Another excellent post from Geert Noels in which he classifies countries based on their 2010 total gross public debt and fiscal deficit.
I added Brazil to the chart.
Brazil has a 3,35% fiscal deficit and a 61% gross public debt/GDP which ranks Brasil just outside of the Maastricht norm (to which nearly none European country applies to as the article of Noels points out).

Let’s also not forget Brazil’s 253 billion in foreign reserves, which brings Brazil’s net debt (total debt minus international reserves and other government cash) to 42,2%.  Nevertheless, I would have liked to see Brazil’s gross public debt sit below 50%, ranking the country amongst the absolute top performers like Korea and Switzerland.  The Brazilian treasury has all the power to be more aggressive in the debt profile; but like BNP Paribas’ Lintz pointed out: it’s an election year.

It goes without saying that Dilma Rousseff will be elected president in October.  Planninng Minister Paulo Bernardo revealed that a net debt to GDP of 30% is a target for 2014 and clearly, Dilma underwrites to understand the importance of this in many interviews.  This would mean her government would have to keep a primary budget surplus of 3,3% of GDP for the next 4 year.  Seems challenging for me.  If gross debt could fall below 55% and net debt below 38% by 2014, this would already be a major achievement.

Let’s keep a close eye to economical brains around Dilma.  I’d absolutely vote for Henrique Meirelles to remain president of the central bank.  He’ll be in the cabinet of Rousseff, yet it’s unclear who will be the next president of the Brasilian central bank. Antonio Paloci is also on the list, Pimco is rightfully a fan of him (despite the media-hunt that led to his resignation in 2002, read the 2007 book “Sobre Formigas e Cigarras” if you want to know all on this event).

Last week Dilma shot down media reports that she was planning to cut spending heavily and lower the government inflation target.  But that doesn’t let us look in her cards.  Nobody wins an election by saying the will cut spending, so her denials are totally expected.  Yet, let’s see what she will do at the beginning of her government.
If she wins the election, Rousseff’s choice of cabinet ministers will be the best early sign of whether she intends to run a leaner government.

Tags: Antonio Paloci, dilma rousseff, inflation target Brazil, Paulo Bernardo

The ties between Brazil and the middle East have been growing increasingly stronger over the past year.
Last March 3d, Hillary went to Brazil with a preach on Teheran; Terence Neilan called the initiative “When Hillary Clinton meets with Brazil’s president today, it will be a case of the hawk meeting the dove on the subject of Iran”.

Last November Brazilian President Luiz Inacio Lula da Silva, met with Iranian President Mahmoud Ahmadinejad in Brasilia.  Lula then said Iran should not be sanctioned for its nuclear program.

And Clinton’s visit last week was a complete faillure; Brazil won’t bow down. After meeting in Brasilia with Foreign Minister Celso Amorim on Wednesday, Mrs. Clinton probably knows this better than anyone. Mr. Amorim said Wednesday that Brazil will not “bow down” to international pressure.

Hillary Clinton her visit was preceded by William Burns.  Burns is undersecretary of state for political affairs and is promoting sanctions to Iran.
Read his article on his Blog where he spoke of the status of Brazil as a clear “emerging power” and of the importance of the relationship between the US and Brazil.  The New York Times also wrote an insightful article on the matter.

But again, Brazil won’t bow down.
Last Friday, Brazilian president Lula da Silva left for an official visit to Israel, the Palestinian Territories and Jordan to discuss the Middle East peace process, Iran and trade cooperation.  Thhe focus is on high-tech sectors, including semiconductors, telecommunications, nanotechnology, biotechnology and pharmaceuticals.

While Brazil is taking the stage, China is facing challenges back home andChina is preparing for a showndown with the United States.  The Telegraph wrote today this excellent article: “The long-simmering clash between the world’s two great powers is coming to a head, with dangerousimplications for the international system“.

Tags: clinton brasil, peres lula

Willem Buiter published an article in the Financial Times on one of my favorite topics of debate: greenhouse gas emissions and the right of equaly pollution per capita.

Everytime someone comes up with the argument that the effects of making ethanol would be dramatics for CO2 emissions I come up with these statistics: an average Brazilian yields 20 times less CO2 emissions than the average American.  Moreover: the growth of CO2 emissions of the average America is, despite the fact that he already emits 20 times more CO2, is still 3 times as high as that of the average Brazilian.

But this whole debate gets really interesting when you scrap out the “poor factor” from Willem Buiter’s argumentation, in a mathematical way.
How to do that?  Very simpel: you look at the GDP a country produces and devide it by the total CO2 emission of that country.

If you would take the US (14.264.700 million US$ GDP and 5.902,75 million metric tons CO2) as an index 100, you get the following indexes for:

France: 35 (almost 3 times more efficient that the US in making 1US$ GDP, CO2-wise)
China: 330 (more than 3 times less efficient than the US in making 1US$ GDP, CO2-wise)
South Africa: 385 (peforms even worse than the China in making 1 US$ GDP, CO2 wise; this is due to the massive consumption of coal in SA for their electricity)
India: 226 (twice as inefficient as the US in producing 1 US$ GDP CO2 wise)

Brazil scores 57, this puts the country in the class of a developing country like France as to being competitive in creating 1U$ GDP with as little CO2 emission as possible.

Conclusion: Brazil’s low score in emission per capita is much better than India’s low score per capita.   Becausse Brazil succeeds creating 1US$ GDP with almost 400% less CO2 emissions than eg. China.

While in most countries the economy is collapsing at an unseen speed and the governments have no idea how to plug the massive holes in the budgets, the Brazilian government is studying a plan to lower the contribution of employer’s social contribution from 20 to 15%.  Which will be surely an incentive to hire even more people.

That being said, the unemployment in Brazil isn’t increasing and amounts now 8,9%,  as you can see here.

Read more on the plans of the government on Globo.

End November 2008, Brazil’s president Lula da Silva had an approval rate of 70%.  Not many presidents in the world ever had such a rating.
His approval rating fell somewhet in Q1 2009, but bounced back this May to all-time highs as Brazilians grow confident how Brazil is coping with the crisis.

Lula approval rating is now 69%.  Reports on this can be read in Reuters and on the Boston Globe.

Also worthwhile reading is this article of last week where the Financial times gives president Zuma of South Africa the following advice:
“Zuma shouldlearn from Lula”.
On December 19th of 2007, 18 months ago, this was exactly the statement that I made when I wrote the following article:
“Zuma: choosing the Lula or Chavez scenario?”

Tags: lula da silva