Comments for Brazil Pushes Panic Button and Slaps Restrictions on 60% of Imports at http://www.brazzilmag.com , comment 0 to 20 out of 25 comments http://www.brazzilmag.com Mon, 30 Nov 2009 06:55:33 +0100 FeedCreator 1.7.2 http://www.brazzilmag.com/content/view/10546/1/#pc_19854 1) Dont worry......I/we are never ever ever going to borrow in Brl anyway. Therefore in the case we have an interest to buy Brazilian real estate, we will pay 100 % C ASH......and make a borrowing in another currency. Just as we did for our BBC farm. I am not worried and nor should you be. ;) I would do exactly like you are planning to do. Nothing like driving down the price by having hard cash or financing it borrowing from elsewhere. I have done it a few years ago!! Dnb and Bo have done it also. 2) On your mortgages rates....I simply dont understand what you explained...the way you explained ! sorry with smiles ! Sorry that you did not understand. Probably because of the slight language problem ( 8))!. Though I am yet to find my degree in a Detergent pack ( ;)), let me try to explain again mathematically. Option 1. Prefixed Annual Interest rate of 14%: It is converted into monthly rate of (14 )** 1/12 which works out to be approximately 1.256% per month. So the mortgage of X Reais over a period of 300 months is to be paid in equal monthly installments. You may use the appropriate formula (which I know) or (a HP calculator, though I use a T.I which was a gift from my wife almost 22 years ago and still works well!) to calculate the monthly payment for X Reais you borrowed from the bank. Option 2. Post Fixed Mortgage rate: You borrow at the rate of 1.265% per month for the first 12 months. Then the government slaps 6% inflation rate (for the previous 12 months) and now the annual rate becomes 20% (14 6). Using the same formula, cited before the monthly percentage is (20)** 1/12 which works out to be 1.283%. This percentage is applied to increase your previous monthly payment. ie. if you were paying 1000 Reais per month during the previous 12 months, during the next 12 months, you are going to pay R$1012.83 per month. P.S: I used old computer programming symbols to denote maths formulas! * = Multiply ; ** =Raise to N th power. ;) I am sure you understood. ;) As for your comments to SK, nothing new in it. So no comments from my side. :P - João da Silva Tue, 03 Feb 2009 19:15:36 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19850 In US$ while your currency was still higher than today, your Iphone and Ipod retail prices were 60-80 % MORE EXPENSIVE than the Swiss, European, Japanese or U.S.prices. and....and...and....on the cars, consumers goods...look on top at your EXTRAVAGANT BORROWING INTERESTS RATES...which make the purchase costs even more expensive than they already are...even if goods sre manufactured or not in Brazil !!!!!! - ch.c. Tue, 03 Feb 2009 16:50:25 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19849 Joao 1) Dont worry......I/we are never ever ever going to borrow in Brl anyway. Therefore in the case we have an interest to buy Brazilian real estate, we will pay 100 % C ASH......and make a borrowing in another currency. Just as we did for our BBC farm. 2) On your mortgages rates....I simply dont understand what you explained...the way you explained ! sorry with smiles ! 3) I knew your Selic rates went down. It was just before my trip. sk - you are mostly right ! The Brazilian problem is that the same car model with the same options, even if built in Brazil, is usually more expensive then the price in Europe. - also true for your imported goods ! Believe it or not but the Iphone and Ipod are the World Most Expensive in...BRAZIL ! Comparative stats made by an Australian Bank. In US$ while your currency was still higher than today, your Iphone and Ipod retail prices were 60-80 % than the Swiss, European or U.S.prices. Somewhat curious because they are mostly made anyway in.... CHINA! Meaning the purchase costs are basically the same. The price difference being obivously THE TAXES ! Even more funny that then BRAZIL IS FULL OF TEARS AND CRITICS, when the USA charges ONLY 54 cents a gallon of taxes for foreign ethanol. Especially knowing that this tax is only AFTER THE FIRST TEN PERCENT OF WHAT THE USA PRODUCES. Meaning the first 10 % of the U.S. production is imported...TOTALLY TAX FREE !!!! Hopefully some people understood the messages from OBAMA (not yet a law) : - All newer cars with better fuel efficiency will have to be built...IN THE USA - AND during his election campaign he also said....buying a cheap T-shirt overseas is good only if it doesnt penalize the U.S. jobs. Because especially on cars and also trucks, Brazil has ZERO Brazilian manufacturer anyway ! Thus why should Ford and GM produce cars in Brazil...to be exported in the USA ! I just remind you that years ago even the Japanese automakers were forced to build plants...in the USA ! These things will be on the "why not" table again...in the next 1-2 years....no doubt in my view ! and also strange that emerging nations EXPECT NOT MORE PROTECTIONISM FROM DEVELOPED NATIONS....why at the same time they are FAR MORE RESTRICTIVE IN THEIR IMPORTS ! Simple example, not involving Brazil but India and Thailand : BOTH HAVE IMPORT TAXES OF AROUND 300-500 % ON FOREIGN ALCOHOLS, mostly charging the highest rates on developed nations alcoholic beverages, AND MUCH LESS (but still high) when imported from other emerging nations. And then like hypocrits, they say how unfair developed nations are ! Something similar will happen with China : Both the USA & EUROPE have well over US$ 200 billion trade deficit EACH ! While China overall trade surplus is lower than that. Meaning China has a HUGE trade deficit with most basic commodities exporting nations. Trade deficit further increased by the emerging nations HIGH IMPORTS TAXES AND QUOTAS RESTRICTIONS EVEN ON.... CHINA GOODS ! Conclusion : there is going to be a fundamental change in World Trade. The WTO is for more OVERALL TRADE...NOT.....ONE WAY TRADE....AS SO MANY EMERGING NATIONS TRY TO IMPOSE TO DEVELOPED NATIONS ! If you pay attention closely, every decade there is NEW WORLD BASIC THEME ! in the 2000 decade it was/still is....globalization favoring outsourcing production to emerging nations and creating huge TRADE SURLUSES FOR THEM...EVEN IN MANUFACTURED GOODS...USING DEVELOPED NATIONS MONEY, FINANCING, TECHNOLOGIES AND KNOW HOW...WHICH COULD THEN BE RE-EXPORTED TO DEVELOPED NATIONS !!!!!! GAME OVER ! Outsourcing production for local consumption or exports to other emerging nations....why not ! But no longer AS MUCH for re-export to developed nations....FOR SURE.... ! What does that means ? Emerging nations will have to fight/negotiate more with their REAL competitors....the other emerging nations. FORD OR GM CHINA ARE CERTAINLY MORE COMPETITIVE THAN FORD & GM BRAZIL !!!! Your imports taxes against each others dont interests the developed nations. WE WANT MORE ACCESS TO YOUR COUNTRIES...OR YOU WILL GET LESS INVESTMENTS & TECHNOLOGIES FROM US ! MORE SIMPLE THERE IS NOT, WETHER YOU LIKE IT OR NOT ! WE HAVE THE MONEY, THE FINANCINGS, THE TECHNOLOGY, THE KNOW HOW. YOU DONT ! - ch.c. Tue, 03 Feb 2009 16:42:19 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19846 As with past restrictions, this will mean higher costs for consumers. Brazilians already pay more than other people for many items, such as imported cars (many of which, unlike Brazilian-made cars, have sufficient safety equipment), due to tariffs and taxes. Brazil has protected many industries over the years, including computers, and consumers have suffered. - sk Tue, 03 Feb 2009 14:43:35 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19842 Posting the url mentioned above so that you may have a quick access by clicking on it. http://www.estadao.com.br/noticias/economia,queda-da-taxa-selic-nao-muda-crediario,311783,0.htm - João da Silva Tue, 03 Feb 2009 12:50:48 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19841 [quote]Then let me repeat the question I asked around 2 weeks ago for which I did not see your answer : [/quote] Herr.Ch.c, I take serious questions seriously and give answers to best of my knowledge! I had given you the answer in the following link which of course you didn't get to see, because you were in CA & FL!!: http://www.brazzilmag.com/content/view/10525/1/ That was on Jan 23rd. However, to make it easier for all of us, I am reproducing what I wrote: [quote][b]I think this question was addressed to me. As I said a few months ago, the best bank to get a Mortgage is CEF (Caixa Econômica Federal). At that time you could get two kinds of Mortgage. One with Prefixed annual interest rate and the Second one is Post Fixed. In the first case the, if you borrow at the annual rate of say 14% , it remains the same during the mortgage period. In the second case, you borrow at 14% and after a year the rate changes (according to the inflation rate determined by the government). It may come down or go up (though I have never heard of it coming down!). I really do not know if the mortgage rate is going to come down even if the SELIC rate goes below 10%. There is an article that I am posting below that says that the by cutting down SELIC rate by 1%, the consumer credit has gone down just by 0.08%. It is an interesting article and will help you in your analysis. http://www.estadao.com.br/noti...1783,0.htm I look forward to hearing your opinion.[/b][/quote] The recent news is that the CEF has been asked to give preference to those whose family income is less than R$2000 per month. btw, you must be aware that to get financing from CEF, one has to be a Brazilian citizen or a Permanent resident of the country. - João da Silva Tue, 03 Feb 2009 12:47:57 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19838 Then let me repeat the question I asked around 2 weeks ago for which I did not see your answer : How are the mortgages rates fixed in Brazil ? Similar to Spain.....once a year, or like in the USA or Europe for several years such as 3-5-10-15-30 years depending of the borrower decision subject to the lenders approval ? As to my non expert feelings on Brazilian Real Estate - if rates are reset once a year....problems can be better contained than if rates are fixed for longer periods. But you see in Spain, despite they reset the rate once a year on 90 % of their mortgages...they still have a real estate meltdown. Somewhat funny that their Official stats show a national price decline of 3 % for 2008, while in reality it is more like 15 % or so. And it is not with a 3 % decline that thousands of their developers went or are going BANKRUPT ! Interesting also to know that in the EU, from 2003 to 2007, half of the WHOLE EU economic growth rate came uniquely from the construction boom (including infrastructure)....IN SPAIN ALONE ! Since there also was a construction boom in the other EU nations, it means that nearly ALL the EU economic growth rate came from CONSTRUCTION including infrastructure ! What most people also forgot is how this boom was financed. Simple : in 2003-2004 when rates were still very low, EU governments such as UK, France, Spain issued 50 years governmenrt bonds paying 3-3,5 % interests. And the size of their borrowings were not in the 3-5-10 billion Euros or BP ! Nooooooo....they were 50 billion Euros or BP borrowings for 50 years at a FIXED LOW rates...per bond issue ! And guess who were the largest buyers of these bonds, due to political and governments "fanfare pressure" ? THEIR GOVERNMENTS/STATES/CITIES/LARGE COMPANIES....PENSIONS FUNDS...OF COURSE!!! I understand that pensions funds must be the suppliers of cheap money for the construction of the national infrastructure. That is even healthy and beneficial to everyone. But not stucked and fixed rates for 50 years....when interests rates are very low ! Because of course these Mega-Jumbos borrowings were then further leveraged using the PPP (Public-Private-Partnerships) model...obviously !!!!! ;) :D ;D :o - ch.c. Tue, 03 Feb 2009 11:57:34 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19829 [quote]I went to the USA. California and Florida. [/quote] I knew you were up to something :D . Keep us informed of the progress of this new venture. Let me give you a good old but true story : The story was interesting and I have a strong feeling that in some cities in Brazil it is going to repeat. - João da Silva Mon, 02 Feb 2009 16:33:17 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19825 I went to the USA. California and Florida. To see, smell the real estate odor. Was there 75 % for "see and smell", 25 % for "tits touching" ;) With partners, we are going to launch a new residential real estate fund. A small one with US$ 15 million, times leverage...of course. We got a lending offer at very low rate. What gave us this stupid idea ? Simple : A few months ago, we read in an article that a group (not named) bought many fully built prime residential condos in Miami, in one building, at 50 % the asking price, because the developers were...CLOSE TO BANKRUPTCY..and still had many unsold condos ! Therefore...WHY NOT.....if we find other depressed developers ? And there are truckloads of them ! It is just a question of PRICE....after all ! The ones with Cash and available lending....dictate the prices...for the time being ! Will see ! Just went there to let a few of them know...we are interested....depending of the dealing price, not their asking price ! :D ;D :D ;D :D ;D Let me give you a good old but true story : In the previous U.S. real estate meltdown in the early 1990s, that involved hundreds of Savings & Loans Banks going bust and taken over by the Resolution Trust Company, there was a black sheep in the name of Sun Trust or Centrust (I dont recall) in Miami. Their HQ was really a prime and beautiful recent building. After they went under, the building which was originally built for US$ 700 millions, was sold for US$ 200 millions. Better yet, the buyers did put only US$ 30 millions as down payment, the balance being of course with mortgages. Just imagine how much money these buyers made, regardless if they sold 5 or 10 years later or even if they remain the owners today ! :o :o :o - ch.c. Mon, 02 Feb 2009 15:07:46 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19823 Joao......Ohhhh yesssss...I am still alive and well, full of life ! How and where did you spend your vacation? Ho Chi Minh City ? :D - João da Silva Mon, 02 Feb 2009 11:48:29 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19818 On the subject of the article DONT FORGET WHAT ROBBING HOOK EXPECTS : THAT DEVELOPED NATIONS DONT GO TO MORE PROTECTIONISM....BUT THIS IS WHAT ROBBING HOOK THE CHEATER IS ALREADY DOING...OF COURSE ! 2 or 3 months ago, HE already said HE is going to increase the imports taxes on many goods ! Still waiting the details. In the meantime he puts a queue at the imports customs...to delay the entry of goods ! More to be revealed shortly...probably ! :D ;D :D ;D :D ;D :D ;D - ch.c. Mon, 02 Feb 2009 10:03:12 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19812 Thanks for the link and I fully concur with the following paragraph: "The generation that lived through the Great Depression was very conservative in their spending and aggressive in savings," said Scott Hoyt, senior director of consumer economics at Moody's Economy.com. "I think we're going to have a set of consumers who are moving in that direction because they don't have that much faith in their assets." I have talked to some people who lived through the Great Depression in U.S. and they passed on this habit to their children. In Brazil it was no different. The old German ,Italian and Nippo Brazilians in the South had and some still have this habit. What really changed the Brazilian habit of saving was the reckless decision taken by the first "democratically elected" government after the Military gave up power. That government headed by Fernando Collor de Mello decided to freeze the people´s Savings Bank account for 12 months and pay back the amount in 18 equal installments with government manipulate interest rate. This was done to supposedly put a brake on spending and thus a high inflation rate. The objective was not really accomplished. In terms of dollar value, people got about 40 % of their original savings back.Collor was subsequently impeached for different reasons, but a large majority of Brazilians lost its faith in Savings. The policy of the successive governments including that of Lula is to encourage spending whether be it public or personal. Therefore, it did not come as a big surprise to me when Lula appeared on the TV in the beginning of December asking people to spend! Of course, the right minded Brasilians did not take him seriously!! The article you sent makes lots of sense. It is time for both Americans and Brasilians to reflect on the message and relearn about frugality and savings. - Célio Borba Sun, 01 Feb 2009 20:05:58 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19811 Coincidentally, I saw this from the AP: http://hosted.ap.org/dynamic/stories/S/SAVINGS_FRUGAL_SOCIETY?SITE=ORMED&SECTION=HOME&TEMPLATE=DEFAULT - VinnyCarioca Sun, 01 Feb 2009 15:24:41 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19795 ( I avoid the word "Silicon" while talking to Non-Technical fellow Brasilians! Just ask your beautiful Carioca wife why) I don't have to. I've been to Rio enough times to deduce that one. :D I am not a pessimistic by nature, but I think that it is going to be rough. Yesterday I had a meeting with an old gentleman in his late 70´s. Very traditional Brazilian and he is predicting that every sector of the economy is going to confront problems during the next 18 months with job losses. I concur. I am not pessimistic by nature also but, in early 2007, I became so when I noticed that our Federal Reserve was pumping an unprecedented amount (at that time) of liquidity into equity markets...which befuddled me. (I purchased financial information that monitored federal liquidity injections) At that time our "leaders" here in the U.S. were touting the solid economy and were soothing any concerns of sub-prime contagion or anything harmful to our versatile economy. They knew damn well what was coming. I believed it back then and I believe it now. Another belief of mine is that there will become a culture of saving and frugality. People (in general) are going to remember what it felt like to spend spend spend then lose lose lose while having no savings as a safety net. The lesson of a lifetime. - VinnyCarioca Fri, 30 Jan 2009 20:28:49 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19794 I'm not in Silicon Valley. I am in La La Land (SoCal). My wife (a real Carioca) is beauty itself so happiness abounds. Hah hah, my apologies. I thought you were in the "Valley" ( I avoid the word "Silicon" while talking to Non-Technical fellow Brasilians! Just ask your beautiful Carioca wife why) . I am glad that your business is tough, but not a disaster. I am sure you will come out unscathed with the positive attitude. I don't know how your outlook is, but, from the information I get...it's going to get pretty rough. I am not a pessimistic by nature, but I think that it is going to be rough. Yesterday I had a meeting with an old gentleman in his late 70´s. Very traditional Brazilian and he is predicting that every sector of the economy is going to confront problems during the next 18 months with job losses. I asked him about Telcos and he said they would be the last, but can not escape. He was highly critical of the irresponsibility of the Government in promoting "consumerism", especially in the Automotive sector.He thinks that it is time for the Brasilians to give value to small things for which they fought hard to conquer. Time to innovate and keep our existing trading partners happy and conquer new territories. He was not pessimistic about the capacity of the Brasilians to confront the crisis, but indeed questioning the "Leadership". It was a good meeting and I tend to share his views. :D - João da Silva Fri, 30 Jan 2009 19:46:54 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19793 I'm not in Silicon Valley. I am in La La Land (SoCal). My wife (a real Carioca) is beauty itself so happiness abounds. Business is little tough but not a disaster. I'm in manufacturing and lucky enough to have quite a few long term relationships in servicing the full spectrum of industry. Some sectors are doing quite well right now such as food processors. Some are terrible such as anything tied to the housing industry and automotive. We'll see...a lot of fear and pessimism out there. I don't know how your outlook is, but, from the information I get...it's going to get pretty rough. - VinnyCarioca Fri, 30 Jan 2009 18:33:22 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19791 Your right Joao. Your noisy comments forced them to relent. You may have single-handedly salvaged the Doha round. Thanks Vinny, sometimes a man has to muster up his courage to question the rash decisions made by the "Rulers" ;) On a serious note, how are things in the Silicon Valley ? - João da Silva Fri, 30 Jan 2009 12:02:27 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19770 I hope you have learn 't to make Caipirinha with good cachaça. Some prefer with Vodka, BUT....BUT...., I like with well blended cachaça.It has real Brasilian identity, if you don't mind my saying so. I only use good cachaca (preferably from Parati) ;) in my caipirinhas. I've actually become rather snobbish about that. :) Brasilia - The Minister of Finance, Guido Mantega, announced this Wednesday, 28, the government decided to suspend the adoption of the license prior to imports. Segundo ele, a medida causou ruídos e foi mal interpretada. He says the measure has caused noise and was misinterpreted. Your right Joao. Your noisy comments forced them to relent. You may have single-handedly salvaged the Doha round. :D - VinnyCarioca Wed, 28 Jan 2009 23:57:37 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19768 I'm still waiting for the suspension of the strict rules for making caipirinhas Vinny, my dear fellow, the rules are quite flexible even for "Gringos" like ya. Creativity is the keyword regardless of nationality, color or creed. ;) I hope you have learn 't to make Caipirinha with good cachaça. Some prefer with Vodka, BUT....BUT...., I like with well blended cachaça.It has real Brasilian identity, if you don't mind my saying so. You think Ch.C is still alive? :D - João da Silva Wed, 28 Jan 2009 21:44:57 +0100 http://www.brazzilmag.com/content/view/10546/1/#pc_19767 That was quick! I'm still waiting for the suspension of the strict rules for making caipirinhas. :D - VinnyCarioca Wed, 28 Jan 2009 20:27:50 +0100