Now hold your breath! In 2009, it will lend 200 billion. Betting on Brazil with these numbers is a no-brainer.
* Internal Tourism grew 18% in January and February. Instead of traveling to Europe and USA, where everybody is depressed, and stressed, Brazilians have opted to travel internally, which means more jobs and income are conserved in house.
* Government has created a very efficient and productive housing plan, basically streamlining the bureaucratic mess, and freeing working capital, usually to carry housing until financing was approved. It reduces barriers of entry allowing thousands of new builders to enter the market.
* Automobile industry resumes sales, but there is a possibility that only 70% of Brazilians are buying, the rest are still fearful of losing jobs. If that is confirmed, that means there is a hidden 30% growth rate, which will manifest itself in the second and third quarter.
* 50% of Brazilians Banks are state owned, 40% are family owned, if you include Santander. That is conservatism and safety for every depositor to sleep well at night. Brazil is poised to be the Swiss bankers of the world, and safer.
The other 10% are foreign banks run by execuives on bonuses, leveraged to the hilt, but those are easy to pick out.
Jobs are being created in Brazil, nowhere else. What more is to be said?
1. Employment figures for February are up, and should increase to 100.000 new jobs in March
2. Fosfertil, Brazil's main fertilizer company increased sales by 3% in January (37% annualized), which surprised everyone. Agriculture was supposed to suffer, since it is commodity driven, and fertilizer purchases was supposed to go down due to the world recession and lack of credit. Not so.
3. Car sales increased 4% during the first two week's in March, 8% projected for the month. Car sales nearly back to normal. End of automobile crisis, mainly caused by alarmist headlines.
4. The amount of bad checks decreased 28% in São Paulo. Repeat it: -28%. In a financial "crisis", it should be the other way round.
5. Jose Pastore, Brazil's leading Labour specialist, predicts only a 0,8% increase in unemployment in 2009.
6. Interest Rates Futures for Jan 2010 signals 9,75% a year, the first single digit interest rate in Brazil in 50 years!
"Greedy Bastards" is the conventional saying. The truth, however, is quite different. I talked to a friend that had just left a nice job to work for AIG. "Are you crazy ?"
No one changes a secure job to go to a failed company. He tells me that AIG is quite solvent, the bailout money actually is more than it needs, and management's big worry now is retaining talented management, specially the newly hired that are not part of the mess.
These newly hired were attracted by offering base salary, and a guaranteed bonus for the first years, otherwise they would have stayed out. You would have done the same.
But the good news, if my friend is to be believed, is that AIG is thinking ahead, not being greedy and taking the spoils.
Standard & Poor’s responded to February's interim budget, which revealed a grim fiscal situation, by putting the country on watch for the loss of its investment grade status. In the middle of the global financial crisis, that’s bad news.
The Industrial leading indicator created by FGV points to another 5% increase in February -- that is after a 5,7% rise in January.
This is another indication that Brazil will be the shinning star, whatsoever. Compare this to Chinese, American, British, German, French, or Russian banking systems...
Being one of the safest banks in the world, with an average 5 to 8 times leverage,there has been a massive transfer of deposits from foreign banks to Brazilian banks, as the bank scare grows bigger and bigger.
The collapse of Citi banks shares from 3 to 1 dollar, after the US government said it would become a significant shareholder can mean only one thing: confidence in the US government's solvency is now in stake, as its ability to perform.
Brazil has 200 billion in reserves which can go a long way in maintaining the adequate stability. In other crisis there would have been capital flight. This time there is even capital inflow.
The talk of the town is that the Central Bank may reduce interest rates by 20% next Wednesday. Most interest rate deductions over the last 10 years have been 0,25% basis points, from a colossal 15% nominal rate, much a do about nothing..
This Wednesday we have the confluence of two drivers, a possible 1,25 basis points reduction a a 6% real interest rate. Shifting from 6% to 4,5% is extremely significant. Shifting from 2% to 1,5% as has just happened in Europe is not.
This is obviously bad news for conservative treasury holders, which may see the Brazilian stock market, with all the good news we have already posted here, as an attractive venue.
Much much safer than government debt, meaning US and European government debt.
So we are not the only ones. All that's left of the Brics. One leaning to the Left, the other leaning to a responsible right, with rule of law, congress, free press. Take your pick.
China And Brazil: All That's Left Of BRIC.
What really gets most Brazilians annoyed is the conventional wisdom that Brazil is a commodity driven country, due to presumably the well known blue chips of Vale and Petrobras.
That is totally wrong. Brazil is driven by a First Ever Economy, most Brazilians have yet to buy their first ever everything, they have no family debt. That interest rates have been dwarfed, credit driven growth will be the driver is this economy.
Fiat Brazil's Cledorvino Belini declares that Fiat will produce 3.000 cars per day, the same rate as before the US crisis. That is the first 100% rebound of an automobile company in the world. Repeat: in the world.
This is partly due to the intelligent economic policies rapidly implemented by Lula, an autoworker himself.
Rather than dolling out billions to US car makers to enable them to pay suppliers of their unsold inventory, as the US policy, Brazilians economists slashed Excise Taxes on Cars, which led to consumers buying the unsold inventory, and replenishing car makers with cash. Simple as that.
There is an enormous difference though between US and Brazil. In Brazil 80% of the Brazilians are buying their first ever car, no recession is going to take that joy from them.
Americans with 2 to 3 cars are more likely to postpone replenishment.
Question: Which country will come out of this mess first? Countries like Brazil, that have consumers too eager to buy their first evers, or America and European countries with consumers heavily in debt?
Repeat it: where would you invest your money in the next couple of years?
Being the first country in the world to successfully weather out the world crisis, Brazilian businessmen with The Wall Street Journal are preparing a world road show, the first event being in New York on March the 16th.
BRAZIL - Global Partner In A New Economy, with a lot of Brazilian heavy weights. Check it out!
Fitch's Shelly Shetty declared today that Brazil is better prepared than most other BBBs.
This is a subtle reminder that they may be downgrading other BBBs, but that Brazil is not on the list.
"Brazil, unless things change radically, should maintain its BBB- Rating".
With more reserves than debt, Brazil should be AAA, and the US Treasuries, CCC. Let's wait and see,
Latin American Herald Tribune - General Motors to Invest $1 Billion in Brazil Operations.
Jaime Ardila announced that funding will come from the financial aid package.
You know what that means. Brazil is betting on Brazil to save its production capability with cost effectiveness.
Americans will be buying shortly cars made in Brazil, and Brazil may be the solution for many other sectors and industries that are not cost effective anymore in their own countries, such as steel and cellulose .