Throughout the world, the reversion of fortune suffered by the Brazilian economy since reaching its zenith as recently as 2010 has confounded shrewd commentators, seasoned analysts and market players alike. As 2015 unfolded,
ominous projections ("An Economy on the Brink", "Brazil's Economy Falters" "Worse May Be To Come") were no less widespread than expressions of bewilderment ("Whatever Happened to Brazil", "Brazilian Waxing and Waning",
"Brazil's Scandalous Boom to Bust Story"), and, more recently, of alarm ("Goldman Sachs Says Brazil Has Plunged Into ‘An Outright Depression’") concerning the fate of the South American BRIC country.
Despite profuse official protestations to the contrary, however, Brazil's afflictions
turn out to be of its own making, as it so often proves to be the case. Looking at
the set of clearly laid-out policy choices made by the Brazilian government – and
the almost as clearly spelled-out political objectives underlying them – should
provide enough explanatory evidence to sort out this cautionary tale for
developing countries everywhere.
Brazil towards economic depression and the political and social changeFernando Alcoforado
Brazil is experiencing stagflation, characterized by low economic growth and high inflation. The government has tried stimulating consumption through tax cuts, but this has not increased investment. Inflation remains above targets due to rising production costs. If current economic policies continue, restricting growth and failing to reduce inflation, Brazil risks entering an economic depression with mass unemployment, business failures, and declining production and investment levels. Social unrest may also increase as purchasing power falls and inflation fuels expansion of social movements.
This paper looks in detail at the sharp slowdown in the Brazilian economy for the years 2011-2014,in which economic growth averaged only 2.1 percent annually,as compared with 4.4 percent in the 2004-2010 period. The latter level of growth was also more than double Brazil’s average annual growth rate over the prior 23 years (although it was much lower than the pre-1980 period). It is important to understand why the higher rate of growth experienced from 2004 to 2010 was not
sustained over the past few years.
The authors argue that the slowdown is overwhelmingly the result of a sharp decline in domestic
demand, rather than a fall in exports and even less any change in external financial conditions. The sharp fall in domestic demand, in turn, is shown to be a result of deliberate policy decisions made by the government. This decision to slow the economy was not necessary, i.e., it was not made in response to some external constraint such as a balance-of-payments problem.
This document summarizes key economic indicators in the United States from 2005 to 2015. It discusses components of GDP like consumption, investment, government spending and net exports. It also analyzes unemployment rates, inflation, oil prices and consumer confidence. The economy recovered from the Great Recession, with GDP and consumption increasing steadily in recent years. However, inflation remains low and unemployment higher than pre-recession levels, suggesting more room for improvement. Falling oil prices could boost growth but also pose deflation risks if price declines continue.
In this paper we analyze the evolution of Brazilian inflation under the inflation targeting
system from a cost-push perspective. We identify the main features of three quite distinct
phases (1999-2003, 2004-2009 and 2010-2014) and explain them in terms of tradable
price trends in local currency, changes in the dynamics of monitored prices and behavior
of wage inflation. We conclude that the trend towards continuous nominal exchange rate
devaluation after mid-2011, together with the strengthening of the bargaining power of
workers and the trend of rising real wages since 2006, means that distributive conflicts in
Brazil are getting much more intense. We also suggest that the apparently very irrational
recent (early 2015) change in the orientation of economic policy towards contractionary
fiscal, incomes and monetary policies in a stagnating economy seems to be ultimately
based on the desire to weaken the bargaining power of workers that was much
strengthened during the brief but intense Brazilian “golden age” of 2004-2010.
The purpose of this paper is to show that the interaction between large changes in the external conditions facing the Brazilian economy since 2003 and smaller changes in the orientation of domestic economic policy after 2005 explain the improved control of inflation, the recovery of more satisfactory rates of economic growth and the stronger improvement in income distribution and poverty reduction in the second half of the decade. The change in the orientation of economic policy also explains the relatively moderate contraction and strong recovery of the economy after the world crisis hit Brazil in late 2008.
Global economic growth remains weak with many forecasts being revised downward. While talk of recession is overdone, growth of around 2.5-3.0% may be the new normal. Government leadership is lacking and central banks have limited policy tools remaining. The US economy has strengthened but China's transition to more sustainable growth has stalled. Monetary policy still has room for easing in some emerging markets.
Estudo do Impacto da Dívida no Crescimento EconómicoJorge Barbosa
The authors replicate the study by Reinhart and Rogoff (2010a and 2010b) which claimed that countries with public debt over 90% of GDP see average GDP growth rates about 1% lower than countries with lower debt levels. Through their replication, the authors find coding errors, selective exclusion of data, and unconventional weighting methods in the RR study that inaccurately represent the relationship between debt and growth. When properly calculated, the authors find that average GDP growth for countries with debt over 90% of GDP is actually 2.2% rather than the -0.1% claimed by RR, contradicting their key finding. The authors refute the evidence put forward by RR for a debt threshold of 90% above which growth is
Is fiscal policy effective in Brazil? An empirical analysisFGV Brazil
This document analyzes the effectiveness of fiscal policy in Brazil using empirical analysis from 1997 to 2014. It estimates fiscal multipliers using structural VAR and TVAR models to identify the impact of fiscal stimuli on output. The most robust estimate of the government spending multiplier is approximately 0.5. Higher multipliers are found using other approaches but may be biased. No significant response of output to tax changes was found, but output appears to generate tax revenue. The high level of government spending in Brazil may undermine the importance of fiscal shocks and help explain the country's fiscal conundrum.
Brazil towards economic depression and the political and social changeFernando Alcoforado
Brazil is experiencing stagflation, characterized by low economic growth and high inflation. The government has tried stimulating consumption through tax cuts, but this has not increased investment. Inflation remains above targets due to rising production costs. If current economic policies continue, restricting growth and failing to reduce inflation, Brazil risks entering an economic depression with mass unemployment, business failures, and declining production and investment levels. Social unrest may also increase as purchasing power falls and inflation fuels expansion of social movements.
This paper looks in detail at the sharp slowdown in the Brazilian economy for the years 2011-2014,in which economic growth averaged only 2.1 percent annually,as compared with 4.4 percent in the 2004-2010 period. The latter level of growth was also more than double Brazil’s average annual growth rate over the prior 23 years (although it was much lower than the pre-1980 period). It is important to understand why the higher rate of growth experienced from 2004 to 2010 was not
sustained over the past few years.
The authors argue that the slowdown is overwhelmingly the result of a sharp decline in domestic
demand, rather than a fall in exports and even less any change in external financial conditions. The sharp fall in domestic demand, in turn, is shown to be a result of deliberate policy decisions made by the government. This decision to slow the economy was not necessary, i.e., it was not made in response to some external constraint such as a balance-of-payments problem.
This document summarizes key economic indicators in the United States from 2005 to 2015. It discusses components of GDP like consumption, investment, government spending and net exports. It also analyzes unemployment rates, inflation, oil prices and consumer confidence. The economy recovered from the Great Recession, with GDP and consumption increasing steadily in recent years. However, inflation remains low and unemployment higher than pre-recession levels, suggesting more room for improvement. Falling oil prices could boost growth but also pose deflation risks if price declines continue.
In this paper we analyze the evolution of Brazilian inflation under the inflation targeting
system from a cost-push perspective. We identify the main features of three quite distinct
phases (1999-2003, 2004-2009 and 2010-2014) and explain them in terms of tradable
price trends in local currency, changes in the dynamics of monitored prices and behavior
of wage inflation. We conclude that the trend towards continuous nominal exchange rate
devaluation after mid-2011, together with the strengthening of the bargaining power of
workers and the trend of rising real wages since 2006, means that distributive conflicts in
Brazil are getting much more intense. We also suggest that the apparently very irrational
recent (early 2015) change in the orientation of economic policy towards contractionary
fiscal, incomes and monetary policies in a stagnating economy seems to be ultimately
based on the desire to weaken the bargaining power of workers that was much
strengthened during the brief but intense Brazilian “golden age” of 2004-2010.
The purpose of this paper is to show that the interaction between large changes in the external conditions facing the Brazilian economy since 2003 and smaller changes in the orientation of domestic economic policy after 2005 explain the improved control of inflation, the recovery of more satisfactory rates of economic growth and the stronger improvement in income distribution and poverty reduction in the second half of the decade. The change in the orientation of economic policy also explains the relatively moderate contraction and strong recovery of the economy after the world crisis hit Brazil in late 2008.
Global economic growth remains weak with many forecasts being revised downward. While talk of recession is overdone, growth of around 2.5-3.0% may be the new normal. Government leadership is lacking and central banks have limited policy tools remaining. The US economy has strengthened but China's transition to more sustainable growth has stalled. Monetary policy still has room for easing in some emerging markets.
Estudo do Impacto da Dívida no Crescimento EconómicoJorge Barbosa
The authors replicate the study by Reinhart and Rogoff (2010a and 2010b) which claimed that countries with public debt over 90% of GDP see average GDP growth rates about 1% lower than countries with lower debt levels. Through their replication, the authors find coding errors, selective exclusion of data, and unconventional weighting methods in the RR study that inaccurately represent the relationship between debt and growth. When properly calculated, the authors find that average GDP growth for countries with debt over 90% of GDP is actually 2.2% rather than the -0.1% claimed by RR, contradicting their key finding. The authors refute the evidence put forward by RR for a debt threshold of 90% above which growth is
Is fiscal policy effective in Brazil? An empirical analysisFGV Brazil
This document analyzes the effectiveness of fiscal policy in Brazil using empirical analysis from 1997 to 2014. It estimates fiscal multipliers using structural VAR and TVAR models to identify the impact of fiscal stimuli on output. The most robust estimate of the government spending multiplier is approximately 0.5. Higher multipliers are found using other approaches but may be biased. No significant response of output to tax changes was found, but output appears to generate tax revenue. The high level of government spending in Brazil may undermine the importance of fiscal shocks and help explain the country's fiscal conundrum.
This document discusses the state of the global economy following the 2008 financial crisis. It summarizes that the recovery of the US and EU economies as well as continued growth in China were seen as key to overcoming the crisis. However, five years later the recovery remains uncertain and incomplete. The economic models in both China and Western nations face fundamental challenges as well, with China needing to rebalance its economy away from investment and towards consumption, while Western nations struggle with high private debt. Unless these issues can be addressed, the document raises the possibility of another global economic crisis on the scale of the 1930s Great Depression.
http://bit.ly/GEWjuin2014PwC
Le Brésil accueille la Coupe du Monde de football ce mois-ci. Cet événement sportif va mettre l'accent sur une économie des BRIC qui a traversé une période difficile depuis la crise financière.
The main message of this contribution is that lean times are here to stay for the old member states. The main reasons are deep seated: Deteriorating demographics continue with ratio of working age population to total population falling. There are thus fewer and fewer producers for every consumer and recipient of transfers. On top of this productivity growth is declining as labour quality is falling and investment growth slowing. In the new member countries the demographic trends also unfavourable, but they are (more than) compensated by catch up growth as a relatively well educated work force finds its place in the internal market.
What does this diagnosis imply for the role of structural policies? No Lisbon agenda change demographics trends, nor can it change the declining capital/labour ratio due to insufficient investment growth. But structural reforms might counteract the impact of these two negative trends. Moreover, the performance gap between big and small member countries suggests that policy can make a difference.
Authored by: Daniel Gros
Published in 2005
The Economic Outlook for 2017 by Kevin LingsSTANLIB
South Africa is searching for higher economic growth in a global environment increasingly shaped by rising nationalism, higher levels of trade protection and a fall-off in the effectiveness of monetary policy.
The document discusses the shift in global economic power from developed to emerging markets. It notes that emerging markets now make up 24% of global equity market capitalization, attracted by higher growth prospects. Developed nations face decades of low growth and high debt levels from stimulus measures. Emerging economies like China, India, Brazil are seen as the next generation of growth engines, with investors pouring money into these markets. Going forward, emerging markets will play a more prominent role in the global economy and its management.
Here is my quarterly update on Brazil. Enjoy reading and feel free to get in touch with me for questions or comments.
Aquí esta mi actualización trimestral sobre Brazil. Disfrutenla y ponganse en contacto conmigo si tienen preguntas o quieren comentar algo.
The document discusses whether the US economy has truly recovered from the Great Recession. While GDP and corporate profits have increased since the recession, the author argues that the quality of life for most Americans, especially the bottom 99%, has not significantly improved or has deteriorated. Unemployment rates only consider those actively looking for work and do not account for discouraged workers, and labor participation is at a 38-year low. The author believes inequality has increased and many Americans remain unemployed or underemployed, indicating the economy has not fully recovered for most.
This commentary investigates how the targeted inflation rate has been achieved successfully amidst stagnant economic growth, declining domestic manufacturing, boiling asset economy, and piling financial vulnerabilities in the developed economies. It re-examines the modus operandi of the inflation targeting as an integral part of the management of the macroeconomy in these economies.
EEUU: relaciones económicas con América LatinaYsrrael Camero
Informe de la Comisión Económica para América Latina y El Caribe de las Naciones Unidas sobre las relaciones económicas de Estados Unidos con la región, entre los años 2013 y 2014.
September 2015 - Powering up the electricity sectorFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
- Germany has had a record current account surplus of 7.5% of GDP in 2014, reflecting weak domestic demand growth of just 0.4% per year from 2012-2014.
- Weak wage growth and high household savings have caused private consumption to fall as a share of GDP, weakening business investment despite strong corporate profits.
- Germany's large surpluses are not in its own interest and pose an obstacle to economic recovery in Europe, as they require other countries to take on more debt to import German exports. Policy changes are needed to boost German domestic demand and reduce its surplus.
The document analyzes the current state of the US economy and argues that while GDP and unemployment rates show recovery, income inequality has increased. It summarizes that GDP and unemployment have improved significantly since the recession but wages have grown slowly, many workers are underemployed or dropped from the labor force, and gains have disproportionately benefited the wealthy while median income has declined.
April 2011 - Building for a more competitive BrazilFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
Quarterly Update on Colombia's Economy as at 30/09/2015 Actualización Trimestral sobre la economía colombiana (30/09/2015) Enjoy reading and please get in touch for any comments or suggestions. Disfruten y por favor ponganse en contacto si tienen comentarios o sugerencias.
April 2014 - Calming the financial watersFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
May 2014 - Is time running out for the minimum wage policy?FGV Brazil
Economists analyze proposals for revising minimum wage policy in 2015 and ask, Should it be based on productivity?
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
Standpoint: Global Reflation by Kevin Lings STANLIB
Fears of sustained deflation and stagnant growth in the United States and Europe have been replaced by a more optimistic growth outlook as well as concerns about rising inflation. This has driven developed market equities higher, but also weakened major bond markets.
2 william blair global market outlook - december 2013123jumpad
- Developed markets significantly outperformed emerging markets in 2013, led by the US which returned 29%. This was driven by multiple expansion rather than earnings growth.
- Going forward, growth is expected to strengthen in developed markets like the US, Europe, and Japan as economic recoveries become more durable. Meanwhile, emerging markets that had relied on credit-driven growth are facing slower growth as stimulus is removed.
- Within the US, the recovery is progressing with improving housing and job trends. Wage growth is also accelerating, supporting consumption. However, the stock market is nearing the top of its valuation range and may be pricing in too much optimism about the recovery.
The document provides an overview of the global business environment in August 2015. It discusses the economies of key regions:
- The US economy saw growth in the first half of 2015 driven by consumer spending and low oil prices, though federal spending declined. Household debt levels remained stable while delinquencies decreased slightly.
- The EU recovery remains fragile despite measures like ECB bond purchases. Second quarter GDP growth of 0.3% missed targets as France stagnated and other major economies saw slower growth.
- Other topics covered include expectations for the timing of US interest rate rises, high stock valuations, trade balances of various countries, and the impact of sustained low oil prices on the global economy.
Surviving the lions den - how to sell SaaS services to security oriented cust...Moshe Ferber
Passing through the Lion’s den – How to sell cloud services to security guys:
Pitching your SaaS offering is usually fun, until the security guys walks into the room as anyone who try to promote cloud services to organizations probably knows. On the other hand, for the CISO, sometimes cloud vendors represent the sum of all their greatest fears.
So, how can providers of cloud based software do better job in satisfying those gate keepers? Learn to speak their language and understand their terminology and way of thinking. In this presentation we will walk through the do’s and don’ts when pitching to information security professionals, and try to better understand their motivation and how to address their concerns.
This presentation is an introduction to a workshop providing better tools for cloud based companies to overcome challenges when selling their offering.
This document discusses the state of the global economy following the 2008 financial crisis. It summarizes that the recovery of the US and EU economies as well as continued growth in China were seen as key to overcoming the crisis. However, five years later the recovery remains uncertain and incomplete. The economic models in both China and Western nations face fundamental challenges as well, with China needing to rebalance its economy away from investment and towards consumption, while Western nations struggle with high private debt. Unless these issues can be addressed, the document raises the possibility of another global economic crisis on the scale of the 1930s Great Depression.
http://bit.ly/GEWjuin2014PwC
Le Brésil accueille la Coupe du Monde de football ce mois-ci. Cet événement sportif va mettre l'accent sur une économie des BRIC qui a traversé une période difficile depuis la crise financière.
The main message of this contribution is that lean times are here to stay for the old member states. The main reasons are deep seated: Deteriorating demographics continue with ratio of working age population to total population falling. There are thus fewer and fewer producers for every consumer and recipient of transfers. On top of this productivity growth is declining as labour quality is falling and investment growth slowing. In the new member countries the demographic trends also unfavourable, but they are (more than) compensated by catch up growth as a relatively well educated work force finds its place in the internal market.
What does this diagnosis imply for the role of structural policies? No Lisbon agenda change demographics trends, nor can it change the declining capital/labour ratio due to insufficient investment growth. But structural reforms might counteract the impact of these two negative trends. Moreover, the performance gap between big and small member countries suggests that policy can make a difference.
Authored by: Daniel Gros
Published in 2005
The Economic Outlook for 2017 by Kevin LingsSTANLIB
South Africa is searching for higher economic growth in a global environment increasingly shaped by rising nationalism, higher levels of trade protection and a fall-off in the effectiveness of monetary policy.
The document discusses the shift in global economic power from developed to emerging markets. It notes that emerging markets now make up 24% of global equity market capitalization, attracted by higher growth prospects. Developed nations face decades of low growth and high debt levels from stimulus measures. Emerging economies like China, India, Brazil are seen as the next generation of growth engines, with investors pouring money into these markets. Going forward, emerging markets will play a more prominent role in the global economy and its management.
Here is my quarterly update on Brazil. Enjoy reading and feel free to get in touch with me for questions or comments.
Aquí esta mi actualización trimestral sobre Brazil. Disfrutenla y ponganse en contacto conmigo si tienen preguntas o quieren comentar algo.
The document discusses whether the US economy has truly recovered from the Great Recession. While GDP and corporate profits have increased since the recession, the author argues that the quality of life for most Americans, especially the bottom 99%, has not significantly improved or has deteriorated. Unemployment rates only consider those actively looking for work and do not account for discouraged workers, and labor participation is at a 38-year low. The author believes inequality has increased and many Americans remain unemployed or underemployed, indicating the economy has not fully recovered for most.
This commentary investigates how the targeted inflation rate has been achieved successfully amidst stagnant economic growth, declining domestic manufacturing, boiling asset economy, and piling financial vulnerabilities in the developed economies. It re-examines the modus operandi of the inflation targeting as an integral part of the management of the macroeconomy in these economies.
EEUU: relaciones económicas con América LatinaYsrrael Camero
Informe de la Comisión Económica para América Latina y El Caribe de las Naciones Unidas sobre las relaciones económicas de Estados Unidos con la región, entre los años 2013 y 2014.
September 2015 - Powering up the electricity sectorFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
- Germany has had a record current account surplus of 7.5% of GDP in 2014, reflecting weak domestic demand growth of just 0.4% per year from 2012-2014.
- Weak wage growth and high household savings have caused private consumption to fall as a share of GDP, weakening business investment despite strong corporate profits.
- Germany's large surpluses are not in its own interest and pose an obstacle to economic recovery in Europe, as they require other countries to take on more debt to import German exports. Policy changes are needed to boost German domestic demand and reduce its surplus.
The document analyzes the current state of the US economy and argues that while GDP and unemployment rates show recovery, income inequality has increased. It summarizes that GDP and unemployment have improved significantly since the recession but wages have grown slowly, many workers are underemployed or dropped from the labor force, and gains have disproportionately benefited the wealthy while median income has declined.
April 2011 - Building for a more competitive BrazilFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
Quarterly Update on Colombia's Economy as at 30/09/2015 Actualización Trimestral sobre la economía colombiana (30/09/2015) Enjoy reading and please get in touch for any comments or suggestions. Disfruten y por favor ponganse en contacto si tienen comentarios o sugerencias.
April 2014 - Calming the financial watersFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
May 2014 - Is time running out for the minimum wage policy?FGV Brazil
Economists analyze proposals for revising minimum wage policy in 2015 and ask, Should it be based on productivity?
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
Standpoint: Global Reflation by Kevin Lings STANLIB
Fears of sustained deflation and stagnant growth in the United States and Europe have been replaced by a more optimistic growth outlook as well as concerns about rising inflation. This has driven developed market equities higher, but also weakened major bond markets.
2 william blair global market outlook - december 2013123jumpad
- Developed markets significantly outperformed emerging markets in 2013, led by the US which returned 29%. This was driven by multiple expansion rather than earnings growth.
- Going forward, growth is expected to strengthen in developed markets like the US, Europe, and Japan as economic recoveries become more durable. Meanwhile, emerging markets that had relied on credit-driven growth are facing slower growth as stimulus is removed.
- Within the US, the recovery is progressing with improving housing and job trends. Wage growth is also accelerating, supporting consumption. However, the stock market is nearing the top of its valuation range and may be pricing in too much optimism about the recovery.
The document provides an overview of the global business environment in August 2015. It discusses the economies of key regions:
- The US economy saw growth in the first half of 2015 driven by consumer spending and low oil prices, though federal spending declined. Household debt levels remained stable while delinquencies decreased slightly.
- The EU recovery remains fragile despite measures like ECB bond purchases. Second quarter GDP growth of 0.3% missed targets as France stagnated and other major economies saw slower growth.
- Other topics covered include expectations for the timing of US interest rate rises, high stock valuations, trade balances of various countries, and the impact of sustained low oil prices on the global economy.
Surviving the lions den - how to sell SaaS services to security oriented cust...Moshe Ferber
Passing through the Lion’s den – How to sell cloud services to security guys:
Pitching your SaaS offering is usually fun, until the security guys walks into the room as anyone who try to promote cloud services to organizations probably knows. On the other hand, for the CISO, sometimes cloud vendors represent the sum of all their greatest fears.
So, how can providers of cloud based software do better job in satisfying those gate keepers? Learn to speak their language and understand their terminology and way of thinking. In this presentation we will walk through the do’s and don’ts when pitching to information security professionals, and try to better understand their motivation and how to address their concerns.
This presentation is an introduction to a workshop providing better tools for cloud based companies to overcome challenges when selling their offering.
Aligning Risk with Growth - Cloud Security for startupsMoshe Ferber
Every young company discovers that installing security in place can be expensive. So they need to manage the priorities. In the presentation we discuss the various phases in start-up life cycle and which security controls should be placed on each phase.
This paper presents an analysis of Portugal's economy from 1999 to 2015, providing an
alternative to explanations that present the situation faced by Southern European
countries after the Great Recession as a matter of excessive expenditure or loss in
competitiveness. Based upon the Sraffian Supermultiplier model, we look at how
demand components evolved along the analyzed period, in a growth accounting setting.
This assessment evidences that insufficient effective (public) demand -- not balance-ofpayments
constraints nor an alleged excess of public expenditure -- is what explains
Portugal's low-to-negative growth rates from 2001 forward. Given the limited
productive structure, a labor market that is not strong enough to guarantee a solid
internal credit expansion and the present institutional setting (which makes fiscal
expenditure an also limited source of effective demand), we conclude that the only way
for Portugal to abandon the low growth path would be a more cooperative fiscal stance
from the European Union.
Cloud security for banks - the central bank of Israel regulations for cloud s...Moshe Ferber
This presentation discuss how the Israeli banks should cope with the Israeli central bank cloud regulations. In the slide we examine different articles inside the cloud regulation and discuss the challenges and controls to be used.
The document provides an overview of letters of credit (LC), including:
- Definition of an LC as a written instrument from a bank promising payment to an exporter for goods if documents are presented as stipulated.
- Key parties in an LC transaction including applicant, beneficiary, issuing bank, advising bank, confirming bank, and negotiating bank.
- The basic mechanism of an LC transaction with 9 steps from contract to goods delivery and payment.
- Additional details on confirmed LCs and how the LC process works in practice.
This document provides an overview of componential analysis, an approach to analyzing word meanings by decomposing them into semantic features or components. It gives examples of how words can be analyzed into features like [+/-MALE] and [+/-ADULT]. Specifically, it shows how the meanings of words like "man", "woman", "boy", and "girl" can each be represented by a formula of three semantic features: [+HUMAN], [+/-MALE], [+/-ADULT]. Componential analysis provides a formal way to represent word meanings and reveals that words contrast in some features but not all. However, it also has limitations in that it may not apply to all lexicons and semantic features may not be universal
5. Methods of Payment in International Trade/Export and Import FinanceCharu Rastogi
This presentation discusses methods of obtaining export and import finance such as Accounts Receivable Financing, Factoring (Cross-Border Factoring), Letters of Credit (L/C) Banker’s Acceptance (BA), Working Capital Financing, Medium-Term Capital Goods, Financing (Forfaiting) and Countertrade. It also discusses methods of payment of international trade; Cash in Advance, Letters of Credit, Documentary Collections and Open Account followed by a comparative study of different methods. Furthermore, types of letter of credit and procedure of working of a letter of credit are also discussed.
It will be inevitable the impeachment of Brazilian President Dilma Rousseff not only due to fiscal responsibility crimes that she has committed, but also by all the devastating work on the Brazilian economy that she and Lula held that and Lula held it in 13 years of PT governments. The balance of 13 years of PT governments indicates the lack of commitment of both governments to the great struggles of the Brazilian people carried on the past 50 years, a historical inconsistency traitor. This inconsistency has occurred, especially in the economic and moral planes. Inconsistency in the economic sphere is manifested in the fact that both governments have given continuity to the neoliberal and anti-national policy of the Fernando Collor, Itamar Franco and Fernando Henrique Cardoso following what established the Washington Consensus in the 1990s. On the moral sphere, it was institutionalized systemic corruption in the PT governments that contributed to pushing Petrobras and the country to bankruptcy.
The disastrous Dilma Rousseff government in Brazil has led to worsening economic indicators since 2013. Inflation is at its highest level since 2005, interest rates are at their highest since 2008, and the budget deficit in 2014 was the largest in history. The industrial sector has fallen 3.15% in the last 12 months, and unemployment reached 8% by the end of April 2015 due to the economic downturn. The recession is concentrated in the construction sector due to corruption scandals and mismanagement at Petrobras. The situation reflects a deterioration in confidence and a complex business environment in Brazil.
President Lula said in his inaugural speech in 2003 he won the election because hope (of the people) won fear (of change). However, when taking office, President Lula and his team have shown that the fear of facing the real causes of national problems overlapped on the hope of the people to carry out the changes required to promote economic and social progress of Brazil because it kept neoliberal economic policy of the Fernando Henrique Cardoso government.
Instead of mobilizing civil society to together with the government to develop and implement a national development plan capable of breaking the barriers to economic and social progress of Brazil that correspond to the true interests of the majority of the Brazilian people, governments of PT (Worker Party) of Lula and Dilma Rousseff decided to maintain the neoliberal economic model opened in the Fernando Collor government which resulted in increased dependence of the country on foreign capital and low economic growth.
Brazil is clearly in a recession that was engendered by a series of economic policy mistakes made by the neoliberal governments that followed from 1990 up to the present moment, and also by the passive attitude of the incompetent Michel Temer government that does not adopt any effective measure that is Capable of avoiding Brazil's journey towards economic depression.
It seems that if Dilma Rousseff is not destituted of power through impeachment by the responsibility of crime described lines ago, Brazil can be the stage of upheaval with the confrontation between the overwhelming majority of the Brazilian people that want their deposition and the supporters of Government of unpredictable consequences. One must consider the lessons of history that teach us that the social upheaval can lead to the establishment of dictatorships. This is the risk that threatens the Brazilian society. Does Brazil face the possibility of a tragic future economic and political? This scenario depends on the outcome that may occur with respect to the impeachment of President Dilma Rousseff.
Poverty, Inequality and Social Policies in Brazil: 1995-2009 UNDP Policy Centre
Since the mid-1990s, Brazil has undergone extensive reforms that have finally reversed the dismaying economic performance of the 1980s. In particular, poverty and inequality indicators have improved dramatically, especially since the late-2000s. This new paper published by the International Policy Centre for Inclusive Growth (IPC-IG) provides an overview of such recent trends and discusses the role played by four major government interventions: public education, the minimum wage law, Social Security pensions and Social Assistance transfers. Additionally, available data sets and methods for policy evaluation are also discussed. Check out more IPC-IG papers on social protection in the developing and emerging countries here: http://www.ipc-undp.org/CctNew.do?language=1&active=3
Urges the construction of a new alternative of political power in brazilFernando Alcoforado
The lack of political conditions to make economic changes that meet the interests of the nation and ensure the governance of the current power holders is committed because the government Dilma Rousseff has shown not have political force, does not have enough power and have no leadership to propose the nation a national development project that contributes to reverse the current situation. Time works against the government Dilma Rousseff whose tendency is to worsen the current situation and drop in acceptance of his government by the Brazilian population. All this set of factors can contribute to growth the movement for impeachment of Dilma Rousseff. Given this perspective, the Brazilian nation have to build a new alternative power with the creation of a new party that is the antithesis of the parties that held power after the military regime and demonstrate they are unable to promote economic and social development of country for the benefit of the vast majority of its population, and many of them are complicit with systemic corruption that advances in all instances of national power.
THE OBSTACLES THAT IMPEDE THE DEVELOPMENT OF BRAZIL IN THE CONTEMPORARY ERA A...Faga1939
This article aims to demonstrate that the Lula government is faced with two major challenges in its effort to promote Brazil's economic and social development. The first challenge, of an economic nature, is represented by the obstacles that exist with the spending cap policy, despite the flexibility provided by the fiscal framework and the existence of an independent Central Bank, which make the Brazilian government unable to coordinate its fiscal and monetary policies, make public investments in the expansion of the economy and obtain macroeconomic stability and, the second challenge, of a political nature, is represented by the obstacles existing in the National Congress due to the fact that it does not have a majority in parliament, which prevents the federal government from putting its national developmental project into practice and fully meet social demands. For Brazil's progressive forces to re-elect President Lula in the 2026 presidential elections and obtain a parliamentary majority in the National Congress committed to political, economic and social advances, the Lula government will have to be successful on the economic front, promoting the expansion of the economy, increasing significantly generating jobs and income, keeping inflation under control and meeting the maximum social demands that benefit, above all, the country's underserved populations. Brazil's progressive forces need to commit, starting from the 2024 municipal elections, towards to elect the maximum number of mayors and councilors committed to Brazil's political, economic and social advances. These are the conditions to prevent, in 2026, right-wing extremists from regaining the Presidency of the Republic, expanding their participation in state governments and the National Congress and putting their nefarious anti-social and anti-national project into practice.
The governments of Lula and Dilma Rousseff of the Workers' Party (PT) in Brazil failed in the economic, social, political, and moral spheres. Economically, they continued the neoliberal policies of prior governments and increased Brazil's financial and technological dependence on foreign capital. Socially, they did not promote true social inclusion or reduce unemployment. Politically, they formed alliances with corrupt politicians and parties and were involved in corruption scandals themselves. Morally, their behavior called into question the ethics of the PT and allied leftist parties.
This document provides information about Group 6B's project on analyzing the macroeconomic policies of Brazil. It outlines the key aspects they will focus on, referred to as CCCF - Capital Flows, Competitive Advantage, Communication, and Fiscal Policy. The document then provides details on each of these topics as they relate to Brazil, including sections on the country's history with capital flows, competitive advantages according to Porter's Diamond model, developments in communication and IT, and an overview of Brazil's fiscal policies and tax system.
Brazil's economy has slowed significantly in recent years after a period of strong growth until 2011. GDP growth was barely 0.9% in 2012 and is projected to be around 2.5% for the current year and next. This decline is attributed to factors like the high value of Brazil's currency, stagnating commodity prices, deteriorating infrastructure, social inequality, and declining investment. Credit ratings agencies currently rate Brazil's investment grade as second-lowest and improvements will require long-term reforms by the government. President Dilma Rousseff faces the challenge of accelerating economic growth by reducing the public sector's role and examining the tax system, while also controlling inflation and reducing public debt levels. There is growing social unrest over economic conditions
Similarities between the crisis of 1930 and 2015 in brazilFernando Alcoforado
The political and economic crises that shake Brazil at the moment have some similarities to those that occurred in 1930 and led to the deposition of President of Republic, Washington Luis. The political crisis in 1930 was the product of exhaustion of the oligarchic regime inaugurated in 1889 with the proclamation of the Republic and the economic crisis was a consequence of economic infeasibility of the existing agro-export model in Brazil since the colonial period that suffered heavy blow to the global economic crisis of 1929. In turn, the 2015 political crisis in Brazil is the product of exhaustion of the social contract established with the 1988 Constitution and the current economic crisis is a result of the exhaustion of the neoliberal economic model dependent on the outside in place since 1990 and it is also suffering the consequences of the 2008 economic crisis that erupted in the United States and spilled over the world.
The harmful effects of neoliberalism about brazil and how to overcome themFernando Alcoforado
This document discusses the harmful effects of neoliberalism in Brazil. It argues that the neoliberal economic model adopted in Brazil since the 1990s has led to low economic growth, deindustrialization, rising debt levels, and inadequate infrastructure investment. Adherence to policies like privatization, deregulation, and free trade have weakened Brazil's economy and made it more dependent on foreign capital. The document asserts that overcoming these issues requires moving beyond the failed neoliberal approach.
Brazil’s unfinished business - A view on the presidential electionsBrunswick Group
This document provides an overview and analysis of Brazil's 2014 presidential election. The key points are:
1) Incumbent president Dilma Rousseff has lost her early lead in polls to environmentalist candidate Marina Silva, who has surged in popularity following the death of her running mate.
2) Brazil is facing economic challenges like slowing growth and high inflation, and many feel opportunities were missed to implement reforms that could have strengthened the economy.
3) Whoever wins will have tough policy choices to balance fiscal responsibility with spending on priorities like education, while addressing structural issues holding back growth. Silva's platform in particular would represent an uncharted direction for Brazil.
November 2010 - Growing Investment FundsFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
The document discusses several factors contributing to high bank spreads in Brazil, including defaults, administrative costs, required reserves, taxes and fees, and unexplained reasons related to profits. It notes that while the cost of raising funds for banks has decreased, spreads have fallen more slowly. The global crisis presents an opportunity to further reduce spreads by lowering required reserves and credit taxes. Establishing a centralized client credit registry could help increase competition and information sharing among banks, leading to lower spreads over time.
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
Political scenarios of brazil after dilma rousseff governmentFernando Alcoforado
Before the deep economic crisis that leads to Brazil's economy to stagflation, the policy and managerial inability of the federal government to manage the destinies of the nation and the widespread corruption that dominates the country is being put on the agenda the possibility of impeachment of President Dilma Rousseff's. Currently, there is a national clamor for the removal of Dilma Rousseff of the Presidency either through impeachment or a military intervention.
How brazil must face global recession and internal economic stagnationFernando Alcoforado
This article aims to present the impacts that the ongoing global recession will have on the Brazilian economy and the solutions to deal with this gigantic problem and the internal economic stagnation.
Signs of economic, political and social ruination are already present in Brazil indicating the strong possibility of the country to be convulsed in 2016 by the confrontation between the political forces interested in the removal of Dilma Rousseff of power and those who fight for their stay in the Presidencyof the Republic. It seems that in 2016, Brazil will be politically convulsed with the confrontation between supporters and opponents of the current government. This may cause them to also street clashes that may require the intervention of the armed forces for the maintenance of constitutional order. In other words, whether to dismiss or stay in power Dilma Rousseff, Brazil will be convulsed by a political struggle with unpredictable consequences.
Similar to Political Aspects of Unemployment: Brazil's Neoliberal U-Turn (20)
Atualmente, diversos economistas das mais variadas origens e tendências argumentam que o Banco Central deve imprimir dinheiro para financiar o déficit público e zerar a taxa básica de juros para fazer políticas monetárias não convencionais, chamadas lá fora de Quantitative Easing (QE) e que consistem na compra de ativos privados e talvez até divida pública de prazos mais longos.
1) O artigo discute a evolução do conceito de Lei de Say no pensamento econômico, desde a versão original de Jean Baptiste Say até as interpretações clássicas, neoclássicas e da escola de Cambridge.
2) A versão original de Say tratava da identidade entre produção e consumo, onde toda produção gera demanda equivalente através dos salários pagos e do poder de compra gerado. Isso pressupunha a neutralidade da moeda e ausência de entesouramento.
3) Posteriormente, interpretações cl
The purpose of this paper is to contribute to an interpretation of Ricardo’s theory of foreign trade following the lead of Sraffa ́s own 1930 critique of Ricardo ́s alleged error and recently developed by other Sraffians. We argue that Ricardo assumed that trade happened at natural prices in each country. And once we take the process of gravitation towards those prices into account it follows that : (i) Ricardo’s theory is not incomplete, but fully determined so there is no need for price elastic demand functions, contrary to what John Stuart Mill argued; and (ii) in the simple cases of the examples of chapter 7 of Ricardo ́s Principles, the terms of trade are determined by the ratio of the given actually traded levels of reciprocal effectual demands.
Taking into account the pull-push debate on the weight that external or internal factors have on the behavior of capital flows and country-risk premium of developing economies, the aim of this article is to assess empirically the extent by which the push factors, linked to global liquidity and interest rates, (compared to country-specific factors) play on the changes in the risk premium of a set of countries of the periphery, in the period 1999-2019. This done using the methodology of Principal Component Analysis, which can relate the information from different countries to its common sources. We also test for a structural change in the premium risk series in 2003, by means of structural break tests. We find that push factors do play the predominant role in explaining country risk changes of our selected peripherical countries and that there was indeed a substantial general reduction in country risk premia after 2003, confirming that the external constraints of the periphery were significantly loosened by more favorable conditions in the international economy in the more recent period. The results are in line both with the view that cycles in peripherical economies are broadly subordinated to global financial cycles, in but also that such external conditions substantially improved compared to the 1990s.
This document analyzes Brazilian National Treasury primary auctions from the 2000s using a Modern Monetary Theory interpretation. It finds that:
1) The Brazilian government was always able to sell its treasury bonds and was not pressured into higher interest rates by bond markets or rating downgrades.
2) Downgrades by international rating agencies did not cause persistent pressure on auction rates or changes in bond sales volumes.
3) The Central Bank ensured liquidity for treasury bonds through repo operations, maintaining interest rate targets and guaranteeing demand for government bonds.
Taking into account the pull-push debate on the weight that external or internal factors have on the behavior of capital flows and country-risk premium of developing economies, the aim of this article is to assess empirically the extent by which the push factors, linked to global liquidity and interest rates, (compared to country-specific factors) play on the changes in the risk premium of a set of countries of the periphery, in the period 1999-2019. This done using the methodology of Principal Component Analysis, which can relate the information from different countries to its common sources. We also test for a structural change in the premium risk series in 2003, by means of structural break tests. We find that push factors do play the predominant role in explaining country risk changes of our selected peripherical countries and that there was indeed a substantial general reduction in country risk premia after 2003, confirming that the external constraints of the periphery were significantly loosened by more favorable conditions in the international economy in the more recent period. The results are in line both with the view that cycles in peripherical economies are broadly subordinated to global financial cycles, in but also that such external conditions substantially improved compared to the 1990s.
This paper extends the analysis of Haavelmo (1945), which derived the multiplier effect of a balanced budget expansion of public spending on aggregate demand and output. We first generalize Haavelmo's results showing that a fiscal expansion can have positive effects of demand and output even in the case of a relatively small primary surplus and establishing the general principle that what matters for fiscal policy to be expansionary is that the propensity to spend of those taxed should be lower that of the government and the recipients of government transfers. We also show that endogenizing business investment as a propensity to invest makes the traditional balanced budget multiplier to become greater than one. Moreover, if this propensity to invest changes over time and adjusts capacity to demand as in the sraffian supermultiplier demand led growth model, the net tax rate that balances the budget will tend to be lower the higher is the rate of growth of government spending, even in the presence of other private autonomous expenditures.
This paper extends the analysis of Haavelmo (1945), which derived the multiplier effect of a balanced budget expansion of public spending on aggregate demand and output. We first generalize Haavelmo´s results showing that a fiscal expansion can have positive effects of demand and output even in the case of a relatively small primary surplus and establishing the general principle that what matters for fiscal policy to be expansionary is that the propensity to spend of those taxed should be lower that of the government and the recipients of government transfers. We also show that endogenizing business investment as a propensity to invest makes the traditional balanced budget multiplier to become greater than one. Moreover, if this propensity to invest changes over time and adjusts capacity to demand as in the sraffian supermultiplier demand led growth model, the net tax rate that balances the budget will tend to be lower the higher is the rate of growth of government spending, even in the presence of other private autonomous expenditures.
Thirlwall’s law, given by the ratio of the rate of growth of exports to the income elasticity of imports is a key result of Balance of Payments (BOP) constrained long run growth models with balanced trade. Some authors have extended the analysis to incorporate long run net capital flows. We provide a critical evaluation on these efforts and propose an alternative approach to deal with long run external debt sustainability, based on two key features. First, we treat the external debt to exports ratio as the relevant indicator for the analysis of external debt sustainability. Second, we include an external credit constraint in the form of a maximum acceptable level of this ratio. The main results that emerge are that sustainable long run capital flows can positively affect the long run level of output, but not the rate of growth compatible with the BOP constraint, as exports must ultimately tend to grow at the same rate as imports. Therefore, Thirlwall’s law still holds.
(1) O documento discute a análise de Lara Resende sobre as ideias da Teoria Monetária Moderna (MMT) e propõe um arcabouço teórico alternativo baseado na abordagem do excedente.
(2) A análise de Lara Resende aceita o modelo do Novo Consenso, mas reconhece que não há restrições monetárias ou fiscais. No entanto, suas implicações de política econômica não decorrem desse modelo.
(3) O arcabouço teórico alternativo propõe
1. O documento apresenta um modelo matemático para analisar sistemas econômicos representados por matrizes que indicam insumos e horas de trabalho necessárias para a produção.
2. É definido o conceito de matrizes redutíveis e irredutíveis e apresentados teoremas sobre propriedades de matrizes irredutíveis como tendo um autovalor máximo único.
3. Explica como representar sistemas de preços com e sem excedente usando esse modelo, encontrando soluções relacionadas a autovalores e autovetores das matriz
1) O documento é uma tese de doutorado apresentada à Universidade Federal do Rio de Janeiro que analisa o crescimento liderado pela demanda na economia norte-americana nos anos 2000 a partir da abordagem do supermultiplicador sraffiano com inflação de ativos.
2) No primeiro capítulo, a tese faz uma crítica à abordagem da macroeconomia dos três saldos proposta por W. Godley, argumentando que ela tem inconsistências contábeis.
3) Em seguida, a tese apresenta o arcabouço teórico do
1) O documento discute as contribuições teóricas de Piero Sraffa à teoria do valor e distribuição.
2) Sraffa propôs retomar a abordagem clássica do excedente e criticou a abordagem marginalista neoclássica.
3) Ele mostrou que há uma relação inversa entre salário real e taxa de lucro para qualquer número de bens, confirmando os resultados clássicos.
Este documento é uma dissertação de mestrado que analisa criticamente os modelos neo-kaleckianos sobre como a competitividade internacional influencia a taxa de crescimento de uma economia aberta. O autor argumenta que esses modelos restringem excessivamente a relação entre taxa de câmbio e distribuição de renda e omitem fontes alternativas de desvalorização cambial. Além disso, eles podem permitir déficits comerciais permanentes sem mecanismos de ajuste e sugerem que a desvalorização pode piorar o déficit comercial.
1) O documento discute modelos pós-keynesianos de crescimento e distribuição de renda, comparando-os com a teoria da distribuição de Cambridge.
2) Nos modelos iniciais, o nível de produção e utilização da capacidade dependem negativamente da parcela de lucros, enquanto a taxa de lucro realizada é constante.
3) A teoria de Cambridge argumenta que a parcela de lucros é determinada endogenamente no longo prazo, variando positivamente com o grau de utilização da capacidade.
(1) Keynes criticou a suposição neoclássica de que a taxa de juros é flexível, argumentando que ela é determinada monetariamente e não se ajusta automaticamente para manter o pleno emprego. (2) Sraffa criticou a ideia de que há sempre substituição entre fatores, mostrando que com capital heterogêneo a intensidade do uso de um fator não se correlaciona necessariamente com seu preço. (3) Ambas as críticas questionam se os mecanismos propostos pela teoria neoclássica são suficientes para garant
This paper examines the semiconductor’s industry growing importance
as a strategic technology in the modern industrial system and in contemporary war
-
fare. It also analyzes this industry’s evolution in China and the Chinese semiconduc-
tor industrial policy over the last years. We review the Chinese interpretation of the
‘revolution in military affairs’ and China’s perception of its backwardness as well as
the possibilities of catch-up and evolution in the most sophisticated segments of this
productive chain through domestic firms and indigenous innovation.
1) O documento discute a Hipótese de Estagnação Secular (HES) e suas inconsistências teóricas ao analisá-la a partir de perspectivas neoclássicas e heterodoxas da teoria do crescimento econômico.
2) A HES sugere que economias avançadas enfrentam tendência de estagnação devido a fatores como baixo crescimento populacional, tecnológico e da produtividade que limitam o investimento.
3) O documento mostra que a HES apresenta inconsistências tanto na abordagem neo
Monthly Market Risk Update: June 2024 [SlideShare]Commonwealth
Markets rallied in May, with all three major U.S. equity indices up for the month, said Sam Millette, director of fixed income, in his latest Market Risk Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
In World Expo 2010 Shanghai – the most visited Expo in the World History
https://www.britannica.com/event/Expo-Shanghai-2010
China’s official organizer of the Expo, CCPIT (China Council for the Promotion of International Trade https://en.ccpit.org/) has chosen Dr. Alyce Su as the Cover Person with Cover Story, in the Expo’s official magazine distributed throughout the Expo, showcasing China’s New Generation of Leaders to the World.
Navigating Your Financial Future: Comprehensive Planning with Mike Baumannmikebaumannfinancial
Learn how financial planner Mike Baumann helps individuals and families articulate their financial aspirations and develop tailored plans. This presentation delves into budgeting, investment strategies, retirement planning, tax optimization, and the importance of ongoing plan adjustments.
Poonawalla Fincorp’s Strategy to Achieve Industry-Leading NPA Metricsshruti1menon2
Poonawalla Fincorp Limited, under the leadership of Managing Director Abhay Bhutada, has achieved industry-leading Gross Non-Performing Assets (GNPA) below 1% and Net Non-Performing Assets (NNPA) below 0.5% as of May 31, 2024. This success is attributed to a strategic vision focusing on prudent credit policies, robust risk management, and digital transformation. Bhutada's leadership has driven the company to exceed its targets ahead of schedule, emphasizing rigorous credit assessment, advanced risk management, and enhanced collection efficiency. By prioritizing customer-centric solutions, leveraging digital innovation, and maintaining strong financial performance, Poonawalla Fincorp sets new benchmarks in the industry. With a continued focus on asset quality, digital enhancement, and exploring growth opportunities, the company is well-positioned for sustained success in the future.
Tdasx: Interpreting the 2024 Cryptocurrency Market Funding Trends and Technol...
Political Aspects of Unemployment: Brazil's Neoliberal U-Turn
1. Political Aspects of Unemployment: Brazil's Neoliberal U-Turn
December 2015
Franklin Serranoa
L. E. Melinb
Throughout the world, the reversion of fortune suffered by the Brazilian
economy since reaching its zenith as recently as 2010 has confounded shrewd
commentators, seasoned analysts and market players alike. As 2015 unfolded,
ominous projections ("An Economy on the Brink", "Brazil's Economy Falters"
"Worse May Be To Come") were no less widespread than expressions of
bewilderment ("Whatever Happened to Brazil", "Brazilian Waxing and Waning",
"Brazil's Scandalous Boom to Bust Story"), and, more recently, of alarm ("Goldman
Sachs Says Brazil Has Plunged Into ‘An Outright Depression’") concerning the fate
of the South American BRIC country.
Despite profuse official protestations to the contrary, however, Brazil's afflictions
turn out to be of its own making, as it so often proves to be the case. Looking at
the set of clearly laid-out policy choices made by the Brazilian government – and
the almost as clearly spelled-out political objectives underlying them – should
provide enough explanatory evidence to sort out this cautionary tale for
developing countries everywhere.
A Tale of Two Policies: from Deceleration to Stagnation to Collapse
The origins of the 4.5% fall of Brazilian GDP in the first three quarters of 2015
can be traced back to the economic policies implemented during President
Rousseff’s first administration.1
Between 2011 and 2014, Brazilian economic growth was halved, averaging only
2.1% annually, in comparison with a 4.4% average in the 2004-2010 period. But
a Franklin Serrano teaches Political Economy and Macroeconomics at the Federal University of Rio -
UFRJ. He is a Senior Research Associate of the Centre for Economic Policy Research - CEPR, Washington,
DC.
b L. E, Melin teaches Political History and Economic Development at the Catholic University of Rio - PUC-
Rio. He is a member of the Advisory Board of the Official Monetary and Financial Institutions Forum -
OMFIF, London.
1 For a more thorough macroeconomic analysis of this period, see F. Serrano & R. Summa, Aggregate
Demand and the Slowdown of Brazilian Economic Growth from 2011-2014, Centre for Economic and
Policy Research - CEPR, Washington DC, August 2015.
2. 2
this acute slowdown of economic activity is only the first of the symptoms arising
from a series of policy changes promoted by the ruling Workers’ Party (PT)
government under President Dilma Rousseff.
From 2011 to 2014, a clear change in policy was promoted with the deliberate
purpose of reducing the direct role of the state in the Brazilian economy, although
important social inclusion policies concerned with decreasing inequality
remained in place during that period.
The chief objective of this policy change was to signal that the admittedly,
notoriously successful strategy pursued until 2010, in which the public sector
played a central role in directly promoting economic growth, would no longer be
pursued. The previous strategy, as is well known, was implemented chiefly
through the public sector (including state-owned companies and public banks)
stimulating aggregate demand and generating supply-side structural change
through public investment.
This development strategy enabled robust growth to be consistently achieved and
allowed significant reductions in inequality to be fostered. In turn, the resulting
changes both in the Brazilian social matrix and in labour-market relations
generated growing political resistance from the country's financial and business
communities. Even at the height of prosperity, large private media groups and
economists associated with, or sponsored by, large private banks, were
particularly vocal in expressing their discontent.
Beginning at the end of 2010, in an attempt to placate the increasingly strident
criticism from corporations, banks, part of the opposition and the media,
President Rousseff and her party (with the public acquiescence of former
President Lula da Silva) decided to endorse the view that the government was
intervening “too much” in the economy.
Instead of acting as a primer for aggregate demand expansion, the government’s
economic role was openly shifted to one of slowing down the growth of domestic
demand and mainly providing incentives for private investment, in the shape of
substantial and unconditional tax cuts to business, together with a (quickly
reversed) reduction of interest rates and a first large exchange-rate devaluation.
Unlike more traditional trickle-down theory, the rationale underlying the policy
was that private business should thus be stimulated to lead economic growth,
instead of following in the wake of public investment and social transfers, as had
happened in the previous decade.
This policy shift initiated in 2011 proved nevertheless ineffective, and as public-
sector investment fell dramatically no corresponding increase in private
3. 3
investment and net exports materialised. The downward effects were
compounded when unusually dry weather and mismanagement of the energy
policy guidelines imposed on Eletrobras, the large state-owned electricity
company, pushed the country close to a serious power shortage in 2014, despite
the fact that demand was weak because domestic economic activity had been
decelerating every year for four years.
Instead of reverting to the successful policy trajectory of 2006-10 and seeking to
improve long-term planning through better technological and infrastructure
policies, the second Rousseff administration inaugurated in January 2015 decided
to double down on its market-led strategy. From the first day of its new term in
office, the government fully committed itself to implementing the policies
championed by the defeated conservative opposition during the recent 2014
election campaign.
In fact, President Rousseff's government went significantly further than that.
Working in close concert with Brazil's redoubtable financial industry (the new
Minister of Finance came into office straight from the Executive Board of the
country's largest private bank), the PT-led government has put in place a vastly
more radical version of the austerity recipe lately in fashion in many northern
hemisphere countries and multilateral institutions.
This neoliberal U-turn was materialised in an unprecedented combination of
public spending cuts, consecutive interest-rate hikes, an array of credit-inhibiting
measures, and large increases in utility prices. By deploying simultaneously every
available policy tool that can decelerate economic activity, while allowing a
substantial exchange-rate devaluation to occur, Brazilian authorities created a
perfect storm of austerity that has plunged the country in what has become its
deepest recession since 1990, with a net loss of 1.4 million formal jobs over the
last twelve months.
The World's to Blame: the Brazilian Government Version
Given that five years of continually deteriorating, and ultimately collapsing,
macroeconomic figures – including eight consecutive quarters of falling
investment – cannot easily be swept under the carpet when it comes to an
economy the size of Brazil's, the official line has consistently been one of
explaining away the negative results of deliberate economic policy choices by
blaming adverse international conditions. Not a particularly creative line of
official discourse, and hardly ever a defensible one, trying to make the
4. 4
"international crisis" the culprit of present Brazilian predicaments is very much
akin to blaming the sinking of the Titanic on climate change.2
Even basic analytical scrutiny can reveal that changes in external economic
conditions, such as trends and composition of the balance of trade, or the
availability of external finance have had very little direct impact on the overall
performance of the Brazilian economy over the past five years.
It is not amiss to point out that Brazil's exports grew only feebly between 2011
and 2014 (1.6% on average), primarily as a result of much weaker world trade,
combined with a sharp fall in commodity prices. However, this admittedly
underwhelming performance had a virtually negligible direct effect on aggregate
demand, once the small relative weight of exports in Brazilian GDP (of around
11%), as well as the very high import coefficient of many key Brazilian exports,
are taken in account.
Furthermore, are even more relevantly, Brazil has not faced even the remote
threat of a balance-of-payments crisis at any point of its trajectory from economic
deceleration to stagnation to collapse. Foreign debt has remained at historically
low levels (under 16% of GDP) from 2010 to 2014, being even lower than that by
July 2015, while international reserves stood at historical peak levels throughout
the period and, at US$ 370 billion, currently amount to nothing less than 20% of
GDP.
Despite this remarkably solid balance-of-payments position, the threat of Brazil's
sovereign credit rating being downgraded by private international agencies
(which finally came to pass on March 2015) was repeatedly invoked as one of the
main arguments used by financial market economists and Brazilian government
officials alike to justify why even deeper spending cuts and ever wider austerity
measures had to be implemented domestically.
Thus a recurring conflation between domestic public debt denominated in local
currency and the country's foreign liabilities in hard currency (both private and
public) was introduced at the heart of the Brazilian economic debate and
presented as a crucial lynchpin for preventive, and subsequently, corrective
contractionary policies.
This rudimentary rhetorical artifice was taken to an extreme of conceptual
befuddlement when Standard & Poor's textually reaffirmed Brazil's strong
foreign-exchange position in the body of very same document that announced
2 Without belabouring the point overmuch, a Brazilian cabinet minister actually combined both when
he declared, last May, that the government had "absorbed as long as it could the impacts of the
international crisis and of climate change – and this policy has [now] reached its limit."
5. 5
that the country's foreign currency ratings were being stripped of investment-
grade status, in early September.3
The rating agency justified placing Brazil below investment grade because of its
"fiscal performance" and of the "rise of net general government debt". The report
goes on to mention Brazil's "low external financing needs" and "its high level of
international reserves".
From a macroeconomic standpoint this raises more questions than it answers
since it is by definition impossible for any government to be compelled to default
on internal debt denominated in its own currency. In any country where the
Central Bank can buy and sell any quantity of short-term government bonds in
the secondary market to set the basic interest rate of the economy, any bonds not
purchased by the private sector can be (and usually are) bought by the central
bank itself at the set interest rate. For some reason, this simple fact of public
finance seems to have eluded both Brazilian advocates of ever-growing austerity
and the obdurate analysts of US credit-rating agencies.
To be fair, after Brazil, S&P also downgraded Japanese government bonds (having
even downgraded US government bonds some time ago), thus confirming that the
rating agency's peculiar brand of macroeconomics is not restricted to, nor
directed against, Brazil. When taken to court in the US (and Europe) over their
role in the financial crisis of 1997, credit rating agencies stated through their
lawyers that their ratings are "merely an opinion," protected as free speech, and
should not be construed as anything other than that.4
Apparently President Rousseff took these "mere opinions" very seriously and the
downgrading by S&P was ostensibly used to justify yet another round of
proposed cuts. The rating agency's opinions were only selectively taken on board
by the Brazilian government, nonetheless, insofar as ministers and officials went
on talking about the importance of reining in gross (domestic) public debt,
regardless of the S&P report's specific mention of net government debt being the
problem.5
The result was that even though exports are not a significant direct source of
aggregate demand in Brazil, and in spite of the fact that for years the country has
3 This particular instance of rating-agency theoretical innovation was timely spotted by M. Vernengo in
http://nakedkeynesianism.blogspot.com.br/2015/09/from-bbb-razil-to-bbrazil-or-meaning-of.html
4 See Jefferson County Sch. Dist. v. Moody’s Investor’s Servs., Inc., 988 F. Supp. 1341, 1348
(D. Colo. 1997), aff’d, 175 F.3d 848 (10th Cir. 1999)
5 Gross debt in Brazil is larger than net debt mainly because of monetary and credit policy operations,
particularly by the bonds that are the counterpart of the massive foreign exchange reserves and, to a
much lesser extent, by loans to government owned banks.
6. 6
had very comfortable levels of foreign-exchange reserves and relatively low
levels of foreign debt – in other words, that there was no threat of balance-of-
payments problems in the horizon – the international crisis was blamed for the
economic downward spiral brought about by the government's increasingly
restrictive and orthodox policies.
Wage Share and Distributive Conflict: the Politics behind the Policies
Until recently Brazilian authorities made use of by now run-of-the-mill rhetoric
to justify the arsenal of austerity measures that effectively derailed the Brazilian
economy. That came either under the guise of the standard "the international
crisis made me do it" discourse just described, or by resorting to the notion that
fiscal (and, in the present case, also monetary and credit) pains are the only way
to ensure growth gains – the well-known "expansionary fiscal contraction", or
"EFC", argument.
As it turns out, the previously unstated purpose of the set of policies currently
being implemented in Brazil is to weaken the bargaining power of workers by
reducing real wages and by increasing unemployment. Unlike advanced Western
economies, the institutional ensemble that protects the interests of labour in
Brazil is comparatively weak and lacking both in organic and in party-political
clout. Thus, swelling the ranks of unemployed workers has the added benefit of
effectively reducing the resistance to the introduction of the neoliberal measures
necessary to reverse the advantages gained by labour over the past decade,
perceived as being excessive.
As recently as June 2015, Finance Minister Joaquim Levy told an audience of
business executives, in the presence of both local and international press, that it
was time to “rethink the country” and that he intended to “abandon rhetoric and
face some realities.” His declared aim was clearly spelled out: “We are going to
have to reverse this reduction in the supply of labour.” According to Minister Levy,
there were people who previously “did not want to join the labour market, who
now will have to look for jobs”, thus causing labour supply to be increased. As a
corollary, the audience was told that “There can be no economic growth without
an increase in labour supply.”6
It matters little that, in saying so, the minister made a rather crude mistake in
terms of economic theory. Even according to the tenets of the orthodox,
neoclassical growth theory he avowedly subscribes to, it is of course only a fully-
6 See http://www.valor.com.br/brasil/4091982/crise-e-momento-importante-para-repensar-o-pais-
afirma-levy
7. 7
employed labour force that would generate growth – and not the unemployed
who, by definition, produce nothing.
But politically Mr. Levy's diagnosis was an accurate, if somewhat blunt, one. The
bargaining power of the Brazilian workforce was, perhaps inadvertently, much
increased by a tight labour market between 2006 and 2014, as well as by
successful social policies introduced by the PT-led government over that period.
Unemployment had fallen markedly and average real wages in the formal sector
increased continuously, at a steady average of 3% per annum, beginning in 2006.
Even more relevantly, having reached a deep trough in 2004, the wage share of
GDP has been recovering since then.
After much political pressure from private business (despite record-high profit
levels reached in the preceding decade) and, even more vocally, from large media
groups and opposition parties, in 2015 the PT-led government began to act in
earnest to reverse this state of things by means of increasingly strong measures.
The fast generation of unemployment by means of radical austerity policies, as
well as sharp shifts in income distribution away from wages, have created a
political climate in which it is possible substantially to decrease the size and
importance of the Brazilian state in the overall economy. This, in turn, is paving the
way for a roll-back of distributive gains, labour rights and social benefits put in
place since 2003, some of which are already being either dismantled or
significantly reduced.
Many PT militants, as well as social movements and trade unions, were clearly
taken aback by this sudden and unequivocal endorsement of a neoliberal agenda
they had together long opposed, and one that hurts their own working-class base
the hardest.
This reaction, if understandable, is somewhat predicated on wishful thinking.
Closer empirical analysis of its 30-year history reveals that the PT has an
established tradition of avoiding direct confrontation with the country's
conservative property-owning classes once they are in power, whether at local,
state or federal level. While they sincerely appear to want to promote social
change, the ruling party’s top people have long been steered by a consensus-
seeking credo according to which there is no situation where a compromise that
avoids upsetting Brazil's moneyed elite, while simultaneously improving the lot
of the country's huge underclass, cannot be reached.
This peculiarly cordial brand of political philosophy may seem to stretch
credulity when one considers that Brazil is the only country that figures
simultaneously among the top 20 largest economies and among the top 20 worst
8. 8
income distributions in the world. Nevertheless, this political squaring of the
circle had seemed possible prior to 2011, at the federal level, in the wake of a
foreign-exchange bonanza, coupled with the extraordinary surge both in
domestic consumption and in profit levels that followed the initial opening of the
"social inclusion" floodgates.
As sporadic conflicts over income distribution in the political arena became more
widespread, and ideological criticism gave way to undisguised class antagonism,
the previous self-congratulatory mood among the ruling party's top brass
changed into one of diffidence and alarm. Faced with a hostile new Congress after
winning the 2014 presidential elections, and weighed down by its heavy
dependence on funding from big private firms and banks, the PT leaders' pliable
ways and placatory beliefs translated into a seldom seen episode of top-down
political capitulation.
The Hunt for Red Corruption: a Very Brazilian Affair
What may seem intriguing from the perspective of an external observer is the fact
that the ongoing public debate in Brazil gives virtually no emphasis to all of the
key economic and political factors hitherto mentioned. Any visitors to the
country since 2014 will tell a similar tale, of an entire society that daily devotes
its full attention not to policy, but to police matters.
Since at least the days of the late President Vargas, in the early 1950's, public
corruption has been the go-to political tactic of the Brazilian conservative
establishment, whenever a situation seen as unduly imbalanced in favour of
labour needed to be tackled in short order.7 And that is precisely the perception
that took shape over the course of President Rousseff's administration, and was
solidified by the defeat of the right-of-centre candidates Aecio Neves and Marina
Silva in the 2014 elections.
Even though from her first days in office President Rousseff's policies of reducing
the government's role in the economy and promoting unconditional tax cuts to
business ostensibly aimed to please both the Brazilian private sector and foreign
investors, recurring economic and political mismanagement resulted in that, by
the end of her government's first term in 2014, those policies in practice served
no one. Business saw growth and profit levels go down and investment fall, while
the labour market remained tight. Workers also had little to celebrate as
7 Besides removing Vargas in 1954, the moral crusade against corruption was a key tool again in
toppling President Goulart (who championed a "trade-unionist republic") in '64, and in preventing the
election of Lula da Silva and his left-wing coalition in '89, before reappearing unsuccessfully to try to
impeach then-President Lula in 2005, and again, more forcefully, in the last few years.
9. 9
household disposable income stagnated then fell, and jobs became increasingly
thinner on the ground.
From the perspective of Brazil's traditional economic and political elite, it had
became plain by then that change would have to be much deeper and to come
much faster. For those familiar with Brazilian political mores over the last
century it should hardly come as a surprise, then, that long-prevailing but shady
contracting practices involving the country's state-controlled oil and gas
company, Petrobras, became an overnight outrage and began to be treated as
nothing short of a national emergency.8
What is perhaps less widely known outside Brazil is that, this time around, the
anti-corruption discourse did not gain the political centre stage through the
efforts of the conservative opposition alone, but was in fact ushered in and given
priority status by President Rousseff herself. Since taking office in 2011 she
repeatedly stressed her personal commitment to prosecuting "wrongdoers" and
fighting corruption – quickly dubbed by both domestic and international press as
a "clean-up" (faxina) operation.
By the end of 2013, however, the anti-corruption broom, as it were, had changed
hands. It was no longer merely a case of producing media sound bites, replacing
the odd cabinet minister or conspicuously introducing (increasingly cumbersome)
regulatory compliance requirements, as the PT-led government had been doing
so far.
The probes into Petrobras' dealings that began a few months earlier were being
conducted by groups clearly hostile to the ruling party and its leaders, and when
the first indications of the involvement of politicians surfaced, President
Rousseff's government and former President Lula da Silva became the obvious
political targets, despite the fact that both situation and opposition politicians
were equally implicated.
The public reverberations of the ensuing media campaign were greatly amplified
by the eagerness for the limelight of politically ambitious magistrates and
prosecutors whose every action received instant praise from large newsgroups
openly sympathetic to the opposition camp. This represents a new development
in its own right, signalling a departure from a long-established tradition of
Brazilian members of the judiciary keeping out of politics that, in its own right,
could add a different dimension to future political use of the anti-corruption
discourse in the country.
8 President Cardoso (who championed privatisation and the Washington Consensus agenda in Brazil
from 1995-2002) admits in his recently published memoirs that he had knowledge of the Petrobras
"scandal" since October 1996, thought of intervening in the company, but ultimately chose not to do so.
10. 10
Keeping in character, President Rousseff's government treated the Petrobras
affair as a political live wire and sought at every stage to keep its distance from it.
This was a problematic strategy, at best, given that the government holds a
controlling interest in the company, whose economic and strategic importance is
of such an order that ministers of state are regularly appointed to sit in its board
of directors.
Besides earning the government no image or political dividends, their chosen
attitude of "splendid isolation" towards the Petrobras affair ultimately cost the
company itself in terms of financial dividends as well. With the local media
continuously force-feeding selective leaks of federal police investigations into
Petrobras' activities in front-page headlines for several months, speculative
market movements predictably became more and more frequent.
But the controlling shareholders' aloofness meant that short-run changes in the
company’s stock-market value were often passively accepted as though truly
reflecting the actual value of Petrobras' assets. Left unchecked, this recurring
speculative markdown of Petrobras stock value led to a deterioration of the
overall creditworthiness of the company and, in some cases, actually created
credit constraints where none previously existed.
Political squeamishness in the face of the daily flurry of accusations was taken a
step further, however. In a bid to be perceived as being stricter and "cleaner"
with regard to Petrobras' finances than the media and the prosecuting authorities
themselves ever demanded, the government then froze the company's large
investment plans. The knock-on effect of the sizeable reduction in its orders upon
the oil giant's extensive supply chain severely hit several different economic
sectors, shipbuilding not the least among them.9
The steep fall in popularity resulting from the Petrobras "scandals", as well as
poor management of party alliances, both in Congress and within the Cabinet, has
pushed the Rousseff administration into a singularly fragile political position.
This, in turn, has made it easier to shift economic policy toward austerity even
further, as it has accentuated a trend, already dominant among PT party leaders
after the October 2014 elections, to do whatever can be done to meet “market”
(i.e., big private business groups, large private banks, and the media) demands.
9 Originally estimated at US$ 44 billion, Petrobras' investments for 2015 were pared down to US$ 31
billion, while the new business plan, announced in late June, has cut investments for the 2015-2019
period by more than 40%, from US$ 221 billion to US$ 130 billion.
11. 11
The job losses and business slump brought about by these austerity policies then
took their own toll in further eroding the government's popular support, thus
closing the cycle.
Should the incumbent PT face next year's municipal elections still being
associated with recession, unemployment and corruption by voters, the outlook
suggested by current approval ratings (around 10%) is a rather bleak one.
The Turning of the Tide: New Priorities, both Foreign and Domestic
One should not hastily qualify the current Brazilian government's economic
policies as having failed. It may well be true that the results of these policies fall
short of the mark when judged by the frequent pro forma political statements of
unswerving adherence to the tenets of cherished orthodox doctrine. But if, on the
other hand, the efficacy of adopted policies is gauged in terms of the objectives
spelled out by the incumbent Minister of Finance, then one must admit that the
economic policies have been rather successful.
First, the unemployment rate shot up quickly, reaching 7.9% by official figures in
November,10 and thus increasing the available pool of labour identified as being
an obstacle to future growth. Additionally, inflation has also risen, having reached
10.48% – the highest in more than two decades and far above the upper bound of
the official inflation target for the year, set at 6.5 percent.11
Since the actual function of higher inflation is to lower real wages, long
considered by the government and in Brazilian business circles to have caused
excessive "cost pressure" in the previous decade, no attempt was made to
prevent a major currency devaluation and increased public utility prices
throughout 2015. If anything, they were officially celebrated by local ministers as
representing a “correction of the imbalance of relative prices”. The combined
effect of those two results – growing unemployment and tumbling real wages – is
reflected in the reduction of 10.4% in the total wage bill of the Brazilian economy
in real terms over the last twelve months.
Ordinary Brazilians are already having to deal with the declining efficiency of
public services. In a move not usually listed among the technical requirements of
fiscal austerity, the government has been withholding payments to private
10 According University of Sao Paulo researcher H. Zylberstajn, were it not for the unusually high
number of unemployed people who stopped looking for jobs last month (around 170,000), the level of
unemployment would have reached 8.5 percent.
11 The Brazilian Central Bank “suspended” the inflation target for 2015, after having remained below its
upper limit for 10 years in a row.
12. 12
suppliers of public institutions, such as public hospitals and universities. Despite
causing the supply of goods and services to be interrupted, thus hurting the
quality of public services used mostly by the lower-paid segments of the
population, this artifice does not result in any improvement in fiscal numbers, by
international accounting standards.
Such policies, as well as the daily parade of "scandals" and indictments amplified
by the constant media glare, help to create a widespread consensus that the state
is inefficient and corrupt, paving the way for the adoption of wider-reaching and
more permanent measures gleaned from the neoliberal primer.
Curiously, former President Lula and the PT led a partially successful opposition
to both macroeconomic austerity and neoliberal reforms during the 1990s, and
this helped Brazil escape some of the worst impacts of neoliberalism in Latin
America. Twenty years later the wheel has come full circle.
Presently, a PT-led government is promoting the full gamut of austerity measures
and sponsoring legislation that reduces labour rights. The priority assigned to
this political agenda was underlined by the fact that the first bill sent to Congress
in President Rousseff's second term (on the eve of her inauguration)
simultaneously curtailed access to unemployment insurance, pay compensation
for laid-out workers, benefits for employees on sick leave and widows' pensions.
The legislative priorities of President Rousseff's government are not restricted to
labour rights and "fiscal adjustment" (the local euphemism of choice) measures.
Changing the constitution to make public security a federal issue and the
approval of a federal Terrorism Act that innovates jurisprudence by allowing the
possibility of damage to property being considered an act of terrorism in and of
itself, also kept government whips busy in 2015.12
Brazilian priorities in foreign policy have also been visibly altered. Affirming
regional leadership and expanding the country's presence in high-growth
emerging markets in Latin America and Africa was at the centre of Brazilian
strategy for a decade. Between 2003 and 2010, the country pushed for new
regional institutions and cooperation mechanisms, opened up 19 embassies in
Africa alone and multiplied trade finance tenfold.
Now these themes have little room either in government actions or even in
official discourse. Under President Rousseff Mercosur is increasingly treated as
an encumbrance rather than an asset, while already sparse official visits to Africa
12 A UN Special Report issued a warning that the text of the new Brazilian Terrorism Act is "too broadly
drafted and may unduly restrict fundamental freedoms" See
http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=16709&LangID=E
13. 13
ceased to take place two years ago. More importantly, in the wake of a protracted
and largely unopposed media campaign that sought to portray official support for
exports as potentially corrupt, trade finance was also cut in half from 2014's
below-average levels. Brazil's modest market share as a supplier of manufactured
goods, and especially of engineering services, for emerging economies is already
being reduced and is expected to recede further in upcoming years.
The new foreign policy topics to merit governmental attention are "regulatory
convergence" with the US and Europe, and climate change (the former foreign
minister was chosen on the basis of his expertise in the subject). Concrete
ambitions of the new international agenda are to conclude a agriculture-for-
services tariff agreement with the EU (kicked off in the 1990's by the previous
government), with the avowed aim of "integrating Brazilian economy into global
supply chains"; to pave the way for future membership of the OECD, joining Chile
and Mexico at the organisation's lower table; and a rapprochement with the
United States.
This last objective seems to be the one more readily attainable, as can be inferred
by the degree of affability witnessed during President Rousseff's state visit last
June. All symbolic gestures were duly observed, including meetings in Wall Street
as well as with Republican Party icons such as Henry Kissinger, Condoleezza Rice
and Rupert Murdoch – and even including an off-the-cuff remark by the Minister
for Trade and Industry stating that a free-trade agreement with the US, which the
PT fought steadfastly against in the 1990's, is "an aspiration" of the present
Brazilian government.
Such niceties aside, more structural reasons guarantee the ultimate success of
President Rousseff's goal of boosting ties with the US. Between Brazil stepping
back from its would-be leadership role at regional level and withdrawing
voluntarily from the competition for high-growth emerging markets, on one side,
and the country's new-found zeal for international cooperation on corruption
and counterterrorism matters,13 on the other, there is very little news coming
from Brasilia these days that is not good news for Washington.
The Tunnel at the End of the Light: Present Predicaments and Prospects
Faced with the government's unenviable track record of deepening recession,
political beleaguerment and dwindling popularity, a detached observer could be
excused for assuming that some earnest thinking about a new course of action
13 Several of the Petrobras investigations mentioned above were carried out in close cooperation with
US law-enforcement agencies and with the DoJ.
14. 14
must be taking place in Brasilia right about now. In particular, the remarkable set
of negative economic indicators being steadily produced each month in what has
now become a context of stagflation, might have prompted at least some
mainstream economists or even a single government official to consider
proposing possible countercyclical measures.
In reality, however, it has become commonplace for mainstream economic
commentators in Brazil to attribute all of the country's present economic
predicaments irresponsible overspending in general, and to the post-Lehman
countercyclical policies, in particular.
An illustration is provided by a well-known former minister, and an informal
advisor to former President Lula, who, confronted by the collapse of investment
(both public and private) in Brazil, has recently equated proposals to do away
with contractionary policies with "magical thinking". As the Brazil faces its worst
economic slump in 25 years, his prescribed strategy to restore growth is "to
create the expectation of growth", to find some way to "stimulate the animal
spirits" of entrepreneurs. Not a self-evident winner, on the face it.
The fact remains that new measures that reaffirm and reinforce President
Rousseff's chosen neoliberal policies are regularly being announced. Although the
initial fiscal targets for 2015 had to be revised down on more than one occasion
in view of the drastic reduction in fiscal revenues brought about by the decline in
overall economic activity, targeting the size of gross government debt and
achieving a balanced primary budget remain the official priorities.
It could be argued that scarcely anyone outside of the IMF would advise
tightening the fiscal screw further in the middle of a recession of historic
magnitude.14 But although the IMF's self-given licence for ignoring the lessons of
history has been lately emulated by quite a few Brazilian government officials
and the usual entourage of obliging economists, the over-the-top orthodoxy of
their discourse does not square easily with the reality of prevailing
macroeconomic conditions.
Although neither government officials nor local media "expert" commentators
are keen on reminding public opinion of this fact, even at its 2015 peak Brazil's
gross public debt is below 70% of GDP, which is lower than that of austere
14 A fair-minded early reviewer pointed out that in the G-20 meeting of June 2010, as the US was still
wading out of the recession mire and the EU was slowly wading in, the BIS stated that countries should
not wait recovery to cut budget deficits "decisively" while warning that, unless interest rates were
raised soon, "distortions" would be created. Neither the risk of said countries relapsing (or plunging)
into recession, nor the cost of raising rates of public debt were cited.
15. 15
Germany, and significantly lower than that of the US or the UK, both of which are
hovering around the 120% of GDP mark15.
More importantly, all the talk concerning fiscal adjustment and the reduction of
gross public debt starts to sound extremely impractical when, in addition to
plummeting government revenues (an effect that was curiously absent from
nearly all mainstream analytical exercises in the country), both the cost and size
of government debt are inflated by steep interest-rate increases.16
Still, if public announcements and commitments being made by the PT-led
government are any guide, the prospects for 2016 are of more of the same. More
spending and public investment cuts, social security and pensions reform, even
hitherto untouchable social benefits (such as the bolsa-familia programme) – all
have been openly placed in the crosshairs of the Brazilian austerity agenda.
Such extreme persistence in a course of action in the face of deteriorating results,
and of growing discontent among both business and labour, goes some way
towards explaining why the current Brazilian government has the lowest popular
approval ratings since the early 1990's.
The fact that the political and economic problems facing them are nearly entirely
self-inflicted, however, makes Brazil a sobering lesson for other developing
countries. In such countries, any development project that aims at the political
and economic enfranchisement of those at the lower rungs of society, especially
its underclass, is always going to be contentious. This is particularly true where
not only income but also property distribution is strongly imbalanced, as is the
case in Brazil.
To succeed, political leaders have to be willing to make alliances and concessions,
but must never do so at the cost of their primary goals and basic principles. The
idea that, in this sort of context, it is possible for one to curry favour with
traditional sectors whose previous dominance is being checked by back-pedalling
on one's main strategy and "temporarily" adopting their political agenda and
priorities is altogether unrealistic.
In transformational situations such as these, gainful compromises can only be
entered into from a position of relative strength, which necessarily involves
keeping those that benefit the most from the changes being promoted politically
mobilised; and, above all, ensuring the continuity of job creation and wealth
generation, even if, on occasion, at a slower pace.
15 The measurements in all cases refer to total government gross debt, at both central and local levels.
16 Since January 2014, the Brazilian Central Bank raised its policy rate (Selic) by nothing less than 425
basis points – 300 bps of which over the last twelve months.
16. 16
But for all the record-breaking recession, wage loss and unemployment figures,
the current political crisis is less likely to end dramatically for President Rousseff
than it did for previous left-leaning presidents Vargas (driven to suicide in 1954)
and Goulart (forced to flee the country in 1964).
For one thing, the Brazilian military, who played a direct role in deposing both
men in a Cold War context, have long accepted that the era of coups d'état is over.
For another, as the record described above shows, President Rousseff and the PT
party leadership have already reneged on their political commitments to labour
and surrendered on all key public policy issues without much of a fight, making
their removal from office a moot point.