Real vs Dollar and other currency issues

[CBGBConnisur]

Ben Bernanke is the steward of the Dollar's value, he has kept interest rates low and has no plans to raise them. The US has a mountain of debt, he would rather risk inflation than see the economy go into stand still. The US is not in a true recession but its growing at a snail's pace. The ECB recently raised interest rates, the Fed was hoping the ECB would cut interest rates to narrow the spread between US and European rates, which would put less pressure on the Dollar. The spread in interest rates between the US Federal Reserve and other major banks is one of the reasons why the Dollar continues to lose value.

I have a lot of friends who work in real estate in the US and most of them still have jobs... because of foreign real estate buyers, many from Europe and the Mideast, the US is going through a fire sale right now.

[Bubba Boy]

Alan Greenspan ran really loose monetary policy for years, this essentially expanded the level of debt in the banking system and combined with Bush's policies (ie higher budget deficits and the war spending) and has got us to where we are now. Bernanke inherited the subprime mess which has dominated monetary policy since. He is basically just trying to keep the banking system from imploding.

[CBGBConnisur]

Like I said the Dollar's fate has nothing to do with politics. Greenspan helped to turn America into a debtor nation. We have no manufacturing, many of our jobs constantly go overseas, even the service ones that were meant to replace the factory work. Our middle class is in serious jeopardy of winding up in poverty. I would not be surprised if favelas show up in the good old United States, some areas of major US cities are already looking squalid. Recall that Schwarzenegger movie the Running Man?? The scenario was about the USA in 2017 where oil winds up in short supply leading to an economic collapse of the US, in that movie the US turns into a third world style police state with heavily guarded modern areas and shanty towns, only the superwealthy have rights, a dictatorship of the affluent, kind of resembles what Brazil looks like today, and handful of rich people and most in dire poverty. Real scary stuff.

Obama is certainly not going to be a savior of American democracy. People are going to be disappointed in his quest for Change.

[Clandestine782]

Ben Bernanke is the steward of the Dollar's value, he has kept interest rates low and has no plans to raise them. The US has a mountain of debt, he would rather risk inflation than see the economy go into stand still. The US is not in a true recession but its growing at a snail's pace. The ECB recently raised interest rates, the Fed was hoping the ECB would cut interest rates to narrow the spread between US and European rates, which would put less pressure on the Dollar. The spread in interest rates between the US Federal Reserve and other major banks is one of the reasons why the Dollar continues to lose value.

I have a lot of friends who work in real estate in the US and most of them still have jobs... because of foreign real estate buyers, many from Europe and the Mideast, the US is going through a fire sale right now.Ben Bernanke is NOT the steward of the dollar's value. The policy of the government is (as it has been since Nixon ended the gold standard) is BENIGN NEGLECT. Currency pegs/ fixed exchange rates all fail in the long run, and so the US did the right thing by not trying to maintain any fixed value of the US currency against *anything*. For a longer discussion of why the gold standard was not a good idea, read Paul Krugman's "Goldbug variations."

[Hitmanm3]

Like I said the Dollar's fate has nothing to do with politics. Greenspan helped to turn America into a debtor nation. We have no manufacturing, many of our jobs constantly go overseas, even the service ones that were meant to replace the factory work. Our middle class is in serious jeopardy of winding up in poverty. I would not be surprised if favelas show up in the good old United States, some areas of major US cities are already looking squalid. Recall that Schwarzenegger movie the Running Man?? The scenario was about the USA in 2017 where oil winds up in short supply leading to an economic collapse of the US, in that movie the US turns into a third world style police state with heavily guarded modern areas and shanty towns, only the superwealthy have rights, a dictatorship of the affluent, kind of resembles what Brazil looks like today, and handful of rich people and most in dire poverty. Real scary stuff.

Obama is certainly not going to be a savior of American democracy. People are going to be disappointed in his quest for Change.Favelas have been in the USA since the 6o's it was called the projects and they are still around visit places like south central LA and go to New York and see Brownsville and so on. You really need to to open your eyes.

[Clandestine782]

Like I said the Dollar's fate has nothing to do with politics. Greenspan helped to turn America into a debtor nation. We have no manufacturing, many of our jobs constantly go overseas, even the service ones that were meant to replace the factory work. Our middle class is in serious jeopardy of winding up in poverty. I would not be surprised if favelas show up in the good old United States, some areas of major US cities are already looking squalid. Recall that Schwarzenegger movie the Running Man?? The scenario was about the USA in 2017 where oil winds up in short supply leading to an economic collapse of the US, in that movie the US turns into a third world style police state with heavily guarded modern areas and shanty towns, only the superwealthy have rights, a dictatorship of the affluent, kind of resembles what Brazil looks like today, and handful of rich people and most in dire poverty. Real scary stuff.

Obama is certainly not going to be a savior of American democracy. People are going to be disappointed in his quest for Change.
A few points:

1. The world's largest creditor nation is........Japan. And it has been in recession for the last 20 years, and that status has increased. Being a debtor nation in the sense of having large amounts of Foreign Direct Investment is not the same thing as being a debtor nation because of having a huge budget deficit (Japan has a bigger budget deficit, but is still a creditor nation). There are other countries that have much higher debt/ GDP ratios. (Belgium. Italy. Japan. Singapore....etc).

2. Being a debtor nation as a result of FDI is similar to a bank being in debt because someone has put their savings there. Every time someone makes a deposit, the bank goes that much deeper in debt. And so it is with the United States (and even China, if their FDI figures are to be believed).

3. Manufacturing is not everything. If you did some looking of the figures of manufacturing volume, I wouldn't be surprised if it had actually increased in the United States. It's just that it takes fewer people to make the same amount of stuff. It's called............productivity. As a subset to this, I should say that the US is a service based economy anyway. Something like 85% of our economy is in goods and services. (And it's always been that way.) People can make money in logistics (which is the distribution of things that they may or may not have made) or financial services or any thing *other* that manufacturing.

4. There is oil in the United States. It's just that environutbags are afraid that we might disturb some birds or something and so the vast majority of it is off limits to oil developers. So now what?

[Clandestine782]

The Euro has been rapidly replacing the US dollar as a popular reserve currency choice. Already the big OPEC nations are untying their currencies from the dollar and moving to a basket of currencies. The IMF recently audited the US Federal Reserve. The Dollar continues its swan dive, Ben Bernanke will never lift interest rates, he rather have hyperinflation than US economic slowdown.

The writing is on the wall for the Greenback, and it has absolutely nothing to do with Bush or Obama. The US has consumed more than it has produced for nearly four decades and now the chickens have come home to roost.

I could not give a flip what some moron canuck thinks of California and of Obama. Canadians like Bill hate Obama because he is going to throw NAFTA in the trash. Australia is lucky that it has China to fall back on than the US.
Your comments about the Euro replacing the dollar as reserve currency are WRONG. (Do you look up *anything* before you post?)

Here are two links. One the IMF and the other (you guessed it)....Wikipedia.

http://www.imf.org/external/np/sta/cofer/eng/cofer.pdf
http://en.wikipedia.org/wiki/Reserve_currency

1. Even if the US dollar lost its status as reserve currency, it is not like US dollars would never be accepted anywhere for Americans to buy the things that they want. Swiss francs are accepted everywhere in the world-- even though ChFr make up less than 1/2 of 1% of the listed reserve currencies- and the Swiss Franc is the last currency on the face of the earth that is priced in terms of gold. (Swiss Constitution.) What happens if the US dollar is no longer reserve currency? The pound sterling was once a reserve currency and it isn't anymore. Has Britain fallen into the sea?

2. Have you noticed that it is not normal for countries to be able to make such money off of seignorage? If the US lost this ability, then it would be LIKE EVERYONE ELSE.

3. It is far from clear that the Eurozone will take over. (I think we already went down the road of the existence of the CFA Franc not being enough to make a single African currency.)

http://www.theglobeandmail.com/servlet/story/RTGAM.20080407.WBmarkets20080407154932/WBStory/WBmarkets

[CBGBConnisur]

the us dollar would still be accepted but the issue with reserve currency is allowing yourself to spend more than you earn. the us can do this only because of the dollar's reserve status. most americans use debt to finance their lifestyles, thats why we can go around buying flat screen tvs, suvs and luxury cars, vacations to brazil and other locales, etc. it would be much harder to afford those things if we had to pay cash.

the euro in the short term, over the next two decades, is becoming a credible alternative to the us dollar. over the long haul the chinese renmimbi is the one to watch. even the real is going to become a major currency, brazil is one of the goldman sachs brics countries.

economic growth and interest rates(which are set by central banks) are key to a currency's value. bernanke might not control the dollar's fate completely but he has a big say in how it pans out. his predecessor allowed the us to wind up in a mountain of debt.

worst case scenario for the us is americans will have to live more financially conservative lifestyles. going overseas will be different too, you just won't be seen as "rich americans" for much longer, we'll become like everyone else.

europe and china still see the us as an important customer, so they will prop us up for a while.

the uk struggled for a very long time after it lost its reserve currency status, the us was propping up the uk in the post world war 2 period. i somehow have serious doubts if the chinese or the continental europeans will do us a favor in the long run, they will keep us up in the short term to cover their own rear ends. the sterling used to buy as many as 5 us dollars in the world war 2 era.

greenspan delivered a speech in 2001 claiming the us dollar would hold its ground against the euro. he changed his tune recently. worst case scenario is that the euro eclipses the us dollar and best case scenario is that it shares the stage equally according to greenspan.

http://www.federalreserve.gov/boarddocs/speeches/2001/200111302/default.htm

http://www.newsmax.com/insidecover/greenspan_euro/2007/09/17/33472.html?s=al&promo_code=3a32-1

in the late 90s when asked about his own personal investments, alan greenspan said he held only us treasuries, recently he said he has "diversified". does not sound like good news for the greenback. a lot of people
these days are diversifying their assets. a while back it was unthinkable to preserve wealth in non us dollar denominated assets.

[Ryjerrob]

Favelas have been in the USA since the 6o's it was called the projects and they are still around visit places like south central LA and go to New York and see Brownsville and so on. You really need to to open your eyes.

There's no comparison between Favelas and Housing Projects. There's also no comparison between the poor of Brasil and the poor of the USA. Are you trying to make some "quase' political statement?

ryjer

[CBGBConnisur]

Favelas in Brazil are bad, I would bet the slums in a lot of Asian and African cities are even worse. Comparing American ghettos to Brazilian favelas is a very big stretch. Even some of the worst parts of US cities usually have reliable electricity and clean drinking water, which is hard to find in a favela.

[Sperto]

Favelas in Brazil are bad, I would bet the slums in a lot of Asian and African cities are even worse. Comparing American ghettos to Brazilian favelas is a very big stretch. Even some of the worst parts of US cities usually have reliable electricity and clean drinking water, which is hard to find in a favela.
Rubbish!

"Clean drinking water"? You've never noticed that brazilians filter their water or buy mineral water?

"Electricity"? I've seen quite a few favelas in Brazil. All of them had working electricity.

I know nothing about american ghettos, but I guess your picture of brazilian favelas are wrong. Except for the violence in the favelas it's not that bad living in a favela. Most of the people living in the favelas are just normal hardworking people.

[Mangera]

I am not a 100% sure, but if I am not mistaken, people who live in the favelas do not pay for water and electricity. People who live in the states ( inner city/projects ) do pay for water and electricity. Just thought I would throw that into the discussion.

[Puta Romeo]

I do not think that holds true to all projects Mangera. I know in San Francisco for example residents only pay rent, electricity, garbage and water are free.

[Alex Deuce]

Favelas in Brazil are bad, I would bet the slums in a lot of Asian and African cities are even worse. Comparing American ghettos to Brazilian favelas is a very big stretch. Even some of the worst parts of US cities usually have reliable electricity and clean drinking water, which is hard to find in a favela.

The above quote is from someone that obviously has never lived in a project or low income tenement building. Reliable electriciy and clean drinking water! LMAO

CBGBConnisur you can blame Benanke or Greenspan but the fate of the US Dollar resides in two factors. Slow rate of GDP and percentage of Deficit spending to GDP. Basically, DUBYA has done this! Trickle down strikes again! But to make it worse, we have a damn Republican spending like a damn drunken sailor on leave in Brazil.

[Madd Love]

Your comments about the Euro replacing the dollar as reserve currency are WRONG. (Do you look up *anything* before you post?)

Here are two links. One the IMF and the other (you guessed it)....Wikipedia.

http://www.imf.org/external/np/sta/cofer/eng/cofer.pdf
http://en.wikipedia.org/wiki/Reserve_currency

1. Even if the US dollar lost its status as reserve currency, it is not like US dollars would never be accepted anywhere for Americans to buy the things that they want. Swiss francs are accepted everywhere in the world-- even though ChFr make up less than 1/2 of 1% of the listed reserve currencies- and the Swiss Franc is the last currency on the face of the earth that is priced in terms of gold. (Swiss Constitution.) What happens if the US dollar is no longer reserve currency? The pound sterling was once a reserve currency and it isn't anymore. Has Britain fallen into the sea?

2. Have you noticed that it is not normal for countries to be able to make such money off of seignorage? If the US lost this ability, then it would be LIKE EVERYONE ELSE.

3. It is far from clear that the Eurozone will take over. (I think we already went down the road of the existence of the CFA Franc not being enough to make a single African currency.)

http://www.theglobeandmail.com/servlet/story/RTGAM.20080407.WBmarkets20080407154932/WBStory/WBmarkets


All currencies are depreciating against real goods.I think People would be foolish to bet one currency would be used over another as a reserve currency. There is no backing of these currencies except more paper with a number & another countries logo We are all part of a FIAT experiment to see we can print an endless stream of money to prosperity and history has always proved this wrong since the days of John law, to weinamar Germany the only thing holding up all currencies in the wold is is confidence.

Everyone believes the paper dollar, Euro, Real, etc... is worth something. The truth is the more you have of something he less valuable it is. That saying is true with anything in life. The more paper money it is relative to real goods the less valuable that paper money is and people will want to get rid of it and this increases the vicous cylcle of depreciation and inflation.

If the dollar goes down everyone should be worried, because if the dollar declines be 40% then the backng of foreign currencies declines 40%.

The world is going to experience severe inflation not just the U.S. because the U.S have negative real interest rates, which is infecting the world with its Flu like symptoms. The Euro is also way behind the inflation curve and also experiencing conflict. The Euro may break apart after 10 years in existence:

France is expected to grow 2% his year.
Italy barely at all


Also take a look at Interest rates spreads between government bonds in France, Spain, Germany and Italy
See the chart attached:

The sudden rocketing in sovereign bond spreads between core German Bonds and Club Med debt - Italian, French, Spanish, Portuguese, Greek, as well as Irish, Belgian and Slovenian - is a clear sign that markets are starting to price in a break-up risk for the single currency,

Currency unions have endured only when - like the UK and US - they've been fused after generations of political union and held together by a federal tax system.The euro, in contrast, is built on a series of policy conflicts, confusions


Also another serious issue is protectionism. We saw this recently with food exports and will likely continue in the future with reverse globalization.

[Mangera]

All currencies are depreciating against real goods.I think People would be foolish to bet one currency would be used over another as a reserve currency. There is no backing of these currencies except more paper with a number & another countries logo We are all part of a FIAT experiment to see we can print an endless stream of money to prosperity and history has always proved this wrong since the days of John law, to weinamar Germany the only thing holding up all currencies in the wold is is confidence.

Everyone believes the paper dollar, Euro, Real, etc... is worth something. The truth is the more you have of something he less valuable it is. That saying is true with anything in life. The more paper money it is relative to real goods the less valuable that paper money is and people will want to get rid of it and this increases the vicous cylcle of depreciation and inflation.

If the dollar goes down everyone should be worried, because if the dollar declines be 40% then the backng of foreign currencies declines 40%.

The world is going to experience severe inflation not just the U.S. because the U.S have negative real interest rates, which is infecting the world with its Flu like symptoms. The Euro is also way behind the inflation curve and also experiencing conflict. The Euro may break apart after 10 years in existence:

France is expected to grow 2% his year.
Italy barely at all


Also take a look at Interest rates spreads between government bonds in France, Spain, Germany and Italy
See the chart attached:

The sudden rocketing in sovereign bond spreads between core German Bonds and Club Med debt - Italian, French, Spanish, Portuguese, Greek, as well as Irish, Belgian and Slovenian - is a clear sign that markets are starting to price in a break-up risk for the single currency,

Currency unions have endured only when - like the UK and US - they've been fused after generations of political union and held together by a federal tax system.The euro, in contrast, is built on a series of policy conflicts, confusions


Also another serious issue is protectionism. We saw this recently with food exports and will likely continue in the future with reverse globalization.
I really have not heard too much news as far as the possibility of the break up of the Euro. Is your theory based on written articles or just on your assumptions?

[Ryjerrob]

The above quote is from someone that obviously has never lived in a project or low income tenement building. Reliable electriciy and clean drinking water! LMAO

CBGBConnisur you can blame Benanke or Greenspan but the fate of the US Dollar resides in two factors. Slow rate of GDP and percentage of Deficit spending to GDP. Basically, DUBYA has done this! Trickle down strikes again! But to make it worse, we have a damn Republican spending like a damn drunken sailor on leave in Brazil.

AD is it really necessary for you to be "that guy?" What housing projects are you talking about? Even at it's worst, the inner city/urban housing projects are much better than the favelas. But if you think the favelas are better suited for your taste, then by all means, save your money and purchase one of the luxury suites for the low, low price of only R$14.000.

You really seem to take the word reliable way out of context.

I apologize to everyone for your ignorance.

ryjer

[Alex Deuce]

AD is it really necessary for you to be "that guy?" What housing projects are you talking about? Even at it's worst, the inner city/urban housing projects are much better than the favelas. But if you think the favelas are better suited for your taste, then by all means, save your money and purchase one of the luxury suites for the low, low price of only R$12,000.

You really seem to take the word reliable way out of context.

I apologize to everyone for your ignorance.

ryjer


First of all, if you ever looked at my past posts, you would have learned that I was born and raised in Miami right twixt little Haiti and Liberty city. I have worked in inner-cities doing urban renewal in Harlem, ATlanta, Chicago, Louisiana etc.. etc.. etc.. I have seen some of the most horrific living conditions in American. I have been to most of Sao Paulo and Rios Flavelas and they all have the sanitary and construction characteristics of no less or no more than Louisiana's' old 5th ward before the hurricane. Basically, other than Magnolia, the rest were shanty towns. And yes, i was down there sifting through the bodies and helping rebuild. I have seen bad and Flavelas as a whole are not bad.

Secondly; My comment was:

"The above quote is from someone that obviously has never lived in a project or low income tenement building. Reliable electricity and clean drinking water! LMAO"

The Above statement was a Joke! But your comments it illustrates your ignorance of the conditions in America and a level of BitchAssNess in your willingness to start some shit.

For the past month, I,Mangera, Madd Love, CBGBConnisur, Bubba Boy, Rastaman, Bill1963, George90 and even Clandestine782 have been giving clear informed pontification on veiws of world economics and the expectation of the Real vs. the dollar. There has been a little political butchery involved. However, the only personal attack has come from your ass.

[Kent747]

A few points:

1. The world's largest creditor nation is........Japan. And it has been in recession for the last 20 years, and that status has increased. Being a debtor nation in the sense of having large amounts of Foreign Direct Investment is not the same thing as being a debtor nation because of having a huge budget deficit (Japan has a bigger budget deficit, but is still a creditor nation). There are other countries that have much higher debt/ GDP ratios. (Belgium. Italy. Japan. Singapore....etc).

2. Being a debtor nation as a result of FDI is similar to a bank being in debt because someone has put their savings there. Every time someone makes a deposit, the bank goes that much deeper in debt. And so it is with the United States (and even China, if their FDI figures are to be believed).

3. Manufacturing is not everything. If you did some looking of the figures of manufacturing volume, I wouldn't be surprised if it had actually increased in the United States. It's just that it takes fewer people to make the same amount of stuff. It's called............productivity. As a subset to this, I should say that the US is a service based economy anyway. Something like 85% of our economy is in goods and services. (And it's always been that way.) People can make money in logistics (which is the distribution of things that they may or may not have made) or financial services or any thing *other* that manufacturing.

4. There is oil in the United States. It's just that environutbags are afraid that we might disturb some birds or something and so the vast majority of it is off limits to oil developers. So now what?Some valid points yet consider following:

1. Japan has been in recession because they don't use tricks and gimmicks to stimulate economy (subprime loans, easy home equities, tech stock bubbles, etc). Also, Japan is no longer a developing economy so their growth rate is not like they used to be (same with Western Europe). Also, Japan invested their money to energy solutions (they built enough nuclear plants so they use less oil per capita than lets say Korea or China).

2. True, manufacturing is not everything but when a country imports more than exports, something got to give. Some smart folks are doing well in high tech (which don't require as many people as manufacturing) and use global economy (ie: Walmart), but they are just a few people of entire US population. Countries such as Germany and Japan are still surviving in manufacturing because they focus on high quality products. GM and Ford wanted easy money so they just added a couple of seats to their truck line and charged 30% more than a regular truck.

3. Yes, US can be more aggressive in drilling oils and they have to drill more soon or later.combination of new technology to consume less oil, new government policies to motivate people to consume less oil (ie: high tax for SUVs), and additional drilling should be start ASAP.

[CBGBConnisur]

I actually lived in some parts of New York that would be considered ghetto to many people. Try the South Bronx, still it was better than a lot of third world countries, and I have been back recently.

[Ryjerrob]

First of all, if you ever looked at my past posts, you would have learned that I was born and raised in Miami right twixt little Haiti and Liberty city. I have worked in inner-cities doing urban renewal in Harlem, ATlanta, Chicago, Louisiana etc.. etc.. etc.. I have seen some of the most horrific living conditions in American. I have been to most of Sao Paulo and Rios Flavelas and they all have the sanitary and construction characteristics of no less or no more than Louisiana's' old 5th ward before the hurricane. Basically, other than Magnolia, the rest were shanty towns. And yes, i was down there sifting through the bodies and helping rebuild. I have seen bad and Flavelas as a whole are not bad.

Secondly; My comment was:

"The above quote is from someone that obviously has never lived in a project or low income tenement building. Reliable electricity and clean drinking water! LMAO"

The Above statement was a Joke! But your comments it illustrates your ignorance of the conditions in America and a level of BitchAssNess in your willingness to start some shit.

For the past month, I,Mangera, Madd Love, CBGBConnisur, Bubba Boy, Rastaman, Bill1963, George90 and even Clandestine782 have been giving clear informed pontification on veiws of world economics and the expectation of the Real vs. the dollar. There has been a little political butchery involved. However, the only personal attack has come from your ass.

Make not mistake, this isn't personal. I just think you're ignorant!! But go right ahead and keep comparing apples to oranges.

ryjer

[Ryjerrob]

First of all, if you ever looked at my past posts, you would have learned that I was born and raised in Miami right twixt little Haiti and Liberty city. I have worked in inner-cities doing urban renewal in Harlem, ATlanta, Chicago, Louisiana etc.. etc.. etc.. I have seen some of the most horrific living conditions in American. I have been to most of Sao Paulo and Rios Flavelas and they all have the sanitary and construction characteristics of no less or no more than Louisiana's' old 5th ward before the hurricane. Basically, other than Magnolia, the rest were shanty towns. And yes, i was down there sifting through the bodies and helping rebuild. I have seen bad and Flavelas as a whole are not bad.

Secondly; My comment was:

"The above quote is from someone that obviously has never lived in a project or low income tenement building. Reliable electricity and clean drinking water! LMAO"

The Above statement was a Joke! But your comments it illustrates your ignorance of the conditions in America and a level of BitchAssNess in your willingness to start some shit.

For the past month, I,Mangera, Madd Love, CBGBConnisur, Bubba Boy, Rastaman, Bill1963, George90 and even Clandestine782 have been giving clear informed pontification on veiws of world economics and the expectation of the Real vs. the dollar. There has been a little political butchery involved. However, the only personal attack has come from your ass.

It's very admirable that you helped after the hurricane, but I don't anyone was referring or comparing the favelas to the living conditions after the hurricane.

ryjer

[Alex Deuce]

Make not mistake, this isn't personal. I just think you're ignorant!! But go right ahead and keep comparing apples to oranges.

ryjer

I will take that as a compliment then! It is abundantly obvious that you have no clue nor the mental capability to effectively evaluate my knowledge of socioeconomics nor world maters.

CBGBConnisur, the majority of the slums I was talking about in New york were in Brownsville and South Bronx's during the mid 90's. The conditions were so bad that the Boroughs' had them leveled. The issue now (10 years later) is that there is no low rent housing available for minimum wage workers. However, if you want to meet me, I got a few places in Bedford park,, Camden New jersey, West Philly, Louisiana or Miami I guarantee will open your eyes.

Im not trying to glorify the hood. I live very well thanks to a great education and a set a parents that would not take failure as an option. I think that people take for granted that everyone is afforded the same leisure that they have in America.

[George90]

Some valid points yet consider following:

1. Japan has been in recession because they don't use tricks and gimmicks to stimulate economy (subprime loans, easy home equities, tech stock bubbles, etc). Also, Japan is no longer a developing economy so their growth rate is not like they used to be (same with Western Europe). Also, Japan invested their money to energy solutions (they built enough nuclear plants so they use less oil per capita than lets say Korea or China).

2. True, manufacturing is not everything but when a country imports more than exports, something got to give. Some smart folks are doing well in high tech (which don't require as many people as manufacturing) and use global economy (ie: Walmart), but they are just a few people of entire US population. Countries such as Germany and Japan are still surviving in manufacturing because they focus on high quality products. GM and Ford wanted easy money so they just added a couple of seats to their truck line and charged 30% more than a regular truck.

3. Yes, US can be more aggressive in drilling oils and they have to drill more soon or later.combination of new technology to consume less oil, new government policies to motivate people to consume less oil (ie: high tax for SUVs), and additional drilling should be start ASAP.

I think some of you guys on this manufacturing/service industry bent are missing the more important points.

it is not important that a country manufactures or offers services. It is very important what a country produces and which services it offers. China produces and exports toys, children's clothing, knickknacks, staple foods, etc. And it exports lots of these types of products. Compare that to the complex military aircraft that the US produces, communications satelites, complex specialty chemicals used in producing specialty electronic goods, lasers, medical instruments, machine tools for making high precision/low tolerance component parts. The US doesn't need to export lots of these types of products to achieve the same value of exports as China.

The statement that high tech doesn't require as many people as does manfuacturing is utter nonsense. It reflects a poor to none understanding of what high tech is. The writing of software code, the research into new computer chips and computer materials, the maintenance of high tech equipment is some of the most labor intensive work around. (I think only teaching and health care are more labor intensive.) Microsoft, in its hayday in the mid 90's, was hiring 100 programmers and engineers a day! Other software makers, such as Oracle or SAS Institute, also have tens of thousands of programmers on payroll. In addition, the work these guys do is not outsourced to India because it is too complex and is proprietary. Only mundane, routine work is outsourced.

P.S. The reason why Japan doesn't use 'tricks and gimmicks' to stimulate its economy is because it can't. For some years now, Japan's interest rates have been very low. So low, that when the central bank tries to lower them further, the money supply doesn't expand and the economy doesn't budge. It is a phenomenon called 'liquidity trap'.

P.P.S. When a country imports more than it exports, what gives is the currency exchange rate. It falls relative to the countries from which it imports more than to which it exports.

[CBGBConnisur]

Japan is better poised to survive a slowdown than the US, few Japanese are in debt, and they used most of their public debt to improve infrastructure and investment. Now they are planning to move away from the US and move closer to China in some economic partnership that will also include Russia and India. It will definitely shift the balance of power in the Pacific away from the US towards China.
More and more people around the world are seeing Europe as more financial responsible than the US, this is the first time in decades that such a perception has rose. The Federal Reserve has a very key role in America's financial health and its reputation around the planet.
http://business.timesonline.co.uk/tol/business/columnists/article4289018.ece

The IMF recently did an audit of the US Federal Reserve, and President Bush allowed it on the condition that it only be published until after he leaves office. He must be expecting a very bad report.

I don't live in the US anymore, I moved to Australia almost ten years ago because my company relocated me there and wound up staying. I knew a Brazilian woman who lived near me, and she told me about the favelas, and I saw a documentary about them, the squalor of those favelas are nothing like the projects of Chicago or New York, while people who live in such places are at the bottom of society, they are generally much better off than people who live in the third world. In those areas of NY, I have run into a lot of immigrants from third world countries, and to them its like luxury compared to back home.
Considering the very real threat of globalization to working class Americans, it would not surprise me if real favelas show up in the USA.

As far as I am concerned I don't think Obama will overturn the Patriot Act, he just like Clinton would have, will exploit it to his own advantage. I could see a police state situation arise in the US. Compared to Canada, Australia, and Western Europe, the US already is a police state.

[Clandestine782]

the us dollar would still be accepted but the issue with reserve currency is allowing yourself to spend more than you earn. the us can do this only because of the dollar's reserve status. most americans use debt to finance their lifestyles, thats why we can go around buying flat screen tvs, suvs and luxury cars, vacations to brazil and other locales, etc. it would be much harder to afford those things if we had to pay cash. i can see that this is getting to be like talking astrophysics to a wino. you didn't answer a single question/ rebuttal that i submitted in the last several posts. do you even have any idea of how much seigniorage contributes to the gdp? and if *every single dime* of seigniorage stopped tomorrow, how much would it subtract from the us gdp?


the euro in the short term, over the next two decades, is becoming a credible alternative to the us dollar. over the long haul the chinese renmimbi is the one to watch. even the real is going to become a major currency, brazil is one of the goldman sachs brics countries.don't think so. at least not the chinese rmb. and there are some very logical reasons for this: 1) the rmb is not freely convertible; 2) there are some questions as to the sustainability of china's economic growth (or, for that matter, how near the real thing is to what the chinese government asserts). some people have noted that china's growth is not productivity driven (as opposed to asset driven), and that type of economic growth ends abruptly and the results are not pretty. see: "the myth of asia's miracle," by paul krugman for a basic discussion of total factor productivity; 3) china has a savings rate that is way too high for it to run the trade deficits that are part of having a reserve currency. for the record: s-i=x-m (savings-investment=exports-imports). in the case that s>i, then a country will have a trade surplus. in the case that s<i, then a country will have a trade deficit-- and therefore more currency going out of the country that coming in that other people can use to finance trade in other places.



economic growth and interest rates(which are set by central banks) are key to a currency's value. bernanke might not control the dollar's fate completely but he has a big say in how it pans out. his predecessor allowed the us to wind up in a mountain of debt.. no. there are other things. speculative value is another huge part of what controls a currency's forex value. it has been noted that the most sophisticated models to predict a currency's motion (or its "right" value) don't work much better than the toss of a coin. and we are going way past the standard ppp (=purchasing power parity) model. purchasing power parity *did* predict a decline in the value of the us currency, though. but it looks like this latest movement was an overshoot.

i also suspect that you did not understand what i meant when i said "benign neglect." i can tell you exactly when the last co-ordinated movement to move the us currency was...and that was *the plaza accords* (both one and two).


worst case scenario for the us is americans will have to live more financially conservative lifestyles. going overseas will be different too, you just won't be seen as "rich americans" for much longer, we'll become like everyone else.ok........so that means that the savings rate will have to increase. so now what?


europe and china still see the us as an important customer, so they will prop us up for a while. how is the eu propping up the us currency? can you find any single example of where the eu has intervened in the forex markets to buy the us dollar? it has not happened since 2001-- long before the currency softness in the us currency. for that matter, the us income is still quite a bit higher than the eu average-- and its long term growth rates are higher, in spite of the recent currency movement.


the uk struggled for a very long time after it lost its reserve currency status, the us was propping up the uk in the post world war 2 period. i somehow have serious doubts if the chinese or the continental europeans will do us a favor in the long run, they will keep us up in the short term to cover their own rear ends. the sterling used to buy as many as 5 us dollars in the world war 2 era.can you give me some quantitative figures to demonstrate this? it is thought that britain's decline was preceded by government overregulation and that its renaissance was preceded by the iron lady, margaret thatcher's policy of taking on the unions and restoring market forces to drive the current economic expansion.


greenspan delivered a speech in 2001 claiming the us dollar would hold its ground against the euro. he changed his tune recently. worst case scenario is that the euro eclipses the us dollar and best case scenario is that it shares the stage equally according to greenspan. what *hasn't* greenspan changed his tune? does he have any credibility left after the latest mess he created?

[Clandestine782]

I think some of you guys on this manufacturing/service industry bent are missing the more important points.

it is not important that a country manufactures or offers services. It is very important what a country produces and which services it offers. China produces and exports toys, children's clothing, knickknacks, staple foods, etc. And it exports lots of these types of products. Compare that to the complex military aircraft that the US produces, communications satelites, complex specialty chemicals used in producing specialty electronic goods, lasers, medical instruments, machine tools for making high precision/low tolerance component parts. The US doesn't need to export lots of these types of products to achieve the same value of exports as China.

The statement that high tech doesn't require as many people as does manfuacturing is utter nonsense. It reflects a poor to none understanding of what high tech is. The writing of software code, the research into new computer chips and computer materials, the maintenance of high tech equipment is some of the most labor intensive work around. (I think only teaching and health care are more labor intensive.) Microsoft, in its hayday in the mid 90's, was hiring 100 programmers and engineers a day! Other software makers, such as Oracle or SAS Institute, also have tens of thousands of programmers on payroll. In addition, the work these guys do is not outsourced to India because it is too complex and is proprietary. Only mundane, routine work is outsourced.

P.S. The reason why Japan doesn't use 'tricks and gimmicks' to stimulate its economy is because it can't. For some years now, Japan's interest rates have been very low. So low, that when the central bank tries to lower them further, the money supply doesn't expand and the economy doesn't budge. It is a phenomenon called 'liquidity trap'.

P.P.S. When a country imports more than it exports, what gives is the currency exchange rate. It falls relative to the countries from which it imports more than to which it exports.
THANK YOU! I like your post and your thinking........

[Clandestine782]

Japan is better poised to survive a slowdown than the US, few Japanese are in debt, and they used most of their public debt to improve infrastructure and investment. Now they are planning to move away from the US and move closer to China in some economic partnership that will also include Russia and India. It will definitely shift the balance of power in the Pacific away from the US towards China.
More and more people around the world are seeing Europe as more financial responsible than the US, this is the first time in decades that such a perception has rose. The Federal Reserve has a very key role in America's financial health and its reputation around the planet.
http://business.timesonline.co.uk/tol/business/columnists/article4289018.ece

The IMF recently did an audit of the US Federal Reserve, and President Bush allowed it on the condition that it only be published until after he leaves office. He must be expecting a very bad report.

I don't live in the US anymore, I moved to Australia almost ten years ago because my company relocated me there and wound up staying. I knew a Brazilian woman who lived near me, and she told me about the favelas, and I saw a documentary about them, the squalor of those favelas are nothing like the projects of Chicago or New York, while people who live in such places are at the bottom of society, they are generally much better off than people who live in the third world. In those areas of NY, I have run into a lot of immigrants from third world countries, and to them its like luxury compared to back home.
Considering the very real threat of globalization to working class Americans, it would not surprise me if real favelas show up in the USA.

As far as I am concerned I don't think Obama will overturn the Patriot Act, he just like Clinton would have, will exploit it to his own advantage. I could see a police state situation arise in the US. Compared to Canada, Australia, and Western Europe, the US already is a police state.
You need to go over your notes (again). Japan has a debt to GDP ratio of something like 170%. Maybe even 180% now. The US has one of 40-50%-- which is about the average for the OECD countries, and good enough to join the Euro. (I believe that their credit rating is also lower than Botswana- and you have to really work to have a credit rating lower than ANY African country). You might also look over some of Japan's growth numbers for, say, the last 20 years.

[Exec Talent]

Got 1.65 to 1 today. Didn't try to negotiate since the official rate is between 1.60 and 1.61. He did throw in an extra R$5 for a cup of coffee!

[Kent747]

I think some of you guys on this manufacturing/service industry bent are missing the more important points.

it is not important that a country manufactures or offers services. It is very important what a country produces and which services it offers. China produces and exports toys, children's clothing, knickknacks, staple foods, etc. And it exports lots of these types of products. Compare that to the complex military aircraft that the US produces, communications satelites, complex specialty chemicals used in producing specialty electronic goods, lasers, medical instruments, machine tools for making high precision/low tolerance component parts. The US doesn't need to export lots of these types of products to achieve the same value of exports as China.

The statement that high tech doesn't require as many people as does manfuacturing is utter nonsense. It reflects a poor to none understanding of what high tech is. The writing of software code, the research into new computer chips and computer materials, the maintenance of high tech equipment is some of the most labor intensive work around. (I think only teaching and health care are more labor intensive.) Microsoft, in its hayday in the mid 90's, was hiring 100 programmers and engineers a day! Other software makers, such as Oracle or SAS Institute, also have tens of thousands of programmers on payroll. In addition, the work these guys do is not outsourced to India because it is too complex and is proprietary. Only mundane, routine work is outsourced.

P.S. The reason why Japan doesn't use 'tricks and gimmicks' to stimulate its economy is because it can't. For some years now, Japan's interest rates have been very low. So low, that when the central bank tries to lower them further, the money supply doesn't expand and the economy doesn't budge. It is a phenomenon called 'liquidity trap'.

P.P.S. When a country imports more than it exports, what gives is the currency exchange rate. It falls relative to the countries from which it imports more than to which it exports.You got some good points but consider following:

1. How many people buy special aircrafts and special electronic goods? There is a reason why US has a HUGE trade deficit with China (who supposely only make low tech items).

2. Once MS set up their softwares, all they are doing right now is to make updates. Like you said, in its heydays they had a bunch of people working. Oracle has 72, 000 but GM has 284, 000 employees. Toyota has 300, 000 and MS has 90, 000 employees. A big manufacturing company do need more people than a big tech company.

3. Japanese simply don't believe in high leverage financing. They know that 0% downpayment and no credit home equity loans are just irresponsible. If banks are only commited to give loans to "A" and "B" credit folks with high downpayment, of course liquidity will be low. US is the only country which gives loans to people who are not even legal to live in its own country.

[Kent747]

You need to go over your notes (again). Japan has a debt to GDP ratio of something like 170%. Maybe even 180% now. The US has one of 40-50%-- which is about the average for the OECD countries, and good enough to join the Euro. (I believe that their credit rating is also lower than Botswana- and you have to really work to have a credit rating lower than ANY African country). You might also look over some of Japan's growth numbers for, say, the last 20 years.Japan's debt is mostly financed by domestic sources. US debt is mostly financed by foreigners notably Japan, China, and UK.

[Sltucke]

Got 1.65 to 1 today. Didn't try to negotiate since the official rate is between 1.60 and 1.61. He did throw in an extra R$5 for a cup of coffee!Where did you get a rate like this?

[Svengal]

Got 1.65 to 1 today. Didn't try to negotiate since the official rate is between 1.60 and 1.61. He did throw in an extra R$5 for a cup of coffee!I am quite aware that you've been beaten over the head with this before (which is why I's surprised you haven't learned)..but here it goes anyway...

Care to provide your source?

[CBGBConnisur]

The fact is that I have switched a substantial amount of my own savings away from US assets and I have managed to prevent losing my overseas purchasing power. If I kept all US Dollars, I would have had my overseas purchasing power slashed in half, which means less to go abroad. The US dollar has lost value against every single major currency out there. From what I have read, I seriously doubt the next President will defend the Dollar, and Dollar weakness will continue.
The US makes a substantial amount of income from seignorage but that is because the Dollar is the international reserve currency.

[Mangera]

The fact is that I have switched a substantial amount of my own savings away from US assets and I have managed to prevent losing my overseas purchasing power. If I kept all US Dollars, I would have had my overseas purchasing power slashed in half, which means less to go abroad. The US dollar has lost value against every single major currency out there. From what I have read, I seriously doubt the next President will defend the Dollar, and Dollar weakness will continue.
The US makes a substantial amount of income from seignorage but that is because the Dollar is the international reserve currency.

As an American, I also will have to make some adjustments due to the weak dollar........such only banging 3.5 different women per week as opposed to 7 different ones :)

[Rio Bob]

I am quite aware that you've been beaten over the head with this before (which is why I's surprised you haven't learned)..but here it goes anyway...

Care to provide your source?


This is what happens when people post information that just makes them feel good about themselves but doesn’t provide any help to other posters.

[Java Man]

Got 1.65 to 1 today. Didn't try to negotiate since the official rate is between 1.60 and 1.61. He did throw in an extra R$5 for a cup of coffee!

I suspect several Thousand and not a few Hundreds were exchanged. I'm more impressed by the free cup of coffee. LOL

[Mangera]

This is what happens when people post information that just makes them feel good about themselves but doesn’t provide any help to other posters.

In the past, through PM, Exec. Talent has offered to share this info.
(Location for exchange of $) with me. I did not ask, yet he offered. For the record, I did not need it because I had already exchanged the cash. If you ask, he would be more than willing to share.

[Bubba Boy]

One further point on Japanese debt, they pay like 1 per cent on Japanese government bonds, at that rate anybody could borrow a shit load and still pay it back easily.

[Clandestine782]

You got some good points but consider following:

1. How many people buy special aircrafts and special electronic goods? There is a reason why US has a HUGE trade deficit with China (who supposely only make low tech items).

2. Once MS set up their softwares, all they are doing right now is to make updates. Like you said, in its heydays they had a bunch of people working. Oracle has 72, 000 but GM has 284, 000 employees. Toyota has 300, 000 and MS has 90, 000 employees. A big manufacturing company do need more people than a big tech company.

3. Japanese simply don't believe in high leverage financing. They know that 0% downpayment and no credit home equity loans are just irresponsible. If banks are only co
mmited to give loans to "A" and "B" credit folks with high downpayment, of course liquidity will be low. US is the only country which gives loans to people who are not even legal to live in its own country.
1. The ONE AND ONLY reason for the US trade deficit is an excess of investment over savings. (S-I=X-M). Not "competitiveness" or "unfair trade practices" or "exchange rate manipulation." If the Fed did something, like, say, put interest rates up to 15 or 20%, then the trade deficit would disappear because the savings rate would go up as a result. Trade deficits are not really that much to be worried about, since they are accounting identities. A country that is mostly service based will run a trade deficit. Here are a few articles that talk about that exact point. They are short and sweet.

http://www.jewishworldreview.com/cols/shlaes011504.asp
http://www.jewishworldreview.com/cols/williams052505.asp

This one is a little longer, but still relevant:

http://www.freetrade.org/node/61

And the last one is the most technical, but (I think) the most interesting one. It points out that since a trade deficit is an accounting identity (and that every trade deficit must be matched by a capital account surplus), then you could redefine the values used in the calculations such that the US actually has a small surplus. It's a synopsis of a longer article about the idea by Ricardo Hausmann.

http://findarticles.com/p/articles/mi_qn4158/is_20060410/ai_n16182704

2. True, but if you think about it..... If you do manufacture something like, say, DVD players, then there will come a point after which the demand will rapidly fall off. If you have 2 DVD players, then a third *might* be useful. But a fourth? A fifth? On the other hand, if you have people employed in services (say, as brokers for shipment of fruit loads or as repairmen), then those people will always be able to find something to do because a lot of things that are concerned with services are ongoing. You will say that cars are purchase in an ongoing way (which is true), but the frequency of oil changes or tire balancing (both services) are probably more than for replacement of a car.

3. Ok.....So being too tight on credit is almost as bad as being too loose. If no one is buying anything, then no one is making any money. On the other hand, if people are buying something (and some of those people have less than stellar credit) then the *average* cost of borrowing will reflect what banks already know (=that there will be a certain number of defaults). There are also some philosophical questions about what happens in a country such as Japan when there are TONS of savings and very poor leveraging mechanism vs. a country like the US when there is low savings but more skilled leveraging. (I know that you are going to say that the housing debacle is an example of bad leveraging, and that is true. But the vast majority of US leveraging is more skillful than that or of Asian-type lending. Read: Asian crisis or Japan's banking debacle.)

[Clandestine782]

Japan's debt is mostly financed by domestic sources. US debt is mostly financed by foreigners notably Japan, China, and UK.

Point 1: If you buy a house (and mortgage it, like almost everyone else does), does it matter to you if your debt is owed to a bank owned by American people or by Japanese/ Chinese (etc) sources? So what if the budget deficit is financed by Americans or by Japanese?

Point 2: The US debt is denominated in US dollars. So, those obligations could be financed by just printing more dollars (and this may be what is happening if the inflation rates are as fraudulent as some economists claim). Zimbabwe has taken this case to the logical extreme.

[George90]

1. The ONE AND ONLY reason for the US trade deficit is an excess of investment over savings. (S-I=X-M). Not "competitiveness" or "unfair trade practices" or "exchange rate manipulation." If the Fed did something, like, say, put interest rates up to 15 or 20%, then the trade deficit would disappear because the savings rate would go up as a result. Trade deficits are not really that much to be worried about, since they are accounting identities. A country that is mostly service based will run a trade deficit.

Be careful with these statements. They are true only in undergraduate economics textbooks where several simplifying assumptions are made. In more complex models it is acknowledged that the trade deficit is not equivalent to the current account, and net investment is not equivalent to the capital account.

In those models, the accounting identity is Current Account Balance minus the Capital Account Balance equals the Change in Central Bank (Fed) foreign reserve assets. So, trade deficits ARE something to worry about if they are resolved by buying foreign currency (to pay for the imports) and selling domestic currency, leading to a falling exchange rate. (That contributes to inflation if a country still imports more than it exports.)

[Clandestine782]

Be careful with these statements. They are true only in undergraduate economics textbooks where several simplifying assumptions are made. In more complex models it is acknowledged that the trade deficit is not equivalent to the current account, and net investment is not equivalent to the capital account.

In those models, the accounting identity is Current Account Balance minus the Capital Account Balance equals the Change in Central Bank (Fed) foreign reserve assets. So, trade deficits ARE something to worry about if they are resolved by buying foreign currency (to pay for the imports) and selling domestic currency, leading to a falling exchange rate. (That contributes to inflation if a country still imports more than it exports.)Good points. (At least they have some analytical gravitas-- more than what most people are willing to post.) Ok, so what about the other articles? Since we are getting into what constitutes a trade deficit, then I can point out that it is not even clear if there IS a trade deficit (based on the Ricardo Hausmann model). He has pointed out that US forex has not changed that much-- even though that should be the case with the US trade deficit such as it is. The article (to which the following link is) says that accounting for "dark matter" means that the trade deficit does not exist. http://www.cid.harvard.edu/cidpublications/darkmatter_051130.pdf

[Kent747]

Point 1: If you buy a house (and mortgage it, like almost everyone else does), does it matter to you if your debt is owed to a bank owned by American people or by Japanese/ Chinese (etc) sources? So what if the budget deficit is financed by Americans or by Japanese?

Point 2: The US debt is denominated in US dollars. So, those obligations could be financed by just printing more dollars (and this may be what is happening if the inflation rates are as fraudulent as some economists claim). Zimbabwe has taken this case to the logical extreme.Japanese government gets financing from Japanese banks to insure foreigners don't use financial leverage to impact their decision making. In case of emergency, they could work things out easier since they have more common interest. US needs to listen to China since China is the bread and butter of their financing. Of course, US can print more money, but that means you and I will become poorer since we will have less spending power.

[George90]

Good points. (At least they have some analytical gravitas-- more than what most people are willing to post.) Ok, so what about the other articles? Since we are getting into what constitutes a trade deficit, then I can point out that it is not even clear if there IS a trade deficit (based on the Ricardo Hausmann model). He has pointed out that US forex has not changed that much-- even though that should be the case with the US trade deficit such as it is. The article (to which the following link is) says that accounting for "dark matter" means that the trade deficit does not exist. http://www.cid.harvard.edu/cidpublications/darkmatter_051130.pdf

I am not going to comment on your other articles because I have not read them, and I don't intend to. Based on your descriptions, I would not understand them.

For example, I was talking about what constitutes a current account, but you want to debate what the definition of trade deficit based on Hausmann's theories. I don't understand that. A trade deficit is a number, not a theory. It is computed by subtracting the value of all imported goods and services from the value of all exported goods services. You are the first person in my life who suggests there is some uncertainty about that computation.

I have heard debate about what might be an import or an export. The tourism industry caters to foreigners. Their consumption of hotel rooms, restaurant meals, taxis, and payment of sales taxes can be considered an export in a certain way. If an export is US production consumed by foreigners, then there is an argument for things like hotel rooms for foreigners and tuition from foreign students being treated as exports, despite their being consumed in the US. Especially since these products react to the exact same economic factors as traditional exports. but I don't think that is what you are referring to.

I have no idea how 'dark matter' can relate to economics. In fact, I barely understand what it is in physics.

[Clandestine782]

I am not going to comment on your other articles because I have not read them, and I don't intend to. Based on your descriptions, I would not understand them.

For example, I was talking about what constitutes a current account, but you want to debate what the definition of trade deficit based on Hausmann's theories. I don't understand that. A trade deficit is a number, not a theory. It is computed by subtracting the value of all imported goods and services from the value of all exported goods services. You are the first person in my life who suggests there is some uncertainty about that computation.

I have heard debate about what might be an import or an export. The tourism industry caters to foreigners. Their consumption of hotel rooms, restaurant meals, taxis, and payment of sales taxes can be considered an export in a certain way. If an export is US production consumed by foreigners, then there is an argument for things like hotel rooms for foreigners and tuition from foreign students being treated as exports, despite their being consumed in the US. Especially since these products react to the exact same economic factors as traditional exports. but I don't think that is what you are referring to.

I have no idea how 'dark matter' can relate to economics. In fact, I barely understand what it is in physics.It would only take 15 minutes to click on the articles and skim them. And who knows? You might actually learn something. (Or can you not be bothered to clutter up your statements with a reference to the facts?) I can't believe that I am the first person who has ever suggested that what constitutes a trade deficit is not clear. Since a trade deficit is something that is based on accounting conventions (something very close to a tautology), then it follows that a change in the definitions could produce a different result. If you are not interested to discuss the specifics of what constitutes a trade deficit, then what about defending mercantilism (which is essentially your position)?

As far as what is a "theory": There are two meanings that this word corresponds to. 1. An explanation of something; 2. A prediction of something.
We are not talking about using the definition of the trade deficit to do either of these things. (As in, we are not trying to explain economic growth levels in terms of a trade deficit or predict what economic growth would be based on a trade deficit at of a certain level.) So, to put the question back in perspective: The question is "What constitutes a trade deficit and does the US even have one based on a broader definition?" (That was the point of the Hausmann article.) And IF we can agree on a definition of a trade deficit, then what follows from that? There are arguments on both sides (trade deficits not mattering vs. trade deficits being the alpha and omega of economic growth.) Do trade deficits matter? I don't think so. The US has had one for the whole time of its existence (or at least about 75% of that time) and it has still not fallen into the sea. It is perfectly normal for large deficits and surpluses to be built up.

[Clandestine782]

Japanese government gets financing from Japanese banks to insure foreigners don't use financial leverage to impact their decision making. In case of emergency, they could work things out easier since they have more common interest. US needs to listen to China since China is the bread and butter of their financing. Of course, US can print more money, but that means you and I will become poorer since we will have less spending power.Not clear that the case of foreigners being owed money vs. domestic people is that much different..... If Japanese people put their money in a bank, they don't want to see it returned to them with some interest? They don't want to have their money guaranteed? And based on the definition that we talked about earlier (S-I=X-M), it appears that Japanese people know that their returns are lower in Japan and choose to put their capital in the US just the same. I am not sure what it means if Japanese banks are under the control of some arm of the government and they make huge amounts of non performing loans that choke off economic growth (but they don't owe debt to foreigners) vs. the case where foreigners step in and buy debt that will perform (since they aren't a part of the government of the country from whom they will buy the debt) and therefore only make sound loans. If you think about this a little harder, the US may still come out way ahead by selling the debt to foreigners rather than using arms of the government to purchase bad loans/ buy non performing debt........

[Clandestine782]

On the good advice of a Senior Member (via PM), I have decided to just leave this topic alone). Thanks and goodbye.

[Mangera]

On the good advice of a Senior Member (via PM), I have decided to just leave this topic alone). Thanks and goodbye.
Thanks! Muito obrigado!

[George90]

there is an article in today's bloomberg that describes the brazilian stock market. it has been falling for the past 2 months and has now reached over 20% decline since may. that means an official bear market!

some of the reasons given for the decline in the bovespa is the increase in interest rates by the brazilian central bank, the rising rate of inflation in brazil, and the declining commodity prices that have fueled brazil's growth for the past 5 years.

asia is being hurt by the high oil prices. it has increased the costs of their exports and decreased the us ability to import goods. china's economy is slowing down. in addition, asian demand for iron, copper, etc. did the same thing to those prices as it did to oil. they rose dramatically. now china's demand for those commodities is falling and those prices are plummetting.

brazil's economy faces lower growth, possibly recession, as the demand for its commodities falls. its high exchange rate already reduced demand for its manufactured goods such as its commerical jets. the inflation it is experiencing will dampen domestic consumer demand, compounding the lower gdp growth.

my prediction is that the strength of the real will fall due to theses growing economic problems. if the us gets a new president with a serious economic program that addresses the budget and trade deficits, we may see an increase in the strength of the us dollar. these two movements should lead to an increase in the value of the us dollar in relation to the real by fall (october/november). we might see the exchange rate back above 2.0 by the holiday season. the speed with which the bovespa lost 20% of its value indicates, to me at at least, that we might even see 2.25 by new year's!

[Poucolouco]

there is an article in today's bloomberg that describes the brazilian stock market. it has been falling for the past 2 months and has now reached over 20% decline since may. that means an official bear market!

...we might see the exchange rate back above 2.0 by the holiday season. the speed with which the bovespa lost 20% of its value indicates, to me at at least, that we might even see 2.25 by new year's!thanks george. et just mentioned the burger price increases at mcdonalds. my personal index is the kice espresso. the price was r$1,60 a year ago, jumped to r$1,80 in january and just this week broke the r$2,00 barrier.

[Alex Deuce]

there is an article in today's bloomberg that describes the brazilian stock market. it has been falling for the past 2 months and has now reached over 20% decline since may. that means an official bear market!

some of the reasons given for the decline in the bovespa is the increase in interest rates by the brazilian central bank, the rising rate of inflation in brazil, and the declining commodity prices that have fueled brazil's growth for the past 5 years.

asia is being hurt by the high oil prices. it has increased the costs of their exports and decreased the us ability to import goods. china's economy is slowing down. in addition, asian demand for iron, copper, etc. did the same thing to those prices as it did to oil. they rose dramatically. now china's demand for those commodities is falling and those prices are plummetting.

brazil's economy faces lower growth, possibly recession, as the demand for its commodities falls. its high exchange rate already reduced demand for its manufactured goods such as its commerical jets. the inflation it is experiencing will dampen domestic consumer demand, compounding the lower gdp growth.

my prediction is that the strength of the real will fall due to theses growing economic problems. if the us gets a new president with a serious economic program that addresses the budget and trade deficits, we may see an increase in the strength of the us dollar. these two movements should lead to an increase in the value of the us dollar in relation to the real by fall (october/november). we might see the exchange rate back above 2.0 by the holiday season. the speed with which the bovespa lost 20% of its value indicates, to me at at least, that we might even see 2.25 by new year's!

there is not a chance in green hell that you will see 1-2 by november more like 1-1.45. the reduction in oil prices and the september gdp report will kill the dollar!

i can pontificate for hours about why but accurate predictions mean more. and using mcdonalds pricing is an inverse evaluation. if the price of mcdonalds is rising the dollar is devaluing.

[Lucky Strike]

.....
my prediction is that the strength of the real will fall due to theses growing economic problems. if the us gets a new president with a serious economic program that addresses the budget and trade deficits, we may see an increase in the strength of the us dollar. these two movements should lead to an increase in the value of the us dollar in relation to the real by fall (october/november). we might see the exchange rate back above 2.0 by the holiday season. the speed with which the bovespa lost 20% of its value indicates, to me at at least, that we might even see 2.25 by new year's!
you're talking about two economic forces that will lead to higher usd excahnge rates. i disagree, at least partially.
you may be right, in the short term (2-6 months) the dollar may strengthen somewhat vs. other currencies (but i wouldn't expect 2.225reals for 1 usd, that's too much too soon.) this will only be a relative strength, i.e. as world economies slow down, certain other currencies will drop more than the usd relative to other benchmarks.
but longer term i see a different scenario. one example: just yesterday the us congress approved $300billion mortgage bailout package, and increased federal debt ceiling by $800(!!!) billion. i guess they don't expect $300b to be the last of the bailouts....
where do you think the money will come from? higher econmic growth that leads to higher tax revenues? that's unlikely: the entire world's economy is in the slowing phase of the economic cycle. higher taxes? lower gov't spending? don't count on it. when was the last time a politician in the usa proposed either and was elected?
the bottom line is that (unfortunatelly for those of us who have main sources of income in the usa but want to travel abroad) the gov't will print, print, print more and more dollars. the "experts" who have predicted current situation waaaayyyyy back in the spring of 2006 and who have made correct predictions since, now predict a nasty drop in the value of usd after a a brief rise....

[George90]

The "experts" who have predicted current situation waaaayyyyy back in the spring of 2006 and who have made correct predictions since, now predict a nasty drop in the value of USD after a a brief rise....

I agree that elements in the US economy can and will lead to a weak dollar. The value of the USD, the exchange rate, is specific to individual countries. I can see the dollar falling against the euro because the European economy has fewer weak elements (ie smaller budget deficits) than the US economy.

However, my prediction is against the Brazilian economy and the real, not against the euro. What are the specific countries against which your experts predict a nasty drop in the exchange rate? Is Brazil one of them?

[George90]

You're talking about two economic forces that will lead to higher USD excahnge rates. I disagree, at least partially.
You may be right, in the short term (2-6 months) the dollar may strengthen somewhat vs. other currencies (but i wouldn't expect 2.225reals for 1 USD, that's too much too soon.) This will only be a relative strength, i.e. as world economies slow down, certain other currencies will drop more than the USD relative to other benchmarks.
But longer term I see a different scenario. One example: just yesterday the US Congress approved $300Billion mortgage bailout package, and increased federal debt ceiling by $800(!!!) billion. I guess they don't expect $300B to be the last of the bailouts....
Where do you think the money will come from? Higher econmic growth that leads to higher tax revenues? That's unlikely: the entire world's economy is in the slowing phase of the economic cycle. Higher taxes? Lower gov't spending? Don't count on it. When was the last time a politician in the USA proposed either and was elected?
The bottom line is that (unfortunatelly for those of us who have main sources of income in the USA but want to travel abroad) the Gov't will print, print, print more and more dollars. The "experts" who have predicted current situation waaaayyyyy back in the spring of 2006 and who have made correct predictions since, now predict a nasty drop in the value of USD after a a brief rise....

Here is a link to a Bloomberg article about the strength US dollar and a forecast about its exchange rate with the euro.

http://www.bloomberg.com/apps/news?pid=20601039&sid=a7C1zQC4yCU4&refer=home

The article explains why the USD may rise against the euro over the next 12 months.

[Jose Lima]

There is not a chance in green hell that you will see 1-2 by November more like 1-1.45. The reduction in oil prices and the September GDP report will kill the dollar!

I can pontificate for hours about why but accurate predictions mean more. And using Mcdonalds pricing is an inverse evaluation. If the price of McDonalds is rising the dollar is devaluing.


I think your absolutly right. Also dont forget that the cats out of the bag. Brasil is a safe place to earn between 15-17% investing in SECURE CD's from reputable banks(bradesco, banco do brasil, etc...) As long as these rates are high the whole goddamn world including USA will continue to flood the brasilian market with DOLLARS in turn keeping the already battered green back at the low end of the spectrum. SOrry folks but that dollar is going to stay low low low for a long long long time

[Lucky Strike]

Here is a link to a Bloomberg article about the strength US dollar and a forecast about its exchange rate with the euro.

http://www.bloomberg.com/apps/news?pid=20601039&sid=a7C1zQC4yCU4&refer=home

The article explains why the USD may rise against the euro over the next 12 months.

Interesting opinion. Every well thought out opinion deserves to be considered. You say USD will rise over next 12 months? And I said in my previous post that I agree with those who give this trend 2 to 6 month. So we basically agree on the direction, but not on the magnitude and longevity of the move. I'm not talking about the rise/fall of USD vs particular currency, but vs. a basket of all freely-convertible currencies.
For the benefit of discourse, I'd suggest another link:
http://www.nysun.com/opinion/thinking-about-the-dollar/82714/
The author is not one of those who I consider "proven winners" when it comes to predicting the future, but newertheless he's a very intelligent economist.
My biggest worry is, as the author argues, the foregners will stop accepting out "paper." Then the USD may crash hard and fast before any import/export imbalance can be worked out... maybe another 50% drop in a matter of month rather than years. It will take USD down vs every currency, including Real.
I'm not willing to "play" the next relatively short-lived USD bounce and risk getting murdered by the drop that will likely follow.

[George90]

I think your absolutly right. Also dont forget that the cats out of the bag. Brasil is a safe place to earn between 15-17% investing in SECURE CD's from reputable banks(bradesco, banco do brasil, etc...) As long as these rates are high the whole goddamn world including USA will continue to flood the brasilian market with DOLLARS in turn keeping the already battered green back at the low end of the spectrum. SOrry folks but that dollar is going to stay low low low for a long long long time

The 15-17% interest rate you refer to is a nominal rate. That means it represents the amount of reais you get from your savings account in Brazil. The problem is that the nominal interest rate is NOT the rate that investors use to make investment decisions. They use the real interest rate. That is the physical amount of goods and services the nominal money you get in interest can actually buy. The rate of decline in purchasing power is the inflation rate. The real interest rate is comuoted as the nominal rate minus the inflation rate.

Your analysis considers ONLY the nominal interest rates in Brazil and the US; it is incomplete. Therefore, your conclusion is not valid. A complete analysis would include the inflation rates in Brazil and the US so as to compare the real interest rates in the two countries, as well as an analysis of their respective economic risks.

I read that the US inflation rate (as measured by the CPI) from July '07 to July '08 is estimated to be around 5%. I have not read the most recent inflation rates in Brazil in business papers but price are high and rising quickly. Some posters who have recently been have described the fast rising prices.

With the target short-term interest rate in the US is 2% and inflation at 5%, the US has a negative real interst rate of 3%. That, by itself, is enough bad news and reflects the poor state of the US economy. Money is leaving in droves. It is no wonder there is such a credit crunch going on now.

On Yahoo News, it is reported that Brazil increased its Central Bank rate by 75 basis points to 13% in order to fight inflation. (I previously posted how these interest rate hikes were hurting the Brazilian stock market. So it continues.) The same article says the current Brazilian inflation rate is around 6.5%, the top of the target range. So Brazil seems to have a real interest rate around 6.5%, well above that of the US.

If the US and Brazil had equal country risks, we could stop here and your conclusion would be correct since investors would seek the higher real interest rate. But countries have risks regarding their economic policies. Brazil does not have a great track record with regards to inflation. It has suffered hyper-inflation in the 1980's. The US has a much better record in that regard. The US has a much lower country risk than Brazil and it will go lower should the new president enact sound economic policy, that might include higher taxes and lower spending to cut the budget deficit.

No one on this list has enough information to evaluate whether the lower risk in the US is sufficient to compensate for the 9.5% points lower real interest rate here. For many investors it might not be, for others it may be. Given that holders of large amounts of US dollars (China, Saudi Arabia, Japan, etc.) have not and are not converting large amounts of their dollars into reais, I would guess that only some investors considers Brazil a better investment target than the US.

Given the slowdown in Asian economies and the potential for further slowing when their oil subsidies prove too expensive and are reduced, I still hold the opinion that Brazil's exports will decline substantially and the lead to a weakening of its currency and the more favorable exchange rate for the US dollar. This effect may be exacerbated if the Central Bank needs to lower Brazil's interest rates to stave off declining GDP growth in 2009.

[Ryjerrob]

Why don't you two run on the same ticket!!!!!!!!

Seriously though, it really isn't worth arguing about. Regardless of who wins, there are tough times ahead. And the fact that the dollar has dropped compared to the real only means less drinking and more fucking for me.

ryjer

[CBGBConnisur]

there is an article in today's bloomberg that describes the brazilian stock market. it has been falling for the past 2 months and has now reached over 20% decline since may. that means an official bear market!

some of the reasons given for the decline in the bovespa is the increase in interest rates by the brazilian central bank, the rising rate of inflation in brazil, and the declining commodity prices that have fueled brazil's growth for the past 5 years.

asia is being hurt by the high oil prices. it has increased the costs of their exports and decreased the us ability to import goods. china's economy is slowing down. in addition, asian demand for iron, copper, etc. did the same thing to those prices as it did to oil. they rose dramatically. now china's demand for those commodities is falling and those prices are plummetting.

brazil's economy faces lower growth, possibly recession, as the demand for its commodities falls. its high exchange rate already reduced demand for its manufactured goods such as its commerical jets. the inflation it is experiencing will dampen domestic consumer demand, compounding the lower gdp growth.

my prediction is that the strength of the real will fall due to theses growing economic problems. if the us gets a new president with a serious economic program that addresses the budget and trade deficits, we may see an increase in the strength of the us dollar. these two movements should lead to an increase in the value of the us dollar in relation to the real by fall (october/november). we might see the exchange rate back above 2.0 by the holiday season. the speed with which the bovespa lost 20% of its value indicates, to me at at least, that we might even see 2.25 by new year's!

a significant dollar recovery is just not happening, as a percent of world reserves the dollar is losing ground. the us federal reserve with its loose monetary policy is allowing the dollar to continue its devaluation, they now want to change course but lets face reality, the us only holds 1 percent of international currency reserves while other major economies hold far more, there is no way the fed will be able to manipulate the value of other foreign countries. middle eastern and asian central banks have tried to stop the devaluation of the dollar with no success.

i agree regardless of obama or mccain there are some really hard times ahead for the us.

the credit problems in the us are already creating problems, if the fed raises interest rates to allow the dollar to gain value it could actually kill the us economy. americans live on credit, higher interest rates would put a big dent in spending.

[Madd Love]

A significant Dollar recovery is just not happening, as a percent of world reserves the Dollar is losing ground. The US Federal reserve with its loose monetary policy is allowing the Dollar to continue its devaluation, they now want to change course but lets face reality, the US only holds 1 percent of international currency reserves while other major economies hold far more, there is no way the Fed will be able to manipulate the value of other foreign countries. Middle Eastern and Asian central banks have tried to stop the devaluation of the dollar with no success.

I agree regardless of Obama or McCain there are some really hard times ahead for the US.

The credit problems in the US are already creating problems, if the Fed raises interest rates to allow the Dollar to gain value it could actually kill the US economy. Americans live on credit, higher interest rates would put a big dent in spending.


Well said and couldn't agree more. But it won't be just us that suffer unfornately but the world will too. Here is a quote from Buffet:


" The faith that foreigners are placing in us may be
misfounded. When the claim checks outstanding grow sufficiently
numerous and when the issuing party can unilaterally determine
their purchasing power, the pressure on the issuer to dilute
their value by inflating the currency becomes almost
irresistible. For the debtor government, the weapon of inflation
is the economic equivalent of the "H" bomb, and that is why very
few countries have been allowed to swamp the world with debt
denominated in their own currency. Our past, relatively good
record for fiscal integrity has let us break this rule, but the
generosity accorded us is likely to intensify, rather than
relieve, the eventual pressure on us to inflate. If we do
succumb to that pressure, it won't be just the foreign holders of
our claim checks who will suffer. It will be all of us as well. "

[Madd Love]

Also expect global inflation to pick up steam at the end of the year and in the next couple of years. The dollar may be loosing ground, but the Real, Yen, Euro are all loosing ground against real world goods. This is happening for the first time globally.

Also the backing of the Real's, yen, Yuan, etc has lost over 40% backing of their own currency. Dollars are backing most currencies as value.

If those countries that hold dollars decide to buy their own currency then that would ignite inflation in their own country even if they move a small percentage to something else would cause a crises, thats why the decline of the dollar has been slow and steady, any other country would have had a run on a currency, but no country can continue inflating the world forever. A dollar crises is likely as well as other currencies link to the dollar that have reserves in the near future unless the government get its act together, which is highly unlikely. Both candidates in the U.S have big spending proposals.

Also obama's plan seems a bit crazy. I personally don't like neither one of them the only real possible hope would have been ron paul,

Obama wants to raise taxes. Why raise taxes in a recession, that would kill the economy, he should just raise interest rates if thats the case:

Proposed changes in taxes after 2008 General election:

CAPITAL GAINS TAX

MCCAIN
0% on home sales up to $500,000 per home (couples). McCain does not propose any change in existing home sales income tax.



OBAMA
28% on profit from ALL home sales

How does this affect you? If you sell your home and make a profit, you will pay 28% of your gain on taxes. If you are heading toward retirement and would like to down-size your home or move into a retirement community, 28% of the money you make from your home will go to taxes. This proposal will adversely affect the elderly who are counting on the income from their homes as part of their retirement income.



DIVIDEND TAX

McCAIN 15% (no change)

OBAMA 39.6%

How will this affect you? If you have any money invested in stock market, IRA, mutual funds, college funds, life insurance, retirement accounts, or anything that pays or reinvests dividends, you will now be paying nearly 40% of the money earned on taxes if Obama becomes president. The experts predict that 'Higher tax rates on dividends and capital gains would crash the stock market, yet do absolutely nothing to cut the deficit.

'

INCOME TAX

McCAIN (no changes)

Single making 30K - tax $4,500 Single making 50K - tax $12,500 Single making 75K - tax $18,750 Married making 60K- tax $9,000 Married making 75K - tax $18,750 Married making 125K - tax $31,250

OBAMA (reversion to pre-Bush tax cuts)

Single making 30K - tax $8,400 Single making 50K - tax $14,000 Single making 75K - tax $23,250 Married making 60K - tax $16,800 Married making 75K - tax $21,000 Married making 125K - tax $38,750


Under Obama, your taxes will more than double!

How does this affect you? No explanation needed. This is pretty straight forward.




INHERITANCE TAX

MCCAIN 0% (No change, Bush repealed this tax)

OBAMA Restore the inheritance tax

How does this affect you? Many families have lost businesses, farms, ranches, and homes that have been in their families for generations because they could not afford the inheritance tax. Those willing their assets to loved ones will only lose them to these taxes.

NEW TAXES BEING PROPOSED BY OBAMA

New government taxes proposed on homes that are more than 2400 square feet.



New gasoline taxes

New taxes on natural resources consumption (heating gas, water, electricity)

New taxes on retirement accounts,

New taxes to pay for socialized medicine

[Alex Deuce]

Like I said earlier. I could sit here and pontificate with you guys for hours but it would be of now use. Most of you have over analyzed the issues to death. In short, regardless of who is in the white house in January, we are in for some tuff times. The following are my Grey Goose inspired observations:

1. At least 5 more banks will fail. Including one of the majors
2. The dollar will continue to fall at a rate equal to the drop in GDP or greater
3. The Fed be forced to raise rates to fight inflation
4. We will be Forced to remove our troops from Iraq. Not because of political reason but because our ability to acquire credit will be greatly reduced.
5. One or two countries, will cease to use the US Dollar as their reserve currency
6. The dollar will be 1-1.45 by November

The above are my predictions. If anyone wants to make a bet on the above, Please IM me with details. For now i have 300R toward the GDP of your choice. I will be in Rio December-January fucking my way through the new years. Thanks to Merrill lynch being one of the best sharks in the tank. If you don't understand the the Merrill reference you might not want to take my bet.

[George90]

Alex,

I agree with your #3, and so does almost all of the smart money. The line I am hearing is that the Fed will hold on interest rates in August but raise them 25 basis points each in October and December.

I also agree a bit with your #1. Several more 'banks' will fail in the next 12 months. I doubt any will be 'major' banks. (Are you saying that Bank of America, Citigroup, Wells Fargo, Wachovia etc can go under or be purchased by another bank? A foreign bank?) A couple can be somewhat large.

As you know, I disagree with your other points. I am very curious as to why you believe that the US economy will weaken more than the Brazilian economy.


MD and CDGB,

Despite the good news for the dollar today, I am holding my breath until after the Olympics. China and other Asian countries subsidize oil and gasoline for thei citizens. China has reduced those subsidies and may reduce them substantially more after the Olympics. If that occurs, the price of oil will fall dramatically (Other commodity prices will also continue to fall.) and the US economy will rebound slightly. That will strengthen the US dollar.

Let's compare notes after Labor Day and see what's up.

[Madd Love]

I agree Alex
I never said the Fed will not be force to raise rates, they will.
Also I agree the U.S is in for hard times as well as the rest of the world as long as we are in a Fiat currency system.
Also inflation will surge in the months and years coming because all central banks are behind the the rate of real inflation which is becoming harder to contain.
I respect everyone's opinion.

Also the Fed has loaned out half its balance sheet for bailouts, after the other half is gone the Fed is going to monetize.

So hold hold on to your seat belts

[Madd Love]

The banking crises in the U.S is just getting started.

At least 90 U.S banks on the watch list.

Also Indy Mac was recently added to the watch list a few months ago.

[Madd Love]

Alex,

I agree with your #3, and so does almost all of the smart money. The line I am hearing is that the Fed will hold on interest rates in August but raise them 25 basis points each in October and December.

I also agree a bit with your #1. Several more 'banks' will fail in the next 12 months. I doubt any will be 'major' banks. (Are you saying that Bank of America, Citigroup, Wells Fargo, Wachovia etc can go under or be purchased by another bank? A foreign bank?) A couple can be somewhat large.

As you know, I disagree with your other points. I am very curious as to why you believe that the US economy will weaken more than the Brazilian economy.


MD and CDGB,

Despite the good news for the dollar today, I am holding my breath until after the Olympics. China and other Asian countries subsidize oil and gasoline for thei citizens. China has reduced those subsidies and may reduce them substantially more after the Olympics. If that occurs, the price of oil will fall dramatically (Other commodity prices will also continue to fall.) and the US economy will rebound slightly. That will strengthen the US dollar.

Let's compare notes after Labor Day and see what's up.


The fed will chop down every tree to save a large bank. But smaller banks won't be as fortunate

[Alex Deuce]

The fed will chop down every tree to save a large bank. But smaller banks won't be as fortunate

The fed does not have enough funds to save any of the top 10 banks including Bank of America, Citigroup, Wells Fargo and Wachovia or any one within 10-15 percent of their Market Caps. It will take only one to fail for all hell to break loose.

Everyone keeps thinking that high interest rates are always a bad thing. Put this in perspective, if the cost of debt is 15 percent what do you think the return is going to be for the issuer of that debt. We have gotten so use to equity financing thanks to the Internet craze that we have the forgotten SML curve and its corresponding theories.

My point is that market has had too much liquidity and money was so cheap that it belied the need for effective business models/plans. All any investor wanted was an above average return that was impossible to get in a sane or prudent market. We (US Government) removed those barriers/controls/safegards to satisfy the markets need for cheep money and large returns. Now the risk as well as the risk premium has now kicked in and we have banks that are borederline insolvent and the dollar is only worth about 60 percent of the face value around the world.

We use to say that wall street is not the economy but a sign of how our economy is doing. Now an uncontrolled and babied wall street has put us in a situation where we are screwed. Im not for Tariffs or additional taxes by any-means but some regulation and darwinism is in needed for our economy and wall street. Printing and Pilling good over bad money in this mess is not going to get us out of it despite what Obamma and McCaine say.

[Watchman4400]

Come on Funkignitor, every time you type a message you prove my point about your level of intelligence. Why the poor language? I guess you can't do any better so let me help you out. First you did not spell "thats" correctly. It is actually "that's" but I guess since you are so smart you knew that. If you beleive that Obama and McCain are controlled by corporations like some type of Manchurian Candidate then I guess we should all vote for Nader! Or Maybe we should vote for Barr.

I am not going to call you another name because I feel bad for you. I hope you have kids because my kids will need someone to cut their grass and clean their homes!


Smart people thats obviously not you. Never fear I have no intentions of voting for corporate idiots like Obama and Mccain. Now go wear your Obama change t shirt and shut the f*** up. idiot

[Fredyann]

This is a comment from one of my important supplier in Brazil. Well, doing business there and importing it is sure that it is getting a little complicated... When this will stop ? It is inflation on every matter !!

"It's a big discussion the subject of brazilian economy. The Central Bank elevate the interest rate to 13% (was 12,25), and some banks are forecasting 14,75 by end of the year. This brings more money to Brazil, makes the Real stronger. The average forecast for the Real by end of the year is 1,65 for 1,00 US$. Two weeks ago the Bank Santander made a forecast for 1,80. Santander was one of a few banks who forecasted the Dollar 1,60 Real one year ago. Brazilian payment balance (importxexport, profit send by foreign companies, travelers,etc) was negative 17 bilion dollars first semester (las year was a smal surplus), compensated by money investitors. So, there is a feeling that something is wrong, the question is how long will it takes until things will be back on the right place".

[Madd Love]

The fed does not have enough funds to save any of the top 10 banks including Bank of America, Citigroup, Wells Fargo and Wachovia or any one within 10-15 percent of their Market Caps. It will take only one to fail for all hell to break loose.

Everyone keeps thinking that high interest rates are always a bad thing. Put this in perspective, if the cost of debt is 15 percent what do you think the return is going to be for the issuer of that debt. We have gotten so use to equity financing thanks to the Internet craze that we have the forgotten SML curve and its corresponding theories.

My point is that market has had too much liquidity and money was so cheap that it belied the need for effective business models/plans. All any investor wanted was an above average return that was impossible to get in a sane or prudent market. We (US Government) removed those barriers/controls/safegards to satisfy the markets need for cheep money and large returns. Now the risk as well as the risk premium has now kicked in and we have banks that are borederline insolvent and the dollar is only worth about 60 percent of the face value around the world.

We use to say that wall street is not the economy but a sign of how our economy is doing. Now an uncontrolled and babied wall street has put us in a situation where we are screwed. Im not for Tariffs or additional taxes by any-means but some regulation and darwinism is in needed for our economy and wall street. Printing and Pilling good over bad money in this mess is not going to get us out of it despite what Obamma and McCaine say.

The Fed will monetize if it does not have enough money. Monetization is coming. Listen to Sennator jim bunning at the hearings before Paulson and the Fed

[Madd Love]

The fed does not have enough funds to save any of the top 10 banks including Bank of America, Citigroup, Wells Fargo and Wachovia or any one within 10-15 percent of their Market Caps. It will take only one to fail for all hell to break loose.

Everyone keeps thinking that high interest rates are always a bad thing. Put this in perspective, if the cost of debt is 15 percent what do you think the return is going to be for the issuer of that debt. We have gotten so use to equity financing thanks to the Internet craze that we have the forgotten SML curve and its corresponding theories.

My point is that market has had too much liquidity and money was so cheap that it belied the need for effective business models/plans. All any investor wanted was an above average return that was impossible to get in a sane or prudent market. We (US Government) removed those barriers/controls/safegards to satisfy the markets need for cheep money and large returns. Now the risk as well as the risk premium has now kicked in and we have banks that are borederline insolvent and the dollar is only worth about 60 percent of the face value around the world.

We use to say that wall street is not the economy but a sign of how our economy is doing. Now an uncontrolled and babied wall street has put us in a situation where we are screwed. Im not for Tariffs or additional taxes by any-means but some regulation and darwinism is in needed for our economy and wall street. Printing and Pilling good over bad money in this mess is not going to get us out of it despite what Obamma and McCaine say.

The Fed will monetize if it does not have enough money. Monetization is coming. Listen to Sennator jim bunning at the hearings before Paulson and the Fed

[George90]

The Fed will monetize if it does not have enough money. Monetization is coming. Listen to Sennator jim bunning at the hearings before Paulson and the Fed

ML,

Do you know what monetization is? Do other members know?

Let's not throw around buzzwords just sound smart, knowledgeable, and important.

I will explain my understanding of the monetization of government debt. In so doing, I will also explain why Madd Love's comment makes no sense.


When the US government runs a deficit, it needs to borrow money to make up the shortfall in tax revenues. The US government sells Treasury bills to investors as a way of borrowing the needed money. Depending on who the investor is, monetization may or may not occur.

If the investor is a foreign sovereign wealth fund, monetization does not occur. If the investor is a domestic bank or hedge fund, monetization does not occur.

If the investor is the Federal Reserve, then monetization occurs.

Monetization of debt occurs when a budget deficit is financed in a manner that increases the money supply. (I am getting this explanation from a textbook on Money and Banking written by Frederic Mishkin, a Fed governor.) When T-bills are sold to anyone other than the Fed, they must use cash to pay for them. This reduces the money supply by the exact amount that the government increases it through its excessive expenditures. There is no net change in money supply, so there is no monetization. Only when the Fed buys these T-bills is there monetization because they Fed does NOT use any cash to pay for them. It simply makes a debit on the asset side of its balance sheet in the government securities account and a corresponding credit on the liabilities side of its balance sheet in commercial bank reserves accounts. These reserve accounts grow because as government spends, its employees and suppliers deposit these cash receipts in their commercial bank accounts.

The buyers of US T-bills are now predominantly foreign investors. Wealthy Americans have reduced their holdings of T-bills in recent years, or not increased them at the same pace as foreign investors. (The foreign money is coming from our trade deficit. What Boone Pickens is saying is TRUE!) The Fed is NOT buying T-bills to finance the deficit, though it does buy them to lower interest rates. Since the focus now is keeping inflation under control, and the Fed is expected to RAISE interest rates in the future, the Fed would be selling T-bills, not buying. So monetization is not going to occur in the US in the near or middle-term future.

[Madd Love]

ML,

Do you know what monetization is? Do other members know?

Let's not throw around buzzwords just sound smart, knowledgeable, and important.

I will explain my understanding of the monetization of government debt. In so doing, I will also explain why Madd Love's comment makes no sense.


When the US government runs a deficit, it needs to borrow money to make up the shortfall in tax revenues. The US government sells Treasury bills to investors as a way of borrowing the needed money. Depending on who the investor is, monetization may or may not occur.

If the investor is a foreign sovereign wealth fund, monetization does not occur. If the investor is a domestic bank or hedge fund, monetization does not occur.

If the investor is the Federal Reserve, then monetization occurs.

Monetization of debt occurs when a budget deficit is financed in a manner that increases the money supply. (I am getting this explanation from a textbook on Money and Banking written by Frederic Mishkin, a Fed governor.) When T-bills are sold to anyone other than the Fed, they must use cash to pay for them. This reduces the money supply by the exact amount that the government increases it through its excessive expenditures. There is no net change in money supply, so there is no monetization. Only when the Fed buys these T-bills is there monetization because they Fed does NOT use any cash to pay for them. It simply makes a debit on the asset side of its balance sheet in the government securities account and a corresponding credit on the liabilities side of its balance sheet in commercial bank reserves accounts. These reserve accounts grow because as government spends, its employees and suppliers deposit these cash receipts in their commercial bank accounts.

The buyers of US T-bills are now predominantly foreign investors. Wealthy Americans have reduced their holdings of T-bills in recent years, or not increased them at the same pace as foreign investors. (The foreign money is coming from our trade deficit. What Boone Pickens is saying is TRUE!) The Fed is NOT buying T-bills to finance the deficit, though it does buy them to lower interest rates. Since the focus now is keeping inflation under control, and the Fed is expected to RAISE interest rates in the future, the Fed would be selling T-bills, not buying. So monetization is not going to occur in the US in the near or middle-term future.


not my comment just a quote from senator jim bunning & the federal reservechairman Ben Bernake at the hearings a few weeks ago. look it up now, if i find a link i will foward it or post it here. Not my words but the people who control the dollar, the federal reserve & the congressman fighting for us against this mess we are in. Watch c-span

[Madd Love]

ML,

Do you know what monetization is? Do other members know?

Let's not throw around buzzwords just sound smart, knowledgeable, and important.

I will explain my understanding of the monetization of government debt. In so doing, I will also explain why Madd Love's comment makes no sense.


When the US government runs a deficit, it needs to borrow money to make up the shortfall in tax revenues. The US government sells Treasury bills to investors as a way of borrowing the needed money. Depending on who the investor is, monetization may or may not occur.

If the investor is a foreign sovereign wealth fund, monetization does not occur. If the investor is a domestic bank or hedge fund, monetization does not occur.

If the investor is the Federal Reserve, then monetization occurs.

Monetization of debt occurs when a budget deficit is financed in a manner that increases the money supply. (I am getting this explanation from a textbook on Money and Banking written by Frederic Mishkin, a Fed governor.) When T-bills are sold to anyone other than the Fed, they must use cash to pay for them. This reduces the money supply by the exact amount that the government increases it through its excessive expenditures. There is no net change in money supply, so there is no monetization. Only when the Fed buys these T-bills is there monetization because they Fed does NOT use any cash to pay for them. It simply makes a debit on the asset side of its balance sheet in the government securities account and a corresponding credit on the liabilities side of its balance sheet in commercial bank reserves accounts. These reserve accounts grow because as government spends, its employees and suppliers deposit these cash receipts in their commercial bank accounts.

The buyers of US T-bills are now predominantly foreign investors. Wealthy Americans have reduced their holdings of T-bills in recent years, or not increased them at the same pace as foreign investors. (The foreign money is coming from our trade deficit. What Boone Pickens is saying is TRUE!) The Fed is NOT buying T-bills to finance the deficit, though it does buy them to lower interest rates. Since the focus now is keeping inflation under control, and the Fed is expected to RAISE interest rates in the future, the Fed would be selling T-bills, not buying. So monetization is not going to occur in the US in the near or middle-term future.


We'll come back to this a year from now and see what happens, because monetization is coming believe it or not.

Also you fail to read Ben bernake's essays. He will chop down every tree in the forest to prevent another great depression. READ bernake's essays. I challenge anyone on this. He will print like no tomorrow. He also said the difference between the depression and now was that they tighten credit and money which caused the depression and now the Fed can print money now unlike the 1930's, where they were restricted, this is not from a text book but from his mouth (Ben Bernake) and his essays. I don't have a lot of time to look and send links now but when i do i will post them for your info.

To believe the Fed will raise rates will say we will have a depression like the 1930's. where unemployment reach 25%.1 and 4 americans were out of work. Money was hard to come by. This was the smart thing to do unlike what they are doing now, (buying time)
The fed will opt to print even risk the U.S currency which its doing now to save wall street friends and banks, belive me monetization is around the corner.

The U.S currency is already crashing with no bottom in site. And we are already experiencing inflation which is picking up steam globally. Thanks to the fed.

If the Fed cared about the dollar rates would have rose a long time ago.But I do feel some time in the future he will be forced to raise rates.

I challenge everyone to read statements from the person who controls the currency not just a text book. Also listen to politicians, not just anyone because it matters where you get your information.

I am not here to give out free advice of what to do but, think for yourselves.

[George90]

I was going to wait until September to post again on this topic, but today there was an Op-Ed piece in Bloomberg about the Brazilian economy. It was so on target that I couldn't contain myself. So here I am again.

The author takes note of recent events and current trends inthe Brazilian economy. The central bank recently raised interest rates in an effort to fight inflation. Inflation is running high, around 6.1%. Real interest rates are at 7% which is the among highest in the world! What I found especially interesting is that the author had statistics showing that the amont of debt Brazilians hold, as a percent of GDP, has been rising and is at its highest level in years, around 37%. The author explained that other countries, developed countries that have well developed mortage markets, have debt rates in the 60% and 70% ranges. But countries like Brazil DO NOT have well developed mortgage markets. The debt people have is not long-term debt to buy homes. It is short-term debt to buy consumer goods, it is credit card debt!

The author claims that Brazilians have been riding their economic boom to higher and higher credit card debt levels used to finance electronics imports. The author notes that despite high exports, Brazil now has a current account deficit due to its addiction to consumer imports. How do you spell 'debt bubble'???? I hope everyone sees some of the similarities with the US mortgage loan / housing bubble of 2002-2005.

I also hope everyone noticed that the prices of commodities have been falling for the past 2-3 weeks. Commodities that include the iron and oil that Brazil exports, so its export earnings are falling. If, (when), earnings fall to the level where Brazilians can't support their credit card debt, there will be a HUGE rush of wind from the bursting bubble. The author stated that credit card default rates have already started to rise.

Based on what I have learned about Brazil and Brazilians, in particular, the short-sightedness of most Brazilians, NO ONE will do anything about this potential bubble until it is bursting in their faces.

My (additional) prediction is that Brazil's economy will seriously falter after Carnaval '09, between 9 and 12 months from now. If the US can get its own act together during that time, then the exchange rate will move favorably.

[Bubba Boy]

Mostly credit card debt - damn, credit card interest rates in Brazil are 50% p a for the best clients, up to 100% pa for lessor qulaity debt.

I totally agree with this piece on Brazil. One thing the piece did not develop further is that although the quoted official rate of inflation is around 6%, the real figure is close to 15%. Similarly in Argentina, the official rate is 9%, the real rate is around 20%. Inflation has killed south american economies in the past. The past always seems to repeat itself in latin america. I think we are at the peak of the boom in the emerging markets, unfortunately the bust always follows and it hits much harder than in the developed world.

[Sltucke]

http://money.cnn.com/2008/08/06/markets/thebuzz/index.htm?postversion=2008080613

[Exec Talent]

I mentioned earlier that I thought that the dollar would continue to trade within a relatively tight trading range. I think now it will break out higher. For what it matters, that is where I have my money.

[Alex Deuce]

i am speechless when it comes to some of the financial terms being bandied about on this board.

monetization is printing money by using any item of consideration in which to base/justify the printing of additional monies when money supply exceeds gdp/revenue growth in order to keep from removing capital from the open market. that is as simple as i can put it and not put the rest of the board to sleep. we engage in a form of monetization at any time we deficit spend.

simply: the fed engaging in open market operations to secure capital

i still think that a lot of you guys pulling for any sign of a weak brazil. sorry to say it but brazil is emerging and will continually change. get down and get the bunda while its relatively cheep!

[Exec Talent]

I mentioned earlier that I thought that the dollar would continue to trade within a relatively tight trading range. I think now it will break out higher. For what it matters, that is where I have my money.

Dollar was up from 1.58 to close at 1.61 today. I hope a lot of you made money.

[Sprite13]

Say you overstay your visa and when you leave Brasil, they stamp your passport with a big red overstay visa. Now, when you go back to your country, if you were to declare your passport lost and had it replaced, the next time you went to Brasil, would the PF and Immigration in Brasil be able to catch you or not?

[Kent747]

I don't think anyone should celebrate for the exchange rates going from 1.55 to 1.59. 2% gain against real still doesn't compare to 3.8 reals to $1 days.

[Benjoe]

Say you overstay your visa and when you leave Brasil, they stamp your passport with a big red overstay visa. Now, when you go back to your country, if you were to declare your passport lost and had it replaced, the next time you went to Brasil, would the PF and Immigration in Brasil be able to catch you or not?
Nowadays, the military police scan your passport into their computer system when you arrive and leave. If you didn't see them scan your passport into the computer upon leaving, this idea might work. If they scanned your passport, it won't work. Overstaying your visa and paying the 7 or 8 reais per overstayed day fine doesn't seem to be a big deal to Brazil. I don't know how this affects travel to other countries.

[Bubba Boy]

A number of people have 2 passports, each from a different country. It used to be that this worked fine. Does anyone know if this still works with the new computer system?

[Alex Deuce]

Say you overstay your visa and when you leave Brasil, they stamp your passport with a big red overstay visa. Now, when you go back to your country, if you were to declare your passport lost and had it replaced, the next time you went to Brasil, would the PF and Immigration in Brasil be able to catch you or not?

If they scanned your passport as they do in Guarulhos/Sao P all your information is read into their database and you will be denied a return visa if you are an Habitual offender. If they simply Stamp it like as in Galeo/Rio you can simply get a new passport. However, I think that they were installing new scanners when i left last August. And i think that they were manually entering names and info into computers to prohibit this.

Ohh.. My buddy in London Had a Canadian and Dominican passport until Homeland Security got a hold of him coming in to Miami. BAD BAD IDEA! 30 hours in detention in an airport and refused admission to US.

[Bubba Boy]

I don't know why he was detained. Many countries allow their citizens to hold 2 different passports from different countries. I have 2 passports from different countries and have entered the US on several occasions on each of them. I have at least 12 stamps in each of them from the US. For the record my countries allow their citizens to hold a second passport.

Some older European countries even allow their citizens to hold 2 pasports from the same country with different numbers - something to do with travelling to countries that don't like each other IE Israel and Arab countries.

Anyone used 2 passports in Brazil lately and stay longer than the 6 months per year permitted?

[Grinder62]

I have a European Union and a US passport. I have no issues using both. Essentially I travel out of the US with my EU passport as it reduces my need for visas and come back into the US on US passport. Of course when departing a country you do need to present the passport you entered with to exit.

[Rio Bob]

Dollar was up from 1.58 to close at 1.61 today. I hope a lot of you made money.

Of course we did, we have been waiting months for your cue on which way the market is going to move, thanks for the tip. My broker even asked me where I'm getting such good information from. I told him from the InternationalSexGuide, a guy by the name of ExecTalent who posts periodically for the benefit of the people on this board. He seemed surprised. Lets hope this has staying power. What do you think?

I have to admit though that when you gave us the same cue months ago I didn't bite. Good thing because as we all know since that day when the Real was at 1.75 to the dollar we lost even more all the way down to 1.56. One out of three predictions aint bad, thanks keep up the good work. Who would have thunk that not only could we find girls to have sex with us that we have to pay for on this board, but we could also get it paid for by following your advice as vezes(at times). You're amazing, good thing you're here.


Back on 2/28, about a month ago, I mentioned that something had to give. We are seeing a rise in the Real to about 1.75 now.

I believe in numerical analysis, but often times you have to step back and look at what makes sense from a macroeconomic viewpoint.

I just am thankful that Greenspan is no longer Fed Chair (though he still opens his mouth way more than he should). I could never figure out what he was doing, I just knew I wouldn't like it.

Your quote from 2/28 as you said, entitled "Hit the nail on the Head" you are so spot on:


For that exact reason I think we will see a rise in the exchage rate. Regardless what the other George thinks, the US is entering a recession. As a result, demand for foreign goods will continue to decline. Something has to give. My bet (and my dollars) are on the exchange rate.

[Exec Talent]

Of course we did, we have been waiting months for your cue on which way the market is going to move, thanks for the tip. My broker even asked me where I'm getting such good information from. I told him from the InternationSexGuide, a guy by the name of ExecTalent who posts periodically for the benefit of the people on this board. He seemed surprised.

Glad I could help!

[Alex Deuce]

I don't know why he was detained. Many countries allow their citizens to hold 2 different passports from different countries. I have 2 passports from different countries and have entered the US on several occasions on each of them. I have at least 12 stamps in each of them from the US. For the record my countries allow their citizens to hold a second passport.

Some older European countries even allow their citizens to hold 2 pasports from the same country with different numbers - something to do with travelling to countries that don't like each other IE Israel and Arab countries.

Anyone used 2 passports in Brazil lately and stay longer than the 6 months per year permitted?

overstays and taxes

[Bubba Boy]

Ok I understand now. Yes trying to hide something from the US immigration system would be significantly different from the Brazilian system. The US system is sophisticated and would catch most stuff, I would not try to fuck with that system.

The Brazilian system though, I get the impression, is implemented way way less efficient - may be a good system purchased from an oversees company, but the implementation is typically Brazilian IE way fucked up.

[SlimHoleDrill]

A number of people have 2 passports, each from a different country. It used to be that this worked fine. Does anyone know if this still works with the new computer system?

Actually, a little known fact is that the US will allow you to have 2 US passports at the same time. You have to convince them that you do so much traveling that you might have one of them away at an embassy getting a visa while you still need to travel.

This probably would not help since you would have to get a Brazilian visa in both of them. But who knows, maybe it would work if the Brazilians only key off of your passport number, and, I'm not sure they give you two different numbers. Interesting thoughts though...

Slim

[Exec Talent]

Yesterday stopped in one of the cambios on NS Copacabana near the Copacabana Palace. Asked for the dollar exchange rate and was told it was 1.58 (and displayed on the big Gringo calculator circa 1980 that they all have). I said that the official rate was 1.63. After checking with the boss, I was then told that it was 1.63.

[Exec Talent]

http://articles.moneycentral.msn.com/Investing/Dispatch/080815markets.aspx

Sangue Bon (the poster formerly known as Rio Bob), since I know you follow my advice religiously, with all the money you made this week, I am sure we will see you in Rio soon. Come on in, the exchange rate is fine.

[Rio Bob]

http://articles.moneycentral.msn.com/Investing/Dispatch/080815markets.aspx

Sangue Bon (the poster formerly known as Rio Bob), since I know you follow my advice religiously, with all the money you made this week, I am sure we will see you in Rio soon. Come on in, the exchange rate is fine.

We don't deserve to have someone like you on this board, but we got lucky. You're right again, my next trip to Rio is in the works and thanks to my recent good fortune it will be first class all the way. As a matter of fact I might even make my first attempt at VM. And as a token of my gratitude I'll buy you any piece of Bucetta you want in VM.

Appreciate your help.

SB/RB

[Bubba Boy]

I agree a bottom has been put in for the declining dollar. The first part of the equation is the strength in the dollar, the second part will be the Real tanking. The real at 1.60 is a joke, much like OIL was at $147 a barrel. In the short term markets can be out of whack, but in the long term they revert to reality. The Real will be back over 2.00 in a year........(oil wil be under a $100 as well).

[Juancaminante]

I agree a bottom has been put in for the declining dollar. The first part of the equation is the strength in the dollar, the second part will be the Real tanking. The real at 1.60 is a joke, much like OIL was at $147 a barrel. In the short term markets can be out of whack, but in the long term they revert to reality. The Real will be back over 2.00 in a year........(oil wil be under a $100 as well).I agree OIL will be at 100 but the Real I dont Know - I reckon it will be 1.60 - 1.70 for the next 18 months.

[Rio Bob]

I think we're all curious, every once in a while you post a message like the one below. You get everybody excited and everybody asks you where did you get that great rate? You never respond. Obviously you have the inside track on the exchange rate in Rio, good for you, a guy of your level should:


Got 1.65 to 1 today. Didn't try to negotiate since the official rate is between 1.60 and 1.61. He did throw in an extra R$5 for a cup of coffee!


So why then this below post? Why all of a sudden do you have to negotiate like the rest of us? Where is the inside track? why did you have to negotiate for a better rate now and never before? What happen? No cup of coffee this time?


Yesterday stopped in one of the cambios on NS Copacabana near the Copacabana Palace. Asked for the dollar exchange rate and was told it was 1.58 (and displayed on the big Gringo calculator circa 1980 that they all have). I said that the official rate was 1.63. After checking with the boss, I was then told that it was 1.63.

[Exec Talent]

I think we're all curious, every once in a while you post a message like the one below. You get everybody excited and everybody asks you where did you get that great rate? You never respond. Obviously you have the inside track on the exchange rate in Rio, good for you, a guy of your level should:




So why then this below post? Why all of a sudden do you have to negotiate like the rest of us? Where is the inside track? why did you have to negotiate for a better rate now and never before? What happen? No cup of coffee this time?

Rather than be stuck in some putrid locale (for sake of argument, New York) I actually do travel to Rio quite often. Even though I have the inside track (as you call it) I like to practice my negotiation skills and to show what the average Joe or Bob could get. I actually got higher than 1.63.

[Off Road]

We don't deserve to have someone like you on this board, but we got lucky. You're right again, my next trip to Rio is in the works and thanks to my recent good fortune it will be first class all the way. As a matter of fact I might even make my first attempt at VM. And as a token of my gratitude I'll buy you any piece of Bucetta you want in VM.
SB/RBOK, I was out and had a few drinks and read this and for some reason found it funny. You are going FIRST CLASS ALL THE WAY? but then you are going to VM? just struck me funny as a contridition, I have never been to VM but from what I have heard, does not seem first class location.. but I could be wrong..

[Sperto]

OK, I was out and had a few drinks and read this and for some reason found it funny. You are going FIRST CLASS ALL THE WAY? but then you are going to VM? just struck me funny as a contridition, I have never been to VM but from what I have heard, does not seem first class location.. but I could be wrong..
It's more like business class. R$ 25 business.

[Bubba Boy]

I don't see the conflict of going to Villa Mimosa and flying business/first class. I have plenty of very wealthy friends that bang very cheap women, its just another sexual fantasy type of deal. Very normal.

1 Example : Hugh Grant banging that really cheap, downright ugly h**ker while he was married to Elizabeth Hurley, a very stunning woman. Each to their own.

[Howman]

It's looking better for the dollar the last few weeks versus many forneign currencies, not only the Real. From what I've read, this is a trend we can get used to. Every economy runs in cycles and it appears the worst is over. Let's hope they're right.

BTW, I would recommend VM to anyone, including "first class" travelers to visit VM in Rio. In fact, I would say you would be missing a one of a kind experience if you went half way around the world and missed it! If you are new to this thread, Vila Mimosa is sleazy area not far from downtown Rio. The main street sports several barn like buildings, each with several dozen brothels in it. Think of it like a county fair with GDP's instead of cows! (you can milk them too but I will save that story for another thread) I would guestimate anywhere upwards from 500 girls working at one time! Prices are extremely cheap and there are some absolutely stunning women mixed in with the filth. Rich or poor, who wouldn't want to see something like that?

[Bubba Boy]

Brazil's current account deficit reached USD$ 17.5 billion in the first 6 months of this year. It has been in surplus the last 5 years. Imports increased 50% over last year, that is an incredible increase. In the next 6 months the deficit is forecast to widen even further. This will have an impact on the REAL as Brazil is importing a lot more than it is exporting now. IE less demand for the REAL and more demand for Dollars.

One thing to note with currencies, they tend to trend in 1 direction. Once the trend gets broken, they snap back the other direction quite quickly before settling into the new trend. Look at the USD versus the Euro the last 2 weeks, went from 1.6 to 1.45, thats a 10 per cent movement. As Brazil is a much more volatile economy than Europe, the currency movements are magnified IE it will move faster and further, it did when it was strengthening, it should do so when it weakens. All it takes is a few large financial institutions to dump their positions and it will be a stampede to the exits. One would have to expect the REAL will be 2+ some time in the next 12 months.

I am not saying the REAL will weaken today, tomorrow or next week. What I am saying is when the REAL does get hit, it will move very quickly. Much more quickly than everybody thinks is possible. As I said, just have to wait until a few of the big guys start to unload their massive positions and that will be the catalyst.



http://www.bloomberg.com/apps/news?pid=20601087&sid=ab8A4jP_.3PU&refer=home

Current account deficit : A general definition of the current account is essentially (exports - imports) + (foreign income - foreign payments). In Brazils case it is essentially exports - imports - interest payments on its foreign debt.

[Exec Talent]

And that is on what I based both my original and current opinion. In a declining US economy, how is Brazil going to sell their goods. I have been following those numbers all along, particularly the BOT.

[Abzsafado]

I agree a bottom has been put in for the declining dollar. The first part of the equation is the strength in the dollar, the second part will be the Real tanking. The real at 1.60 is a joke, much like OIL was at $147 a barrel. In the short term markets can be out of whack, but in the long term they revert to reality. The Real will be back over 2.00 in a year........(oil wil be under a $100 as well).

Unlike some contributors I am no financial expert but according to most newspaper reports the American banking system is in a very poor state. Coupled with the fact that Petrobras are finding oil everywhere they stick a hole in the ground in the previously untapped sub-salt structure off Santos. And with Brasils strength in food production and the availability of cheap labour I can see no reason for a return to the R$6 to the pound era that followed Lulas election.
However I have heard that Brasil is due an election soon and that Lula is ineligible to stand. I am not 100% sure about this but some of my Brasilian friends working in europe are holding on to their euros in the hope of a better exchange rate caused by a change of government.
Unfortunately Brasil has ceased to be a cheap mongering destination, but it's still a fun place to be.

[Bubba Boy]

Not being a financial expert does not disqualify you from being correct. Most "experts" are wrong most of the time when it comes to finance. Only time will tell.

One thing though, I will back a highly efficient economy like that of the US to overcome its problems rather than a corrupt, super inefficient latin american economy.

[SlimHoleDrill]

... Coupled with the fact that Petrobras are finding oil everywhere they stick a hole in the ground in the previously untapped sub-salt structure off Santos. ...

Despite all the announcements about oil finds (which may or may not be as large as estimated, but will be substantial anyway), Brasil is still a net importer of oil by a substantial amount.

The fact is, oil from these new finds will not start to flow realistically for 8 years, maybe 10 years. On top of that, Brasil (like most of the world's oil producers) face a steep decline in production in existing fields. The oil finds will definitely help, but probably not enough to radically change Brasil's position. You have to look at the education, population growth, motivation of the people, etc. to understand how it will play out. This is a difficult question...

I agree that currency fluctuations are a long term proposition. It has gone against the dollar for some time now and the effects are starting to show. If I knew when the shift would occur, I would be rich.

I doubt that it will be a monolithic shift. Probably the dollar will strengthen against European currencies but not against others and Brasil may maintain its strength. However that will damage exports and tourism so it will eventually balance out and weaken the R. But when?

[El Minetero]

I guess those who have seen better exchange rates feel that Brazil is no longer a cheap mongering destination, but 15BR for 15 minutes, 30BR for 30 minutes, etc, sounds mighty good to me. From what I read, if you get out of the major cities there's still lots of great places with lower prices. Of course, anywhere you go, you still have the high end clubs with the women asking astronomical prices. But really, I don't care if they have sparks flying out their ass, what can they do that's worth the extra money?

KT

[Bubba Boy]

Warren Buffet said today that he has unwound all positions but one, against the US dollar. He has been betting, for a couple of years, that the US would fall. He now has taken his profits and is out of these positions. Interestingly he still has 1 small bet, that is that the Brazilian real will continue to rise against the US dollar.

What he is saying is that the US dollar has broken the down trend against most major currencies. He has kept his position on the Real because he is thinking that trend has not been broken yet. The minute it hits a wall he will be out of that as well. He and a ton of other huge investors are just waiting.

Most "experts" are not worth listening to. Mr Buffet is worth listening to.

[SlimHoleDrill]

I guess those who have seen better exchange rates feel that Brazil is no longer a cheap mongering destination, but 15BR for 15 minutes, 30BR for 30 minutes, etc, sounds mighty good to me. From what I read, if you get out of the major cities there's still lots of great places with lower prices. Of course, anywhere you go, you still have the high end clubs with the women asking astronomical prices. But really, I don't care if they have sparks flying out their ass, what can they do that's worth the extra money?

KT
For me, it's not so much hot hot they are (but they are), but it is just a lot of fun at a terma. Hang around, BS with them, nice drinks and atmosphere. The 1R/min is not that experience.

Back in the good old days (not so long ago) you could have a great time at a terma, two girls, excellent quality, lots of drinks all night long and not even break $200. Now that the dollar is so weak, that same evening is more like $400. Bummer. It is still a unique experience, but as you say, other alternatives start to look interesting. And the prices start to look like other places in the world, even the US.

But having said this, there is nothing quite like the termas anywhere in the world.

[Bubba Boy]

My first time in Rio was about 5 years ago. Lúomo prices were - Entrance and a girl for 40 minutes (R$ 150) + a few drinks used to run about R$ 180.00 total, which was US$ 56 (FX rate 1=3.2) . Now entrance and the girl is R$ 250.00 + drinks R$50 runs about R$300, which at 1.6 is US$ 190.00. That is 3.4 times more expensive in Dollars.

It is not just the cost of P4P, everything has about doubled in price in 5 years in local currency, despite the government quoting the inflation rate at about 6% pa. Add in the dollar which is halved and things are about 4 times as expensive for me.

[SlimHoleDrill]

My first time in Rio was about 5 years ago. Lúomo prices were - Entrance and a girl for 40 minutes (R$ 150) + a few drinks used to run about R$ 180.00 total, which was US$ 56 (FX rate 1=3.2) . Now entrance and the girl is R$ 250.00 + drinks R$50 runs about R$300, which at 1.6 is US$ 190.00. That is 3.4 times more expensive in Dollars.

It is not just the cost of P4P, everything has about doubled in price in 5 years in local currency, despite the government quoting the inflation rate at about 6% pa. Add in the dollar which is halved and things are about 4 times as expensive for me.

Yeah, it has really changed. I guess I first went to Rio about 20 years ago. Back then, you were on your own. The locals I knew didn't tell you about options so you had to find it on your own, mostly what you bumped into in places like Mabs and of course Barbarella. Those were the years of hyperinflation. You changed money every day and not at the bank. The bell boy in the hotel was usually your cambio and you never changed more than you had to. Sometimes I changed money twice a day. Their rate could change 20% in a day. Crazy, and you had to bring cash with you. No ATMs and if you put it on your credit card, your hotel bill could be 30-50% more because the rate they gave you was the official one.

I think back then it worked out you could get a pretty nice companion for the night for about $25 or $30, but it has been a long time. I do remember that a beer in Mabs was less than 50 cents.

Places in centro like 65 were there at that time and, as I understand, much nicer than they are today. More facilities, not just about the cabinas. I could kick some of my friends for not telling me about those places back then, but they say they didn't think gringos would be into that. Back then, they were probably mostly right. Your typical businessman going to Rio back then might have been shocked out of his mind or scared to death of getting ripped off. Rio was much, much more dangerous back then and almost nobody spoke English, even in hotels.

I think I could have handled it ....

[Edward M]

Anybody know what they are giving for US$ now?

[Exec Talent]

For those interested, the official exchange rate is approaching 1.68 today.

[Ryjerrob]

For those interested, the official exchange rate is approaching 1.68 today.

I don't pretend to be an economists, just a fellow monger looking for the best benefits of my dollars will allow. While I've considered different destinations, Brasil is where I want to be. Regardless of what happens, I remain optimistic on exchange rates.

Girls, I'll be back soon..............

ryjer

[El Greco]

Yeah, it has really changed. I guess I first went to Rio about 20 years ago. Back then, you were on your own. The locals I knew didn't tell you about options so you had to find it on your own, mostly what you bumped into in places like Mabs and of course Barbarella. Those were the years of hyperinflation. You changed money every day and not at the bank. The bell boy in the hotel was usually your cambio and you never changed more than you had to. Sometimes I changed money twice a day. Their rate could change 20% in a day. Crazy, and you had to bring cash with you. No ATMs and if you put it on your credit card, your hotel bill could be 30-50% more because the rate they gave you was the official one.

I think back then it worked out you could get a pretty nice companion for the night for about $25 or $30, but it has been a long time. I do remember that a beer in Mabs was less than 50 cents.

Places in centro like 65 were there at that time and, as I understand, much nicer than they are today. More facilities, not just about the cabinas. I could kick some of my friends for not telling me about those places back then, but they say they didn't think gringos would be into that. Back then, they were probably mostly right. Your typical businessman going to Rio back then might have been shocked out of his mind or scared to death of getting ripped off. Rio was much, much more dangerous back then and almost nobody spoke English, even in hotels.

I think I could have handled it ....


You brought up memories Sir.

I think it was 1981 during carnival. When I arrived the "parallel" black market was 8000 cruzeiros to the dollar. The day I was leaving after 12 days it was about 12000.

In the Taverna next to Meridien hotel (I was staying above) they were writing the prices on a blackboard with a chalk because they were changing 3-4 times a day.

Nevertheless I managed to do nine girls in those 12 days and only the first one was a WG. I still remember that I gave her $20 next morning and she was very happy.

By the way club Rezine in the basement of Meridien was my hunting grounds for a few nights back then.

I also remember a live fu****g show nearby. We were watching four couples doing it in front of us, within a meter, while I was having my drinks with the $20 one.

Have fun.

[Rock Harders]

Mongers-
About 6 months ago I theorized (not on this board) that the US dollar would continue to fall against all international currencies once it hit $1.50 to the Euro for a period determined by the probable outcome of the November election. I argued that if it looked probable that McCain would win the election, the dollar would continue its slide to the point of possible abyss (this is based on my theory that McCain would continue the bankrupting wars indefinitely, therefore maintaining a massive budget deficit indefinetly, and further eroding confidence in the dollar); if it looked probable that Obama will win, the dollar would turn around at some point and begin a long, extended recovery that will bring it back to within 10-15% of the Euro (and major gains against all currencies) within 18-24 months. At this point it looks likely that Obama is going to win, and lo and behold, the dollar has started its long, extended recovery. Six months from now, I expect the US economy to begin its recovery, which will facilitate the continued recovery of the dollar, along with more stable oil prices that should settle in around $75-$90.
This means that we should see an exchange rate of around 2 Real-1 USD six months from now, with the rate settling in a longer term range of about 2.2-2.3 Real-1 USD.
Suerte,
Rock Harders

[Ryjerrob]

At this point it looks likely that Obama is going to win, and lo and behold, the dollar has started its long, extended recovery. Six months from now, I expect the US economy to begin its recovery, which will facilitate the continued recovery of the dollar, along with more stable oil prices that should settle in around $75-$90.

I really hope you're correct. Prior to traveling, I never paid much attention to exchange rates. Now I find myself checking several currencies daily. I would imagine that if Obama wins that there may be a surge. The way things are going now, I'm hoping for 1 to 2 by the end of the year. Again, I'm just hoping for the best. Call it my own selfish motivation.

ryjer

[Rio Bob]

You brought up memories Sir.

I think it was 1981 during carnival. When I arrived the "parallel" black market was 8000 cruzeiros to the dollar. The day I was leaving after 12 days it was about 12000.

By the way club Rezine in the basement of Meridien was my hunting grounds for a few nights back then.

I also remember a live fu****g show nearby. We were watching four couples doing it in front of us, within a meter, while I was having my drinks with the $20 one. Have fun.

Yes, the club in the basement of the Meridien was called Regine's, they had them in New York/Paris and maybe London. I used to go there all the time.

The fu****g show nearby that I used to go to in the early 80's was in a club called Club Munchen, near Praca Cardeal Arcoverde. it was a place like Brabarella's is today but they had live sex shows both with men/women and Lesbos.

Things were cheap then plus you could get a 40-50% better rate on the black market for the dollar.

[SlimHoleDrill]

Yes, the club in the basement of the Meridien was called Regine's, they had them in New York/Paris and maybe London. I used to go there all the time.

The fu****g show nearby that I used to go to in the early 80's was in a club called Club Munchen, near Praca Cardeal Arcoverde. it was a place like Brabarella's is today but they had live sex shows both with men/women and Lesbos.

Things were cheap then plus you could get a 40-50% better rate on the black market for the dollar.

There was also Erotica near the Meridian which had a cabaret show that finished with live "Acts" on stage. That was not a bad spot to make, ah, friends. I have been told that couples in the audience would also get into it right there, but I never saw it personally.

I had forgotten about the chalk prices, but I remember it now. It was just crazy -- even taking a taxi ride was a problem because of rapid price changes.

Years later, I asked a friend why he didn't tell me about the termas and he said "well, that's just a w**re house." I thought, "Exactly!"

I also have some great memories of non pros from back then. I think that with the explosion of gringos going to Rio just for mongering, it has made it much , much more difficult with any non pros. There have been a few other comments on this board to that effect. In fact, the last non pro experience I had didn't exactly work out -- it was not going to be a one night score and I was not ready for a long-term commitment. Two days? Come on.

I have to say that I could wax romantically for quite some time about how it "used to be" and there were some good things, but in many ways it is better now.

However, my dream would be to go back to the real days of Rio de Janeiro before it went down hill -- say the 1920's through the late sixties. I understand it was really something. Style, music, women, without all the grunge. It would have been beautiful I am sure.

I'll put in a post when I finish my time machine.

[Jazzy Daddy]

SAO PAULO, Sept 4 (Reuters) - Brazil's currency sank 2.15 percent to its lowest in more than four months as a slump in global equity markets increased investors' aversion to emerging market securities.

The real BRBY slumped to 1.714 per U.S. dollar from Wednesday's close of 1.678, the weakest since April 29.

The currency's decline tracked a 4 percent tumble in the Bovespa index .BVSP of the Sao Paulo stock exchange and declines of more than 2 percent on the Dow Jones industrial average .DJI and the Nasdaq Composite index .IXIC. (Reporting by Elzio Barreto; Editing by James Dalgleish)

[Bubba Boy]

The real is at 1.71 today.

The trend is for strength in the US, will it last? Who knows, but for now you cannot bet against the US dollar, it is on a roll.

[Hobbying]

I've been keeping track of the Real with the Argentina Peso which has not moved much since it gained on the USD. Not sure why though. My guess is that the Real moves with the Euro and Peso is tied to the USD.

[Exec Talent]

The real is at 1.71 today.

The trend is for strength in the US, will it last? Who knows, but for now you cannot bet against the US dollar, it is on a roll.

I told you so yet?

[Rio Bob]

Can I say ... I told you so yet?

Since you have been waiting for about 6 months to say it, sure go ahead you deserve it.

[Exec Talent]

Since you have been waiting for about 6 months to say it, sure go ahead you deserve it.

why six months here or there matters to a guy who comes to Rio once every five years but has a need to write about his experiences nearly every day. Enjoying Rio the home game?

[Bubba Boy]

Be nice guys........

[Exec Talent]

http://articles.moneycentral.msn.com/Investing/JubaksJournal/How-to-share-in-the-dollars-surge.aspx

[Bubba Boy]

Exec, Interesting. The article was good, except didn't like the part on US stocks. Me thinks they have another couple of legs down before this bear has finished mauling anyone that wants to be in this market.

[Exec Talent]

Exec, Interesting. The article was good, except didn't like the part on US stocks. Me thinks they have another couple of legs down before this bear has finished mauling anyone that wants to be in this market.

I have a number of stocks on watch lists to buy at the right price. Definitely think we have a way to go on the downside.

[Exec Talent]

The current rate is 1.74

Site I use is:

http://www.xe.com/ucc/

[Edward M]

They offered 1.70 last night for a dollar. Since this was less than the current bank rate I paid in Reais. Hopefully they will catch up and offer more than the exchange rate next week.

[El Greco]

Exec, Interesting. The article was good, except didn't like the part on US stocks. Me thinks they have another couple of legs down before this bear has finished mauling anyone that wants to be in this market.

A couple of months ago I could see the bottom near the 9800 figure.

Last November I told them in the Argentina forum that bottom was around 11300 points and I was correct.

Now I am a little confused for the time being. Let's see.

[Jasperhup]

EDITOR'S NOTE: This report was deleted in accordance with the Forum's SPAM policy prohibiting reports containing political commentary. Please read the Forum's Posting Guidelines for further information. Thank You!

[George90]

Can I say "I told you so" yet?

You can't say it to me because in early August I said the same thing as you.

But ... where is Alex Deuce????

[Alex Deuce]

You can't say it to me because in early August I said the same thing as you.

But ... where is Alex Deuce????

Im here licking my wounds. Literally, im in Brazil. What im lickin aint none of ya business. However, i still think the dollar will fall when third quaters gdp is released. But for now, im in search of thin mulatas. Right now im being hounded by a bunch a fat 5 and 6's.

[Balluba]

I will assume that many of the Forum's members own real estate, house or apartment in Brazil. Given that one realize these values, this compensate in part in the last years of currency changes, and mongering costs.

I choose to give an example, just to explain what I mean :
Since I bought my (very reasonable) house in 2005, the increase of BR$ is about 17 - 20% of my currency from then til today. This amounts to approx. U.S. $ 20,000.

In addition, general inflation, in my area, it has been very pleasant, about 40 - 50% in 4 years. My new neighbors buying houses and apartments are not American or Europeans, they are all essentially the Brazilian.

Given that, in my case, I sell, I am left with a pretty profit to just under U.S. $ 100,000.

I know that the math is not complete, here is interest rates, maintenance and operating costs, and on the other hand, rental income.

In any case, a view of a nice profit in the very intimate setting and the benefits of lovely brazilian ladies.

Photo is from Beira Mar Fortaleza.

[El Greco]

I will assume that many of the Forum's members own real estate, house or apartment in Brazil. Given that one realize these values, this compensate in part in the last years of currency changes, and mongering costs.

I choose to give an example, just to explain what I mean :
Since I bought my (very reasonable) house in 2005, the increase of BR$ is about 17 - 20% of my currency from then til today. This amounts to approx. U.S. $ 20,000.

In addition, general inflation, in my area, it has been very pleasant, about 40 - 50% in 4 years. My new neighbors buying houses and apartments are not American or Europeans, they are all essentially the Brazilian.

Given that, in my case, I sell, I am left with a pretty profit to just under U.S. $ 100,000.

I know that the math is not complete, here is interest rates, maintenance and operating costs, and on the other hand, rental income.

In any case, a view of a nice profit in the very intimate setting and the benefits of lovely brazilian ladies.

Photo is from Beira Mar Fortaleza.

Your calculations seem to be accurate. Good for you.
But can you please explain to us what short of taxes you will have to pay and how are you gonna get that money out of the country in case you sell?

Thanks

[Exec Talent]

Your calculations seem to be accurate. Good for you.
But can you please explain to us what short of taxes you will have to pay and how are you gonna get that money out of the country in case you sell?

Thanks

Is that when you buy an apartment in Rio you need to put up all the money. Then there is the cost and time to remodel. Give me the same amount of money you spent and the returns would be through the roof (so to speak). You guys can talk all you want about the great investments you made in buying an apartment in Rio. You did not make a good investment.

If you want to say you own an apartment in Rio, by all means, buy one. Just don't blow smoke up everyone's ass by saying you made a good investment. You didn't.

[Magic2000]

Your calculations seem to be accurate. Good for you.
But can you please explain to us what short of taxes you will have to pay and how are you gonna get that money out of the country in case you sell?

ThanksHi,

Is one to assume that when you sell a property in Brasil taking the cash from the proceeds is not allowed? I hope this is not the case!

Regards,

Magic

[Magic2000]

Is that when you buy an apartment in Rio you need to put up all the money. Then there is the cost and time to remodel. Give me the same amount of money you spent and the returns would be through the roof (so to speak). You guys can talk all you want about the great investments you made in buying an apartment in Rio. You did not make a good investment.

If you want to say you own an apartment in Rio, by all means, buy one. Just don't blow smoke up everyone's ass by saying you made a good investment. You didn't.Hi,

With the greatest of respect I would like to know why making 100K US profit is not a good investment for this person.

I am trying to learn as much as I can about Brazil and from your comment but I would appreciate more information to understand your statement please.

Many thanks,

Magic

[Magic2000]

Is that when you buy an apartment in Rio you need to put up all the money. Then there is the cost and time to remodel. Give me the same amount of money you spent and the returns would be through the roof (so to speak). You guys can talk all you want about the great investments you made in buying an apartment in Rio. You did not make a good investment.

If you want to say you own an apartment in Rio, by all means, buy one. Just don't blow smoke up everyone's ass by saying you made a good investment. You didn't.Hi ,

My appologies to you, I was not reading your post carefully, I understand now why you think it is not a great investment in terms of where you could put money. I do agree with you, if you take financial gearing that you can get in other countries then you could make much greater returns elsewhere.

Regards,

Magic

[Off Road]

Is that when you buy an apartment in Rio you need to put up all the money. Then there is the cost and time to remodel. Give me the same amount of money you spent and the returns would be through the roof (so to speak). You guys can talk all you want about the great investments you made in buying an apartment in Rio. You did not make a good investment.

If you want to say you own an apartment in Rio, by all means, buy one. Just don't blow smoke up everyone's ass by saying you made a good investment. You didn't.I am not sure he said Rio. Fortaleza might be a good investment, there will be flights there from Atlanta next year and that will probably increase USA investments.
I did not buy my apartment in Rio for an investment, and only lucked out and might make some money, in dollars, because the dollar has declined. My aparmtent might have appreciated some in 2 years, but not as well as putting the money in a brazil savings account.
Although I might make money in dollars, I live here and will not be taking the money back to the USA, so what is the point of thinking in dollars, nothing.

[Balluba]

Your calculations seem to be accurate. Good for you.
But can you please explain to us what short of taxes you will have to pay and how are you gonna get that money out of the country in case you sell?

Thanks

Yes, I try:
Capital gains on the sale of a property by individuals will be subject to Brazilian tax at a rate of 15%. The tax is determined by the difference between the sale price and the acquisition cost duly reported on the annual income tax return.

Because there is a tax agreement between my country and Brazil (as in most OECD countries), there will be no double taxation. Anyway, its not a theme, as its written in my laws:
Capital gains on sale of holidayhome is tax-exempt when:
the owner has used the property as a separate holiday for at least five of the last eight years.

If one wish to take the profit out of Brazil, I would believe that one can swift them, as they where swifted into the country. Everything is fully legal.
B

[Balluba]

Is that when you buy an apartment in Rio you need to put up all the money. Then there is the cost and time to remodel. Give me the same amount of money you spent and the returns would be through the roof (so to speak). You guys can talk all you want about the great investments you made in buying an apartment in Rio. You did not make a good investment.

If you want to say you own an apartment in Rio, by all means, buy one. Just don't blow smoke up everyone's ass by saying you made a good investment. You didn't.

Eehhh...
I can not speak for Rio, I do not know this market. I just gave an example from the Nordeste.

My post is written with the intention that one can also look at the bright side of the currency problems. What is the case for some, is not the case for all others. The post is not written to honor myself, or boast of good investments. My apology if it is perceived so.

If one wants to own a property in Brazil, often with a view to long-term stay or a pension, it can be wise to do that for some years in advance. Not only as an investment of money, but the possibility one then have to build up a network and make oneselves known, in a very different way than as a one-week tourist at Praia do Futuro, or Copacobana.


In the end, (for me) it is not about to win the dollars, but to live as you wants, in the country you want, with the lifestyle you adore and with the women(s) you love and desire.

B

[Balluba]

Yes, I try:
Capital gains on the sale of a property by individuals will be subject to Brazilian tax at a rate of 15%.

Important correction, this is form another site, and written by an accountant office in Fortaleza :

This rules is specific for private people (Not a company)

1) If you sell after 5 years of ownership of the property and it is the only property you own in Brazil, and the property sale is under R$440,000 then it is tax free on Capital Gains.

Related the sales, if you sell the property after 5 years, you will have an opportunity to reinvest for buying a new land without tax within 6 months for doing the new operation. If you only sell the land after 5 years, you will pay tax.

BUT IF YOU REINVEST THE AMOUNT WITHIN 6 MONTHS YOU WON´T PAY TAX.

This mention according the Brazilian law is related the quantity of R$ amounts more than R$ 35.000,00, because if you have the amount of sale value less than R$ 35.000,00 you will not pay any tax ( will be tax free). For this rule, the property sale could be over R$ 440k.


2) a) Regardless of when you sell or the amount of sale, if you reinvest within 6 months the full amount then this would also be tax free.
b)If you reinvest with the 6months but under the full total sale price, you may pay some CG tax but can be offset against your new investment.
a) it is correct ( you will not pay tax if you do this operation ONLY once per 5 years within 6 months for bying a new piece of land);

b) it is correct ( you will pay tax for the difference)

[Exec Talent]

See my comments under Rio de Janeiro - Hotels & Apartments

[Sperto]

IIf you sell after 5 years of ownership of the property and it is the only property you own in Brazil, and the property sale is under R$440,000 then it is tax free on Capital Gains.
What if you sell within 5 years?

[Balluba]

What if you sell within 5 years?

As I understand this Sperto, not an expert, but by reading and asking; you must pay CG tax 15% of your earning. If reinvested in other projects same amount or more within 6 months, then no tax.

But everybody should consult an accountant or a lawyer, to do this legal and as there are of course paperwork to be done.


We are all the time talking about European and American buyers. Most of my neighbors are Brazilians. There are 3 doctors, one own a textile factory making sports outfit , one own a hotel, one do export of skin to Italian fashion industry, etc. I guess they are middle class or upper middle class ? I am not used to those classification from my country. And I really dont care. They are extremely nice persons, to me. One even took an english courses some evenings, just to be able to share a beer and chat a little with me at the pool :-)

Someplace I read this :
"Brazil already has 220 thousand millionaires (2008).
A report released by the Boston Consulting Group (BCG) showed that 220 thousand Brazilians have, together, $ 1.2 trillion applied in the financial market. According to the Folha de S. Paulo, to belong to that group, you must have invested at least $ 1 million. Two years ago, the Brazilians formed group of 130 thousand members with $ 1.1 trillion."

Ok, this are the very rich ones. But with this increase, more people will follow soon. Maybe not the working class, but the middle class will have more money to spend.

[El Greco]

I will buy the drinks next time in Fortaleza early December.

[Balluba]

I will buy the drinks next time in Fortaleza early December.

There had been an honor El Greco, and to reciprocate. Unfortunately, I am not there until closer to Christmas. If you're still there then, feel free to send a PM.
B

[Bubba Boy]

"Brazil already has 220 thousand millionaires (2008).

Yes that is correct, it is about 0.1% of the population. In comparison about 1.0% of the population of the US are millionaires.

Another interesting stat is, there are about 4000 Brazilians with a net worth above $30 million. In the US there are about 40,000.

There are about 20 billionaires in Brazil, just under 500 in the US.

[Rio Bob]

Is that when you buy an apartment in Rio you need to put up all the money. Then there is the cost and time to remodel. Give me the same amount of money you spent and the returns would be through the roof (so to speak). You guys can talk all you want about the great investments you made in buying an apartment in Rio. You did not make a good investment.

If you want to say you own an apartment in Rio, by all means, buy one. Just don't blow smoke up everyone's ass by saying you made a good investment. You didn't.

Relax, be happy, stop being so angry, it's not good for your health. If you're in Rio you should be having fun and enjoying yourself and not posting such angry toned posts such as this. Go out and have a good time and stop playing the home game, get off the computer and go get laid, put a smile on your face and stop scaring away new members, you're losing money for Jackson and he deserves it for making such a great investment in this informative site.

[Exec Talent]

get off the computer and go get laid

Why go out?

Actually, I just dislike seeing people get scammed like when a guy changes his name and regularly deletes posts to eliminate evidence of his outdated (lack of) knowledge of Rio.

BTW, didn't I see you in the NYC Brazil Day parade?

[Rio Bob]

Why go out?

Actually, I just dislike seeing people get scammed like when a guy changes his name and regularly deletes posts to eliminate evidence of his outdated (lack of) knowledge of Rio.

BTW, didn't I see you in the NYC Brazil Day parade?

HMMM, looks like we still need to work on your disposition, remember this is supposed to be a fun thing, not too heavy at all, relax man, you're the lucky one who is in Rio, enjoy it.

[El Greco]

There had been an honor El Greco, and to reciprocate. Unfortunately, I am not there until closer to Christmas. If you're still there then, feel free to send a PM.
B

Hope to be there until mid February. See you then.

[Bubba Boy]

Hit 1.77 yesturday.

It is falling but not as much as other currencies against the US. The Brazilian stockmarket did this as well, it held up better than most in the early part of the year. However when it started to go down, it more than made up for it by plummeting. Possibly the currency could follow this trend, that is hold up sort of ok, then crash. Has to be a better than average chance we will see 2+ in a few months.

[Madd Love]

Sao Paulo’s Bovespa stock index down 34% off from its May 20th all-time high.
The Brazilian real has plunged 10% in the past 10-days to 1.77 its lowest level against the dollar since February.

[Superion]

$1 = R$1.81

[Exec Talent]

For those in the game, keep a close eye on the Dollar/Real today.

As I expected, a little bit of a wild ride. Down as far as 1.77 before closing at 1.825

[Rio Bob]

I appreciate you disagreement but your premise for a return to 4:1 is shaky at best. I did not say they were going to be wealthy (wealth does not equal wealthy) but ask your self when did I last see 4:1? In the 90’s. not in the 20xx. Historical data USD to BRL shows the exchange rate 04/09/03 to 09/15/08 (as far back I could get data for) a five year period the statistics:

Average (1987 days): 2.36331
High: 3.24800
Low: 1.55380
Current as of 9/15/08 opening 1.78830

.[/blue][/size]

Not that it matters so much but the dollar fetched close to 4 Reais in late 2002. See attached graph.

From 1994 to 1999 Brazil tried to keep the Real pegged to the dollar 1:1 then they let it float and it was great, every couple of months things became cheaper and cheaper.

I remember many GDp's were not converting their Dollars to Reais because they all thought that it would soon fetch 5 Reais. One girl I knew who was making a lot of money even told me she had a boy friend who knew all about finance and had the inside story, they were sure it would fetch 5 soon, LOL.

[Bubba Boy]

I appreciate you disagreement but your premise for a return to 4:1 is shaky at best. I did not say they were going to be wealthy (wealth does not equal wealthy) but ask your self when did I last see 4:1? In the 90’s. not in the 20xx. Historical data USD to BRL shows the exchange rate 04/09/03 to 09/15/08 (as far back I could get data for) a five year period the statistics:

Average (1987 days): 2.36331
High: 3.24800
Low: 1.55380
Current as of 9/15/08 opening 1.78830

The 3’s were in the 2Q 2003 then dropped and resurfaced again 2Q-3Q 2004 only ever since then the real has risen against the dollar.

Be honest with your self with the US financials and dollar so weak the Brasilian economy would have to collapse which is not going to happen. As far as Brasil managing resources I will bet that they will do a good job (i.e., ethanol usage vs countries using oil for autos) they are managing ethanol to the point they are not dependent on oil and are now a net exporter of ethanol. So when they do get the oil from the newly discovered reserves they will be a major exporter of oil. Watch as they start to increase spending on infrastructure projects which they desperately need which will create more jobs.

As you mentioned purchases based on credit or access to easy credit by consumers will shake out, Brasilians are new to this its not like they are use to it like the developed countries but it will not be such a strain on the economy as you think. Again credit card debt is on finished goods for consumer purchase not on commodities. Commodity prices figure in the price of goods prior to and up to sale. Once sold commodities have no impact on the consumer thus their income figures into payment of debt, delinquency or failure to pay off debt.

In addition to Brasil’s base emphasis on education and elevating as much of the population from below the poverty line and increased foreign investments will elevate Brasil’s economy in the long run. Thus the future exchange rate value will not rise above 2:1.

If you think 4:1 will return what is your timeframe for this occurrence and what factors do you feel will precipitate the occurrence?

Overall this is not at world economic analysis forum/thread so I will end my lengthy dissertation. Let get back to what we come to these forums for monger reports!

EDITOR'S NOTE: I would suggest that the author or another Forum Member consider posting a link to this report in the Reports of Distinction thread. Please Click Here (http://www.internationalsexguide.info/forum/announcement-reportsofdistinction.php?) for more information.

I actually do not have a premise that the Real will be 4:1, the part I did not agree with was your assessment that Brazil would continue to be prosperous in the coming years. Unfortunately Brazil has a history of boom/bust. The have just had the boom, IMHO they are just setting up for the bust. They haven't bucked this trend in 50 years, hence can't see anything different this time round. Particularly in the fact that their government is carrying record debt, has increased by 500% over the last 5 years. Adding to this is record private debt, increased 1000% in 5 years.

The US stock markets look like closing down 3+% today, Brazil looks like it will close down 7%.

[UniversalX]

I actually do not have a premise that the Real will be 4:1, the part I did not agree with was your assessment that Brazil would continue to be prosperous in the coming years. Unfortunately Brazil has a history of boom/bust. The have just had the boom, IMHO they are just setting up for the bust. They haven't bucked this trend in 50 years, hence can't see anything different this time round. Particularly in the fact that their government is carrying record debt, has increased by 500% over the last 5 years. Adding to this is record private debt, increased 1000% in 5 years.

The US stock markets look like closing down 3+% today, Brazil looks like it will close down 7%.IMHO I don't feel there are going to be large swings in Brasil’s economy nor will it go bust. Let's revisit over the long term. I'm generally lurking but I'll chime in from time to time. Right now best be worrying about the US economy. Did you hear today’s quote "The worst is yet to come" - Allen Greenspan, Former Fed Chairman.

[JohnnyBraz]

Not that it matters so much but the dollar fetched close to 4 Reais in late 2002. See attached graph.

From 1994 to 1999 Brazil tried to keep the Real pegged to the dollar 1:1 then they let it float and it was great, every couple of months things became cheaper and cheaper.

I remember many GDp's were not converting their Dollars to Reais because they all thought that it would soon fetch 5 Reais. One girl I knew who was making a lot of money even told me she had a boy friend who knew all about finance and had the inside story, they were sure it would fetch 5 soon, LOL.How do I go about finding how my currency (australian dollar) was against the real past 5 years ago?

[Bubba Boy]

IMHO I don't feel there are going to be large swings in Brasil’s economy nor will it go bust. Let's revisit over the long term. I'm generally lurking but I'll chime in from time to time. Right now best be worrying about the US economy. Did you hear today’s quote "The worst is yet to come" - Allen Greenspan, Former Fed Chairman.

Yes the US economy and europe are headed for tough times. This is exactly the situation in the past which has hit Brazil due to its higher volatility. When times are bad who gets hit harder the richer or poorer countries? Yes when times are good Brazil has done well in the past (the boom), however because they don't reform their economy when world economic times get bad Brazil gets absolutely hammered (the bust). We are looking at negative world growth for probably the next year.

The Brazilian economy is poorly diversified and severely inefficient. The Brazilian government just 2 years ago surveyed the top 48 economies in the world according to efficiency. Brazil came in number 48! This from their own government.

Lets not forget Brazil was defaulting on its debt as little as 7 years ago. Inflation was 1000+% just a little before that. This is a pattern that has been repeated over and over this century. What has changed this time around to suggest Brazil will not repeat is mistakes? In my opinion the same errors are there IE massive private and public debt, and zero economic reforms.

Now, in your argument you don't suggest any reasons why this time in the economic cycle Brazil will not experience what it has in the past other than they produce ethanol and have discovered some oil. These 2 factors combined account for perhaps 2% of total GDP. Basically a drop in the bucket.

You just can't expect a serverely corrupt, severely inefficient economy to whether a world economic downturn. hasn't happened in the past, history always tends to repeat itself.

In a years time the US will have worked through its problems and will start growing again.

[Ryjerrob]

Just checked the rates

$1 - R$1.84

Is $2 right around the corner?

ryjer

[Trippleecks]

JohnnyBraz.. 5 years ago it was 1.93 BRL to 1 AUD...

[JohnnyBraz]

JohnnyBraz.. 5 years ago it was 1.93 BRL to 1 AUD...I know that and also that it was 2. 2 at one stage around that time, but I would like to go back a bit further. Like when the real was first introduced. Thanks anyway.

[JohnnyBraz]

Australian dollar v Brazilian real

[Bubba Boy]

Real 1.88 today.

The last 3 days the dow jones has dropped about 6%, the brazil index has dropped about 12%. The real has also gone from 1.77 to 1.88.

This is my point about volatility. When the US gets hit, the world gets hit. When times are good Brazil can do well, when times get really tough Brazil gets absolutely hammered. 1:2 is probably not far away.

[Exec Talent]

I find Bloomberg (both TV and web site) a good source of information. Most of the reporting in balanced and cite sources.

http://www.bloomberg.com/apps/news?pid=20601083&sid=aDjpv0V_CyOE&refer=currency

1.90 -- Who's your daddy?

[Dwilso39]

Does anyone know where I can get the whole sale exchange rate for REAL in the US? Most of the curreny exhcange rate charge about a 20% sur charge, and I don't feel like getting rip off anymore.

Thanks

[Allforrio]

I find Bloomberg (both TV and web site) a good source of information. Most of the reporting in balanced and cite sources.

http://www.bloomberg.com/apps/news?pid=20601083&sid=aDjpv0V_CyOE&refer=currency

1.90 -- Who's your daddy?Any financial experts have any idea how the reai to the dollar project say in the near future like say in 90 days when i make my trip to RDJ

For 27 days.

At this present rate.

It was 1. 61 only 2 1/2 weeks ago.

It really is a great site to see.

[Sperto]

Any financial experts have any idea how the reai to the dollar project say in the near future like say in 90 days when i make my trip to RDJ.
Real will go down. Confirmed by my crystal ball.
Just guessing (and hoping) like everybody else.

[Bubba Boy]

No one knows for sure what the rate will be in 3 months. If anybody knew with 100% certainty, they would be billionaires.

Having said that, there is a clear trend for a weaker Real.

[JohnnyBraz]

No one knows for sure what the rate will be in 3 months. If anybody knew with 100% certainty, they would be billionaires.

Having said that, there is a clear trend for a weaker Real.I have to agree, but I can see the real dropping up to 30% against most mayjor currencies by Carnival.

[El Greco]

http://www.internationalsexguide.info/forum/showthread.php?t=2550

Very nice report. Please read it.

I share same thoughts.

DJI 10.700 resistance was broken yesterday 9.800 being next one.

Hope to be wrong though because I am not an expert but a dummy investor
who played the markets down two months ago. 50% down being the limit.

I hope this limit will not be reached but very close might be the extreme of this turmoil. IMHO we are at the very begining.

My problem is whether my bank will be still there to pay me off. LOL

[Madd Love]

This morning 1.89

[Bubba Boy]

This afternoon 1.94

This has gone from 1.55 to 1.94 in a few weeks, incredible times we live in.

Whos your daddy now ;-)

Edited- 30 minutes later: Real back down to 1.90, the dow up almost 4%. Quarterback Paulson throws deep..............and its a touchdown!

[Hobbying]

Some girls that are good at math will ask for more since they know you're a gringo with higher rated currency. So I wonder if its a good thing or not.

I booked my trip a few weeks ago on expedia when it was still 1.6 because I figured I'd avoid paying 3% surcharge on my credit card if I paid at the hotel in Brazil. I shouldn't have done that!

[Alex Deuce]

I was wrong and I admit it. Ill take my medicine as soon as i get back from Rio. However, i still don't think that its over.

[Allforrio]

Real will go down. Confirmed by my crystal ball.

Just guessing (and hoping) like everybody else.i knew in context no one could say for sure.

BUT what a great sight to see.

LOL

[Ohp1972]

I was wrong and I admit it. Ill take my medicine as soon as i get back from Rio. However, i still don't think that its over.Alex,

In this case I'm sure if anyone wants to give you "medicine" over what is going on w/ the Dollar vs. Real I'm sure it's NOT going to both you or anyone of us!!! LOL......

[Bubba Boy]

I was wrong and I admit it. Ill take my medicine as soon as i get back from Rio. However, i still don't think that its over.

Back down to 1.84. The world financial markets are just nuts right now, completely friggin nuts.

The downward trend is still intact though. Nothing moves in a straight line.

[Jamaicanceo]

Back down to 1.84. The world financial markets are just nuts right now, completely friggin nuts.

The downward trend is still intact though. Nothing moves in a straight line.Don't talk down the Real!!!! Here is the current dollar real exchange.

Currency Conversion Results
Symbol U.S. Dollar Exchange
Rate Brazilian Real Bid Ask
USDBRL=X 1 Sep 19 1.8930 1.8930 1.8930 1.8940

[Bubba Boy]

When I mean a downward trend, it means the dollar will strengthen, ie BRL will go down ie we will move to 2:00

This is from the close of the day. Financial markets now shut for the weekend.

Live rates at 2008.09.20 20:15:08 UTC
1.00 USD

=

1.83050 BRL
United States Dollars Brazil Reais
1 USD = 1.83050 BRL 1 BRL = 0.546299 USD

[Dwilso39]

When I mean a downward trend, it means the dollar will strengthen, ie BRL will go down ie we will move to 2:00

This is from the close of the day. Financial markets now shut for the weekend.

Live rates at 2008.09.20 20:15:08 UTC
1.00 USD

=

1.83050 BRL
United States Dollars Brazil Reais
1 USD = 1.83050 BRL 1 BRL = 0.546299 USDBubba,

This is just an opinion, but if the baid out works quickly like the government wants, then the dollar will continue to weaken; espeically if this bail-out cause inflantion. I will be there in the middle of Aug. and if I get 1.8 I will be skipping up and down Copa.

[Jamaicanceo]

When I mean a downward trend, it means the dollar will strengthen, ie BRL will go down ie we will move to 2:00

This is from the close of the day. Financial markets now shut for the weekend.

Live rates at 2008.09.20 20:15:08 UTC
1.00 USD

=

1.83050 BRL
United States Dollars Brazil Reais
1 USD = 1.83050 BRL 1 BRL = 0.546299 USDOkay. I just can't believe our luck, or whatever we want to contribute the real's upswing.

[Exec Talent]

I was a buyer early last week, then a seller, now a watcher. Caution.

http://www.bloomberg.com/apps/news?pid=20601087&sid=arSYa87HCb9U&refer=home

[Looking For Eden]

damn I was just getting excited again when we hit 1.88 last week. Now it seems to me that that will be the high for a while. Damn wall street bailouts :(

[Jamaicanceo]

I was a buyer early last week, then a seller, now a watcher. Caution.

http://www.bloomberg.com/apps/news?pid=20601087&sid=arSYa87HCb9U&refer=homeThe only thing bad about the bailouts is that it's the tax payer who foots the bill. However, what other country is able to do a bailout. That's why the dollar won't sink.

After 9/11 our economy still recovered. That's why other counties value the dollar. yeah we may whine about recent issues with wall-street bad boys, but the American economy can with stand anything. The real, yen, pound, euro, etc is no where without American consumerism. Plus, the American economy usually gets soft this time of year.

And if we have it bad, others will have it worse. All those financial woes on wall-street is world-wide. Last week, the Russian market had to close to avoid a collapse. Asia, too, is bad off. Whose going to by their rice their consumer products if we don't? Beside, the Chinese bought a lot of our bad debt. The American economy is based on debt.

[El Greco]

It seems to me that Bush administration, one way or another, will drain out reserves before they leave office. Iraq, bailout and maybe attack on Iran through others.

IMHO with all that spending I don't need a market guru to tell me which way dollar has to go. It has to be down.

As for the real it will be normal to benefit at least for a short time.

Let's see.

[Bubba Boy]

They are not aiming to bail out wall st, they are aiming at stopping banks going bankrupt. If a big bank like Citibank goes bankrupt then we are all screwed.


They did the same thing in the S & L crisis and the government actually made money after selling the assets after about 5 years.

[Mr Enternational]

Saturday before I came the interbank exchange was 1.84 for the U.S. dollar. When I arrived the money changer dude at the airport would only give me 1.66. Then last night (Sunday) I got 1.70 from Bobby. Now I see the exchange is 1.80. That is why I stick to ATMs. The money that I withdrew from my HSBC account on Sunday night came out as 1.77 on Monday.

[Bubba Boy]

From briefing - a paid for service for financial market paticipants.

-------------------------------------------------------------------

The government plan to buy mortgage-backed assets from financial institutions is likely to be a win-win. It will be a win for financial institutions because it would finally provide a legitimate buyer for mortgage-backed assets. It will be a win for the government because these assets are trading well below their intrinsic value. The government could make a large profit.

The "Bailout" Concept

The U.S. government has now proposed to buy $700 billion or more of mortgage-backed securities.

This should not be termed a bailout, even if it has the effect of helping financial institutions.

The government is buying assets that provide a current income stream -- a good income stream. It is in effect an investment.

In fact, it is an investment that could prove extremely profitable for the U.S. taxpayer, even if the government never sells a single security back in the open market.

If mortgage defaults do not rise appreciably, these securities will reap a huge profit.


The Math

The national foreclosure rate on all mortgages was 2.7% in the second quarter, according to the Mortgage Bankers Association. The percentage of mortgages with one or more late payments was 6.4%.

That means that 93.6% of all mortgages (including subprime) were current.

If the average mortgage rate on a package of loans is 5%, and even assuming that all delinquencies are going to lead to foreclosure (which simply won't happen), then 94% of that 5% income stream equals a 4.7% return. And that is just on the interest payments. There is an equity portion in the majority of mortgage payments that provides a return of capital.

A 5% return in the first year on the full face value of the debt instrument gives the MBS value. Even assuming significant further increases in foreclosures (the above example suggests that foreclosures will triple to 7% almost immediately), the math implies a decent income stream for years to come.

The data above are general because each MBS has to be evaluated separately based on the mortgages held.

Nevertheless, the ABX index for AAA is at $0.50 on the dollar, and that for subprime at less than $0.10 on the dollar.

This is despite the fact that mortgage default rates on AAA debt are less than 1%, and for subprime 12%.

It simply doesn't make sense for subprime mortgages, which have a 12% default rate, to trade at $0.07 on the dollar. That means that 88% of the mortgages are not in default. Even if only 70% are current, the return on those mortgages is probably close to 7%.

Yet, a basket of mortgage-backed securities was sold by Merrill Lynch to a hedge fund not too long ago for $0.22 on the dollar.

Depending on the mortgages in those securities, that hedge fund may well reap the entire $0.22 within the first three or four years. If foreclosure rates don't rise sharply over the very near term, that hedge fund will make a killing.

The lack of liquidity in the secondary market for mortgage-backed securities has created huge mispricing conditions that create massive opportunities for able and willing investors.

Why should hedge funds be the only ones able to prosper from this? Why not the U.S. government?

[Java Man]

Saturday before I came the interbank exchange was 1.84 for the U.S. dollar. When I arrived the money changer dude at the airport would only give me 1.66. Then last night I got 1.70 from Bobby. Now I see the exchange is 1.80. That is why I stick to ATMs.

Citibank ATM was giving 1.67 this morning.
The exchange rate was 1.89 Friday!! What a roller coaster ride.

[Bubba Boy]

Citibank ATM was giving 1.67 this morning.
The exchange rate was 1.89 Friday!! What a roller coaster ride.


This has been the craziest week I have seen. The Dow moved 2000 points (20%) and ended up basically flat for the week. This is just amazing volatility for the worlds largest companies.

An interesting side note, the 30 dow companies have a greater turnover than the whole of Brazil, several times over!!!

[Exec Talent]

As I have said before, making money in the markets (stock, currency, commodity, etc.) is all about movement.

http://www.internationalsexguide.info/forum/showpost.php?p=679971&postcount=271

Although those rat bastards stopped the short sell option on most of the financial stocks, though interestingly not on CIT (wink, wink), there are still ways to make money on the downside.

HSBC ATM was giving 1.83 today. I had to slap it a couple of times while no one was watching.

[El Greco]

" There are two sides of the balance sheet..

The left side and the right side..

On the left side, there is nothing right.. and on the right side, there is
nothing left....


My comment...

What a nice way to privatise gains and socialise losses!!!


My two bailout declining dollars. Watch out for the 1,618 figure to the euro.
Very crucial

[Hobbying]

Look at this way, the gains will be erased but it was really due to artificial gain. So when the economy is stabilized (whenever that is) it will be realized gain on the Real and will go back to 1:2

[Albert Punter]

A hotel in Caxias do Sul is paying US$ 1,79 and EUR 2,66 today.
So, not bad for us foreign mongers.


Citibank ATM was giving 1.67 this morning.
The exchange rate was 1.89 Friday!! What a roller coaster ride.

[Exec Talent]

What a ride. I have been plotting the DOW against the Reais/Dollar for some time. Lately it has been tracking inverse again. When the DOW was up earlier today the Dollar Exchange was down under 1.80. When the DOW reversed this afternoon and went negative, the Dollar was up. Right now it is up over 1.84 when the DOW was down 155. Now it is back down to 1.83 when the DOW recovered to 55 down.

BTW, GE and CIT just were added to the stocks you cannot short. Rat bastards.

Let's hope everyone is e-mailing their congressperson and telling them that the clueless CEOs who couldn't find their ass with both hands and a flashlight deserve to be put out of the street with zippo.

[Sperto]

I usually always use ATM's in Brazil.
However on my next trip I'll bring some cash. Does anybody have any recommendation for what is best to bring, Euro or US$?

[Poucolouco]

I usually always use ATM's in Brazil.

However on my next trip I'll bring some cash. Does anybody have any recommendation for what is best to bring, Euro or US$?It depends on where you are coming from. If the Euro is not your national currency you are likely to lose money making conversion between dollars and Euros and then to Reais when you go to Brasil.

[Eros74]

And for those are bringing cash, does anybody have any recommendation for the best place where to hide them, euro or $, in the flat ?

[Looking For Eden]

I fear we have seen the highs for the US dollar for quite some time. I hope I am wrong but if this bailout package goes through and it looks certain that it will, the dollar will get wrecked. :(

[Jan 156]

And for those are bringing cash, does anybody have any recommendation for the best place where to hide them, euro or $, in the flat ?

Depends how you travel. I travel light and this comes second nature to me but maybe sounds complicated to someone not conversant with good backpacks.

Get a slashproof wallet and padlock it to the inside (metal part) of your backpack. Use a retractable steel wire (available from outdoor travel shops) to padlock your backpack to the bed or some other heavy object.

Apart from that - again this doesn't suit those that like to book in advance - but I always clock the apartment for stash places when viewing it. Most don't have locks that couldn't be opened with a knife but I like to be able to lock my backpack discretely so it isn't too obvious I've taken precautions.

Again - this varies from country to country - but you get into a routine that doesn't leave her opportunities to rip you off and then you can relax, enjoy the atmosphere, and 'trust'. For instance, I like apartments where I can leave the bathroom door open and see what's happening (rather than big apartments with separate rooms).

There's old tricks like putting your pants (with your cash to pay her) under the mattress when she goes to shower. Especially for an overnighter. Then you don't have to worry about waking up first. I say, 'when she goes to the shower' because I never want to suggest that someone (who may be perfectly trustworthy) shouldn't be trusted. Personally I like to build up an emotional closeness and openness. And this is much easier if I've taken precautions routinely and discretely. If I don't want that I don't take her back.

Just my opinion.


not all dishonest girls are intelligent, but some are, and know the apartments and 'hiding places' better than visiting punters. If I feel I need to hide something I would not relax unless it could not be removed. If you stay in Copa, I think more and more it is like being on a Disneyland experience and the girls pull the shots by and large to make it what it is. Chat up a girl in Copa and tell her you stay in Centro next to a 10R knock shop and watch the magic spell disappear from her eyes. . . <g>

[Albert Punter]

assuming you mean when a girl visits:
a) safebox in your room >>> obvious answer
b) inside your locked suitcase


And for those are bringing cash, does anybody have any recommendation for the best place where to hide them, euro or $, in the flat ?

[Sperto]

It depends on where you are coming from. If the Euro is not your national currency you are likely to lose money making conversion between dollars and Euros and then to Reais when you go to Brasil.
Assume that your national currency isn't Euro or US$. You're going to bring cash in one of these two currencies to Brazil. Which currency would be the most favorable to bring?

[Sperto]

And for those are bringing cash, does anybody have any recommendation for the best place where to hide them, euro or $, in the flat ?
There were a discussion about this issue and several suggestions in the Carnaval section two weeks ago.

[Jan 156]

And for those are bringing cash, does anybody have any recommendation for the best place where to hide them, euro or $, in the flat ?


assuming you mean when a girl visits:
a) safebox in your room >>> obvious answer
b) inside your locked suitcase

I've been away from the forum so have missed the discussion Sperto mentions (we're in the wrong thread on this anyway, surely) but

Both good ideas. Except
a) I've never stayed in an apartment with a safebox. Sounds like your problems 'solved' if you do . . .
b) why not. But do someone recall the well-written post a while back (the general theme of which was) two girls lugging a heavy locked suitcase down flights of stairs and only interrupted by the owner shortly before they exited the apartment if I remember correctly. <g>

We are in Brasil, after all, Gentlemen. Not Thailand!


(Checking that other thread, I see Brazil Specialist made the same recommendation I did. You can still buy the steel mesh slashproof bags btw. Pacsafe ones are available on the 'Net as well as in shops - the anti-theft waist wallet is quite adaptable. Pacsafe also sell a product* which they claim is like a portable safe in your room (I've only seen this on their website - maybe slightly bulky for my liking but probably good if you have caneras and so on that are worth protecting.) I also routinely use Sperto's suggestion about hiding keys in high-up places where she can't reach. I mostly use combination locks on my stuff, but I also like to be in control of when the front door of the apartment opens from the inside. Checking for high places (eg tops of kitchen units) is something included in my checklist when viewing aptos. I usually have a bathroom bag I take with me to the bathroom with *my* stuff - eg expensive cologne that a garota will find is good body spray / bathroom room spray lasting only a couple of visits.

This has only been a worry for me the first two or three times to Rio. After that one gets better at judging crazies and not letting them over the threshold.

*http://www.pacsafe.com/www/index.php?_room=3&_action=detail&id=78

[El Minetero]

Lukasek,

www.riverdaleorganics.com

www.can-safe.net

KT

[Eros74]

Thanks and I answer you in general info thread ;)

[JohnnyBraz]

I always rent an apartment with a digital safe, a safe with a key is not good enough for me, I put all money in the digital safe and even the front door key. As for the currency, my country is neither us or euro. Apart from what currency the apartment is payed in, I see what currency either us or euro's I get the best rate on upto 8 weeks prior. I can always change my currency in centro, and always get bank rate a one place there, but I will only do that once or twice during my trips. The place in centro is in a small shopping mall, head down uriguianna from carioca, go past uriguianna 24, turn first right, then 1st left. I was getting 150 there in August, while in copa I was lucky to get 120 or 110. The place is a little travel place as you enter the mall on your right.

[Exec Talent]

The good news is with the US Stock Market tanking the dollar is rising. Right now above 1.96.

The bad news is that no one will have any money left to exchange.

Pretty soon in the US all the bank buildings will be painted black and yellow and simply say -- BANK.


Sept 30 08 UPDATE - Driving home a point: The US DOW was down 777 yesterday and the exchange was 1.96. Today, DOW futures are up significantly and the exchange is 1.93.

Remember the Bunda Movement theory -- movement means money. When there is no movement, is when it is hard to make money.

[Jan 156]

Pretty soon in the US all the bank buildings will be painted black and yellow and simply say -- BANK.



ROFL!!!

The Argentineans had an even better trick in their last crash. They just shut the banks for a week and let the ATMs run out.

[George90]

The real is falling faster than the dollar! Yes, ET, the dollar closed today at 1.96 according to xe.com. The euro, pound, and yen, also fell against the dollar.

Oil sank! I hope it falls below $90 by Friday. The fares to Brazil should fall somewhat as a result.

The Brazil stock exchange HALTED TRADING after its index fell 10%! It is down something like 40% on the year.

Corn, iron ore, and copper were also down today. The speculation is that China's economy is slowing substantially. The demand for Brazil's commodities is drying up.

Europe bailed out a big bank today, Fortis. Watch for the bottom fall out of the global economy if European and Asian banks can't sell their US subprime mortgages to either the Fed or their own central banks.

I hope the real reaches 2.25 by December. Is that possible?

[Ryjerrob]

The real is falling faster than the dollar! Yes, ET, the dollar closed today at 1.96 according to xe.com. The euro, pound, and yen, also fell against the dollar.

How long does it take for the rates from xe.com to actually reach Brasil. There seems to be a practice of trying to wait a few days, and hoping that there is an up/down motion of the rates.


ryjer

[Looking For Eden]

How long does it take for the rates from xe.com to actually reach Brasil. There seems to be a practice of trying to wait a few days, and hoping that there is an up/down motion of the rates.


ryjer


I get the rate the same day in Recife at a cambio I use. Whatever the rate is that day thats what I get

[Jan 156]

Senor Lula says it's all America's fault . . .
http://english.aljazeera.net/news/americas/2008/09/200893006218621.html



The Brazil stock exchange HALTED TRADING after its index fell 10%! It is down something like 40% on the year.

Corn, iron ore, and copper were also down today. The speculation is that China's economy is slowing substantially. The demand for Brazil's commodities is drying up.

[Allforrio]

The real is falling faster than the dollar! Yes, ET, the dollar closed today at 1.96 according to xe.com. The euro, pound, and yen, also fell against the dollar.

Oil sank! I hope it falls below $90 by Friday. The fares to Brazil should fall somewhat as a result.

The Brazil stock exchange HALTED TRADING after its index fell 10%! It is down something like 40% on the year.

Corn, iron ore, and copper were also down today. The speculation is that China's economy is slowing substantially. The demand for Brazil's commodities is drying up.

Europe bailed out a big bank today, Fortis. Watch for the bottom fall out of the global economy if European and Asian banks can't sell their US subprime mortgages to either the Fed or their own central banks.

I hope the real reaches 2.25 by December. Is that possible?Same here I am booked for 27 days in from dec 24 thru jan 20

It will be great if it hit that rate

Lets hope

YEEEE HAAWWWW

[Exec Talent]

Earlier this morning (10/2) the dollar had been at 1.91, now at 8:20 EST it is over 1.95. DOW futures are down about 1%, Bovespa futures down about 2%.

9:00 EST - 1.99 DOW futures down on jobless data. Bovespa opened flat.

Is it safe to keep your money under your mattress in Brazil?

[George90]

At midday, the real broke 2.00!!!

It has been a while!

[Looking For Eden]

2.02 at the cambio here :)

[Brazilman]

I'm no economist, but if the economy in brazil keeps tanking, could i dare say 3 to 1? What do you guys think. The funny part is that when it goes back to 3 to 1, the retail in brazil will go back down. Chicks will go back to asking for 150 reals all day.

[Exec Talent]

My crystal ball is broken! Movement is one thing, knee-jerk reactions is another. Under the mattress it goes.

[Balluba]

Wednesday, July 2, 2008
1 US Dollar = 5 NOK

Friday, October 3, 2008
1 US Dollar = 6 NOK

In 3 months ! Also very strong against the Euro.

[Sprite13]

The real falling is a good news for us in here! I hope and I can see the $ be at 2.5 by Carnaval 2009!!!!:)

On a more serious note, a strong real is hurting more than helping the Brasilian economy. A more realistic and profitable exchange for the real should be at 1US$=2.5 to 3 Reais. It would boost Brasilian economy. And to think that I was in Brasil at the worst time of the year, exchange wise, in June where it was 1.54 Reais per $!!!!Oh well, I hope to be awarded for that during Carnaval for a nice time with the $ at 2.5 or higher!!!

[Exec Talent]

Could those in Rio check your Credit Card online and see what conversion rate you are receiving (Dollar Purchase / Real)? I am particularly interested in AMEX. They are supposed to be taking 2%. That is not what I am seeing.

[Spidy]

With the markets in turmoil, a friend of mine sugguested (in jest) the following:

Do you think we could start our own derivatives market - CBOs = Collateralized Buceta Obligations or CMOs= Collateralized Mongering Obligations. Maybe the ISG will consider financing the first offer.... I'm sure there's a market among mongerers out there.

It could work?

Ciao
Spidy

[George90]

With the markets in turmoil, a friend of mine sugguested (in jest) the following:

Do you think we could start our own derivatives market - CBOs = Collateralized Buceta Obligations or CMOs= Collateralized Mongering Obligations. Maybe the ISG will consider financing the first offer.... I'm sure there's a market among mongerers out there.

It could work?

Ciao
Spidy

If enough GDPs were astute enough, we might create a futures market for GDP prices. GDPs and mongerers would contract to deliver/accept services at the contracted price in the futures contract, irrespective of the current price in the 'spot' market.

This would guarantee the GDP a minimum revenue and guarantee the mongerer a maximum cost. The price of futures would depend on the supply of GDPs, whether it is Carnaval or not, the currency exchange rates, the supply of men, etc.

Based on my experience, too many Brazilians are too blinded by the opportunity for earning a short-term gain to avoid experiencing a longer-term loss through hedging using futures. Pity.

[Spidy]

Based on my experience, too many Brazilians are too blinded by the opportunity for earning a short-term gain to avoid experiencing a longer-term loss through hedging using futures. Pity.

G90,

Would definitely have to agree with you on the short sightedness of the Brazilian GDPs. I've seen that far too often in my travels. But when most GDPs (as do many other Brazilians for that matter), live on a day-to-day basis for the "now" only and not the future, its somewhat understandable.

Anyway, just think of the mess we'd be in, years down the road, when our little CBO & CMO derivative market has its meltdown...who'd be there to bail us out or backstop us (pun intended)? (LOL!)

Ciao
Spidy

[Jamaicanceo]

Currency Conversion Results
Symbol U.S. Dollar Exchange
Rate Brazilian Real Bid Ask
USDBRL=X 1 Oct 5 2.0480 2.0480 2.0480 2.0490

[George90]

Currency Conversion Results
Symbol U.S. Dollar Exchange
Rate Brazilian Real Bid Ask
USDBRL=X 1 Oct 5 2.0480 2.0480 2.0480 2.0490

This afternoon xe.com gave a quote of 2.18.

[David68]

This afternoon xe.com gave a quote of 2.18.I am spending the better part of my day watching the exchange rate instead of working. Is this thing crazy or what. Hope it keeps rolling for my New Year's trip.

[Hobbying]

This afternoon xe.com gave a quote of 2.18.2.20 now and the DOW dropped below 10k. There's one thing thats associated with bad economy, increased crime so becareful out there gents in Brasil.

[Exec Talent]

Before the market opened today I e-mailed an economist friend of mine what was going to happen. Basically the market manipulators were going to drive the market down, buy, then drive it back up again and sell. DOW was down about 800 pts then closed at 370 down.

http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches-100608.aspx?GT1=33002

If they went after these market manipulators the same way they did poor Martha Stewart, there would be no one left working on Wall Street.

I see them playing this game a lot over the next few days. The key to making money in this market unfortunately, has less to do with fundamentals or technical analysis than it does with guessing right how Wall Street is going to manipulate the market.

[Dub624]

This afternoon xe.com gave a quote of 2.18.
We're back in business.

[Dub624]

These wall street titans are the lowest form of scum on the earth, If they saw someone having a heart attack they would not even get off their phones to call for help.

Any chance the airflight prices will go down going to brasil? Like from 1000.00 to about 850.00.


I'd doubt it, unless you are a penguin.

Penguins ride air force jet to South Atlantic

By TALES AZZONI – 1 hour ago

SAO PAULO, Brazil (AP) — More than 370 penguins that mysteriously washed up on Brazil's equatorial beaches were flown south on a huge air force cargo plane and released closer to the frigid waters they call home, animal advocates said Monday.

Onlookers cheered as the young Magellanic penguins were set free on a beach in southern Brazil and scampered into the ocean, the International Fund for Animal Welfare said in a statement. It called the penguin release the largest ever in South America.

The penguins were among nearly 1,000 that have washed up on Brazil's northeastern coast in recent months, said group spokesman Chris Cutter. About 20 percent of the penguins died and the rest were not healthy enough send back.

The penguins, which had been kept at an animal rehabilitation center in the northeastern city of Salvador, were flown on an air force C130 turboprop plane usually used for heavy military cargo to southern Brazil and set free on Saturday.

Experts hope a small group of older penguins released along with the young ones will help guide them south to the Patagonia.

Magellanic penguins breed in large colonies in southern Argentina and Chile and migrate north as far as southwest Brazil between March and September.

Environmentalists say it is not know why the penguins were stranded so far north, but suggest they could have been carried beyond their usual range by a flow of warm water.

------------------------------------

They have cut capacity, so you have no choice but to pay what they want. Don't look for those bag fees to be cut either.
--------------------------------

Aviation fuel to cost less, but airlines against fare reduction
Domestic air travel will not become cheaper despite oil companies reducing the price of aviation turbine fuel...


Domestic air travel will not become cheaper despite oil companies reducing the price of aviation turbine fuel (ATF) by as much as 16 per cent mainly on account of fall in international ATF prices. The only other time this year when ATF prices fell was in February.

Indian Oil on Sunday announced that from September, domestic airlines picking up ATF in Delhi will be charged Rs 59.65 a litre, down from Rs 71.02 a litre charged in the previous month. Similarly, in Chennai, airlines will pay Rs 65.49, (Rs 77.66 a litre), while in Mumbai, airlines will be charged Rs 61.83 a litre instead of Rs 73.67.

ATF accounts for about 45-50 per cent of the operating costs of most domestic airlines. The increase in crude prices has seen the industry either increase fuel surcharge or basic fares.

However, arguing against any immediate decrease in airfares, airline officials point out that while ATF costs have increased by about 90 per cent between October 2005 and July this year, fares of full-service airlines on the Delhi-Chennai sector have increased by just 27 per cent, while fares in the Delhi-Kolkata sector have risen by 1 per cent.
Need time

"For the time being, we do not want to change our pricing strategy. We want to see medium term development of ATF prices before taking a call. Even with this decrease, oil prices are significantly above the levels as compared to about six months ago," the Chief Executive Officer, Jet Airways, Mr Wolfgang Prock-Schauer, told Business Line.

Echoing similar sentiments, the Chief Financial Officer of the Delhi-based low-cost airline, SpiceJet, Mr Partha Sarathi Basu, added that the airline will need at least 2-3 months of stable ATF prices before it can review current airfares.

The recent increase in ATF prices has hurt the entire industry which expects to post a loss of around Rs 4,000 crore this year. SpiceJet alone has reported a net loss of Rs 102 crore during the first quarter of the current year mainly on account of 132 per cent increase in fuel costs.

[George90]

Before the market opened today I e-mailed an economist friend of mine what was going to happen. Basically the market manipulators were going to drive the market down, buy, then drive it back up again and sell. DOW was down about 800 pts then closed at 370 down.

http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches-100608.aspx?GT1=33002

If they went after these market manipulators the same way they did poor Martha Stewart, there would be no one left working on Wall Street.

I see them playing this game a lot over the next few days. The key to making money in this market unfortunately, has less to do with fundamentals or technical analysis than it does with guessing right how Wall Street is going to manipulate the market.

I don't doubt that there are traders who try to manipulate the market. I also don't doubt that a few succeed in driving up or down the prices of a few individual stocks.

My question to you, Exec Talent, is how do traders manipulate the market as a whole? There are 3,100 or so stocks traded on the NYSE. I think more than that on the NASDAQ. How do traders arrange to have 6,000 different stocks go up or down at the same time?

The manipulation of markets has been attempted many times. Central banks are constantly trying to manipulate money markets and currency exchange markets. OPEC tries to manipulate the crude oil market. The Hunt family tried to manipulate the silver market. None have consistently succeeded.

Who are these traders who are successful at manipulating the NYSE?

[Jamaicanceo]

The only thing bad about the bailouts is that it's the tax payer who foots the bill. However, what other country is able to do a bailout. That's why the dollar won't sink.

After 9/11 our economy still recovered. That's why other counties value the dollar. yeah we may whine about recent issues with wall-street bad boys, but the American economy can with stand anything. The real, yen, pound, euro, etc is no where without American consumerism. Plus, the American economy usually gets soft this time of year.

And if we have it bad, others will have it worse. All those financial woes on wall-street is world-wide. Last week, the Russian market had to close to avoid a collapse. Asia, too, is bad off. Whose going to by their rice their consumer products if we don't? Beside, the Chinese bought a lot of our bad debt. The American economy is based on debt.I learned from previous economic lessons. The dollars is an international icon.

[Max Mojo]

"Who are these traders who are successful at manipulating the NYSE?"

George, it's quite simple really if you consider the DJIA is comprised of only sixteen blue chip stocks. Any trader (of which there are many) with, lets say, enough capital in the market can easily manipulate the average. Thats why it's important to look at the broader averages i.e. Russell, S&P 500 or NASDAQ which are much harder to manipulate becasue of shear number of companies that comprise the average.

[Madd Love]

Brazil Scraps Bond Sale as Real Sinks to Two-Year Low

Article in Bloomberg
http://www.bloomberg.com/apps/news?pid=20601087&sid=aacHWhWFxhXg&refer=home

Oct. 7 (Bloomberg) -- Brazil canceled a local bond sale for the first time in seven months, a sign the global credit crisis is beginning to squeeze the finances of Latin American countries.

The Treasury shelved an auction of inflation-linked bonds, known as NTN-Bs, as a tumble in the currency throttled demand for local assets. The Treasury hadn't said how much it planned to sell of the bonds.

``We are in the middle of a crisis of confidence that's everywhere and is affecting everyone,'' said Jose Mauro Cardoso Delella, chief economist at Itau Asset Management.

The currency sank to a two-year low today of 2.2801 per dollar before paring losses after the Federal Reserve said it will create a special fund to purchase U.S. commercial paper as part of its effort to stem the credit crunch.

The real was down 1.9 percent to 2.2205 at 11:19 a.m. New York time. It plunged as much as 4.4 percent earlier today after sinking 6.2 percent yesterday, its biggest decline since the government abandoned a currency peg system in January 1999.

The currency has slumped 14.3 percent in October, making it the worst performer among the 16 most-traded currencies against the dollar. It has plunged 30 percent from a nine-year high reached on Aug. 1.

The bond sale cancellation was the first since March, when yields surged after the government imposed a tax on foreigners' local debt purchases. The Treasury planned on selling inflation- linked debt today with maturities ranging from 2011 to 2045. It holds auctions of the securities twice a month.

Stocks Plunge

Yields on the securities have climbed amid the credit crisis. The yield on the 6 percent inflation-linked bonds maturing in 2011 has risen 78 basis points, or 0.78 percentage point, to 9.65 percent from 8.87 percent on Sept. 12, according to Banco Votorantim. The yield rose 1 basis point today from 9.64 percent yesterday.

The benchmark Bovespa stock index slipped 1.9 percent today after dropping 5.4 percent yesterday to a 19-month low. The Bovespa sank as much as 15.5 percent yesterday, prompting officials to halt trading twice. The index has shed 44 percent from a record high reached on May 20.

Brazil stepped up efforts yesterday to contain the fallout from the crisis in Latin America's biggest economy. President Luiz Inacio Lula da Silva authorized the central bank to buy loans from cash-strapped lenders and to use foreign reserves to lend dollars to Brazilian banks abroad, central bank President Henrique Meirelles told reporters yesterday in Brasilia.

`Solid' Banks

The central bank will also use reserves to finance exports and will accept foreign assets in currency-swap contract auctions aimed at stemming the real's declines, Meirelles said. The government will provide the state development bank with an additional 5 billion reais ($2.29 billion) to finance trade.

``These measures will surely allay the crisis in the medium term,'' said Roberto Padovani, Banco WestLB do Brasil's chief economist in Sao Paulo. ``In the short term the markets will still be volatile because the confidence problem won't be over instantly.''

Last week the central bank eased rules on bank reserve requirements for a second time in as many weeks to make more cash available in the financial system.

Finance Minister Guido Mantega said yesterday the global financial crisis is probably at its peak now and will ease after European banks clean up their balance sheets. He said Brazilian banks don't have any ``bad assets'' and are ``solid.''

`Liquidity Problem'

``Brazil doesn't have a solvency issue,'' Mantega said. ``It's just facing a liquidity problem.''

Brazil's federal budget projects economic growth will slow next year to 4.5 percent from a range of 5 percent to 5.5 percent in 2008. Morgan Stanley yesterday cut its forecast for Brazilian growth in 2009 to 2 percent from 3 percent.

Brazil has amassed $207 billion of international reserves, the result of a six-year commodities rally that has sent the country's exports to a record high. The tumble in commodities, which account for about two-third of Brazil's exports, in the past three months has added to the rout in the currency and stocks.

Lula's authorization for the central bank to buy bank loans and lend dollars to Brazilian institutions abroad are preventive moves and authorities see no need to use them at this moment, Meirelles said yesterday.

The measures ``are important steps to shield the Brazilian economy from the impact of the international crisis,'' said Meirelles late yesterday.

[Max Mojo]

"Who are these traders who are successful at manipulating the NYSE?"

George, its quite simple actually. The DJIA is comprised of sixteen blue chip stocks. Any trader with significant financial means (think hedge fund) can dictate the movement of the Dow by purchasing or short selling massive shares of the companies in the Industrials. The media most always uses the DJIA as the benchmark for its headlines, so any significant movement up or down will result in sensationalized media headlines.

A more reliable indicator of what the market is doing and wher it's going are the Russell 1000, S&P 500 and NASDAQ indexes.

[Madd Love]

lula urges brazilian consumers to ignore crisis, keep spending

bloomberg article:
http://www.bloomberg.com/apps/news?pid=20601086&sid=aqivzkklqtra&refer=latin_america

oct. 7 (bloomberg) -- brazilian president luiz inacio lula da silva urged consumers not to be afraid of the global credit crunch and maintain their buying habits because the domestic economy will keep growing.

``brazilians should continue doing what they're doing,'' lula said in a speech at the christening of the p-51, a 180,000 barrel a day oil platform owned by petroleo brasileiro sa, in angra dos reis. ``don't be afraid. you must have certainty that we have found our destiny.''

lula said the brazilian government is taking measures to shield brazil from the credit crisis, adding the nation has a record $207 billion in international reserves and no longer owes dollars to creditors.

the brazilian president yesterday authorized the central bank to buy loans from cash-strapped lenders and will use the nation's reserves to ease a credit crunch that sent the local currency to the lowest in two years and roiled stock markets.

authorities will use reserves to lend dollars to brazilian banks abroad and will accept foreign assets in currency swap contract auctions to stem the decline of the real. the government will also provide the state development bank with an additional 5 billion reais ($2.29 billion) to finance exports.

[Ryjerrob]

This afternoon xe.com gave a quote of 2.18.

How high can this actually go??? It wasn't that long ago, some were saying this would never happen, at least no time soon. Is 1:3 right around the corner, or just a wet dream?

ryjer

[Jamaicanceo]

The Brazilian market never opened. This signal major strength for the dollar against both the euro and real, and a major drop in value for the euro and dollar.

Only the US market has the mechanisms to adjust with corrections in market free falls instead of market shutdown. When the dust clears, only the dollar will be standing tall.

USD to BRL
(N/A: USDBRL=X)
Last Trade: 2.1970
Trade Time: 8:28AM ET
Change: 0.0000 (0.00%)
Prev Close: N/A
Open: N/A
Day's Range: N/A
52wk Range: N/A
Bid: 2.1970
Ask: 2.1980

[Exec Talent]

How high can this actually go??? It wasn't that long ago, some were saying this would never happen, at least no time soon. Is 1:3 right around the corner, or just a wet dream?

ryjer

When the Exchange rate was 1.6 -1 I said it would go up. The other day I mentioned that my crystal ball was broken. I am good, but right now I have no clue (well, little ones). Currently it is at 2.31 - 1. It does seem to still be increasing on bad or pending bad US stock market results. Correlation, not causation.

George, got my hands full right now, but market manipulation works something like this -- you upgrade one day and I downgrade the next. You are a large institutional investor and make a few calls letting others know you are selling. Next day they call you. If you do not think it goes on ...