Posted on 01/18/2016 3:47:26 PM PST by SeekAndFind
Brazil is the new Greece, and 90% of government spending cannot be cut by law:
At 70% of GDP, public debt is worryingly large for a middle-income country and rising fast. Because of high interest rates, the cost of servicing it is a crushing 7% of GDP. The Central Bank cannot easily use monetary policy to fight inflation, currently 10.5%, as higher rates risk destabilising the public finances even more by adding to the interest bill. Brazil therefore has little choice but to raise taxes and cut spending.
Too often, at the popular level, there is a confusion between "austerity is bad" and "the consequences of running out of money are bad."
Sophisticated analysts of fiscal policy do not make this mistake.
By the way, here is a long study of how Brazilian fiscal policy has been excessively pro-cyclical.
And how is Brazilian output doing, you may wonder?
By the end of 2016 Brazil's economy may be 8% smaller than it was in the first quarter of 2014, when it last saw growth; GDP per person could be down by a fifth since its peak in 2010, which is not as bad as the situation in Greece, but not far off.
Two ratings agencies have demoted Brazilian debt to junk status. Joaquim Levy, who was appointed as finance minister last January with a mandate to cut the deficit, quit in December.
Any country where it is hard to tell the difference between the inflation rate -- which has edged into double digits -- and the president's approval rating -- currently 12%, having dipped into single figures -- has serious problems.
(Excerpt) Read more at businessinsider.com ...
Looks like Brazil is starting to run out of other peoples money.
Looks like Brazil is starting to run out of other peoples money.
YUP!
And they are still gonna blame someoen else for their collapse like Greece did.
Nobody panic!
The Olympics will save them!
Brazilians have a saying about Brazil.
Brazil is a land of great promise, and always will be.
RE: Brazil is a land of great promise,
Africa is also a continent of great promise ...
A lot of large regional airlines buy the Embraer regional jets that are so popular among airlines these days. “E-175s” in particular.
I am wondering how this will affect the purchase of future aircraft as well as product support? It can’t be good.
“O pais do futuro” is on their flag,
but the future is always tomorrow.
It is a good product and sells well on the international market. If we have local economic collapse local wages will decrease and the product will then become more competitive on the world market.
Brazil, unlike Greece is an industrial powerhouse that can print it’s own money supply. So no the comparison is false.
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