exports. So, even though the government is 'holding' 200 billion dollars, the money has already been spent through an increase in the number of Reals in circulation. Ever wonder why the real has been losing value on the world exchanges? There is your answer, it is inflating internally within Brazil."

    I probably should have more explicitly said (and not just implied by noting it cost much higher interest to borrow locally to buy the dollars than was earned on the US Treasury bonds) that the 400 billion distributed during the buying of the dollars were almost immediately sterilized by the issue of bonds. I.e. the Real did not weaken as you suggest wrt dollar because 400 billion more real were in circulation - they were not. They were removed by selling bonds. It was stupid, as I said to create bonds on which Brazil was paying 14+% interest to get dollars that invested into US treasuries were earning 5%.

    Now that you know that your "400 million more in circulation" was not true, perhaps you agree that the strength of the dollar (in last 6 months only) wrt Real (and almost all other currencies, except Yen) was due to two things mainly:

    (1) The residual belief of many, especially people and companies in countries where "run-a -way" inflation is only a decade or less ended, that the dollar was a safe store of value. I am amazed that this "residual belief" still exists as in the average of recent ten year holding times scales (typical bond life) buying Treasury has been a loser as far as purchasing power is concerned, even when the interest received is included.

    (2) The lack of essential credit (to stay in business or meet repayment of maturing loans that holder will not roll) has forced raising funds by selling investments that have capital gains still. - E.g. sell stocks in Brazil bought 4 or 5 years ago. Then the conversion of the local currency gained for the sale into dollars does make pressure on the local currency. See my comment following your next post to understand this is a real pressure on the local currency and not neutral as you state here:

    Again we have slightly different ideas as to what is "circulating money" In my POV, the funds in the stock, or held as reserves by central bank and applied to Treasuries, are not making pressure on the local currency. When they become demand deposits in the seller's account AND are offered for sale to buy dollars, they are making pressure on the local currency. I.e. if foreign investors were happy to continue holding their local investment (or even trading it for another) they do not affect the local currency. (But of course they did earlier when they came with their dollars and bought the local currency to invest with.)

    I.e. the more than doubling of the Real's value wrt the dollar between 2004 till mid 2008 was due to many foreigners investing in Brazil (making demand for Real). The rise in sales and commodity prices also brought dollars to Brazil. - Both together strengthened the Real, but it was the investors that more than doubled the BovSp index.

    Now that foreigners have been net sellers of stocks since the credit crunch hit in US and EU (to raise cash they cannot borrow from their own banks) this demand for Real has inverted (locally the demand is for dollars) and the Real has given up much of gains of the earlier four year period.

    I tried to say this in last post - why I predicted in it that less than 2R$ will buy a dollar again when people (and companies) needing cash in the US can once again borrow it from their local banks instead of sell stocks in Brazil.

    They could sell stocks in the US but do not (unless they need a tax loss) to raise cash; however most prefer to sell where they still have capital gain or at least much smaller loss. Today I noted that, (for the first time ever, I think) at end of 2008, with a 10 year hold of the S&P 500 Index there is a NEGATIVE return (-1.38%)! (The five year hold is -2.19%, 1 year hold is -37%, 3 month hold is -21.94%) Brazil's BovSp index is positive for almost any period of 2 years or greater. - That is why foreigners who need cash, cannot get a bank loan, are selling stocks in Brazil.
    We fully agree here, but I note that the US is in a downward and accelerating economic spiral and thus the government cannot "shut down the printing press when inflation is getting out of control." - That would just make the job lose rate accelerate and the depression deeper.

    Also and even more important is the huge holdings of dollars in foreign reserves - much larger than the ~2 trillion or so the FED will be creating from thin air before end of 2009. These dollars (may in the form of very liquid bonds) ALREADY EXIST (cannot "unprint" them). If only they return, as they surely will when inflation is 10% and increasing every month, that "modest inflation" will convert to "hyper inflation" These foreigners will not passively hold and watch their losses mount as the dollar slide down "modestly" As I stated some years ago, the hole GWB dug is just too deep - depression with significantly more than 10% annual inflation is now unavoidable.

    I would love to be wrong on this. Can you tell me any way the FED &/or Treasury can "shut down the printing press when inflation is getting out of control" without making the recession into a depression with high interest rates? Yesterday the FED reconfirmed it earlier announcement that it will be buying even long term Treasuries -IT HAS NO CHOICE,* and will continue to buy more every year as more central banks unload the dollar reserves at least by not rolling maturing bonds if not actively selling prior to maturity. S. Korea, which recently announced it will start unloading, will not lack company soon. China can choose when the dollar collapses already.

    The US economy has two stakes thru the heart already:

    (1) About 5 trillion dollars that cannot be "unprinted" in foreign hands that will return when inflation is "modest" to convert it into "hyper-inflation."

    (2) A growing need to aid states, banks, industries etc to avoid their bankruptcy and stimulate a sinking economy requiring Fed to make 1 to 2 trillion more printing press dollars annually. (With 10% or more inflation only the FED will buy Treasury paper at interest rates low enough to avoid rapid conversion of the recession into worst ever depression.)

    US and EU are headed for an unprecedented "inflating depression."

    *Treasuries MUST be sold to pay for the increasing deficits (less taxes and greater expenditure) AND redeam the bonds that central banks (and others) will not roll. Only the FED will buy at non-crushing interest rates when the liquidity crisis is over - as you said, then others will be buying real assets, not Treasury promises.

    PS -I just added the IMF's GDP projections to post 71.
    Last edited by a moderator: Jan 29, 2009
  17. 2inquisitive The Devil is in the details Registered Senior Member

    Billy T,
    You stopped one step too short, Billy. The government 'selling bonds' is borrowing that money from the private sector. That removed it from circulation alright. But what did the Brazilian government do with that borrowed money? They placed it right back into circulation via "Bolsa Familia" spending and so forth. It is no different than the US selling treasuries and using the money to pay for government expenses. In the US, most of these recent treasury sales are used to loan money to the private sector such as banks and the auto industry. At least most of that money should be recovered with time, but the Brazilian bond money used to finance government spending will not be returned to the government. In other words, the Brazilian government was using foreign investment to finance its internal spending. Those 400 billion reals are still in circulation. In order for Brazil to remove them from circulation, Brazil must convert its 'foreign reserves' into reals and use the money to buy back those bonds that were issued. That is why I said those foreign reserves are of essentially valueless now. The money has already been spent by the government. The next problem for Brazil is how will the government get the money to pay for the "Bolsa Familia" spending this year? (I use Bolsa Familia spending only as an example, it applies to all government spending)
    The US is in an economic recession, but there is essentially no inflation. The IMF forecast that you love to quote projects US inflation at .25% during 2009 and 2% in 2010.
    The US Treasury issues treasuries, not the Fed. The US Treasury has been using the money from the sales to loan to the Fed in the form of TARP funds and stimilus checks. The US Fed has been using those TARP funds authorized by congress to loan to banks etc. for liquidity purposes. Most of the 'unrecoverable' money so far has been to pay for last year's stimilus checks. Obama's new plan does call for much greater 'unrecoverable' government spending in addition to the bank loans.
    Most of those 'very liquid bonds' are long-term treasuries. They are liquid in the sense thay can be traded on the bond market, but they cannot be 'cashed in' until their maturity date, such as 2038. They cannot possibly come back to the treasury for payment in 2009. As far as the foreign reserves go, they are held almost exclusively by exporting countries, countries that have more exports than they have imports. If those countries dump their reserves on the market, it would increase the value of their currency compared with the dollar. Most exporting countries such as China and Brazil manipulate the value of their currency to prevent exactly that scenario. A strong currency is a deterrent to their exports, further increasing their problems in a world recessionary economy. China cannot afford to close even more factories due to a further decrease in exports. Brazil is already facing grave problems due to the collapse in commodity prices. Did you know that that Brazil had a $645 million trade deficit for the first four weeks of Janurary? The global economy is not looking good for anyone.
  18. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Q: How effective will China's $585 billion stimulus package be in rescuing the economy and dealing with the social unrest?

    A: This stimulus is just the start. Additional measures include aggressive interest rate cuts, subsidies for exporters and maybe a reduction in personal income tax. People forget that China has two things that almost no other country does--money, and a very strong political will to get the economy going. In fact, China may have a better chance of lifting the economy out of the doldrums more than anyone else.


    Where Forbes is asking the Qs of JPMorgan's China chief, Jing Ulrich

    The interview is called: "China in the year of the ox"
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    No. That is not correct. You seem to be forgetting where YOUR 400 billion R$ number came from. It was the R$ equivalent of Brazil’s central bank reserves. Those reserves were expanded by more than a factor of four in less than two years and NOT used for “Bolas Familia.” – They were used to buy US Treasury bonds. Recall that was why I was angry / annoyed at the central bank. They borrowed locally by issue of bonds with 14+% interest rate to invest in bonds at ~5% interest rate!
    In some sense, Brazil is like China - takes money from its people to lend to the USA!

    The annoying part was the false reason the central bank told for this stupid action. Said it was to make Brazil “bullet proof” against a speculative attack. The truth was that Brazil already was with adequate reserves and the buying was political. (Also Brazil had paid off entirely its prior IMF loans and could easily get more IMF funds to stop any speculative attack on the Real. I am not sure, but think Brazil already has a pre-negotiated, large, "Line of Credit" with the IMF, just for this purpose.) The central bank tried to prop up the sagging dollar so that the high labor cost industries in Brazil, like makers of shoes, would not close. When a lot of voting workers are losing their jobs, the government does silly things to try to stop the closing of factories. (For example now in the US, the auto makers are getting tax payer dollars which will delay their bankruptcy for about 6 months.) Of course the effort failed (the shoe factories are now closed) but the government can now tell the angry unemployed voters: “We tried, but Brazil alone could not stop the dollar’s slide down.” Cost was at least 14-5 = 9% net interest loss on about 160 billion US dollars, which is still continuing. Brazil, should join S. Korean and dump it excessive US treasuries while the Treasury prices are high, IMHO.

    By chance there is a great deal of information about Bolsa Familia in yesterday’s Folio de Sao Paulo (29Jan09) because Lula has just made it more generous. (Brazil's president can also make new laws, valid for 90 days, I think. If the congress does not pass the law, he can just issue essentially the same again, but each new version must be at least slightly different from the prior ones.)

    Brazil has 12.3 million receiving Bolsa Family (Total population is about 180 million, I think, so that is less than 7% of the population getting this aid) Because getting your vaccinations and staying in school until 18 is required, the program pays very high returns in the long run (Just like the GI education grants after WWII did.) The saving in health care alone also probably pays for the program. (Health care is free in Brazil – I just had my cancerous prostate removed at a very good university hospital at zero cost to me. I was eligible to go to it despite not living in its service district as wife had worked for USP – best university in all of S. America.)

    Even discounting these longer term benefits, Bolisa Familia, probably pays for its self short term in that the family getting these funds generally were previously outside of the cash economy but now are buying things and there is a big multiplier effect on adding new customers. ~5% more customers added to the cash economy.

    For example, when I had my cattle ranch, I paid my honest hard-working manager the equivalent of $100/ month. (Others land owners though I was a rich American trouble maker by paying so generously that their workers were asking for more.) He got free 2nd hand clothes, grew all his own food, except sugar and flour and a little soy oil. (He used the lard from his pigs mainly for cooking. The oil was for his salads.) He grew his own tobacco, rolled his own smokes and even the “paper” was “palia” (the softer inner layers of the corn ear husk). His need for flour was small as he processed part of his corn in one of those hollowed out wood stumps with a wooden Pissa he pounded the corn to meal with. - Not an easy skill - I tried once.

    Once we were in the town together and I offered to buy a pack of commercial cigarettes for him but he declined – he did not like their bland taste - they were not sweet like his.) I think he spent about $60/month, at least half on electricity, so he was not entirely outside the cash economy, but 5% or so in Brazil were prior to Balsa Familia. For people outside of the cash economy there is no crisis, (unless the rains fail to come).
    For many Brazilains the dollar could lose 90% of its value and they would hardly notice.

    Prior to the just announced expansion only11.0 million were receiving Bolsa Familia. With the increase in the school allowance and members, the program will cost R$549 million more each year and have a total cost of 11.95 billion Reais. The opposition parties are already saying this is an “election measure” – Lula has huge popularity (about 80% over all approval rating) but among the really poor it is nearly 100%. It is really ironic. The Real got very weak prior to his first election (more than 4 required to buy a dollar as the rich tried to get their wealth out of Brazil when it looked like Socialist Lula would win.) Now they are worried because the constitution will not let him have a third term. He is so popular some are suggesting the constitution be changed.

    Even expanded, Bolsa Familia’s 12 billion is much less than the 200+ billion of reserves and a relatively minor expense in Brazil’s budget – AND one that at least “breaks even” if not more than pays for itself in immediate saving and increased taxes with more people in the cash economy buying plus giving huge long term benefits, like the GI bill did. - Prior to Bolas Familia, most of these very poor families now receiving it had their kids working in the fields as soon as they could read and write (poorly) and do some simple math. I.e. they typically quit school during fourth grade. Lula did not go to high school, speaks only Portuguese (and not correctly, so I am told – mine is much worse so I cannot directly tell.). He got his first shoes at age 12. – He knows the value of Bolas Familia better than anyone, but economist in some other poor countries are trying to get their governments to copy it.

    BTW, Lula did not go to Davos -he is at the socialist's alternate economic forum in the Amazon. He is a very smart politician - does not want to be photographed with those who caused the coming depression. Today's newspaper's front page has large photo of Hugo Chavez, Rafael Correa, Evo Morales, Fernando Lugogith (Parauai) and Aleinda (Che's daughter) all giving a Karoke song performance to entertain the 1000s that have come for the "socialist forum" and its tent city. This year there are socialist forums in several countries, India being one -The wave of the future? after capitalism collapses, they hope. Lula is NOT however in the photo - too smart / clever for that (keeping his options open).

    Yes, most of the world is now worried about deflation – I am picking up a few more TIPs now as I plan long term and no one seems worried about the run-a-way inflation that is coming, so they are a real long term bargain now, IMHO. (Most of my retirement 403b US dollar assets, that I could not get out of US for tax reasons went into TIPs about 1.5 years ago (as I posted at the time) so I missed the ~50% decline of the stock index funds they were invested in – it really helps to think about condition coming a few years from now as few invest with more than a year or two time horizon.)

    Brazil is barely an exception to the current deflation trend. For several years the “inflation targeting” goal the central bank has used (and always met) was 4.5% + or – 2%, but lowering it is being discussed now. Currently the inflation is thought to be on the negative side of the goal. Thus, even with the recent reduction of the “basic interest rate" to 12.75% the real earnings on government guaranteed bank deposits is more than 8%. Actually, because the banks in Brazil charge outrageous interests rates for loan (>30% annually) and they compete for deposits, I get about 1.3% nominal gain EACH MONTH, but you need more than R$50,000 in the account to get this rate. Lula is constantly complaining about the high “spread” in bank loans vs. what they pay in interest. Brazil’s banks are extremely profitable, except for a few one-branch tiny ones that the crisis has scared their depositors to move their deposits to a bigger bank. Very different from even the biggest US banks that all need bailouts.

    What is the IMF saying is Brazil’s inflation rate now? Surely it is more than the US’s as the internal demand (in part due to Bolas Family) is so strong it is hard to control inflation even with double digit basic interest rates. Unlike the US, there is lots of room for monetary stimulus in Brazil, if that should ever be needed; currently, however, the government is using mainly fiscal stimulus (tax relief / cheap loans) especially for the exporters.

    Yes I knew. Posted that earlier and noted it was the first negative month for the trade balance in years. I suggested part of it might be related to the fact that there were strikes in the car industry in December, with essentially no export of flex-fuel cars, and also the price of the soy was 11 dollars a sack then, not the current 18 dollars a sack.

    I have never said that Brazil will not be hurt by the collapse of the dollar and exports to US and EU. What I have said is that unlike US and EU, thanks mainly to the growing exports to Asia, that Brazil will not even go into recession even as US and EU sink into depression. Recall the quote from my last short post:

    People forget that China has two things that ALMOST no other country does--money, and a very strong political will to get the economy going. In fact, China may have a better chance of lifting the economy out of the doldrums more than anyone else.

    Brazil is why they needed to say “ALMOST no other country.” To give a few more examples of the “strong political will” (in addition to the expansion of Bolsa Familia):

    (1) Brazil’s internal development bank BRNDs last week made 100 billion R$ MORE available to local industry in loans, especially for the exporters.

    (2) Today paper tell tells that the government will buy a million new simple houses directly from major contractors to rent to the poor (They are very small and simple (one story, one bath, two rooms plus small kitchen/ laudary area and two windows and a door only usually) but Brazil is not repeating the US’s mistakes of high rise slum public housing that is often closed by concrete blocks or torn down in less than a decade. These are private separated homes, each on it small lot that march over the hillside as far as one can see. (Not very pretty as all are identical but cheap to build).

    (3) A few days ago Brazil's "FED" cut the basic interest rate by 1% and government suspended many taxes on industry.

    (4) Is, in response to the auto worker’s demands, making a “soft link” between new government loans and not firing workers. Also encouraging “work sharing” by cancelling some laws so that the work week hours and the associated pay can be reduced. (It has been illegal to cut a worker’s pay. Brazil has a “rights acquired cannot be cut” complex, often written into the law. Thus new workers often get less now and new collectors of Brazil’s Social Security get less than those already in the system.*)
    *Like everyone else with a population that is aging and birth rates falling Brazils SS is unstable long term. They have broken the “rights acquired” slightly, by offering more pay out for later retirement. There is a complex “age factor” table and “years of contribution” table now. It is so complex that the poorly educated who are collecting have no hope of understanding the system. – I think that is part of the point – will permit them to collect less than their “rights acquired” would to make the system more stable. The US did sort of the same some years ago – I got “full benefit” at age 65 but now you must be older to get “full benefit.” Brazil’s tables change each year so their “full benefit” age is also silently creeping up. I.e. “rights acquired” is subtitly being cancelled, as it must be due to demographic changes.
    Last edited by a moderator: Jan 30, 2009
  20. 2inquisitive The Devil is in the details Registered Senior Member

    Billy T,
    No, I am not forgetting where 400 billion real number came from. The Brazilian Central Bank is (was) holding almost 200 billion in US dollars. That money came from investment in Brazil and trade surpluses. It was not 'government money', the central banks are not the Brazilian Treasury. The Treasury issued bonds to remove reals from the economy, which were again spent back into the economy through government spending. The Central banks do not issue bonds and do not 'give' money to the government. Central Banks are responsible for monetary policy (exchange rates, etc.) and handle currency transactions between different countries. This month, for example, Brazil's Central Bank has held at least two dollar auctions on the international spot market, to provide liquidity to the Brazilian financial markets. You seem to be confusing Brazil's new 'sovereign wealth fund' with Brazil's Central bank. Brazil's Central Bank and its currency reserves are not connected with the sovereign fund in any way, unlike the sovereign wealth funds of most countries. The intent of Brazil's fund was to use surplus budget money to fund the sovereign fund, to be used in years when there was a budget shortfall, and also to provide moneys to Brazilian firms operating outside Brazil for expansion. Brazil had no budget surplus, so Lula ordered the Brazilian Treasury sell bonds to aquire money for the sovereign fund, 14.2 billion reals ($5.9b) so far. The money for the fund did not come from the Central Bank foreign reserves.
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    No STILL FALSE. About 40 billion dollars was what the Brazilian reserves were a few years ago, and had been for several years. The Real was weaker (about 2.8R$ required to buy a dollar.) back then (a few years ago). Then commodity prices began to surge upwards, bringing lots of dollars to PRIVATE Brazilian exporting companies, mainly agriculture and iron ore, whose price per ton more than double in about one year! This great increase in the flux of dollars into Brazil did NOT GOT TO THE CENTRAL BANK, as you are asserting.

    These “gainer of dollars” PRIVATE COMPANIES could not use them to pay their workers so the dollars were sold for Real. This unusual volume of selling of dollars and buying of Real in the open market of course made the Real grow stronger wrt the dollar. At its strongest point, it took only 1.54R to buy a dollar. About when the exchange rate was approaching 2R$ / dollar, Brazilian high-labor-cost factories, like shoe makers and textiles, could no longer export and began to shed workers. That forced the Central bank, which is not independent of political pressure (but likes to pretend that it is) to start buying up the surplus of dollar, that private companies (mainly the importers) had no need of. (Brazil’s “FED” is not independent as Lula can replace all at the top of the central bank, ANY TIME HE WISHES. They do not have a fixed term like Bernanke does. They cannot ignore strong political pressures as Ben can.) In an effort to appear not to be bowing to these political pressures, the central bank put out the cover line that they were buying dollars to make Brazil “bullet proof” from speculative attack. No one (as indicated by newspaper comments at the time) was fooled, but the central bank stuck to their face saving cover line for two years. They badly want to be truly independent and by doing what the politician want them to do a few years more may someday gain that status. – They certainly will not escape political control if they give evidence that being independent causes politicians in office to lose the next election.

    How did the central bank buy those surplus dollars? – As I said before, they issue Real denominated bonds (with about 14+% interest) and sold them in Brazil to collect Real from the population (and corporations). With these Real the central bank then enter the open market and bought dollars that were in surplus. (They also did a lot of some sort of “future credit swaps,” which I do not understand, but the newspaper financial experts always say has the same effect on the exchange rates as buying dollars does.) Now with dollars, obtained effectively from the population via these newly printed Treasury bonds, the Central bank bought 160 billion dollars of US treasury bonds (paying ~5% interest.) They are still holding them and annually losing more than 14-5 = 9% on 160 billion dollars.

    This is as all as I have explained in less detail in prior post, but you still do not seem to understand that the Brazilian government bowered locally (paying 14+% interest) to invest in US treasuries (getting ~5% interest). Stupid, IMHO. I.e. took liquid circulating money from Brazilians (via non-circulating bonds)* to lend to the US, as China does to its citizens (and companies). The central bank did this to manipulate the exchange rates when the Real was growing excessively strong (killing the high labor cost exporters and making unemployed their VOTING workers) NOT for the reasons they stated. It was an expensive failure – many shoe makers and textile factories are now closed and the annual cost, 0.09x160,000,000 = 14.4 billion DOLLARS continues! Again I suggest that the central bank of Brazil dump the excess dollars it is holding in reserves and return to hold only about 40 billion dollars (or better most in RMBs)
    *After the Brazilian government got the Reals from the people (and companies) it turned arround and put these Real back into circulation (by buying the dollars) so the Real in circulation was not significantly changed. The surplus of dollar in the people (and compay) hands was removed and lent to the US, by purchase of US treasury bonds. In some generalized overview sense, you are correct to say that the FDI and trade surplus sent dollars into Brazil that the Brazilian central banks lent to the US, but the timing details are very important as the dollars were colledted only AFTER they had driven the value of the Real up and closed factories. It is not as if the dollars came directly to the central bank and then went to the US with no effect on exchange rates or the Brazilain economy. I.e. Brazil suffered what is sometimes call the "Dutch Disease." (When Holand got a sudden bonanza of dollars with the North Sea oil and gas discovey, it destroyed Dutch exporters as the surplus of dollars make the Gilder too strong for exports to compete. -The "commody boom" was Brazil's sudden "North sea oil & gas" find.)
    Last edited by a moderator: Feb 1, 2009
  22. adam2314 Registered Senior Member

    A question Billy.

    Many moons ago you mentioned that you had put some of your investments into New Zealand.

    How have they been, since our dollar has dropped like a Stuka over Poland ??.
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    As I recall, I had 100sh of the main telephone company, mainly b/c it was a solid simple way to get exposure to their currency. Not long after I bought it the government ruled (passed a law etc) that they had to make their "last mile" connections to the houses available to their competitors. (I never did quite understand it, but somehow the Austrailian governement was also envolved as NZ tel. had branches or offices in Australia also.)

    This opening of their "last mile" hard wires to houses removed their main advantage and as the bulk of their business was conventional phones (not the fast growing cell phone and data service markets) I sold out about even or a little profit in dollars due to the sagging dollar. I would need to go back into my tax returns to get accurate data -too much trouble.

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