Below en interesting video in English that debates on the Brazilian oil; of course with a layer of PR to try to influence the debate in the US interest (see their BP catastrophy).
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.
Belgium economist Geert Noels highlights in his recent article that Belgium is now riskier than Brazil when one considers trhe spreads on bonds and CDS-premiums.
As below chart highlights, the Brazilian CDS premiums remained stable at 150 while the Belgian premiums almost trippled from 48 to 153 in the last year.
Noels concludes “We -Belgians- are now seen as more risky than Brazil. And that is not so irrational if you compare both countries.”
When talking to real estate developers in Belgium, it surprises me each time that they fail to acknowledge that price appreciation of Belgian real estate from 1980 until the financial crisis occured parallel with the entry of boomers into the labour force. In countries like Belgium an massive amount of women entered the work market and all people obtained higher educational levels than their parents. The quantity and quality of labour increased, total consumption rose and so did aggregated savings. These savings took in countries like Belgium the form of real estate investments and prices rose.
Those times are over in Belgium.
The trend of an increasing amount of woman entering the labor market stopped (saturation reached), educational levels are no longer going up (top has been reached), productivity is decreasing in Belgium and so are the aggregated savings. This has nothing to do with the crisis, it is a long term Trend that started in 2004 and it’s fundaments are the demographics and the massive immigration of people with extremely low added-value to the Belgian economy.
Which brings is to what is called demographic dividend; the major drivers of real estate growth.
Demographic dividend happens when (1) falling fertility lowers child dependency and (2) when the working age population (15-64) expends but (3) before the old age dependency starts to rise significantly.
Belgian lost it’s demographic dividend completely; on the contrary, the country is going into an area of demographic deficit; not only because of the above 3 drivers, but also because of the destructive immigration policies of Belgium.
Demographic dividend goes hand in hand with rising investment and accelerating growth; the Western world enjoyed demographic dividend for the last 30 years; but now the party is over, the benefit is exhausted; no new workers are entering the job market and a massive amount of long-living baby-boomers are retiring, aggregated savings are falling. In the Western world the new morale is “walk away from your mortgage, buy an iPad”
People who believe that in Western Europe the real estate prices will recover after the financial crisis are wrong; they forget the impact of the above described much stronger negative driver. The number of 20-44 year olds, who are the ones buying real estate and first-time homes will fall by 20% in the next two decades, even up to 30% in Belgium and Spain and … China (yes, China: the 1-child policy will have a very ugly impact on China soon), and even decrease a massive 40% in South Korea.
Brazil has a very healthy fat belly of new entrants in the labour market for the coming 20 years, their time to enjoy the stimulans of demograhic dividend.
Brazil is the country that will grow the most after the crisis, generating proportional employment. Today the country has the lowest unemployment rate since records started being kept. Unemployment stands now at 6,8% and employment rate will increase by 6,5% in 2010 with a further growth of 5,5% over the coming years. Brazilian industry optimism remains high.
Last April 962.000 jobs were created in Brazil, the total in 2010 should reach 2 million. These amounts are sufficient to serve the Brazilian youth who is arriving to the labour market.
In 1960 Brazil had the same population as Germany: 72.800.000. In 2004 Brazil had a population of 181.500.000 habitants, Germany 82.500.000.
Next year, in 2011, Brazil will have a population of 200.000.000, Germany 82.800.000.
In 2050, Brazil’s population will have grown to 260.000.000, Germany’s population will have decreased to 74.500.000.
The fear for unemployment stands on a record low in Brazil. If one takes 1997 as a 100 index, the index now stands at a record low of 84%. The number of people who answer that they “have no fear at all to be licensed” is 53%, same as in June. The number who has a “little fear” went down from 32% to 30% this month. And the number who says to have “a lot of fear to be licensed” went from 15% in May to 16% in June.
Uma vida prática e com muito estilo, é o que o empreendimento Le Jardin tem a oferecer a você e sua família. São três casas independentes cercadas pelo verde em um dos bairros com mais qualidade de vida de Florianópolis.
O empreendimento Moradas da Ilha, oferece a oportunidade única de morar em casas cercadas pelo verde em um dos bairros com mais qualidade de vida de Florianópolis.
