Europe Bailout Lifts Gloom
Stocks Surge on $955 Billion Plan, but Economists Question Long-Term Burden
By MARCUS WALKER in Berlin, CHARLES FORELLE in Brussels and DAVID GAUTHIER-VILLARS in Paris
Global financial markets roared back in response to the European Union's nearly $1 trillion plan to avert a public-debt crisis that has threatened to derail the worldwide economic recovery.
Investors' apparent short-term relief was tempered by some economists' worries that in the longer term, the agreement's pledge to bail out troubled members will saddle the euro zone with gargantuan debts.
Stocks surged in Europe and the U.S. after EU leaders agreed to a massive action to prevent Greece's financial troubles from spreading throughout the region. Assets from Portuguese and Greek bonds to oil and other commodities rose world-wide.
The euro, which has been battered in recent weeks, rose above $1.30 to the dollar before closing below $1.28. In the U.S., The Dow Jones Industrial Average logged its biggest gain in more than a year, risingrose 404.71 points, or 3.9%, to 10785.14.
European Union officials announced early Monday in Brussels a plan to support the euro zone with €500 billion that could be lent to imperiled member countries, with more available from the International Monetary Fund. The deal was the result of a marathon weekend session of European leaders—one that included lobbying calls from U.S. officials, canceled trips and a collapsed finance minister. The plan quieted concerns that European leaders weren't moving fast enough to ease fears of a spiraling financial-market panic.
But the deal drew swift criticism. On Tuesday, Federal Reserve chief Ben Bernanke is set to brief lawmakers on the Fed's weekend decision to extend dollar loans to the European Central Bank. Some U.S. lawmakers have assailed the move as a bailout for Europe.
Many economists warned Monday that Europe's radical rescue plan doesn't address the region's underlying economic weaknesses, and could undermine the euro zone's rules and institutions.
A string of countries along the euro zone's fringe, from Greece to Portugal, still have deteriorating public finances and need painful overhauls to restore their competitiveness. Analysts warned that blanket bankruptcy protection from Germany, France and other core euro nations could even reduce pressure on profligate euro-zone governments to mend their ways.
"This step was needed to calm financial markets, and it perhaps succeeded. But it opens fundamental questions about the monetary union," said Daniel Gros, director of the Centre for European Policy Studies in Brussels. "Now that the EU has said it will save everybody in sight, there may be no way to enforce fiscal discipline."
The sweeping measures mark a historic turning point for Europe's single-currency zone. Until now, its 16 nations have shared a single currency and unified monetary policy, set by the European Central Bank, while operating separate national budget and tax regimes.
The weekend's negotiations put the bloc on a headlong course toward fiscal coordination—undoing some of the zone's founding principles, including its ban on governments bailing each other out and its aversion to the ECB buying its member countries' debt. It also raises questions, analysts say, about the credibility and independence of the ECB, which has long been shielded from political pressures.
The uncertainty about the euro zone's future governance makes it even more unlikely that the bloc will be willing to admit new members for now, especially since many Eastern European candidates have their own debt woes. Membership in a currency union with an implicit bailout guarantee could also make joining more attractive to many EU countries.
German Chancellor Angela Merkel, bleary-eyed after marathon negotiations Sunday night, said euro-zone nations need to intensify efforts to cut budget deficits. She stressed that aid for euro-zone governments would come with strings attached, including austerity programs designed together with the IMF.
For Germany, the EU's biggest economy and paymaster, the aid package is a decisive affirmation of political and financial commitment to Europe. Yet that commitment was born out of fear that the euro could fail, rather than enthusiasm for deeper union. Ms. Merkel's challenge now is to convince Germans of a course that could wind up leaving them on the hook for other euro members' debts.
"This package serves to strengthen and protect our common currency," Ms. Merkel said Monday. "We are protecting the money of the German people."
The chancellor for months resisted pressure from France and indebted Southern European countries to bail out Greece, fearing a precedent that could undermine budget discipline throughout the euro zone and saddle German taxpayers with unpalatable burdens.
In 11-hour negotiations Sunday—after losing her parliamentary majority to a regional election and tapping a last-minute stand-in for her ailing finance—Ms. Merkel accepted a safety net for all euro members.
The €750 billion ($955 billion) package has three elements. A government struggling to refinance its debts could first tap a €60 billion EU emergency fund. If that proved insufficient, it could borrow from a €440 billion fund financed through a special-purpose vehicle whose borrowings will be guaranteed by other euro-zone governments. Euro zone officials initially placed the IMF's pledge at €250 billion, but a fund official said Monday that number wasn't precise.
In practice the special-purpose vehicle, or SPV, will be able to lend more than €440 billion, since it allows crisis-hit countries to pledge their bonds as collateral against further loans from the ECB.
The ECB, meanwhile, began buying debt of weaker euro-zone countries in bond markets Monday, a controversial role that puts the ECB in the role of propping up wayward economies.
Just Thursday, ECB President Jean-Claude Trichet rejected European banks' pleas for the central bank to buy euro-zone government debt. Global stock markets and the euro plunged. By Friday, ECB officials say markets had turned "dysfunctional."
In a phone call with Ms. Merkel on Friday, U.S. President Barack Obama called on Germany to act to stem the escalating crisis in global markets, say people familiar with the matter. U.S. Treasury Secretary Timothy Geithner agitated for a more decisive euro-zone response in several conference calls with other Group of Seven finance ministers, these people said, and made specific critiques of European proposals.
On Friday evening, when euro-zone leaders gathered in Brussels to give their formal approval to aid for Greece, Mr. Trichet spoke of a worsening pan-European crisis and called for swift action, EU officials said.
As the leaders sat down to dinner, the yield on Portugal's bonds rose to more than eight percentage points over what ultra-safe Germany pays to borrow for two years—reflecting investors' growing fears of a Portuguese default. EU officials realized that Portugal's trajectory put it just a few weeks behind Greece, which rapidly lost access to capital markets in April.
Leaders agreed something big was needed over the weekend to turn around market sentiment towards the euro zone, the officials said. French President Nicolas Sarkozy, with support from most leaders present, pushed to announce a "European stabilization mechanism" that Friday night, say people familiar with the matter. Ms. Merkel insisted governments take the weekend to weigh options and present a plan before markets opened Monday, these people said.
The great financial crisis keeps opening new acts just when it seems to be drawing to a close. WSJ's David Wessel joins the News Hub and asks whether Europe's bailout will be enough.
Meanwhile, Mr. Trichet, with support from U.S. Federal Reserve Chairman Ben Bernanke in Washington, said European governments needed to take more forceful action of their own before central banks would consider radical steps, according to people familiar with the talks.
Mr. Sarkozy, who had for weeks agitated for bolder European action, pressed for the ECB to play a role, too. Ms. Merkel retorted that the ECB was independent and couldn't take orders from national governments.
No precise agreement was reached Friday. "The euro zone is going through its worst crisis since its creation," Mr. Sarkozy told reporters after the meetings. Ms. Merkel left via a back door, avoiding the cameras.
Mr. Sarkozy canceled a Saturday trip to Moscow, where he was due to attend a parade to mark the 65th anniversary of the end of World War Two. Ms. Merkel, fearing a German no-show would upset the Russians, flew to Moscow. She called other euro-zone leaders from there.
Over the weekend, France and a majority of euro-zone members argued that the EU's executive arm, the European Commission, should borrow funds on capital markets and lend them to a stricken euro-zone nation, EU officials said.
Berlin objected, fearing Germany would end up as the backstop for the region's debt without having control over the debt issuance. It advocated country-to-country loans to a crisis-hit peer, the officials said. That would give an effective veto to Germany, which would have to supply 30% or more of rescue aid.
Several other countries, including Italy, rejected the German plan, saying they are already too indebted and might not be able to borrow enough money.
Euro-zone finance ministers were set to meet at 3 p.m. Sunday in Brussels to broker a deal. German Finance Minister Wolfgang Schäuble had barely arrived when he suffered an allergic reaction to his medication and was taken to the hospital, EU officials said.
Mr. Schäuble, wheelchair bound since he survived an assassination attempt 20 years ago, has spent much of the euro zone's spring crisis in hospital after an operation led to complications.
Ms. Merkel dispatched her former chief of staff, German Interior Minister Thomas de Maizière, on a Luftwaffe plane to stand in for the finance minister.
Arriving around 8 p.m., Mr. de Maizière took a tough stance against letting the European Commission run the bulk of the bailout funds, EU diplomats say. Ms. Merkel and key cabinet ministers met in her Berlin chancellery to keep a tight leash on the negotiations.
Other governments warned that markets were opening in Australia. Mr. de Maizière didn't budge. Finally, Germany and France settled on creating the SPV, allowing the package to be announced before Tokyo opened.
The SPV reduced the burden of borrowing on indebted countries like Italy, while giving Germany control over aid disbursements. Several countries—including Italy—claimed credit for the breakthrough. The SPV "must be a great idea because, apparently, we all had it," said a senior French official.
Brazil Mantega: Govt To Cut Spending If GDP Grows +6%--Estado
MAY 10, 2010, 10:39 A.M. ET
BRASILIA (Dow Jones)--Brazil's government will consider reducing the pace of its spending if the country's economy shows growth above 6% annually, Finance Minister Guido Mantega Monday, according to the Estado news agency.
Speaking at an event in Rio de Janeiro, Mantega said the government would take caution regarding the impact of public-sector spending so as to avoid excessive heating of the economy and subsequent inflation pressure.
"We're studying the possibility of reducing the government's consumption, but we need to examine this cautiously," Mantega said. "If growth is confirmed stronger than our expectations, above 6%, we could reduce government consumption and the current spending of government ministries could be diminished."
Mantega said that, if the government did opt to cut spending, it would attempt to maintain outlays for social programs and infrastructure investment so as to avoid bottlenecks in the economy.
Mounting concerns over inflation in Brazil come as a central-bank market survey Monday showed inflation projections for 2010 rose to 5.50% from 5.42% the previous week.
Brazil has set a year-end inflation target of 4.5% annually.
Brazil's IPCA consumer-price inflation came in at 0.57% in April after ending March at 0.52%.
The latest result put 12-month IPCA inflation at 5.26%, up from 5.17% in March.
The surging inflation has accompanied abundant signs of a resurgence in economic activity this year.
Brazil's industrial output rose 2.8% in March from February and by 19.7% from March 2009.
Brazil's economy contracted by 0.2% in 2009 under the effects of the global financial crisis, but recent central-bank market surveys point to growth of more than 6.2% this year.
Brazil Government Weighs Spending Cuts, Mantega Says (Update1)
May 10, 2010, 10:24 AM EDT | By Joshua Goodman
May 10 (Bloomberg) -- Brazil is studying the possibility of spending cuts as "all sectors" of the economy heat up, pressuring inflation, Finance Minister Guido Mantega said.
"If necessary we will reduce government spending in several ministries," Mantega said in Rio de Janeiro today, adding that infrastructure investments and social welfare programs won't be affected.
Brazil's accelerating inflation is "normal" given that the economy is growing, Mantega said. Annual inflation will slow to 4.7 percent or 4.8 percent in the coming months, he said.
Economists expect inflation to quicken to 5.5 percent by year-end, up from 5.26 percent in April, according to May 7 central bank survey of about 100 economists published today. The country's economy will expand 6.26 percent this year, the fastest pace in 24 years, the central bank survey said.
Latin America's biggest economy has been "barely affected" by the financial crisis in Greece, Mantega said. A 750 billion euros ($962 billion) European Union-led package to contain fallout from the Greek crisis is "strong" and will calm markets, Mantega said, adding that Brazil's fixed-income market may see some turbulence.
The real strengthened 3 percent to 1.7843 per dollar at 10:13 a.m. New York time. The yield on the interest rate future contract due January 2011, the most traded on the Sao Paulo stock exchange, rose 7 basis points to 11.1 percent.
Top stories from Latin America: {TOPL <GO>} Top stories in emerging markets: {TOP EM <GO>} World equity index futures: {WEIF <GO>} Bovespa market map: {IBOV <Index> IMAP <GO>} Brazilian stock movers: {TNI BZS MOV <GO>}
Brazil Will Exceed Its Fiscal Target, Augustin Says (Update2)
May 10, 2010, 7:09 PM EDT
By Andre Soliani and Arnaldo Galvao
May 10 (Bloomberg) -- Brazil's central government will "significantly" surpass its January-through-April fiscal surplus target of 18 billion reais ($10 billion) before interest payments, Treasury Secretary Arno Augustin said.
Augustin, in an interview in Brasilia, said the central government will report a primary surplus of more than 9.1 billion reais when it presents its monthly debt report May 20.
"We're going to exceed the target significantly," Augustin, 50, said today.
Brazil's central government reported a 3.9 billion reais deficit before interest payments in March compared with a 701 million reais deficit in February, on higher public spending. March's result surprised analysts, who were expecting a surplus, and led to the narrowest first-quarter savings rate since 2001.
Brazil's public sector budget deficit, which includes federal and local governments as well as state-run companies, widened to 17.1 billion reais in March, nearly twice the median estimate among five economists surveyed by Bloomberg.
If economic growth remains strong, the government may consider cutting spending and aim for a 2010 primary surplus above the current target of 3.3 percent of gross domestic product, Augustin said. He said the odds of adopting a tighter fiscal policy fell after the eruption of Europe's debt crisis and the Brazilian central bank's decision to raise interest rates.
Spending Cuts
"We're analyzing if the degree of economic growth will demand a more daring fiscal action," he said. "It's a hypothesis that's under consideration."
Finance Minister Guido Mantega said today the government was studying ways to reduce spending as the economy heats up. Speaking to journalists in Rio de Janeiro, Mantega said the possible cuts wouldn't affect infrastructure investments or social-welfare programs.
"Monetary policy has already been tightened, but the fiscal policy hasn't moved in the same direction," Felipe Salto, an economist at Sao Paulo-based research company Tendencias, said in a phone interview. "There is a risk fiscal policy will remain expansive even as the economy grows."
Higher public spending puts an extra burden on the central bank to control inflation, Salto said.
Policy makers, after keeping the overnight rate at a record low of 8.75 percent for nine months, lifted borrowing costs to 9.5 percent last month in a bid to rein in consumer prices.
Inflation Outlook
Economists expect inflation to quicken to 5.5 percent by year-end, according to a May 7 central bank survey of about 100 economists published today. The economy will expand 6.26 percent this year, the fastest pace in 24 years, the survey said.
Brazil's "excessive" currency gains have eased as a result of the financial crisis in Europe, Augustin said. Brazil's currency, after beating all 16 major currencies tracked by Bloomberg last year when it strengthened 32.7 percent against the dollar, has weakened 1.5 percent this year.
"The situation, from the point of view of an excessive appreciation, has improved," Augustin said.
To prepare itself for future crises, the Treasury plans to expand cash holdings it maintains to make debt payments, Augustin said.
"The trend is for a year of strong bond sales," he said.
Augustin was named Treasury Secretary in June 2007. Trained as an economist at the Federal University in Rio Grande do Sul, he served as finance secretary of the state bordering Brazil's southern border with Argentina and Uruguay from 1999 to 2002 before moving to the capital and joining the Finance Ministry when President Luiz Inacio Lula da Silva took office in 2003.
Brazil's Bovespa stock index soared today the most in six months as equities rallied around the world after European policy makers unveiled a $1 trillion loan package to contain the region's sovereign-debt crisis.
The Bovespa gained 4.1 percent to 65,452.68.
Brazil Real Gains Most Since 2008 on European Loan (Correct)
May 10, 2010, 6:09 PM EDT| By Ye Xie
May 10 (Bloomberg) -- Brazil's real gained the most since November 2008 as European policy makers pledged a loan package worth almost $1 trillion to stop a sovereign-debt crisis.
The real rose 3.8 percent to 1.7710 per dollar, from 1.8380 on May 7. The currency fell 5.4 percent last week in its biggest weekly drop since February 2009 on concern Greece, Portugal and Spain may have difficulty financing their budget deficits and derail the global economic recovery.
Stocks rallied globally and the euro strengthened after the governments of the 16 euro nations agreed to lend as much as 750 billion euros ($961.7 billion) to the most-indebted countries. The European Central Bank said it will counter "severe tensions" in "certain" markets by purchasing government and private debt.
"The European package appears surprisingly robust," said Matthew Ryan, a portfolio manager at Massachusetts Financial Services Co. in Boston. "They do appear to have gotten the message that they couldn't continue to take half-hearted measures. The outlook for Brazil is quite favorable."
Europe's financial crisis won't affect Brazil's economic growth outlook, Finance Minister Guido Mantega said in Rio de Janeiro, adding that the crisis may cause some "turbulence" for Brazil's fixed-income market. Brazil's economy will grow between 5.5 percent and 6 percent this year, and inflation will slow to between 4.7 percent and 4.8 percent in the coming months, he said.
The central bank said it bought dollars in the spot market at 1.7779 reais each in an auction today. It has purchased dollars every day since May 2009.
In the overnight interest-rate futures market, the yield on contracts due in January rose six basis points, or 0.06 percentage point, to 11.09 percent.
Bearish Real Bets at Three-Month High Signal Rally to Resume
May 10, 2010, 11:36 PM EDT | By Ye Xie
May 11 (Bloomberg) --- International investors are the most bearish on Brazil's real in three months and the government forecasts the rally will ease. That's a sign the currency will resume its appreciation, if history is a guide.
Foreign institutions placed 104,483 more wagers on the currency falling than rising as of May 7, according to data compiled by the BM&FBovespa SA in Sao Paulo. When traders were that bearish in February, the real gained 4.9 percent the following month, the most in the world, as economic growth quickened. Jumps in the bearish bets also marked the end of the real's slide in November 2008, August 2007 and May 2006.
The real jumped 3.8 percent against the dollar yesterday, the most in 17 months and the biggest gain among the 16 most- traded currencies, after plunging 5.4 percent last week on concern Europe's debt crisis would derail the global economic recovery. The real is up 4.8 percent in the past three months.
"We like Brazil," said Daniel Janis, who help manage $4.2 billion at MFC Global Investment Management in Boston. "We had disruption in the short term, but the longer-term fundamentals in Brazil are very positive."
The real led advances yesterday after European policy makers pledged a loan package worth almost $1 trillion to help meet the financing needs of the region's most-indebted countries. The real is down 1.5 percent this year following a 33 percent rally in 2009 that made it the best-performing major currency.
'Excessive Appreciation'
Brazilian Treasury Secretary Arno Augustin said in an interview yesterday that the currency's "situation from the point of view of an excessive appreciation has improved." Policy makers have sought to slow the rally to shore up exporters' profit margins. The central bank bought dollars in the foreign-exchange market every day over the past year while the government imposed a 2 percent tax on foreigners' purchase of stocks and bonds in October.
Augustin said as recently as April 29 that the Treasury could add to central bank dollar purchases in the foreign- exchange market to stem the real's gains.
"They can smooth out the process, but not necessarily reverse the gradual appreciation of the real," said Janis, who plans to buy more Brazilian local bonds and predicts the real will strengthen as much as 11 percent to 1.6 per dollar by year- end from 1.7710 yesterday. His John Hancock Strategic Income Trust returned 5 percent this year, beating 91 percent of the funds' peers, according to data compiled by Bloomberg.
Falling Yields
Yields on real-denominated government bonds due in January 2017 fell 21 basis points, or 0.21 percentage point, yesterday to 12.84 percent from a three-month high of 13.05 percent on May 7, as the European rescue package encouraged investors to buy higher-yielding assets. Brazil's local bonds have gained 2.8 percent this year, compared with the average return of 1.1 percent in emerging markets, according to data compiled by JPMorgan Chase & Co.
The extra yield investors demand to hold Brazilian dollar bonds instead of U.S. Treasuries narrowed 26 basis points, the biggest decline since June 2009, to 214 basis points. The gap reached a three-month high of 248 basis points on May 6.
The yield on Brazil's overnight interest-rate futures contract due in January climbed six basis points yesterday to 11.09 percent, the first increase in a week.
That yield implies traders expect the central bank will raise the benchmark rate to more than 12 percent by year-end. The bank boosted the rate last month to 9.5 percent from a record low 8.75 percent. By comparison, policy makers in the U.S., Europe and Japan will keep their key rates to no more than 1 percent through year-end, according to Bloomberg surveys.
Trade Flows
Net foreign currency inflows from trade and investment averaged $112 million a day last month, the strongest since November, according to data compiled by the central bank.
Brazil's economy has been "barely affected" by the financial crisis in Greece, Finance Minister Guido Mantega said in Rio de Janeiro yesterday. He forecast the economy will grow as much as 6 percent.
Analysts increased their median forecast for growth this year in Latin America's biggest economy to 6.26 percent, which would be the fastest pace in 24 years, according to a central bank survey published yesterday. Economists expect annual inflation to quicken to 5.5 percent by year-end from 5.3 percent in April, the survey shows.
"Capital always chases good growth stories," said Warren Hyland, a money manager in London at Schroder Investment Management Ltd., which helps oversee $255 billion in assets. "The area you want to look at is emerging-market external debts and currencies which are unrightly sold. If you are confident that the run on Europe won't continue, the real is a great buy."
Contrarian Signal
Foreigners' bearish real bets have been a contrarian signal in the past. When the wagers hit a then record of 230,862 in August 2007, the real broke a one-month slide and gained more than 10 percent by the end of October. The currency climbed 8 percent in the four months after the bets reached an all-time high of 295,896 in November 2008.
"The momentum underpinning the real is pretty positive," said David Spegel, head of emerging-market strategy at ING Groep NV in New York. "Brazil is regarded as some kind of safe haven. There is a bit more upside for the real."
Brazil Bond Sales Slow as Odebrecht Delays Offering (Update3)
May 10, 2010, 5:35 PM EDT | By Veronica Navarro Espinosa
May 10 (Bloomberg) -- Brazilian corporate bond sales, off to their best start to a year, are being derailed by the highest borrowing costs in three months.
Odebrecht SA and Banco Cruzeiro do Sul SA postponed debt sales on May 7, the only two international issues planned for last week, according to data compiled by Bloomberg. Corporate issuance overseas reached $15.1 billion so far in 2010, the most for the period since Bloomberg data began in 1999.
"It's going to take some time for this market to come back," said Eric Ollom, chief strategist for emerging markets at Jefferies Group Inc. in New York. "There are no buyers for new paper right now."
Yields on Brazilian corporate dollar bonds surged 54 basis points, or 0.54 percentage point, last week to 6.56 percent, the highest level since Feb. 12, as Europe's debt crisis reduced demand for riskier assets, according to JPMorgan Chase & Co. indexes. The bonds posted a loss of 3.6 percent, the biggest weekly rout since October 2008.
The price on $400 million of 10-year bonds sold last month by Sao Paulo-based Braskem SA, Latin America's biggest petrochemical producer, fell to 96.8 cents on the dollar from 100 at issue on April 30, Bloomberg data show. The $750 million of 10-year bonds issued by Sao Paulo-based Fibria Celulose SA, the world's largest pulp producer, dropped to 94.2 cents from 99.14 when sold on April 29, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
EU Pledge
Global corporate bond issuance plummeted last week, with $9.4 billion of debt sold, the least this year. European Union finance ministers pledged over the weekend to stop a sovereign debt crisis from shattering confidence in the euro as policy makers unveiled an unprecedented loan package worth nearly $1 trillion and a program of securities purchases.
Brazil sold 22 percent of its exports in 2009 to the EU, government data show. By comparison, the 16 euro zone countries purchased 4.2 percent of Mexican exports and 19 percent of Argentina's.
"Brazilian corporates have real exposure to the European economy," Ollom said.
Brazil's real had its worst weekly performance in two months, plunging 5.4 percent to 1.8380 per the dollar. Its 3.2 percent slide on May 6 was the biggest since January 2009. The real has weakened 1.5 percent this year after a record 33 percent gain in 2009. The currency rallied 3.8 percent to 1.7710 at 5:22 p.m. as the European loan plan fueled a global rally in higher-yielding assets.
Borrowing Costs
Brazilian government dollar bonds yielded 240 basis points more than U.S. Treasuries, up 44 basis points last week. The gap reached a three-month high of 248 basis points on May 6. It shrank 26 basis points to 2.14 percentage points today. Emerging-market bonds overall yielded 2.95 percentage points more than Treasuries, down 35 basis points from May 7.
Brazil scaled back its weekly domestic bond auction as benchmark yields climbed to a 14-month high last week. The government sold 81 million reais ($44 million) of 10 percent notes due in 2014 to yield 12.89 percent on May 6, the smallest amount of fixed-rate debt issued at a weekly auction since February 2009.
The cost of protecting Brazilian debt against default for five years climbed 29 basis points to 152 basis points last week, the biggest weekly jump since December 2008, according to data compiled by CMA DataVision. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements. The swaps fell 25 basis points to 1.27 points today.
'Small'
The yield on Brazil's overnight interest-rate futures contract due in January fell nine basis points in the week to 11.03 percent, halting four straight weeks of increases. It rose six basis points to 11.09 percent today.
Brazilian Finance Minister Guido Mantega said the country's banks own a "small" amount of Greek government bonds. Mantega, speaking to reporters in Sao Paulo on May 7, said Brazil's economic recovery won't be hurt by Europe's debt crisis because domestic demand is fueling growth. Exports to Europe will take longer to recover, he said.
Latin America's biggest economy will expand between 5.5 percent and 6 percent, Mantega said today in Rio de Janeiro. The country has returned to pre-financial crisis levels and all sectors of the economy are heating up, he said.
"I don't think this is going to threaten in any way the financial stability of emerging markets as a whole," said Jaime Valdivia, who oversees $1 billion of assets as director of research at Emerging Sovereign Fund in New York.
'Get Out of Risk'
Odebrecht, a Salvador-based construction and engineering company, suspended its May 7 sale of $200 million of perpetual bonds until debt rebounds, a media representative for the company said in an e-mail. Banco Cruzeiro do Sul in Sao Paulo postponed its planned offering of 10-year dollar bonds until "market conditions improve," said investors relation superintendent Fausto Vaz Guimaraes Neto.
Jefferies' Ollom said there's not enough demand for assets such as a bond from a "small Brazilian bank" and perpetual securities from Odebrecht.
"Are you kidding me? I'm trying to get out of risk, not own it for eternity," he said.
--With assistance from Gabrielle Coppola in New York, Paulo Winterstein and Joao Oliveira in Sao Paulo and Joshua Goodman in Rio de Janeiro. Editors: Lester Pimentel, David Papadopoulos
Pao de Acucar Reports 33% Jump in Quarterly Profit on TV Sales
May 10, 2010, 11:29 PM EDT| By Fabiola Moura
May 11 (Bloomberg) -- Cia Brasileira de Distribuicao Grupo Pao de Acucar, Brazil's biggest retailer, reported a fifth straight quarter of profit growth as the nation's expanding middle class bought electronics ahead of the World Cup.
"You have several positive economic factors that led to this growth," Chief Financial Officer Jose Antonio Filippo said in a conference call with journalists late yesterday. "You also have the World Cup and elections this year, elements that add to the sales."
Net income increased 33 percent to 126.2 million reais ($71.2 million) from 94.9 million reais a year earlier, the Sao Paulo-based company said in a regulatory filing. Excluding results from Ponto Frio, the electronics chain it purchased in June, profit was 129.9 million reais, missing the 137.4 million reais estimate of seven analysts compiled by Bloomberg.
Brazil's middle class grew to 53 percent of the population in 2009, from 42 percent in 2002, Finance Minister Guido Mantega said during a speech in New York April 26. Brazil's retail sales jumped 12.3 percent in February from a year ago, the most in two years and the sixth consecutive monthly increase.
Rising incomes have enabled more Brazilians to buy additional goods and services. Soccer aficionados in particular have purchased televisions ahead of the World Cup, Filippo said. The international soccer tournament occurs every four years. The games begin in June, when Brazil's national team will try for its sixth victory.
The stock rose 3.1 percent to 60 reais yesterday on the Sao Paulo stock exchange. It has fallen 7.7 percent this year compared with a 4.6 percent drop in the benchmark Bovespa index.
Ponto Frio
Pao de Acucar's net income includes a loss of 3.7 million reais at Ponto Frio. The chain's loss a year ago was 35 million reais.
Ponto Frio "is already getting into the profitability curve," Filippo said.
Pao de Acucar, also Brazil's biggest publicly traded food retailer, said April 12 that sales including Ponto Frio stores rose 50 percent in the first quarter from a year ago. Sales at stores open more than a year climbed 15 percent, led by non-food sales, especially electronics and household appliances.
Pao de Acucar's investments more than doubled to 207.1 million reais in the first quarter, according to the filing.
Brazil needs two years to restore export levels: finance minister
12:36, May 11, 2010
Brazilian Finance Minister Guido Mantega said on Monday that his country will need about two years to restore exports to normal levels.
Noting that the U.S. economy is already showing signs of recovery, Mantega said that this will contribute significantly to the rise of Brazilian exports, which were affected by the global financial crisis.
Commenting on the economic problems currently facing Europe, the minister stressed that Brazil's growth will remain the same despite the European woes.
"The consequences for Brazil were the volatility in the stock market and the capital flight, but nothing worrying," Mantega said. "Brazil remains solid and ready for crises much worse than this one."
To avoid the economy overheating, the minister added that the government is considering cutting governmental expenses and ending some stimulus measures.
"Some say there is overheating. I am not sure if there is, but the economy has certainly warmed up. Because of that, the stimuli are being taken back," Mantega said.
Source:Xinhua
America has good reason to worry about Greece
By Clive Crook | Published: May 9 2010 20:17 | Last updated: May 9 2010 20:17
At the end of last week, the US looked hard at Greece and was scared. So tiny an economy should not be bringing all of Europe low and even threatening to explode the euro, but it is. What started as a US financial crisis plunged Europe into recession; was Europe about to return the compliment? What, Americans began to wonder, did Europe's problems tell them about their own?
The cause of the present turmoil, Greek public debt, has aroused fears of a wider sovereign-debt crisis and heightened concern about US government borrowing. More immediately, investors are asking, what if the European Union keeps making a hash of the problem? Will there be a second European banking crisis, and would it infect the US financial system? Even if the answer is no, the US recovery is still fragile. The economy would not be immune to another slump in EU demand.
These fears can be exaggerated, but none is unfounded. In any event, fears do not have to be well-reasoned to make a bad situation worse and justify themselves.
The least substantial line of alarm is Greece as fiscal harbinger. The US might not be Greece, say pessimists, but California could be. Here is a state so strapped for cash that it recently resorted to paying its workers with IOUs rather than money. (If that is not default, it is the next best thing.) Could California do for the US what Greece is doing for the EU?
Unlikely, is the answer. California is a bigger economy: in that sense its problem is on a larger scale. But its debts and deficits are puny compared with Greece's. Other defences and safety-valves, notably lacking in Europe, are to hand: an activist federal government, a compliant central bank, a currency that cannot conceivably split apart.
The parallel should not be dismissed altogether. A country whose government borrows beyond its capacity must eventually pay the price. Greece does teach that lesson, in case anybody had forgotten it – and in the US, some have. But the greater worry for the US at the moment is not that Europe shows where it is heading but that secondary effects from Greece and any widening emergency will squash its fledgling recovery.
These influences are pushing in opposite directions. A flight to safety from European markets brings investors back to US bonds and pushes US interest rates lower. On the other hand, it depresses the euro, which makes US exports less competitive in a crucial market. If Europe's economic recovery – which is both weak and delayed as compared with the US – should fail altogether, the US will not be immune.
Financial contagion is the other big risk. Suppose Greece defaults. That will spread losses across the European banking system. Pressure to default could mount on other European countries, starting with Portugal and Spain but maybe spreading further. Just how badly US banks and non-banks are exposed to to these risks – directly, or through credit default swaps and other derivatives – may be unclear until it happens. Any new financial waves would crash over a US government whose fiscal capacity is all but maxed out and a country whose willingness to rescue banks is exhausted.
Up to now, the US has wanted to think that Greece was a European problem that could be left to the EU to solve. Both parts of that supposition have turned out to be wrong. In recent days, the administration said it pressed for a speedier resolution of the Greek mess, and the involvement of the International Monetary Fund in the deal to supply new lending gave the US formal standing on the issue. Yet the problem is no closer to being solved.
The EU-IMF adjustment programme for Greece improves on the previous EU position that Greece must bear all the costs of its troubles alone – but not by much. European and international taxpayers are now on the hook, too. Greece's creditors are not, however, which is wrong. Partly for that reason, the new plan is nearly as delusional as the old one. As Arvind Subramanian argued on this page last week, it implies three years of crippling austerity, at the end of which Greece's flattened economy will have to support a far larger public debt than today's. (This is assuming things go well.) The plan resolves nothing. It is a delaying action at best, and a pretty desperate one at that.
Default looks ever more likely. This can be planned, with some hope of keeping things orderly – though the best chance of that has now been missed. Or it can be unplanned, after a further period of denial in which the problem worsens. Notice the irony. Conventional wisdom holds that early-resolution mechanisms are needed for failing banks and non-banks: the key thing is to get in front of the problem. But a similar logic applies to distressed governments, especially where sharing pain with creditors is concerned. This lesson, evidently, will have to be learnt all over again.
The harder question is whether even a Greek default will resolve Europe's difficulties. My bet would be no. Greece has a huge primary budget deficit. At least for a time after a debt restructuring it would struggle to find lenders. So even with its debts written down to nothing, it faces a period of fiscal austerity that will be wrenching at best and politically impossible at worst – with no central bank to support demand, and no currency of its own to devalue.
The EU says that default must be avoided at any cost. I say default will happen. The EU says exit from the euro is not an option. I would not count on that, either. In any event, the US had better brace itself.
Woes of the 'new Argentina' weigh on the old Argentina's debt swap
La Nación newspaper carried a poignant picture on its front page at the weekend: Graffiti on a wall in Athens in Spanish which read "Solidarity Athens – Buenos Aires".
Argentina has indeed been where Greece is now, and Greece must be looking uncomfortably at Argentina to see how the consequences of default play out.
But the Greek and Eurozone turmoil have highlighted the fragility of Argentina's bid to return to respectability in a crunch week for its bond swap. Though the swap is still expected to be an overall success, a rollercoaster market that could reduce the value of the offer is the last thing Argentina needs as numerous retail Italian investors, who have held out vociferously until now for their money back in full, decide mid-week whether to accept this offer after declining an initial Argentine deal in 2005.
The Greek crisis may also put paid to Argentina's hopes of raising new money parallel to its debt swap – specifically $1bn at a single-digit interest rate. Though the government swears there is no financial necessity for the operation and it just wants to mark the fact that it is back in business with a "symbolic" issue, it has set much store on the issue. It has also, quietly, admitted that if it returned to issuing, it could sell more bonds this year – something that would come in handy as government coffers empty and an expensive year of election campaigning looms before presidential polls in 2011.
In the debt swap, Argentina is offering new bonds for nearly $20bn of debt still unpaid from its 2001 default and institutional investors have until Wednesday to sign up early for the swap without the penalty of 1 cent per $1 tendered.
As Siobhan Morden at RBS Securities put it in a note to clients:
The market risk and penalties clearly motivate early participation. We also assume that retail investors would be motivated to participate for the same distressed reasons of having witnessed the last few days of EU centric risk aversion. The large headline participation of institutional investors may also motivate retail participation. This suggests potential for "sticker shock" of large participation announcement on May 17 closer to the ceiling of $15bn than the floor of $10bn.
She sees Argentina pushing forward on the $1bn new money quest.
Some observers see an outside chance that Néstor Kirchner, the husband of President Cristina Fernández and the key economic decision maker, could halt the swap if the new money plans look likely to fail.
Unpredictability is the most defining characteristic of Argentine politics and domestic political instability led to $4bn in capital flight during the first quarter. This week's events will have far-reaching consequences for Argentina's government and finances.
Brazil won't take chances on overheating
11/05/2010 | Jonathan Wheatley
Is Brazil's economy overheating? Guido Mantega, finance minister, says it is not - but nor is he taking any chances.
Interviewed on video for FT.com at the FT's Brazil Infrastructure Summit taking place in Rio de Janeiro on Monday and Tuesday, he said demand growth needed curtailing and, since the government was loath to trim private-sector investment or spending, it would instead cut what is widely regarded as the bloated machinery of government in Brasília. All ministries, he said, would be told to make cuts, even though this is election year. By how much? He wasn't saying, though his aides reckoned it would be about R$10bn. That's quite a promise. We will be watching to see if it is delivered.
Mr Mantega flagged another measure to cool the economy: import tax cuts. If that sounds counterintuitive, the reasoning is that cutting tariffs on heavily taxed imports such as steel or textiles would take some pressure off inflation. This measure has not been promised yet; but it is under consideration.
Also during the conference, the FT and Valor Econômico, Brazil's leading business daily and co-organiser of the event, conducted a live on-stage interview with Dilma Rousseff, President Luiz Inácio Lula da Silva's former chief minister and soon-to-be candidate in October's presidential election. She laid out some of her plans for government including, surprisingly, the idea of floating Infraero, the government-owned airports manager. This would not only capitalise it, she said, but also "bring in some governance".
That implies a refreshingly realistic assessment of Infraero's past and current performance. Plans to bring some market discipline to Brazil's often chaotic airports had previously been quietly shelved. Now, it seems, they are back in vogue.
Can the Crisis in Greece Be Contained?
11/05/2010 | By NICOLE ITANO / Athens, LISA ABEND / Madrid AND MICHAEL SCHUMAN
The words scrawled in green and black spray paint on the sidewalk outside Greece's parliament summed up the mood: "George get out. Out IMF and U.S. and E.U." A few days earlier, Prime Minister George Papandreou — the George in question — had the unhappy duty of telling Greeks that the bill for past excesses had come due. On May 2, he and other Greek ministers had filed into an extraordinary Cabinet meeting where the terms of a bailout deal hammered out with the International Monetary Fund (IMF) and European states was confirmed. After months of tense negotiations, and failed attempts to convince markets that European pledges to help Greece were more than talk, Papandreou handed over Greece's sovereignty in exchange for a rescue. Now he's not only fending off bankruptcy, but rebellion on the streets too.
Violent protest is as Greek as feta, but it's usually calculated, part of the country's intricate political theater. On May 5, however, anger at Papandreou's government for agreeing to slash $38 billion from the state budget over the next three years boiled over with deadly consequences. Three bank workers died in a blaze set by rioting protesters at Marfin Egnatia Bank, as fierce battles between police and angry citizens raged on the streets of Athens. The government had hoped that Greeks would accept the austerity program with stoicism, but those hopes are now in tatters. With Greece teetering on the edge of bankruptcy, Papandreou's government agreed to harsh measures — which include deep cuts to civil-service pay, higher taxes and sweeping reforms to pensions and labor laws — as a condition of $146 billion in loans from other euro-zone countries and the IMF. It will be the largest such bailout ever, and questions remain about whether it will even work. During talks over the terms of the bailout, the Greek government had warned that there was only so far the Greek people could be pushed. "We will be in the streets for as long as it takes," says Christos Sarris, 40, a professor at a private university. "It's our only chance, otherwise we will be full of unemployment and poverty. It's our responsibility to ourselves and our children."
Many Greeks, even those who joined the protests, disapprove of the violence. But few believe the bailout will bring better times soon. According to a new poll for the Greek newspaper To Vima, only 14.8% percent of Greeks were relieved at the bailout, compared to 31% who were angry and nearly 23% who felt ashamed. For Greeks, who are proud of their contribution to Western culture but have felt squeezed by foreign powers for much of their modern history, it's humiliating to have to beg from Germany and play by the IMF's tough rules on conditionality. Out on the streets in a May Day march in Athens, computer engineer Dimitris Mitrovgenis said many young Greeks like himself are thinking about leaving Greece for places where the economy is better and merit, rather than connections, is rewarded. Even before the crisis, Greece suffered from a brain drain of its young talent and now there are rising fears that the crisis will spark a wave of mass emigration.
Ripple Effects
The question bothering world leaders now is whether Greece's problems will be exported, just like its talented young people. Just about everywhere you look these days, the green shoots that began to sprout in the global economy late last year are blossoming and bearing fruit. The IMF in April upgraded its 2010 forecast for global economic growth once again to 4.2%. Hopes were buoyed that the all-important American consumer has started spending again after the U.S. economy expanded at an annual rate of 3.2% in the first quarter of 2010. In emerging markets, the recovery is zooming ahead. Singapore's gross domestic product grew an annualized 32% in the first quarter, while China posted 11.9% GDP growth, compared to the first quarter of 2009.
But we haven't shaken the gloom from the Great Recession just yet. "Even if the recovery is stronger and faster than expected, it is fragile," IMF Managing Director Dominique Strauss-Kahn said in late April. "The world is still a dangerous place and I would not like that too many people have in mind that the crisis is over and that we can go back to business as usual." Private demand and investment is still weak, especially in the advanced economies, financial sectors are not fully repaired and unemployment is still extremely high.
It's against this uncertain backdrop that the euro-zone debt crisis takes on special significance. Though unlikely to completely derail the global recovery, the crisis will very likely make it even more anemic and tentative. "The bottom line is that [Europe's debt crisis] will almost certainly have ripple effects around the world," says Eswar Prasad, an economist at Cornell University. "This is going to act as a drag on global output and employment growth." The impact is amplified, he says, due to the weak nature of the recovery. Though the debt crisis may be a "small minus" for the global economy, "even a minor blow will set back the recovery. It will drag things out a little more."
That's because Europe's debt crisis could have a dampening effect on the region's economic growth, which, in turn, could slow up the entire global recovery. The euro zone was already slated for an especially meager rebound. The IMF in April forecast only 1% economic growth for the euro zone in 2010 (compared to 3.1% in the U.S.). Now there are fears growth could be even worse. The Greek crisis will likely force other weak economies in the euro zone to get their deficits under control, with a corresponding reduction in demand. Will the private sector step into the breach? Maybe not. Consumers in these countries could delay spending in the face of continued high unemployment and expected tax hikes. And banks throughout the euro zone could well become more cautious and keep credit tight. Barry Eichengreen, an economist at the University of California, Berkeley, argues that Europe could experience a "double-dip" recession, possibly again slipping into a contraction in 2010.
That's bad news for everyone, since Europe is a key source of global demand. Many nations, from Brazil to South Korea, and even the U.S., are hoping that increased exports will help sustain the recovery and create jobs. But with a weakened Europe, that becomes more difficult. China, for example, ships about a fifth of its exports to the European Union, and if those falter, the resulting pain would move along tightly knit supply chains and manufacturing networks to the rest of Asia. "The direct effects [on Asia] are going to be limited," says Cornell's Prasad, "but Europe is a major consumer of exports from Asia." Adds Eichengreen: "There is cause to be very worried. [The Europeans] are important to the rest of us."
Nor is the effect on trade the whole story. The euro-zone crisis could make investors generally more risk-averse, leading to a flight to safety, especially dollar-denominated assets. That could help the U.S. finance its own deficits, but also make American goods less competitive on world markets, dampening hopes for an export-led recovery. In Asia, the stronger dollar could reverse inward flows of capital. BNP Paribas forecast in an April 30 report that Asian stocks could potentially tumble by 17% in the short term as a result.
The Next to Fall?
Perhaps the biggest worry of all is the chance that the Greek crisis is a window into the future of the entire Western world. Stephen King, chief economist for HSBC, notes that heavily indebted governments with large fiscal deficits can be found not just through the weak points of the euro zone, but in much of the developed world — the U.K. and the U.S. included. These countries, says King, have "no credible plans to reduce their deficits." Eventually, they'll all have to implement austerity programs like Greece is doing now, which would suppress growth, not just through the pain of spending cuts, but by depressing business and consumer sentiment as well. King worries that such a mix "doesn't create a double dip, but a stagnation scenario," much like the one Japan has experienced for the past 20 years.
Such fears are particularly acute in Spain — if only because the past 20 years have not been stagnant but golden. To move in Spain's financial circles these days is to know what England must have felt as it awaited the invasion of the Spanish Armada. Dread tempered with the occasional flicker of patriotic hope, knowledge that other nations have fallen victim to the same threat, an uncomfortable awareness that the rest of the known world expects your most imminent demise. The arrival of King Philip's conquering navy, or Greek contagion: turns out they feel like much the same thing.
As Greece swallowed its medicine, one rating agency lowered its grade on Spain, another warned it may downgrade Portugal's debt, and the Spanish unemployment rate officially passed the 20% mark. Both countries have emphasized the ways in which they are not like Greece. They have comparatively low levels of public debt (85% of GDP for Portugal and 67% for Spain vs. Greece's 124%) and, in Portugal's case, a recent history of making tough fiscal reforms. "All serious analysts have made it perfectly clear that Spain's situation is very different from Greece's," says Finance Minister Elena Salgado. "Spain does not have, nor is it going to have, a solvency problem, so there is no need for outside aid." But if Spain has its sovereign debt under relative control, it has other problems almost as troubling. For one thing, its levels of private debt are extremely elevated. Taken together, private and public debt reach 170% of the country's GDP — an amount actually higher than Greece's total debt. And the problem with that, economists point out, is that it reduces the flexibility with which the government can respond to its own citizens' needs. "What happens if the private sector needs a bailout?" asks Fernando Ballabriga, economist at Barcelona's ESADE business school. "The rise in public debt — even if it's still below Greek levels — means that the public sector won't be able to rescue the private sector."
Both Portugal and Spain also suffer from anemic growth — in Portugal's case, lagging behind the E.U. average since 2002. For Spain, which thanks to its ill-founded housing boom was not long ago experiencing growth rates that neared 4%, the drop has been dramatic: its economy continues to contract, making its recession the most enduring among euro zone states. But even as projections suggest its numbers will finally — if barely — move into the black in 2011, there is hardly enough consensus to make them reassuring. "Whether we see a slight contraction or a slight rise, the problem is that the Spanish economy is in for a prolonged stall," says Ballabriga. "And that's what is so worrying. When you put all the pieces together, you have a highly indebted country whose possibilities for generating revenue are fairly deteriorated. So it's going to have problems servicing its debt."
Spain's crippling unemployment rate — the highest in the euro zone — is only making things worse. When Spain's housing bubble burst, it took millions of jobs with it, and they have yet to be replaced. As long as unemployment remains high, it's going to be hard, if not impossible, to reduce public debt both because of the high cost of unemployment benefits, and because the more than 4.6 million who are out of work aren't generating the income in the form of taxes the government so desperately needs.
Add to that the nervousness of the markets, and the chance of dominoes falling just increases. "By itself, Spain isn't at risk of defaulting on its sovereign debt," says Alfredo Pastor, an economist at the University of Navarra's IESE business school and former deputy Finance Minister. "But the market isn't always rational. If Portugal should fall, the market would say that the problem is southern Europe, and then both Spain and Italy would be at risk." As if to prove his point, on May 4, both the Spanish and Portuguese stock markets fell around 3% amid unfounded rumors — "complete craziness" as Prime Minister José Luis Rodríguez Zapatero put it — that Spain was about to request a bailout.
Which is why MIT professor Simon Johnson, former IMF chief economist, says no one should wait. "Portugal is the firebreak," he says. "If I were Spain I'd be working really hard to get a preventative package in place for them." It's not hard to see why; Portugal, like Greece, is a small economy. But Spain, the world's eighth-largest economy and the contributor of 12% of the E.U.'s GDP, would require a bailout the like of which has never been seen before. As Pastor says, "They would have to come up with a new kind of measure. And I have no idea what that would be."
No Quick Fix
Every crisis is an opportunity, of course, and there are plenty of observers in Spain who see a chance to engage in the thoroughgoing reform that has been lacking hitherto. The solution to its level of debt, they argue, is not simply fiscal austerity — though more of that, which Spain has thus far been lax in enforcing, is surely warranted: the government is also going to have to reform its financial sector, loosen the rigid labor market that impedes economic growth and encourage new investment from foreign sources. "If they can improve things within all these areas, they can save themselves," says economist Ballabriga. "But it has to be all of them, and it has to be now. In a few months, it will be too late."
In Greece, similarly, there are those who think the bailout may turn out to be a blessing, one day. In agreeing to the euro-zone and IMF terms, the government has pledged to trim its tangled bureaucracy, tackle tax evasion and reduce waste — all measures aimed at helping to stimulate the economy and offset the impact of the austerity measures. "The important thing now is strict implementation, capacity-building in the state sector and tax administration, and trying also to make a clear impact on tax evasion," says Jens Bastian, a German political economist at the Hellenic Foundation for European and Foreign Policy. "This is something that goes beyond financial assistance. This is about a mentality change in Greek society, a cultural revolution in the relationship between citizen and state."
Is Greece ready for that? If so, the curious case of the Greek debt will turn out to be no more than a footnote to the history of the Great Recession. If not, and bailout follows bailout until there are defaults on sovereign debt galore, that word recession may yet have to be replaced with one that sounds similar — but begins not with an R, but a D.
U.S. Debt Shock May Hit In 2018, Maybe As Soon As 2013: Moody's
By JED GRAHAM, INVESTOR'S BUSINESS DAILY Posted 05/05/2010 07:56 PM ET
Spiraling debt is Uncle Sam's shock collar, and its jolt may await like an invisible pet fence.
"Nobody knows when you bump up against the limit, but you know when it happens it will really hurt," said fiscal watchdog Maya MacGuineas of the Committee for a Responsible Federal Budget.
The great uncertainty about how much debt is too much has tended to make fiscal discipline seem less urgent, rather than more. There is no obvious threshold beyond which investors will demand higher real yields for holding U.S. debt. Vague warnings from ratings agencies about the loss of America's 'AAA' status haven't added much clarity — until recently.
In the wake of the financial crisis and recession, Moody's Investors Service has brought new transparency to its sovereign ratings analysis — so much so that 2018 lights up as the year the U.S. could be in line for a downgrade if Congressional Budget Office projections hold.
The key data point in Moody's view is the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18%-20% of federal revenue is the outer limit of AAA-territory, Moody's managing director Pierre Cailleteau confirmed in an e-mail. Under the Obama budget, interest would top 18% of revenue in 2018 and 20% in 2020, CBO projects.
But under more adverse scenarios than the CBO considered, including higher interest rates, Moody's projects that debt service could hit 22.4% of revenue by 2013. "While we see limited risk of a U.S. sovereign debt downgrade in the next 2-3 years, beyond that we cannot be so certain," wrote Societe Generale's economics team in a recent report. The Moody's ratings framework is one that could have a significant influence on policy — particularly in a crisis.
Because debt levels and interest rates can't be lowered overnight, the obvious way of staying within the AAA limits set by Moody's would be to raise revenue. "It would bias the remedy in favor of tax increases for countries that want to improve their bond rating," said Brian Riedl, budget analyst at the conservative Heritage Foundation.
Because economic growth is a key to fiscal health, Riedl argues that a ratings agency concerned about whether bondholders are repaid should bias spending cuts over tax increases. Moody's says that its framework focuses on debt affordability rather than debt levels as a percentage of GDP. "The higher this ratio (interest/revenue), the more public debt constrains the formulation and delivery of other policies," Moody's analysts wrote in March.
Brazil gov't may cut spending to avoid overheating
RIO DE JANEIRO, May 10 (Reuters) - Brazil's government may cut current expenditures to reduce demand and make sure Latin America's largest economy does not overheat, Finance Minister Guido Mantega said on Monday.
There will be spending cuts at every ministry if necessary, Mantega told reporters in Rio de Janeiro.
"We are studying the possibility of reducing the government's consumption," Mantega said.
"We have to be careful, because we can't take stimulus out before having proof that growth is strong."
The comments come on the same day a weekly central bank survey showed economists in local financial institutions upped their forecasts for growth and inflation this year.
Brazil's economy is expected to expand 6.26 percent, according to the survey, up from a 6.06 percent forecast just a week ago.
Economists also raised their projections for 2010 inflation to 5.50 percent from 5.42 percent earlier -- well above the center of a target of 4.5 percent plus or minus 2 percentage points.
Policymakers have said they will do what is necessary to prevent the economy from overheating, having raised interest rates by an aggressive 75 basis points in April to 9.50 percent.
Brazil gov't may cut spending to avoid overheating
11/05/2010 | Rodrigo Viga Gaier
Brazil's government may cut current expenditures to reduce demand and make sure Latin America's largest economy does not overheat, Finance Minister Guido Mantega said on Monday.
There will be spending cuts at every ministry if necessary, Mantega told reporters in Rio de Janeiro.
"We are studying the possibility of reducing the government's consumption," Mantega said.
"We have to be careful, because we can't take stimulus out before having proof that growth is strong."
The comments come on the same day a weekly central bank survey showed economists in local financial institutions upped their forecasts for growth and inflation this year.
Brazil's economy is expected to expand 6.26 percent, according to the survey, up from a 6.06 percent forecast just a week ago.
Economists also raised their projections for 2010 inflation to 5.50 percent from 5.42 percent earlier -- well above the center of a target of 4.5 percent plus or minus 2 percentage points.
Policymakers have said they will do what is necessary to prevent the economy from overheating, having raised interest rates by an aggressive 75 basis points in April to 9.50 percent.
Brazil candidate Serra's remarks on policy issues
11/05/2010 | Raymond Colitt
Following are comments by Brazilian presidential candidate Jose Serra on a series of key campaign issues from an interview on Monday with Brazil's CBN radio.
Serra, a member of the opposition PSDB party, leads rival Dilma Rousseff by as much as 10 percentage points in opinion polls conducted ahead the Oct. 3 election.
ON THE CENTRAL BANK
"The central bank is no Holy See."
"There were several occasions it could have lowered rates and erroneously didn't."
"(Rates) could be lower. I'm concerned Brazil has the highest rates in the world."
"Now, if there are calamitous errors, which are possible to identify, I think the president needs to make his opposition heard."
"The central bank people need to be able to work in peace without constant interference."
ON IDEOLOGY
"In the traditional political analysis of what is right and left, I am (a leftist)."
ON THE ROLE OF THE STATE
"I favor a national development project for Brazil with government activism.
"I defend a strong state, not obese but muscular, with the capacity to promote our development with social justice."
ON BRAZIL'S OIL REFORM BILL
"I have doubts over this ... even changing the model, as the government wants to do. It wouldn't necessarily require creating a new company given the existing firms, like Petrobras, or organs like the National Petroleum Agency (ANP)."
"There are options for alternative energy ... which are not being used in Brazil, and I think that has to be important for the next government."
ON ECONOMIC GROWTH
"We are among those (countries) that invest the least. That hampers our growth. Ports are overburdened, airports are in a state of calamity due to overuse, roads that can take production to the coast, warehouses that can help with the logistics ... there's a lack of infrastructure."
"It's not only a lack of money, its also knowing how to do it, how to plan properly in the public sector."
ON SOCIAL SECURITY
"The pension systems needs a reform to eliminate privileges."
"It may not go bankrupt, but it leaves pensioners in a precarious situation."
ON THE SOUTH AMERICAN TRADE GROUP MERCOSUR
"I think Mercosur needs to be reformed. Very ambitious targets were set, stages skipped."
"I think it's important to save Mercosur. You need to take two steps back before taking one step forward."
"The meetings of presidents have become another show. There is no concrete progress. It needs to be reformed to be strengthened."
A Trillion for Europe, With Doubts Attached
By LANDON THOMAS Jr. and JACK EWING | Published: May 11, 2010
Like the giant financial bailout announced by the United States in 2008, the sweeping rescue package announced by Europe eased fears of a market collapse but left a big question: will it work long term?
Stung by criticism that it was slow and weak, the European Union surpassed expectations in arranging a nearly $1 trillion financial commitment for its ailing members over the weekend and paved the way for the European Central Bank to begin purchases of European debt on Monday.
Markets rallied around the world in response to the concerted defense of the euro, a package that exceeded in size the United States bank bailout two years ago.
Major stock indexes in the United States rose about 4 percent on Monday, while a leading index of blue-chip stocks in the euro zone rose more than 10 percent. The premium that investors had been demanding to buy Greek bonds plunged. But by Tuesday, that rally appeared to have sputtered out, with many Asian markets down slightly.
And as details crystallized of the package's main component — a promise by the European Union's member states to back 440 billion euros, or $560 billion, in new loans to bail out European economies — the wisdom of solving a debt crisis by taking on more debt was challenged by some analysts.
"Lending more money to already overborrowed governments does not solve their problems," Carl Weinberg, chief economist of High Frequency Economics in Valhalla, N.Y., said in a note. "Had we any Greek bonds in our portfolio, we would not feel rescued this morning."
Such concerns may be part of the reason the euro fell back when American markets opened, after surging in Asian and European trading, to end the day at about $1.28.
Another big issue is whether bailing out economies creates moral hazard. Other countries may continue to skirt the kinds of actions that would lower their budget deficits and debt loads — steps painful to the public and dangerous to politicians — because they too can expect to be rescued.
It is clear that Europe's fund will require the sustained support of the 27 nations that form the European Union — not to mention its richest member, Germany, which has until now deeply opposed a bailout.
Indeed, for all the excitement about the scale of the effort, it is important to remember that the core fund does not now exist. The fund, known as a special purpose vehicle, would raise money by issuing debt and making loans to support ailing economies. The European countries would guarantee that fund.
So the package is merely a commitment for the vehicle to borrow money if a large economy like Spain, which represents 12 percent of the output in the euro zone, asks for assistance. The International Monetary Fund is pledging 250 billion euros to support the effort. Sixty billion euros under an existing lending program pushes the total to near $1 trillion.
The fund is therefore more a theoretical construct than the Troubled Asset Relief Program that was created in the United States, and that is where things get tricky.
By definition, if Spain came to a point where it could no longer finance itself, interest rates would be on the rise. The several hundred billion euros for the fund would not only come at a high cost, but would bring additional pain to already indebted countries like Portugal, France, Italy and the United Kingdom, which back the special purpose entity, thus compounding the region's debt woes.
For Dominique Strauss Kahn, the I.M.F.'s ambitious managing director, the program is a hard-earned victory that allows the fund to assume a central role in pushing for economic reform in Europe.
Greece's cabinet on Monday approved major changes in its pension system, including an increase in the early retirement age to 60 and the broader retirement age to 65, as part of a three-year package of reforms imposed by the fund and the European Union.
Yet some fund staff members have pointed out that, if anything, the rescue package and the I.M.F. commitment to support it might give countries like Spain an excuse to retreat a bit from the tough measures that have distinguished Ireland's and Greece's austerity efforts.
"It shows that Europe can come together," said a banker with close ties to the fund who was not authorized to speak on the record. Though it takes the pressure off Spain, "it does not address structural pressure in Europe."
In effect, Germany and other wealthier European countries are assuming responsibility for the creditworthiness of Greece, Portugal and the other debt delinquents.
But the European central government is weak and must invent new structures to administer the promised aid.
"The debt crisis will change the nature of European monetary union," Jörg Krämer, chief economist at Commerzbank, wrote in a note on Monday. "The euro zone has moved away from a monetary union and towards a transfer union."
Mr. Krämer warned that the shift could "undermine political support for the euro zone in the long run. After all, it is unlikely that the countries receiving support will let others permanently dictate their economic policies. Moreover, voters in the countries giving support will not be willing to permanently give financial support to other countries."
On Monday, Jean-Claude Trichet, president of the European Central Bank, warned European governments, all of which will probably miss the budget deficit goals they agreed to when they created the euro, that they must continue to cut government spending.
At a time when economies, from Romania and Hungary to Britain and Spain, are struggling to meet their deficit goals, Mr. Trichet's warning took on extra resonance.
Romania and Hungary are operating under I.M.F. programs, while Britain and Spain are trying desperately to persuade markets that they will not experience the financing problems that have forced so many countries in Europe to seek assistance.
"For us, what is absolutely decisive is the commitment of governments of the euro area to take all measures needed to meet their fiscal targets this year and in the years ahead," Mr. Trichet told reporters at a press conference in Basel, Switzerland.
But after 10 years of mostly missing fiscal guidelines during a worldwide economic boom, it remains uncertain if more finger-wagging by Mr. Trichet and a new fund backed by the I.M.F. will be enough to return European nations to fiscal health as their economies stagnate and social pressures build.
James Kanter, David Jolly and Sewell Chan contributed reporting.
Muddy Road Molds Debate on the Future of Guyana
By SIMON ROMERO
FIFTY EIGHT, Guyana — A battered, decades-old Bedford truck that would not look out of place in a "Mad Max" movie pulled off the road. Gold miners crawled out of its mud-splattered cab, sauntered into Peter Rajmenjan's diner and asked if he had any bush hog for sale.
"The only wild meat I have left today is deer," replied Mr. Rajmenjan, 55, whose establishment lies at the 58-mile marker on the main road cutting through the Guyanese jungle.
Over plates of deer curry, travelers chatted in Caribbean-accented English or murmured in indigenous languages like Macushi, Arawak and Wapishana. Around them, the forest buzzed with mosquitoes. The siren moan of howler monkeys could be heard in the distance.
Then they climbed back into their Bedfords and continued their journey on one of South America's most remarkable roads. It runs more than 300 miles, from Georgetown, the sleepy capital of this former British colony, to Lethem, a boomtown on the border with Brazil.
The status of this muddy, sometimes impassable road represents nothing less than the future of Guyana itself, many Guyanese say. Investors from Brazil, the region's rising power, want to pave the road and dredge a deepwater port near Georgetown, giving northern Brazil a modern artery to export its goods to the Caribbean and North America.
For Guyana, which has just 753,000 people in a country about the size of Britain (population 61 million), the project holds both risk and reward. Many here liken the debate over the road to a battle for the identity of Guyana, a nation pulled between competing desires to delve into the global economy or pursue a slower, more ecologically sustainable path toward development.
President Bharrat Jagdeo, a Moscow-educated economist, has won plaudits for the nation's forest protection policies, but his government is also considering far less pristine endeavors, like oil drilling.
The road is a physical manifestation of these two poles. At one end are echoes of the nation's colonial past, like cricket pitches and hackney carriages (taxis). Hindu temples, for the many Guyanese descended from laborers from the Indian subcontinent, dot Georgetown's canalled streets.
At the other end of the road, on the border with Brazil, every other conversation seems to be in Portuguese. Chinese merchants sell goods to traders, businessmen broker deals to lure Brazilian rice farmers and signs welcome Brazilians and their robust currency, the real, to this outback.
Between these two worlds lies a frontier: thick rain forest and empty savannas in one of the hemisphere's poorest and most sparsely populated countries.
Environmentalists are especially concerned about the road's potential impact on forests that are home to animals like river otters, the 400-pound arapaima fish, even jaguars that can be glimpsed at dusk along a stretch of the road through the protected Iwokrama rain forest. Studies show that more than two million acres of rain forest could be affected if the road is paved.
"Asphalted roads in tropical areas cause deforestation, poaching and attract settlement, and this road happens to run through one of the most species-rich areas in the world," said Graham Watkins, a biologist and resource management consultant in Georgetown.
Those arguing for the road to be paved acknowledge some upheaval will occur. But they also say the road could ease Guyana's poverty, a legacy of isolationist economic policies. Forty-four years after Guyana gained independence, the country remains the poorest in South America, with a per capita income lower than Bolivia's.
Up and down the road, signs of daily struggle abound. Close to where the pavement ends, Dennis Williams, 42, an Arawak Indian, eked out a living in a downpour that stymied even vehicles with four-wheel drives.
"Rain don't humbug the coals," said Mr. Williams, pointing to a lumpy bag at his feet. Translation: the rain doesn't spoil the cooking charcoal that Mr. Williams harvests from trees around his village and sells for about $3 a bag to feed his children.
Only about 100 vehicles a week make the trip all the way to Lethem, taking anywhere from 12 hours to two days to complete it, depending on weather conditions. The muddy, pot-holed road might seem atrocious today — drivers place their vehicles on a pontoon ferry to cross the Essequibo River — but it used to be worse before the early 1990s.
"That's when I shifted Guyana's gaze from the Caribbean toward South America," said Colin Edwards, 63, a Briton who oversaw the upgrading of the road from a cattle trail.
"Now Guyana's continental destiny hinges on the road's asphalting," said Mr. Edwards in the foothills of the Pakaraima Mountains, where he settled, married a Macushi woman, had three sons and opened a roadside hotel. It has a watering hole called the Dakota Bar, where cattlemen used to gather to watch DC-3s depart with steers bound for the coast.
Samuel Hinds, Guyana's prime minister, said it was Henry Ford who originally had the idea of cutting a road through Guyana's forest in the 1920s. Some Guyanese argue that Ford was searching for a way to export cultivated rubber from Fordlândia, his failed outpost of capitalism on a tributary of the Amazon River in Brazil.
Companies in Brazil still want the road improved, and many Guyanese consider it a foregone conclusion that it will be. Still, the Brazilians may have to wait.
"Sleeping with a big neighbor, 200 times your size, you know they might not intend it, but if they roll over it could be the end of you," said Mr. Hinds, reflecting concerns in Guyana over being swallowed up by its southern neighbor. Still, Mr. Hinds said he could support the project, as long as Guyana could find $350 million to finance it.
For now, the road captures both the splendor and the squalor of Guyana's isolation. At one spot where a logging truck had overturned, the piercing song of the screaming piha resonated through the canopy. Loggers gossiped about recent reports of jaguar attacks on people. Ali Shazeez, a truck driver, rolled up his window. "Malaria," he explained, gesturing toward mosquitoes.
Farther down the road, past the lyrically named "bush mouth," where the Rupununi savanna abruptly unfolds from the rain forest, the lights of Lethem beckoned. Workmen labored on dozens of structures on Lethem's outskirts. The dirt bikes weaving between Land Rovers on Lethem's dirt roads, as Jamaican dance hall music boomed from speakers, gave the town an almost frenetic vibe.
For the "coast landers" from Georgetown, Lethem was their journey's end. But for those dwelling in Lethem and the surrounding frontier of savannas, where cattle rustlers still abscond into the Brazilian state of Roraima, the dirt road unfolding from the edge of town represented something else.
"That road is going to end our way of life," said Justin de Freitas, 35, who worked as a porter along the road before returning to Dadanawa, a sprawling cattle ranch where he grew up. Dadanawa's vacqueros, or cowboys, are still Wapishana Indians clad in jaguar pelts who ride their horses for days over the empty savanna.
"Nothing," he said, "will be the same around here once it's paved."
Brasil planteó inquietud por las trabas a alimentos importados
11/05/2010 | José Crettaz | LA NACION
De paso por Buenos Aires, Ivan Ramalho, secretario ejecutivo del Ministerio de Desarrollo, Industria y Comercio Exterior de Brasil, se enteró por la prensa del freno argentino a la importación de alimentos. El funcionario brasileño no alcanzó a entender cómo un organismo técnico del Ministerio de Salud podría paralizar las ventas de choclo en grano enlatado o conserva de tomate, entre otros productos que el gigante sudamericano le vende a nuestro país.
En medio de la reunión mensual de monitoreo del comercio bilateral, Ramalho le preguntó al secretario de Industria argentino, Eduardo Bianchi, sobre el alcance de la medida. Pero su colega argentino poco pudo aclararle. "El tema no está en mi jurisdicción, no bien consiga los detalles te voy a enviar la información acerca cómo se va a instrumentar", le respondió Bianchi, según fuentes del Ministerio de Industria y Turismo, a cargo de Débora Giorgi. El diálogo se dio en términos absolutamente informales en medio de una relación con frecuentes tensiones comerciales.
"A pesar de ser apenas rumores, le expresamos nuestra preocupación al secretario Bianchi", dijo el funcionario brasileño a la agencia Estado, que consignó también la inquietud de empresarios de ese país.
La semana pasada, el secretario de Comercio Interior, Guillermo Moreno, ordenó al director de la Administración Nacional de Medicamentos, Alimentos y Tecnología Médica (Anmat), Carlos Chiale, que el Instituto Nacional de Alimentos (INAL), a su cargo, en lugar de entregar directamente certificados sanitarios a los importadores se los envíe a él. Según fuentes empresariales, Chiale consultó con su jefe, el ministro de Salud, Juan Manzur, y éste le ordenó cumplir con el pedido. La medida, que comenzaría a regir para alimentos no frescos el 1°de junio, fue comunicada verbalmente a los responsables de comercio exterior de supermercados y empresas importadoras.
Desde entonces, la incertidumbre sobre la compra al exterior de alimentos es total. Con bajas expectativas, la Cámara de Importadores de la República Argentina (CIRA) y algunos supermercados participarán hoy de una reunión en la Anmat, a las 11, para conocer la nueva regulación sobre los permisos de importación que, hasta ahora, entregaba automáticamente ese organismo. "Vamos a explicarle la problemática a la autoridad sanitaria. Hay mercadería que está en el puerto, otra que está viajando, y hay compromisos de importación acordados para los próximos seis meses", advirtió el presidente de la CIRA, Diego Pérez Santisteban, que alertó sobre el riesgo inflacionario.
Silencio
A pesar de las insistentes llamadas de LA NACION, la Cámara Argentina de Supermercados (CAS) y la Federación Argentina de Supermercados y Autoservicios (FASA) no opinaron sobre la medida. Como es habitual, el secretario Moreno tampoco respondió la consulta que este diario le transmitió por intermedio de una de sus secretarias.
Por lo pronto, el anuncio extraoficial de las restricciones ordenadas por Moreno despertó las críticas de las empresas y la consulta de Brasil, un proveedor importante de choclo en grano enlatado y tomate en conserva, entre otras mercancías alcanzadas por la decisión.
Ayer, en un comunicado de tono inusualmente ríspido, la Coordinadora de las Industrias de Productos Alimenticios (Copal), que agrupa a las principales cámaras del sector, reclamó que "toda medida de política comercial interna y externa respete los criterios de los tratados internacionales de los que Argentina es parte, ya que es una de las garantías necesarias para evitar represalias en el comercio mundial, que ya han sido solicitadas en sus países de origen por los sectores de la industria afectados".
La entidad, presidida por el abogado laboralista Daniel Funes de Rioja, recordó además que "la industria argentina de alimentos y bebidas por su competitividad y calidad exportó en 2009 más de US$ 22.000 millones, mientras que las importaciones no alcanzan a los US$ 1000 millones".
?Freno a las importaciones. La semana pasada, el secretario de Comercio Interior, Guillermo Moreno, ordenó al INAL, un organismo técnico dependiente del Ministerio de Salud, frenar los permisos sanitarios de importación de alimentos no frescos.
CIERRE DE FRONTERAS
* Certificados sanitarios. Hasta ahora, los importadores buscaban ese documento en el INAL, ahora tendrán que ir a Comercio Exterior.
* Reclamo empresarial. Varias cámaras pidieron precisiones acerca de la medida, que podría impactar los precios de algunos productos.
* Brasil pidió detalles. Preocupados por sus embarques, el país vecino también solicitó precisiones.
Teme Grecia terminar como la Argentina
Viernes 7 de mayo de 2010
ATENAS.? Los ojos arden, el olor es acre y hay vidrios rotos en el piso. Ramos de flores, junto con peluches, velas y cartas, se amontonan ante la ennegrecida sucursal del Banco Marfin, que anteayer se convirtió en una trampa mortal para tres personas y hundió a esta capital en un estado de shock profundo, de inseguridad, de temor al futuro.
A pesar de que ayer, en medio de protestas, el Parlamento finalmente aprobó un durísimo plan de ajuste ?tal como exigían la Unión Europea (UE) y el FMI a cambio de una ayuda de 146.000 millones de dólares?, en Grecia reina la incertidumbre. Y muchos temen terminar como la Argentina, un país que queda a muchos miles de kilómetros de distancia, pero en el cual se reflejan en este momento de apocalíptica crisis económica.
No es casual que a sólo una cuadra de la sucursal bancaria incendiada anteayer por exaltados en la avenida Stadiou, la calle de las grandes tiendas ahora marcada por paredes ennegrecidas, vidrieras rotas, graffiti que insultan al FMI y a los "políticos ladrones", también haya una inscripción que evoca la Argentina. "Solidaridad Atenas-Buenos Aires", pintó alguien con un aerosol negro. La increíble conexión está subrayada en rojo, con pintura que chorrea como si fuera sangre.
En esta Atenas deprimida y en alerta, donde parece regir el estado de sitio por la cantidad de policías con cascos y escudo que patrullan las calles del centro, no hay nadie que no responda con un "¡ah!" cuando esta cronista indica su origen.
"¿Argentina? ¡Ah, sí!? Nosotros vamos a terminar como ustedes, como los argentinos", suele enseguida responder la mayoría de los entrevistados. Y parece lógico: en estos días de anuncios de recortes draconianos, de protestas violentas y de muerte, todos los medios le recuerdan a la opinión pública que en diciembre de 2001 en el país del tango pasó algo muy parecido. Hubo protestas, saqueos, decenas de muertos, cinco presidentes en un puñado de días y la Argentina quedó aislada del mundo, como ahora teme quedar Grecia.
"¿En las protestas que hubo en la Argentina la policía dejaba que participara gente encapuchada? ¿Cómo es ahora la situación? ¿Cómo está el país? ¿Hay mucha pobreza? ¿Cómo vive la gente?", preguntan los griegos, ávidos de información y con opiniones muy cuestionables de lo que sucedió en "el país de Maradona y Messi", que hoy, para muchos aquí, es sinónimo del peor caos económico.
Fantasmas de una devaluación en Brasil
Martes 11, Mayo 2010
Si Europa entra en recesión, la economía de China tenderá a desacelerarse y Brasil precisará devaluar el real. Es lo que afirman algunos economistas brasileños que han llamado la atención sobre los impactos de la crisis de Grecia en la región. Aunque suene a especulación, lo cierto es que ya ocurrió la semana pasada cuando en cuestión de un par de días el dólar pegó un respingo al pasar de 1,73 a 1,84 reales la unidad y casi llegó a tocar, en un momento los 2 reales.
Ayer la moneda brasileña se recuperó de la caída. Pero fue al ritmo de una euforia internacional, que hizo saltar las bolsas cinco puntos hacia adelante, y en cuya duración nadie confía. El paquete de 750 mil millones de euros decidido por la Unión Europea para estabilizar la divisa no obnubiló a los expertos que siguen de cerca el desarrollo de la crisis. Para ellos, la calma europea no irá a durar, en una visión que comparte el Fondo Monetario Internacional. Lo dijo Marek Belka, director del departamento Europa del FMI: "En este momento es un alivio, pero no una solución de largo plazo".
Los economistas brasileños que trabajan sobre los escenarios inmediatos, como los del banco Schahin, consideran que el impacto de la crisis helénica en Brasil dependerá de cuán fuerte sea la recesión en el continente europeo y en qué magnitud se desacelerará la economía china, hoy el principal comprador de productos primarios brasileños. Lo mismo se puede decir de Argentina que puede, inclusive, sufrir las consecuencias de una posible caída de exportaciones hacia Brasil. Aunque el consumo brasileño sigue en alza y eso genera demandas adicionales a la industria argentina, como en el caso de los autos, la tendencia en el segundo semestre puede comprimir las expectativas.
Tal como dijo ayer el ministro de Hacienda Guido Mantega, el gobierno brasileño no tiene medidas en vista para evitar la propagación del efecto Grecia. Entre ellas, está el recorte del gasto público para contener la demanda.
La sensación en el mercado financiero brasileño es que la acomodación del país a la crisis griega se dará a través de una devaluación del real.
Para los analistas, lo que ocurrió la semana pasada, con la salida de divisas del país, indica que la situación europea ya salpicó la economía brasileña que no quedará inmune.
El poder de Brasil llega a la abogacía
Las firmas del país vecino ganan peso en la región y definen la contratación de abogados en otros mercados. Crece el desembarco de multinacionales jurídicas en el Mercosur. Qué hacen los estudios argentinos.
Martes 11 de mayo de 2010
