World Economy Department
There are lot more interesting stuff in Pepe Escobar’s column than diving Brazilian economy. The question is of universal nature – why multi faceted attack on the two countries is successful. Russia has cemented liberal systemic structure. Brazil seems to have the same structure – oligarchic, corrupted and crappy government.
As for now only, both countries are rolling down to the same muddy ditch unless they found truly dictatorial and compassionate leaders. The two adjectives do not create oxymoron here.
The Brazilian Earthquake
From: Sputnik, 13:06 06.03.2016(updated 13:37 06.03.2016), Pepe Escobar
No consumption, no investment, no credit
Brazil couldn’t be in a gloomier situation. GDP was down 3.8% last year; probably will be down 3.5% this year. The industrial sector was down 6.2% last year, and the mining sector down 6.6% in the last quarter. The nation is on the way to its worst recession since…1901.
There was no Plan B by the — incompetent — Rousseff administration for the Chinese slowdown in buying Brazil’s mineral/agricultural wealth and the overall global slump in commodity prices.
The Central Bank still keeps its benchmark interest rate at a whopping 14.25%. A disastrous Rousseff neoliberal “fiscal adjustment” actually increased the economic crisis. Today Rousseff “governs” — that’s a figure of speech — for the banking cartel and the rentiers of Brazilian public debt. Over $120 billion of the government’s budget evaporates to pay interest on the public debt.
Inflation is up — now in double-digit territory. Unemployment is at 7.6% — still not bad as many a player across the EU — but rising.
– “It’s no coincidence that three major BRICS nations are simultaneously under attack — on myriad levels: Russia, China and Brazil. The concerted strategy by the Masters of the Universe who dictate the rules in the Wall Street/Beltway axis is to undermine by all means the BRICS’s collective effort to produce a viable alternative to the global economic/financial system, which for the moment is subjected to casino capitalism. It’s unlikely Lula, by himself, will be able to stop them.“
The Brics are dead. Long live the Ticks
From: Financial TImes, January 28, 2016 8:22 am, Steve Johnson
– “Tech-heavy Taiwan, India, China and Korea are the new darlings of the EM world
The BRICS are dead. Long live the TICKS.
The Brics concept, based on the belief that the quartet of Brazil, Russia, India and China would power an unstoppable wave of emerging markets-led economic growth, gripped the firmament for more than a decade after it was conjured into existence by Jim O’Neill, then chief economist at Goldman Sachs, in 2001.
But the deepening recessions in Brazil and Russia have now dealt such a blow to faith in the Bric hypothesis that, late last year, even Goldman closed its Bric fund after assets dwindled to $100m, from a peak of more than $800m at the end of 2010.
In its place, emerging market fund managers appear to have stumbled on its potential replacement — the Ticks, with tech-heavy Taiwan and (South) Korea elbowing aside commodity-centric Brazil and Russia.
The trend was turbocharged late last year when MSCI widened its EM index to include companies listed overseas, adding the likes of New York-listed Alibaba, Baidu and Netease to the index alongside existing heavyweights such as Tencent.
Wider afield, the two stocks most commonly owned by the 120 funds monitored by Copley are Taiwanese chipmaker TSMC and Korea’s Samsung Electronics.
“These are global companies that are either leaders or significantly well positioned in oligopolistic industries,” says Mr Sneller, who also holds Taiwan’s Hon Hai Precision Industry (also known as Foxconn), partly in the hope that Apple, its largest customer, will start to source automobile parts from it if the US tech group makes a strong push into vehicles. (…)“