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Brazil Injects Close to US$ 3 Billion in Economy to Halt Rising Dollar PDF Print E-mail
2008 - October 2008
Written by Newsroom   
Thursday, 16 October 2008 22:18

100 dollar bills The Brazilian Central Bank announced on Thursday, October 16, further measures to ensure liquidity and support the real, Brazil's currency, the real. The bank expanded the list of securities it will accept to free up reserve requirements on term deposits and took new measures to ensure that banks that borrow from its discount window provide credit lines to exporters

The real closed up 0.2% at 2.16 per dollar after the central bank sold one billion in dollar repurchase agreements and sold 1.814 billion of 2.5 billion in dollar swap contracts on offer in an auction on Thursday.

The Bovespa stock market index ended trading on Thursday down 1.06% at 36,441.72 points after slumping 7%. Bovespa followed the Wall Street 4.6% rally as investors snapped up beaten-down shares following on the worst day since the 1987 stock market crash.

Shares of government managed Petrobras oil company sank 7.5% and mining company Vale do Rio Doce, which is taking a hit from a sharp decline in industrial metals prices, fell 2.1%.

Meanwhile Latin America's second largest economy. Mexico. stepped up intervention in the foreign-exchange market, helping the peso post gains, an hour after central bank Governor Guillermo Ortiz said policy makers were looking to pare back their purchases of the currency.

Banco de Mexico bought 1.9 billion US dollars worth of pesos, up from 400 million on Wednesday. The bank has now purchased 11.2 billion US dollars worth of pesos, depleting its near-record foreign reserves, since the currency tumbled to a record low last week amid the worst global credit crisis since the Great Depression.

The peso finally rose 2.4% to 12.8343 per dollar after having plunged as much as 4.2% before the central bank stepped into the market. The currency has dropped 23% since it reached a six-year high last August as the financial crisis prompted investors to pull money out of higher-yielding, developing-nation assets.

Banco de Mexico may stop using its foreign reserves to prop up the peso soon, Ortiz said in an interview on Televisa network Thursday. He said new peso purchases wouldn't be as large as last week's interventions.

The bank bought 6.4 billion US dollars worth of pesos on October 10 alone. It said on October 14 that reserves had fallen to a one-year low of 75 billion. Reserves stood at a record 86.9 billion US dollars on July 18, up 52% from three years earlier boosted by exports of oil.

Mercopress

Comments (29)Add Comment
" to Halt Rising Dollar" ??????
written by ch.c., October 17, 2008
Just refer to Brazilians thousands of critics DURING THE LAST 3 years AGAINST the US$ (non)value......until only 4 months ago !!!!!!!
Whoaaaaaaaaaaaa.....suddenly it is already....TOO HIGH ??????????
And in all truth, is it not the Brazilian currency plumetting against ALL strong currencies !
yesssssss....the Brazilian currency went down also nicely agains the Euro,CHF and the JPY
Wellll....just look at a chart ! Especially AES...if he disagrees with my view !
But AES, please read a chart correctly, not upside down as you continually did and still do !

Short memory ?
Hmmmmmm....as usual !

...
written by aes, October 17, 2008
The dollar is hyper inflated 11 trillion in paper and debt, what is the dollar worth, you tell me . . . R 1.5, R2, R2.5, R3? probably R2-R2.25. . . Brazil has traded in this range for the past 5 years and has done quite well. What is the problem except with people that are selling axes to grind, fear mongers. Ch.c and company purveyors of paranoia. There is pleanty to buy in Brazil airplanes, land, autos, banking, infrastructure, construction, the Real fell no more no less than the Swiss Frank against Gold. . .it seems that everyting is at parity except maybe the South Korean corrency which is crashing because it has no natural resources.

written by ch.c., October 17, 2008
1) Autos ? When more expensive than from China, France, Spain, Germany ??????' Come on, a similar model is more expensive in Brazil. What Brazilians cars are you talking about ? GM, Ford, Volskwagen, Fiat ? these are NOT BRAZILIANS cars, but cars MADE IN BRAZIL !!!!!! Quite a difference...if you did not know yet !!!!

2) US$ weak ? Thus why it is going UP ?

3) Infrastructure ? Are you talking about the 5 % of paved roads and the 95 % UNPAVED ? Many African countries have a higher rate of paved roads...if you did not know yet ! Just look by yourself if you can read the World CIA Factbook, here it is 100 % paved. You see I have been objective by not taking a Swiss source !

4) "construction" ?
So true, just look at the equity prices of the companies I mentionned yesterday !!!!!!

5) "the Real fell no more no less than the Swiss Frank against Gold" ?
Dead wrong dear idiot ! the Brl FELL against the Swiss Franc quite nicely in the last 3-4-5-6- months !
Again you pretend something you even did not check, because you are junkie !

6)" it seems that everyting is at parity except maybe the South Korean corrency which is crashing because it has no natural resources."
LAUGH...LAUGH...LAUGH......
Noooooooooo. !!!!! here is a 120 days chart of the WON against the BRL...for your review !!!!!!!
Please dont read it upside down as you continually do !
http://www.x-rates.com/d/KRW/BRL/graph120.html
You are not any better than the WON over the last 120 days ! Therefore BOTH CRASHED...NOT ONLY THE WON as you said !!!!

Last but not least :
- When YOU made a reference to Warren Buffett a week or so ago, you stated commodities should go up and gold should go up due to inflation ! That day gold was around $ 900.- PLUS !
TODAY US$ 780.-
I dont even mention the grains and non precious metals prices at the time of your writing !!!!!!

You see AES the Junkie, you always come with assumptions of facts that exist only in your imagination, and I always come up with REAL PROVEN stats and facts. That is what differentiate us !
Instead of writing like idiots do, why dont you check first if the facts in your imagination are proven ?
Such as your Gold sale at US$ 820.- or the WON/BRL...or the Brazilian Infrastructure, just to name a few examples !
I dont really care if right or wrong you are in your future expectations, because no one can PRECISELY be right !

continued
written by ch.c., October 17, 2008
On the question of the US$, it is even more funny that it goes up while the U.S. reduce their rates, and the Brl goes down while having the World Highest Interests rates after inflation ! Is it a sign of Brl strength or weakness ? Because if your answer is a sign of strength....then reduce your rates ! Or Increases it further to why not 25 %.
Hopefully you noticed (let me have doubts about it) that your Government 5 years bond rates are at 16,31 % in local currency !!!!!!!!!
What does that mean ? that Brazilians trust their government or not ???????? And if you dont trust your own government outside of verbal support but not in action, why then foreigners should trust them ??????
And if you currency is so strong (in underlying fundamentals) why NOOOOOO foreign central bank buy this currency having the
World Highest Interests Rate...after inflation.

You see dear idiot you seem to have been pro-created by Lula !
He accused Brazilians entreprises to have speculated against the Brl !
But in reality they BOUGHT the Brl and shorted the US$, and that is why they LOST a bundle.
THEY SPECULATED AND LOST. How great was Lula accusations : DEAD WRONG !
These enterprises initially also lied openly because they said they HEDGED !!!!!
lez me repeat, they did not hedged...THEY SPECULATED !!!!!!!!

Now prove me wrong about Lula and your enterprises and whatever you want ! dont come up with assumptions where I could easily proven wrong...with facts and stats ! Pleaaaaaaaase.....come up with proven facts and stats.

Finally, let me also add, that short term, YESS we are due for a correction on the upside...in these worldwide meltdowns.
If you paid attention to other of my comments, I am no longer (too early yess) BEARISH on the World Equities Markets. SINCE yesterday I am no longer bearish on the Commodities that are also due for a nice BEAR MARKET RALLY...BUT NOT A NEW BULL MARKET ! I have bought very light positions in grains...not in metals !
BUT I REMAIN BULLISH OVERALL ON THE US$ FOR THE NEXT 2-3 YEARS.
The US$ should continue to go up against ALL currencies, may be with the exception of the JPY.
But the weakest of the currencies should be in the EMERGING NATIONS, INCLUDING THE BRAZILIAN CURRENCY !
Meaning that even the Euro will go up against the Brl !
This said it wont be a straight line. I am talking about a TREND !

CURRENCIES DISEASES SPREAD QUITE FAST...if you review history !!!!!!!

As I said the IMF is ready. They offered a few days ago help to Hungary, and today offered US$ 14 B. to Ukraine ! Offers still on the table.
And many South American countries will also be HIT, in 2009, in my humble views !!!!!
Not over for the junkie AES
written by ch.c., October 17, 2008
About your "What is the problem except with people that are selling axes to grind, fear mongers. Ch.c and company purveyors of paranoia."

Why dont you re-read or listen to Robin the Crook & Idiot (your genetical father) THOUSANDS OF statements...against the developed nations ??????

Mines after all are not that important ! I belong to WE THE PEOPLE ! But to my knowledge HE IS THE PRESIDENT YOU ELECTED TWICE !!!!!!!!!!
...
written by aes, October 17, 2008
You remind me of an accountant with an infinite wealth of information and a compete inability to make any money with it. Perhaps this would account for your vitriole. You are angry with yourself Brazil of course is a much larger target than even your inflated ego and so you keep striking and striking at it for what purpose. If it is to rouse the passangers on your economic Titanic than to what purpose? Economic markets are a matter of faith and with new Bovespa trading laws, a larger percentage of stocks were finally transparent and it is this transparency that prevents the recurrence of your hysterical historical economic models. You remind me of an old maid that life has passed by. Let me give you a tip, buy rhodium.
Ch.c Is On To Something ... Pay ATTENTION
written by dnbaiacu, October 17, 2008
ALWAYS ALWAYS FOLLOW THE PAPER TRAIL
For some reason amidst the Federal Reserve Bank buying up and bailing out and lowering the interest rate, the dollar is inexplicably going up against other currencies.

2) US$ weak ? Thus why it is going UP

Strange phenomenon?....
Somebody must be speculating or outright investing. THEY KNOW WHAT IS GOING ON .......
DO YOU?

All of this is NOT so strange when you considering Bible prophecy.

 And I saw another wild beast ascending out of the earth, and it had two horns like a lamb, but it began speaking as a dragon. 12 And it exercises all the authority of the first wild beast in its sight. And it makes the earth and those who dwell in it worship the first wild beast, whose death-stroke got healed. 13 And it performs great signs, so that it should even make fire come down out of heaven to the earth in the sight of mankind.

14 And it misleads those who dwell on the earth, because of the signs that were granted it to perform in the sight of the wild beast, while it tells those who dwell on the earth to make an image to the wild beast that had the sword-stroke and yet revived. 15 And there was granted it to give breath to the image of the wild beast, so that the image of the wild beast should both speak and cause to be killed all those who would not in any way worship the image of the wild beast.

Believe it or not,,, (that is up to YOU)
But this "two horned" beast is the United States and British world powers and they are foretold to bring to life the United Nations the former "League of Nations" that recieved a "sword stroke. Be its cheerleader as it were.
Everything requires FINANCING and SOMEONE is investing behind the scenes if my hunches are right. Everything starts and ends with MONEY in the present world. SOMETHING is betting on this or BEHIND it and investing.
**********************
There are few secrets now. You just have to know what to look for. God is so loving that he has already informed those INTERESTED about what is going to happen. You just have to get outside of YOURSELF to see the signs. Understand the symbols. (these "movers' and shakers" love to mockingly mark their terriotories right in front of your face). Watch it happen and ACt accordingly.
It is really all amazing. And yet some will STILL think this is all CRAP or "distorted" writings written by a bunch of drunks..
Think again.!!!
Know who to keep your eyes on and absolutely NOTHING will be a surprise.
The U.S will weaken,, but not necessarily fall into oblivion. The U.S in conjuction with England as the above prophecy states will "give breath to the image of the wild beast".
It will take money and support . And SOMEBODY is obviously doing it.!
Ch.c .. KEEP IT COMING MAN! TELL THE TRUTH.
smilies/smiley.gif smilies/wink.gif smilies/cheesy.gif smilies/grin.gif
Btw
written by dnbaiacu, October 17, 2008
That prophecy is found at Revelation 13:11-15

Ch.c's "U.S is the next "re-emerging" may be something to really bet on. smilies/wink.gif
Now That Was Deep ...LOL
written by dnbaiacu, October 17, 2008
Economic markets are a matter of faith and with new Bovespa trading laws, a larger percentage of stocks were finally transparent


Someone finally agrees in their own way of saying it.
It is all in your IMAGINATION.
The valuable things of the rich are his strong town, and they are like a protective wall in his imagination.

Proverbs 18:11[/b)
to rouse the passangers on your economic Titanic than to what purpose?


Economic Titanic?????...
It looks like there will probably be an "efeito domino" to a point.. Just enough to get everyone or "most" on the page . And the SECURITY will be the issue. An issue the will probably eclipse whatever is going on economically.
Already they are "cutting up" in Iraq. Killing folks on holy days and in their places of worship. Running "christians" out of the area.
But due to the smoke screen that is the "Historical election" , the masses aren't paying attention.
Here's a quote from Ch.c
BUT I REMAIN BULLISH OVERALL ON THE US$ FOR THE NEXT 2-3 YEARS.

Most will have very little cash to spare , but if you do bank on Amero's. smilies/wink.gif smilies/wink.gif
There are no straight lines and nothing ever goes to zero, ever.
written by aes, October 18, 2008
"Despite the approval of a massive $700 billion bailout plan and coordinated global rate cut, panic continues to dominate market sentiment. For the US dollar, the influence of this undesirable state will determine whether the currency can sustain its aggressive rally or a dramatic retracement brings it back to Earth. To understand where the greenback will go, we need to first understand how it has come to this point. How can a currency that represents a 1.50 percent benchmark lending rate, an oncoming recession and the epicenter for a financial crisis rally against nearly every one of its major counterparts? Security. While the dollar has few redeeming features fundamentally, the US is still the largest economy in the world with deeply liquid Treasuries that can be unequivocally deemed ‘risk-free’ even as traditional asset classes suffer their worst declines in decades. This safe haven status has proven itself to be nearly as universal as the sell off in risky assets has been."
dnbaiacu
written by João da Silva, October 18, 2008
Ch.c .. KEEP IT COMING MAN! TELL THE TRUTH.


Dnb, Ch.C is not going to reveal the secret that he is the reincarnation of Nostradamus!!!
The Question Remains
written by dnbaiacu, October 18, 2008
This safe haven status has proven itself to be nearly as universal as the sell off in risky assets has been."


Just WHO is concluding that the U.S is still a "safe haven" and WHY?
There must some underlying political agenda. Someone KNOWS "something". And it ISN"T the little guy. smilies/cheesy.gif smilies/cheesy.gif smilies/cheesy.gif smilies/wink.gif
Americans are losing jobs and houses. Consumer confidence is nose diving.
So just WHO is betting on the dollar and WHY?
There is AlWAYS an AGENDA smilies/wink.gif
To all !
written by ch.c., October 18, 2008
1) May be the Proverb 18:11 says the truth : 18,10 % SELIC interests rate will be the top !
smilies/cheesy.gif
2) As usual AES the Idiot HAS BEEN UNABLE TO COME WITH SOMETHING SPECIFIC ! Who is surprised ? certainly not me.
Idiots can only be very vague, since they dont even know what tgheya are talking about. He assumed that the South Korea WON
collapsed. When proven with a chart the Brl did not do any better...SILENCE from his part on that matter.Same stuff for Brazilian Real Estate. Same for HIS Brazilian Greaaaaaat infrastructure...when proven that ONLY 5 % of the Brazilians roads are PAVED !!!!!!
And so on and so on !
He talks about the selling axes to grind, fear mongers...but HE cannot see that the one doing so are Chavez & Lula !!!!!!
Yessssssssss.......pay attention that Lula criticizes the developed nations more and more the same as Chavez the Clown.

3) About the crictics on the U.S. Bail out :
Why dont you read the Brazilian bail out ? You do the same. But you do even more ! Brazil goes BEYOND !
The developed nations have provided liquidity to their banks, to allow them to provide loans TO ALL ! Including that their banks can provide financing to Emerging Nations companies and borrowers !!!!!!
But.....but....but....they have so far provided liquidity only to the FINANCIAL system, NOT the Industrial system.
But.....but....but....Brazil Government started to provide liquidity to THE NON FINANCIAL ENTERPRISES.
Yesssssssssss....to the NON FINANCIAL companies who lost their shirt in their currency speculation !
Better yet....ON TOP of course........ using the BNDES subsidized rate !!!!!!!

4) Where few understand of what is happening :
a) The U.S.A. is the only country on earth that can print as many US$ they want, without affecting their currency.
b) the actual additional debts issued are NOT to pay their trade/budget imbalance.
c) these new debts are for LENDING TO THE WORLD COMPANIES, FINANCIALS OR INDUSTRIALS OR SERVICES !
iN DEVERLOPED AND EMERGING NATIONS COMPANIES.
d) So does the European and Japanese Governments !

e) It means they ISSUE DEBTS AT A LOW RATE .....AND RE-LEND AT A LOW RATE PLUS A SPREAD TO MAKE SOME MONEY.....TO FINANCIAL COMPANIES....that will ALSO RE-LEND TO SUB FINANCIAL COMPANIES (SUCH AS iNSURANCES ETC) AND ALSO TO THE INDUSTRIALS AND SERVICES COMPANIES, BUT ALSO TO INDIVIDUALS FOR...their mortgages, credit cards, cars leasing etc etc.....

f) But....but....but the Banks receiving these liquidity will RE-LEND AT A VERY HIGH SPREAD, therefore they are making a TRUCKLOAD of profits.....for every new loans or loans renewals ! So that they can reliquefy their working capital with profits, instead of ONLY raising new capital !
g) As to the distressed debts or companies bought by either the Governments or by larger banks, THERE IS VALUE...that will come on surface...later on (1-4 years) ! Therefore they are acquiring...VALUE...at below VALUE prices !!!!!!!!!

Conclusion :
As I said, the USA is not simply increasing their debts, but are also providing SHORT TERM LOANS ! And when things will stabilize, they will renew these short term loans with a higher rate, higher rate, higher as long and as high as needed. And over time they will simply reduce their short term loans the more the financial system will be able to work again by themselves with their working capital !!!!!!!!
And whatever the Government and the large banks acquired as distressed debts or companies, will also end up OVERALL with CARGOES of profits over the next several years !

NOW OF THE CURRENCIES SIDE RANKING :
1) JPY
2) US$
3) CHF
4) Euro
5) BP
6) START whatever ranking with the emerging nations
Because....the lower the rate a Government pays the easier and cheaper it will cost. When on the other hand for emerging nations.... having much higher rates than the currencies above....they are naturally trapped !
Because.....they will have either to increase their rates further to support their currencies, But FURTHER weakening their economies, or reduce their rates and further weakening their currencies, or sell some of their foreign currencies reserves depleting them of these reserves and further weakening their Governments and economies !!!!!

The IMF IS READY !!!!!!!!
But dont quote me badly, I am not necessarily saying Brazil will need the IMF support ! But I am also not saying they wont need them ! Time will tell !


It will be a simple re-make of what has happened already several times in the past, either with some new countries such as Ukraine and probably others in Eastern Europe (Ex USSR countries who gained independence, and/or older emerging countries in Asia, Africa or South America !!!!!!
finally......
written by ch.c., October 18, 2008
hopefully you understand the underlying advantage and strength of the US$ !
And why it is already UP (despite the dark news)...and has no reason to change its trend over the next several years.
It wont be a straight line...BUT A TREND that will also please the Europeans who had also a big Bubble in the Euro !
smilies/cheesy.gif smilies/grin.gif smilies/cheesy.gif smilies/grin.gif smilies/cheesy.gif smilies/grin.gif
hey hey....here is the latest....that DISEASES SPREAD FAST...including in South America
written by ch.c., October 18, 2008
Oct. 17 -- Argentina may ease its defense of the peso, allowing for a 16 percent slide by year-end, to stem the loss of foreign reserves amid the worst global financial crisis since the Great Depression, JPMorgan Chase & Co. said.
The central bank may opt for a one-time devaluation this year to 3.8 per dollar from 3.2086 today, JPMorgan economist Vladimir Werning wrote in a report. Werning had been forecasting the bank would let it reach 3.8 under a gradual depreciation, known as a ``crawling peg,'' by the end of next year.
The central bank's ``balance sheet is more strained than gross reserves show,'' Werning wrote. ``Policy makers may end up acknowledging that reserve losses are excessive and opt for the lesser of the two evils --- a gap devaluation.''
The central bank said yesterday that reserves totaled $46.9 billion, down from a record $50.5 billion in late March. "

a 16 % devaluation would put the Argentine Peso not too far away from its previous MELTDOWN LOW !!!!!!!

And you havent seen NOTHING YET !!!!!!
This is just the start of a much bigger MELTDWON in EMERGING NATIONS !!!!!!
IT WILL LAST SEVERAL YEARS !!!!!!!!

THE IMF IS READY !


LAUGH....LAUGH....LAUGH....LAUGH....LAUGH...LAUGH....LAUGH....LAUGH....LAUGH....LAUGH....LAUGH....LAUGH !!!!!!!!!!!!!!

Hey AES THE TRIPLE IDIOT, if you know even half the history of your economy, why dont you tell us, what happened each time Argentina GOT A FINANCIAL DISEASE ??????
Brazil got the same DISEASE AND MELTDOWN !!!!!
Dont worry the DISEASE IS ALREADY THERE ! iT IS JUST INCUBATING BEFORE SURFACING HARDER AND HARDER !!!!!!!

Enjoy...TRIPLE DUMBASS !!!!!

smilies/cheesy.gif
...
written by aes, October 18, 2008
chicklet is forever looking at what is wrong instead of what is right. chicklet will never make any money because he cannot see past his fear, he is a rampant critic because it is always easier to find reasons for failure than success, as an american I see opportunity in the infinite possibility of the land of brazil, chicklet is a prescription for failure, and because of his personalization of brazil's flaws I suspect he is an emotional failure projecting the failure of his life on brazil because it fits his paradigm of failure. brazil is like a woman full of the promise of perfection and the presence of imperfection. chicklet is a prigg that does not understand the scent of a woman, he fears fecundity and all its uncertainty, he prefers the sterile environment of a dying switzerland, chicklet is concerned with fear rather than life, he thinks time is truth, the only prediction is decay, entrophy, if your not busy being born you are busy dying, brazil is busy being born, chicklet is busy dying.
Ch.C!
written by João da Silva, October 18, 2008
1) May be the Proverb 18:11 says the truth : 18,10 % SELIC interests rate will be the top !


Hey Mr.Nostradamus, I hope our young friend DnB remembers your prediction about the 20 year "cycle" for the Banks accounts. 2010/2011 is an auspicious period for it to occur. smilies/cheesy.gif smilies/grin.gif
Joao ans AES !!!!!!!!
written by ch.c., October 18, 2008
Joao :
but...but...but...but I never heard of a 20 year cycle in banking stocks !
Sorry Joao !
I know ONE cycle...... 4 years !

AES THE IDIOT !!!!!!
You always confirm how idiot and junkie you are...like your genetical father LULA !
TODAY YOU THE JUNKIE AES, ALL BRAZILIANS, AND EVEN MORE SO LULA AND HIS GANG SHOULD BE VERY HAPPY THAT OIL PRICES AND GRAINS ARE DOWN !

WHY DONT YOU WATCH AND LISTEN THIS :
http://video.globo.com/Videos/...-7823-LULA CULPA OS PAISES RICOS E O PETROLEO PELO AUMENTO DOS PRECOS DOS ALIMENTOS,00.html

THIS IS IN ONE LINE FOR YOUR DRAG AND DROP !!!!!!!!

Another proof that Brazilians are ETERNAL.......... CHEATERS & LIARS
NEVER EVER TRUST THEM....REMAINS MY MOTTO !!!!!!!!!



laugh.....laugh.....laugh....laugh.....laugh....laugh



It doesnt work when I click from above but.....
written by ch.c., October 18, 2008
it works from my PC !!!!!!!
dont know why.

Anyway.....here was what he said LIVE at TV Globo, on June 3, 2008 :

Lula culpa os países ricos e o petróleo pelo aumento dos preços dos alimentos

Now he got what HE dreamed !
More and more ROBIN THE CROOK IS LIKE IS HALF BROTHER.......ROBIN THE CLOWN IN VENEZUELA !!!!!!!

Fasten your belly belt ! You are going to lose some weight...in the next few years to come !!
...
written by João da Silva, October 19, 2008
Joao :
but...but...but...but I never heard of a 20 year cycle in banking stocks !
Sorry Joao !
I know ONE cycle...... 4 years !


I wasn't talking about 20 year cycle in banking stocks. I meant about confiscating the savings bank a/c every 20 years, which you and I have mentioned many times. Don´t you remember the famous "Plano Collor" ?

If you don't remember the "Plano", you are either taking an (well deserved) "Ethanol Break" or your doctor has declared that you are showing early symptoms of Alzheimer. smilies/cheesy.gif smilies/grin.gif

Cheers smilies/smiley.gif smilies/wink.gif
20/4
written by Simpleton, October 19, 2008
Beats the heck out of 24/7. As you may be aware joao, that banking issue of which you speak as well as something not entirely similar but having had the same effect to the north back earlier in the last century did have a very significant effect on the lower middle class / pobres. Never put your money in a bank to save / what money you get your hands on is to be spent as soon as you have any is the mentality that was created. Economies that went the other way and saved in much higher numbers and percentages than elsewhere faired little different than any one else in the recent financial turmoils. Not trusting the banks / not saving is more is likely to be the driving force for the bleak(er) future of the greater populace in brasil or elsewhere than anything else. How many of the bottom 80% even have a centavo in the bank? How is stimulating local economy spending by having higher interest rates, higher duties, higher and higher taxes going to get the people diving deep into the barrel? (Especially those that experienced first hand the last market or banking wipeouts.) Maybe coming down with Alz will help a few forget but that offers little relief to what the subsequent generations will face - the divide and the potential for conflagration appears set to increase not decrease.
Simpleton in Rare Form...
written by dnbaiacu, October 19, 2008
Wow!!!!! smilies/smiley.gif smilies/smiley.gif smilies/smiley.gif
That was good Simpleton!
Somewhat right Simpleton ! Somewhat only !
written by ch.c., October 19, 2008
Because it depends what country you are talking about.
Switzerland has never yet HAD one bank failure with clients losing their assets at the bank !
Even during the Great Depression or earlier or later !

Furthermore, looking at the history and present of developed and emerging nations, ALL previous meltdowns of currencies were DUE TO...THE GOVERNMENTS ECONOMIC POLICIES, NOT due to the financial system.
While the EQUITIES markets swings are different !

And the simple proof is that TODAY currencies swings DONT move in the same direction with the the equities market swings.

the US$ is strongly up since the last few months, while they SHARPLY REDUCED their rates over the last 15 months..
The Emerging Nations currencies moved down, while they nicely raised their rates.
An average mind would conclude to buy the emerging nations currencies and sell the ones reducing their rates !
Right ?
Welllll....it simply doesnt work that way.

Such trades are called CARRY TRADES, which were the name of the game for 5 years : Buy the high yield currency against the currency with the lowest yield !!!!!! this happens when investors/speculators are RISK TAKERS ! And it works quite well, when one is right due to the rate spread cushion.
But what happens when their is RISK AVERSION ? The opposite of course ! Because the high yields currencies are systematically in the emerging nations. Therefore these nations (Governments & Companies) are funded at a LOWER rates than using their OWN HIGH nterests rates.
And when their currencies go up it is a double whammy, because they need LESS local currencies to pay the interests rate in the borrowed currency, and also LESS local currency to REPAY THE LOAN ! RESULTS : a zero or below zero cost, and cheap repayment of principal.


but....but.....the other way around they will need A LOT MORE LOCAL CURRENCIES to repay their foreign interests rates and capital repayment.

Just imagine that not so long AGO a brazilian company who got let say a 5 year loan for US$ 1 million at let say 10 % interests, and currency rate of 1,60 !
He then OWED the equivalent of Brl 1,6 million and annual interests of Brl 160'000.-.
NOW HE OWES Brl 2,1 million and Brl 210'000 for annual interests !

Quite a difference for his business costs AND BALANCE SHEET !

This said, this is STILL LOWER than the 40 % or so he would had to pay if he borrowed in local currency through his local bank.
But he would also "only" still owe Brl 1,6 million not 2,1 millions !!!!!!!!

Just imagine now that the US$/Brl goes to 3.- in the next 12-24 months and think of how the company could survive !!!!!!
And saying it wont, it was like saying the Oil could not have gone over Us$ 80-100.- or saying Oil COULD NOT GO DOWN BY 50 % IN 4-5 MONTHS !
Both the IMPOSSIBLE targets were reached !!!!!!

And despite South Americans countries (and others) sweared and promised they will never ever go again to the IMF is funny !
Because guess how many of their thousands of other promises they made...have been delivered !!!!!!
When things are rosy, the emergings nations in one song say....this time is different, it is sustainable .
A promise delivered by a very small handfull nations...ONLY.......SO FAR !!!!!

Cheaters & liars ALWAYS cheat, lie and hide !!!!!
And they will have again their back in the ice's bucket.....as usual, sooner or later !!!!!!

BOOM AND BUST ECONOMY.... HAS BEEN THE NICKNAME OF ALL SOUTH AMERICANS COUNTRIES, WITHOUT EXCEPTION, INCLUDING BRAZIL !
Ch.C!
written by João da Silva, October 19, 2008
Cheaters & liars ALWAYS cheat, lie and hide !!!!!
And they will have again their back in the ice's bucket.....as usual, sooner or later !!!!!!


A good quote. But....But... Could you please explain this brand new expression of yours :"And they will have again their back in the ice's bucket". Is it Ice bucket or Iceberg ? smilies/wink.gif
dnbaiacu
written by João da Silva, October 19, 2008
Simpleton in Rare Form...


Simpleton has always been good form. A very deep thinker and a great blogger. A man to have on your side in a crisis.
Right or Wrong
written by Simpleton, October 20, 2008
it may be, or only "some what" right with respect to the countries of my choosing as you point out ch. Either way, I and a vast majority of other people do not feel so isolated / separatist / insulated as you do. There will always be exceptions. Take a read on globo and see what they say about the Queen of Inglaterra. In round numbers, year over year, the DOW is off 36%, the USD v BRL is up more than 20%, adjust another 5% or so for the difference in inflation rates - it looks like I've only taken about an 11% hit relatively speaking. No one likes to loose but there's always a way to put rose colored glasses on things isn't there?
Joao
written by dnbaiacu, October 20, 2008
Simpleton has always been good form. A very deep thinker and a great blogger. A man to have on your side in a crisis.


I agree. You must say though that this comment was somewhat of a curve. smilies/smiley.gif smilies/wink.gif
It even got Ch.c's attention. He responed with a full essay smilies/cheesy.gif smilies/cheesy.gif smilies/cheesy.gif
Btw, Ch.c is "really" educating me. It is still hard to believe you get this info for free. It is hard for me to understand why some don't see his "realistic" info for what it's worth. Brazil's situation "is what it is". I have learned to understand the "exploitative nature" of the culture and work with it . Instead of fantasizing about it getting better. Never have unfounded expectations.
Ch.c's explanation on "carry trading" was awesome! And it conforms that SA economies will always be "boom and bust". The infrastructure is just not there for them be any different.
Curve?
written by Simpleton, October 20, 2008
I went back and read what I wrote myself just now Dn. I see what / where I might have been trying to go with things but after closer scrutiny I see some major F-ups and things I would classify as more like seriously twisted than just curved. None the less, what comes out of my simple minded stupor sometimes is, as JDS says, deep, very deep. (It's not the first time I've been told I'm a far cry from being shallow.) Did you know, there's all sorts of aspects to consider with regards to a yo-yo? I hope Ch will oblige us with essays on more than just one and their relationships / correspondance with the economic waves, tides, storms and eddys he so profoundly captures the gist of their underpinnings and explains to us. If not, maybe we'll encounter someone heavy into string theory, fractals, . . . something, anything - glue logic just doesn't work efficiently (unless you manage to ride your dead horse all the the way to the rendering facility!)
Why???
written by Buy steroids, November 01, 2009
My god!!!
Brazil Injects Close to US$ 3 Billion in Economy to Halt Rising Dollar ?
What is it?
Is it charity?
I dont understand why..
Stupid potitisc.

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