Globo published today an article on the rise of the Brazilian Real against the US$ since the beginning of 2009. This graph speaks for itself: The Brazilian Real appreciated 25,49% since, the Chilean Peso 14,06% and the Argintinan Peso 10,95%.
One might argue that despite this 25% appreciation of the Brazilian current, the Brazilian commercial balance yielded a 21,69 billion US$ surplus since January 2009. Just as one might argue that despite the depreciation of the dollar, the US trade deficit in August is still a hefty 3,6% of US GDP.
The IMF projects the Brazilian GDP to clock 2009 with a 0,3% growth; one of the few countries which will not end up in red. The growth for 2010 is projected to be between 4,5% (IMF) and 5% (Mantega).
Meanwhile China’s press is fulminating against claims that the renminbi must be revalued. An editorial in Xinhua last week had this to say:
The Group of Seven rich nations have again pushed developing China to appreciate its currency, the RMB yuan, so as to promote a so-called “more balanced growth”. On Saturday, G7 central bankers’ meeting held in Turkey’s Istanbul failed to produce any significant boost to the world economy. Instead, they turned fire on China’s currency, blaming it for the financial crisis.
In so doing, the rich nations have obviously intended to shirk their due responsibilities in the wide-spreading global financial turmoil. As it is known to all that the current crisis has been a result of developed countries’ lax financial regulation, excessive consumption and their lasting monopoly on the international financial system.
Everyone seems to agree that as part of the necessary global rebalancing the US will have to reduce its net imports, and this will be achieved in part by a depreciation in the value of the dollar, but everyone also seems to agree just as fervently that any reduction of the US trade deficit should not come at their expense, but rather at the expense of the rest of the world.Europe says it is Asian that must appreciate, Asians implicitly insist that it is Europe that must appreciate. It doesn’t take a PhD to see the mathematical difficulty.
My reaction to this is: Brazil already appreciated its currency, while the impact for Asia and Brasil is still ahead.
And you ask why Brasil’s growth is still healthy despite it’s 25% currency appreciation? The answer is: it’s internal market.
But I believe the US won’t win this one. The fact is that these trade disputes are not going to go away, and because each side has legitimate complaints, or at least what seems like legitimate complaints to domestic audiences, without serious global coordination (can take ages) the only very likely outcome is even more trade disputes. And these are disputes which will be won by the country or countries that control the one resource everyone in the world wants: net demand. And net demand is something Brazil has plenty of and China is short of.
This means that if surplus countries don’t allow for a rapid and orderly adjustment of the imbalances, which will require a rise in the value of their currencies among other things, the same thing will be achieved by trade conflict. Meanwhile Brazil should focus on the sovereign fund plans they have, it will be strong economical weapon in the oil-rich future.
End September, Merrill Lynch published its monthly FX forecast. The USD trades now at 1,73 agains the BRL, they consider the USD still to be 10% overvaluated against the BRL and project it to fall to 1,6 against the BRL. This is exactly the June 2008 when the BRL was trading at its top level. Completely aside: also take notice of the South Africa Rand, which they consider to be 16% overvaluated against the USD.
More interesting even are the future projections they make.
1. The US Dollar versus the Brazilian Real
They project the dollar to appreciate 7% from end December 2009 till March 2010, but eventually by end 2010, the dollar would fall against the Real to 1,65 (3% less then the end 2009 rate).
2. The Euro versus the Dollar:
The Euro would continiously fall against the dollar throughout the coming year and end at 1,28 against the dollar, that is a 17% decrease in value.
1+2 would mean that the Euro would fall 20% against the Real from today until end 2010. This would mean that by end 2010, the Euro would trade at 2,12 against the Real. This seems highly unlikeable to me (give and take you get 2 Reais for 1 Euro). On the other hand: I do agree that the Euro will fall against the dollar by 2010 and that the Brazilian Real will more or less remain it’s current rate against the dollar.
Since January 2009 until today, the Brazilian commercial balance account a surplus of US$ 21,69 billion. This is more than the US$ 19,815 billion in the same period of 2008 (the first 3 suarters of 2008 were top quarters for Brazil).
Nicolas Eyzaguirre, director of the Eastern Hemisphere of the IMF, announced last week that Brasil should recuperate faster than any other Latin American country from the crisis.
The IMF announced in Istanbul last week that Brasil’s challenge is to “manage it’s abundance of wealth”.
It’s crucial for Brasil now that investments pump up. Growth cannot only be supported by consumer demand. The installed capacity in Brazil went up to 79,1% again; this is a good sign, only when capacity utilization ramps up above 80% will businesses again invest in extra capacity.
High oil prices. The crisis on Wall Street. Wars in Iraq and Afghanistan….
As Americans faces these challenges, a number of fast-growing countries, Brazil, Russia, China and India, are poised to compete in the global economy. Are they a real threat to U.S. dominance?
If she really had the intention to come to Brazil, why the fuzz?
She had a plane ticket leaving on Friday 4th, which made she would land on Saturday 5 in Sao Paulo. She got her Visa un Sunday 6th and… Monday September 7th is Independence Day in Brazil (no business which is open). So, why didn’t Sarah just reschedule her flight to leave on Sunday 6th or Monday 7th? She wouldn’t have missed a thing in Brazil (no meetings on Synday and monday – national holiday-). Even if her plane ticket was a non-changeable one, buying a new ticket San Francisco – Sao Paulo can’t cost more than 1.000 US$; much less than the “thousands of dollars” of sunk cost Sarah now claims to have lost.
Which brings me to my core point: Sarah had second thoughts of coming to Brazil, mainly because of her husband trying to stop her from going. So she needed an excused, a public one and she invented one where she put the blame on the Brazilian flag.
1. Americans are known throughout the world for their, by whiles very annoying, attitude of supremacy.
Brazil is not a country which will easily accept this behavior. Brazilians are known for their hospitality, just read this post of a San Francisco emigrant who know lives in Florianopolis, Brazil and compares life in Brazil with life in San Francisco. The problem is that people like Sarah leave with the wrong attitude to Brazil. It’s clear this was Sarah’s first visit to Brazil and that she was completely unprepared. As Tom Jobim said: “Brazil is not for beginners”.
And let’s face it, the Techcrunch boys and girls are not really journalists, so it’s normal they struggle to get past the obvious thing as getting a Visa. Compare that to Jenny Wortham, technology journalist of the New York Times (read: a real journalist) who was packing on Friday for Brazil. So the “computer problems” at Brazilian embassies Sarah wants to point to can’t be all that bad if Jenny did manage to get her Visa !
The real issue of Sara is that she is blinded by her self-importance: it’s all me-me-me-me.
2. Brazil doesn’t accept a bullying attitude from foreigners wanting to explore and enjoy their country. Remember this American pilot who tought he could stick out his middle finger to Brazilian immigration? Or these two Briton girls who wanted to pull of a fraud trick in Brazil?
Bad idea. Brazil and Brazilians have a very simple rule: the rule of reciprocity: “we treat you the way you treat us”; Brazilians even extend this to their Visa policies. I love that attitude a a Belgian. We don’t give Brazilians troubles at our borders (actually, the Belgian immigration officers had my wife’s Brazilian passport back to her with an, “obrigada”) and likewise Brazil treats me kind.
Brazil has more than 5 million tourists entering the country every year; 625.000 of them are Americans. More than 1.700 Americans every day who get their Visa for a trip to Brazil without any problem.
But Sarah, naive and unprepared as she is didn’t manage to get it. Why didn’t she want herself to the Brazilian consulate to hand it in and pick it up? Brazilians who want a Visa to the US need an interview in the US embassy…
3. Sarah writes “The country should be embarrassed, and its businesses should be furious. I’m going to aim to try this whole Brazil thing again in December or January. It’s not the entrepreneurs’ or our readers’ fault this happened, and I still believe there are great stories in Brazil that I want to report. But when you’re harder to get into than China, it doesn’t bode well for foreign investment, Brazil.”
Sarah, what has your inability to get a Visa got to do with Brazil’s foreign investments? Brazil’s foreign investments are doing just great and the United States can only dream of the Brazilian trade balance.
We perfectlty understand you are frustrated, but why can’t you just be frustated with yourself instead of being intolerant towards the nation you wished to visit and starting this personal rant?
Earlier in August you wrote “Why am I so angry these days?“. Exactly, thousands of people wonder exactly that !
It would have been an interesting article of you had actually talked about the lost opportunities, or the state of the world in terms of labor mobility or did some research on how many people can’t travel for bureaucratic reasons. Or anything tangently related to this issue, but you completely missed it and wrote something completely unprofessional.
And people would have even give you a break if you would have let steam of on your personal blog, facebook wall or twitter. But Techcrunch was not the place to vent your frustration, which, again, you should have channeled in teh first place to yourself: you have simply not been able to get your Visa to Brazil; whereas 1.700 Americans every day do succeed in that task.
This could have been an excellent occasion for you to start your chapter on Brazil explaining what Jeitinho is, but again: you missed to dicover this essential skillset of Brazilian entrepeneurs.
4. Can you actually proof when you started the Visa application? Every normal person knows you should calculate minimal 30 days to get a Visa. It is completely impossible for Brazilians to get a Visa to the US in 25 days.
5. “They’ve not only been screamed at by me, but loads of business travelers—and even a coach for a national soccer team who can’t get in the country.” Which coach? We are curious (actually: we don’t believe a word of it).
6. “In fact, it was the one place my husband had asked me not to visit, having heard many reports of kidnapping and violence. But I was resolutely convinced there was a world of exciting companies and stories and had been looking forward to the trip for months. In fact, I’d spent about four months studying Portuguese and planning the trip.”
Here it gets interesting:
Firstly: I don’t believe you actually studied Portuguese. Give me 60 seconds on Skype to test 10 very basic words…
Second: your husband seems ill-informed. He does realize that 10 United States cities have higher crime rates than Sao Paulo where you would spend most of your trime as you wrote? Atlanta, Philadelphia, Washington, Detroit, Newark, Oakland, St Louis, Baltimore, Buffalo, Cleveland,…
Sarah, your husband does allow you to travel to those cities in the US, does he?
Actually, last week the top 10 most dangerous cities in the world were published: Cape Town features next to Baltimore and New Orleans (on number 2!). No Brazilian city in the list.
Maybe a first crack in your marriage: the jealous husband not allowing his wife to travel to sexy Brazil?
7. And then you had to call upon your friend Paul Carr to help you out. But it didn’t really work, did it? This comment summed it up pretty well.
8. And then on Sunday evening Sarah had to write another post. But again she couldn’t utter sorry and again it was all me-me-me: “Loads of South American entrepreneurs I’ve never met were excited about some Valley coverage.”
Really? The first lesson you should learn about Brazil is it’s self-suffiency. What could Brazilian entrepeneurs possible need from The Valley?
Users? They’d rather/better look elsewhere for international expansion? Money? No thanks for the US debts. Private Equity funds? Enough wealth in Sao Paulo, look to the financing of Monashees and the many boutique investment shops in Brazil? Expertise from the Valley? Don’t make them laugh. “and even spent several months learning Portuguese”
Proof it Sarah, that you can speak and understand 10 basic words of Portuguese. “Indeed, I said at the end of the post, I was going to come later in the year, and had started re-arranging my schedule to come in December.” Comon Sarah, everyone knows that you will never go to Brazil. You lack the proper open-mind to cover a country like Brazil. And, like you wrote yourself: youyr husband doesn’t allow you to leave to Brazil. “Yeah, I spent thousands of dollars and wasted countless hours for months planning a trip that I never wanted to take all along. How’d you figure it out!“
Seriously now, what did you actually spend thousands of dollars on? The Portuguese Assimil CD-rom and plane ticket can’t have costed more than 1.000 US$. “Not only that, but I don’t know any US business reporter who spends thousand of dollars of his or her own money to travel to other countries and give amazing entrepreneurs the exposure they deserve.”
Check out Jenny Wortham, technology journalist of the New York Times (read that Sarah: a real journalist) who was packing on Friday for Brazil. “This whole thing worries me that maybe the premise for this new book is wrong. Not the core premise– that the greatest opportunity to build the next wave of multi-billion companies is outside the US. I still believe that opportunity is there. And I’ve traveled enough to see that the talent is there. But when people’s families are threatened over a post about burocratic ineptitude, a lot of potential investors, business partners or acquirers will decide maybe that opportunity just isn’t worth it. There’s a real risk that that opportunity never gets fully realized and that’s bad for everyone.” Sarah, you don’t get it. Brazil is not asking you to come. You were visiting them, because you needed to write your book to earn your money. A book on Emerging countries that no Brazilian is interested in, they are the emerging part, remember? It is the IMF who needs the Brazilian money, the United States who yearns for its oil, China who drools over its steel, Europe who needs its chicken, Turkey who flies their Embraer planes,….
The investors are already in Brazil and they are doing just fine. Google, Facebook, etc… are all flying up and down US-Brazil with no issues. It is just you who didn’t get beyond the first obvious step: getting a Visa. “Will I still go to Brazil in December? I don’t know. I want to. I have my visa now. But would you go to a country where people were threatening to spit in your face and rape you as soon as you arrive in exchange for, um, you wanting to help their businesses?”
Mind the word exchange ! Sarah, again, there is no exchange. You were visiting Brazil to write your book and write you desperately need to finnish and write some columns on Techcrunch you were hoping to score with. Brazil doesn’t need a Sarah Lacy “helping their business”. What does Sarah Lacy can bring to Brazilian entrepeneurs that they haven’t already have.
As long as Americans like Sarah don’t start realizing that they are the demanding party and that they are demanding help to Brazil (investment opportunities, worthy stories, growth, natural resources,…) they are bound to fail and continue the track of American implosion.
Two predictions:
1. Sarah Lacy will never go to Brazil, not this year, not next year, no ever.
2. It won’t take more than 12 months before Sarah gets the boot at Techcrunch. It’s always the same with the girl.
Techcrunch and Brazil? Who cares.
The real busienssmen, who are responsible for the real foreign investments in Brazil and made the real 70% jump of the Bovespa since January, all read the New York Times with reporters like Jenny Wortham and have never heared of Techcrunch or Sarah Lacy.
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.
Globo published today an article on the rise of the Brazilian Real against the US$ since the beginning of 2009. This graph speaks for itself: The Brazilian Real appreciated 25,49% since, the Chilean Peso 14,06% and the Argintinan Peso 10,95%.
