Tag Archives: brazil

Have sympathy for the political chaos in Brazil. It could happen in America.

Summary: Street protests and loss of support in parliament have brought down Brazil’s government through quasi-legal impeachment, without the bother of elections. Could this happen in America? The preconditions — the tinder — already exist here, awaiting only a spark. This analysis by Prof Perry Anderson of shows how quickly a seemingly strong and powerful political regime can unravel; the similarities to America are obvious. The results will be ugly for Brazil; as they will they be for us should US elites follow Brazil’s example.

View of the renewed Christ the Redeemer

AFP PHOTO/VANDERLEI ALMEIDA.

Excerpt from “Crisis in Brazil” by Perry Anderson

London Review of Books, 21 April 2016
Posted with his generous permission

Half-hidden, the roots of this debacle lay in the soil of the Workers’ Party’s {PT} model of growth itself. From the outset, its success relied on two kinds of nutrient: a super-cycle of commodity prices, and a domestic consumption boom. … Compounding the end of the overseas bonanza, domestic consumption hit the buffers.

Throughout its rule, the core strategy of the PT had been to expand home demand by increasing popular purchasing power. That was achieved not only by raising the minimum wage and making cash transfers to the poor – the Bolsa Família – but by a massive injection of consumer credit. Over the decade from 2005 to 2015, total debt owed by the private sector increased from 43 to 93% of GDP, with consumer loans running at double the level of neighbouring countries. By the time Dilma Rousseff was re-elected {as president} in late 2014, interest payments on household credit were absorbing more than a fifth of average disposable income. Along with the exhaustion of the commodity boom, the consumer spree was no longer sustainable. The two motors of growth had stalled.

In 2011 the aim of Mantega’s new economic matrix had been to kick-start the economy by lifting investment. But his means of doing so had diminished. …Offering preferential rates to leading companies that added up to a much larger subsidy than outlays to poor families, the ‘Bolsa Empresarial’ cost the treasury about double the Bolsa Família. Favourable to large commodity and construction firms, this direct expansion of public banking was anathema to an urban middle class in an increasingly violent anti-PT mood, with the local media – amplified by the business press in London and New York – vituperating the dangers of statism.

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Professor Hugh Pennington: The story so far of the Zika epidemic

Summary: A new year, another epidemic (they’re all “pandemics” in our fearful world) – Zika. In a world of seven billion people linked by rapid transportation, epidemics will become increasingly common. That does not mean that hysteria need accompany each and every one. As with Avian Flue and Ebola, the FM website provides you with reliable information as an antidote to the fear-mongers, starting with this essay by the eminent Professor Hugh Pennington.

A mosquito stops for lunch

An Aedes aegypti mosquito stops for lunch

Zika Virus, the Story So Far

By Hugh Pennington
London Review of Books, 27 January 2016
Posted with his generous permission. Red emphasis added.

On 18 April 1947 in a cage on a tree platform in the Zika Forest in Uganda, rhesus monkey number 766 developed a fever. Its serum was inoculated into the brains of mice. They fell ill. Zika virus had been discovered. The sentinel monkey researchers were the virologist George Dick and the entomologist Alexander Haddow, based at the Rockefeller Foundation Yellow Fever Laboratories in Entebbe. Haddow went on to build a 120-foot steel tower in the forest to study high-flying mosquitoes and their viruses. The best time and place to find Zika virus was in the evening, 80 to 100 feet above the forest floor.

The first human case to be described was in 1964 in another Entebbe virologist, David Simpson; he had a 36-hour fever, some back pain, a headache and a rash. He was better by day three. Antibody studies in Nigeria in the early 1970s found that 40 per cent of people had been infected at some time in the past.

For many years Zika virus resided quietly in the textbooks as a member of the Flavivirus family, a distant and unimportant relative of yellow fever, dengue and West Nile viruses. The books said that it caused only mild symptoms (or none at all), that it was spread by the bite of Aedes mosquitoes, that monkeys were an animal reservoir, and that it occurred in Africa, India and South East Asia.

An alarm bell rang in 2007 when an outbreak occurred on Yap Island in the southwestern Pacific. The infection was mild, with a rash, conjunctivitis and joint pains. But not only was the outbreak the biggest so far recorded – it was estimated that well over half the residents had been infected – the virus had travelled a long way to get to Yap. Perhaps it could spread to the Americas.

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BRIC building: the future of Brazil, Russia, India and China

Summary: Today we have a follow-up by Paul Schulte to Does corruption limit China’s growth, or pose a threat to its existence? He looks at the leading emerging nations, comparing them to the US and UK at similar point in their evolution to greatness.

20121213-BRICs

BRIC building: the future of Brazil, Russia, India and China

By Paul Schulte
Institutional Investor magazine, in press
Republished here with his generous permission.

The challenge of the BRICs

The November/December 2012 edition of Foreign Affairs Magazine had an article called “How the BRICS Are Crumbling” by Ruchir Sharma (head of Emerging Markets at Morgan Stanley). The tone of the article seems off the mark. The BRICs {Brazil, Russia, India, China} are slowing because they are trying to slow credit growth due to the links of their currencies to the US dollar. They are trying to slow down credit growth while the West desperately uses zero interest rates to accelerate credit growth. So, the West and the BRICs are operating at cross purposes.

The BRICs countries have dollar-linked currencies, so when interest rates are zero in the West and high in BRICs countries they will be bombarded with capital seeking a higher return. This causes their currencies to appreciate, jeopardizing growth. Or, the BRICs countries must intervene domestically to force banks to slow credit growth as these banks fill with cash. Either way they encounter forces which cause their currencies to rise and credit growth to accelerate. This is a classic cocktail for a real estate bubble and accelerating inflation.

Brazil and China are experiencing the same phenomenon now. Both are essentially trying to slow down their respective economies, although China has been more successful.

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Every day the new world emerges, yet we see it not. Like today, as Europe begs China for loans

Summary:  A crisis strips away our pretences, the no longer true beliefs to which we clutch out of fear — from our unwillingness to face the future.   Today we have a fine example as Europe begs for loans from China and the other emerging nations.  The new world order emerges before our eyes.

America loves our status as a superpower.  Europe and Japan relish their status as great powers.  We are all broke.  America has borrowed trillions from the emerging nations, but retains the delusion of hegemony.  Now Europe faces its test, and turns to the new great powers for aid.  Not Japan.  Not America.

BRICS in Talks to Buy Euro Bonds to Help Ease Crisis “, CNBC, 13 September 2011 — Opening:

The BRICS major emerging markets are in initial talks about increasing their holdings of euro-denominated bonds in an effort to help ease the euro zone debt crisis, a Brazil government official told Reuters on Tuesday. The talks are still in a “preliminary stage,” said the source, who asked not to be identified because the negotiations were ongoing. The BRICS countries are Brazil, Russia, India, China and South Africa.

With almost 3 trillion euros in reserves, the BRICs have the ability to rescue the European Monetary Union (i.e., BRICs means China plus the others; China’s reserves are almost 3x the other’s combined total).  Doing so would rebuild the global financial system, creating at last a system to replace the long-dead Bretton Woods framework.  But what would the BRIC nations get from this deal?

What do they want?  Probably leadership, or at least a voice commensurate with their growing power.  The BRICs have 14% of the votes in the IMF.  Increasing that would be a logical step, one that’s inevitable eventually.  That’s probably the least they will ask for.  As Europe’s crisis seems almost certain to deepen in the next few months, we (or at least western governments) will soon see their demands.

My guess:  the price might be hidden (much like the deal settling the Cuban Missile Crisis), but it will be high.  Perhaps very high.  The BRICs have no need to hurry, as Europe’s need for loans will only grow — unless (until) its leaders abandon for now the unification project.

Putting the above in perspective

The BRICs are a disparate group.  Very different internal conditions, few common interests, no signs of acting together.

China remains a poor nation, despite its rapid growth.  For example, despite China’s high levels of investment (too high say critics) it’s per capita capital stock is aprox 1/8 that of the US (at PPP, per GaveKal), aprox 1/5 that of Japan (where Japan was circa 1970).

The growing in the BRICs –esp China — lies in the future.  The shift of power has just started.  America’s political dysfunctionality accelerates that process (as our rich increasingly work to further concentrate power and wealth rather build America).

For more information

For all posts about this, see the FM Reference Page End of the post-WWII geopolitical regime.

About China:

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China moves to the center of the world. America moves to the edge

American tend to see ourselves as white knights.  Selflessly defending nations like the EU and Japan that will not defend themselves.  A force for morality — banning bribery, pushing feminism and other western values (which we call “human rights).  Meanwhile we beg for lower oil prices and borrow like an tramp on a street corner.

Much of the world finds this a pain in the ass, but until now has had no alternative leader.   Someone to provide leadership — political and economic coordination, loans and aid, military protection — without America’s moralizing, without America’s erratic behavior.  Just business.

There was no alternative leader.  Until now.  And the shift of leadership has already begun.  In the daylight.  In the news papers.  Today’s reading is from the Financial Times.  As usual it accurately reports events but remains clueless about the deeper causes.

America is losing the free world“, Financial Times, 4 January 2010 — Excerpt:

Ever since 1945, the US has regarded itself as the leader of the “free world”. But the Obama administration is facing an unexpected and unwelcome development in global politics. Four of the biggest and most strategically important democracies in the developing world – Brazil, India, South Africa and Turkey – are increasingly at odds with American foreign policy. Rather than siding with the US on the big international issues, they are just as likely to line up with authoritarian powers such as China and Iran. The US has been slow to pick up on this development, perhaps because it seems so surprising and unnatural.

… The latest example came during the Copenhagen climate summit. On the last day of the talks, the Americans tried to fix up one-to-one meetings between Mr Obama and the leaders of South Africa, Brazil and India – but failed each time. The Indians even said that their prime minister, Manmohan Singh, had already left for the airport.

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