New York City is Brazil
Posted at 5:28 am | Filed Under brazil
It is always funny when “third-world” news stories pop-up regarding outrageous differences in income. Sometimes one cannot believe the evil that occurs in mankind that would allow such a thing to happen. Thus, revolution of a society is inevitable. We all know about places like Brazil, Venezuela or Colombia where the income disparity is nauseating as well as the poverty factor. This always leads to socialist or communist governments to take hold. The USA is always somehow “in shock” when this happens.
This takes us to New York City, good old capitalist America. A couple of news stories coming out of of the city of late point to an increasingly distressing situation that puts the place in a bizarre world. First, word has come out that the cost-of-living for renters-not even to mention potential buyers-just keeps on going up. The latest reports have about 33% of renters spending at least 50% of their income on rent. In other words, nearly unlivable. Secondly, in an almost nightmarish story, recent New York City Police Department graduates have been applying for food stamps. Yes, food stamps! New York City’s “Finest” are quickly becoming its poorest. These are the same people who make it possible to have record amounts of tourists pouring into the city. Of course, when it comes to contract, the city just does not have the money. Uhhh… yeah right. Thus, new recruits are coming in to the department making around $25,000 a year. In New York, that kind of money can’t buy you a paper bag, forget an actual shot at the “American Dream.”
The simple reality is this: Workers are just not cared about. The rich are always cared about. They make the rules, donate money to campaigns and pay people off. Lies that the rich will somehow “leave” the city if taxes are raised on them are comical. Where are these people going exactly? Meanwhile, the “working stiff” is being drilled into the ground with assorted fees, taxes, adjustments, and simply not being able to keep up. Thus, stress, tension, anger and a never-ending obsession with money become the ways of life. Walk by any group of people talking on a corner in NYC and you will hear a financial conversation in about 70% of the chats. What about sex? What about vacation talk? How about a good book? Nah, not in the city of financial robots. Sometimes I think some people can’t wait to keel over so the stress can finally be taken away.
Of course, this has major negative societal effects. Criminal “rappers” or “mobsters” become idols since they have the money. School becomes a “loser’s way” in life. Quick, get-over schemes to make money rule the day.
The American dream was always to go to school and get a job. Then, when enough money was saved-usually a moderate amount-buying a home would come next followed by a raising a family. In NYC along with some other places, that dream has died. To work a job making around $50,000 a year and for a house to cost around $500,000, something has to give. It usually is the person’s mental health.
So, don’t be surprised in the future when more and more studies compare NYC to a third-world nation-the super rich and everyone else. How far this will advance politically is anyone’s guess. America is very skilled at knocking off third-party contestants. However, this racket cannot continue forever. Money has become the “god” in too many places. Why would a reaction against this insanity be any different here as it has been in Brazil or Venezuela?
Robert Carberry is a freelance writer from New York
Tags: article submission, articles, email, email marketing, email newsletter, ezine, publishing, writers, writingRonaldinho - Football star of Brazil
Posted at 10:33 am | Filed Under brazil
Who is Ronaldinho?
Ronaldinho is arguably one of the best football players in the world, currently playing for FC Barcelona as a midfielder, where he has amazed everybody with his amazing footwork. He is the latest miracle from Brazil, scoring wonderful goals and “dancing the samba” while doing so. He was also named FIFA World Player of the Year in 2004, the most prestigious award a player can receive, following his Brazilian team mates Ronaldo, Rivaldo and Rom
Brazil’s Stronger Balance Sheet
Posted at 3:45 am | Filed Under brazil
Brazil’s booming stock market has caught foreign investor’s attention but the question still lurks in the background like an uninvited guest - is this just another leg in the typical boom and bust cycle?
For the answer, take a look at Brazil’s improving balance sheet. While America piles on the debt, Brazil is going the other way. It decided last December to pay off its remaining $15.5 billion debt with the International Monetary Fund (that must be a relief!) and announced just last week that it will retire all of its remaining $6.6 billion worth of Brady bonds issued during the early 1990’s financial crisis
Where is the money coming from? Brazil recorded trade surpluses in 2004 and 2005 with exports for the last twelve months hitting a record $120 billion. Exports of oil, soybeans, copper, steel, autos, sugar and coffee are surging even in the face of a strengthening currency. The Brazilian real is up 52% against the US dollar since May 2004 and up 22% during 2005. Brazil is almost energy independent and foreign exchange reserves are now $58 billion even after paying off the nettlesome IMF debt.
Behind all these positive numbers are substantial reforms begun by President Cardosa and continued by Luiz Inacio “Lula” da Silva. Payroll taxes and corporate taxes have been cut, the tax system simplified and last week Brazil announced that it would eliminate the income tax for foreigners that purchase public debt. Brazil’s strong currency will likely also lead to a loosening of foreign exchange restrictions.
A cynical friend of mine often comments that successful political leaders need to ignore their strongest supporters if they are to achieve real reform. If so, Lula is a good example since most expected him to reverse market reforms after taking power in 2002 while in fact he deepened them. Up for re-election in October, Lula has nevertheless delivered higher living standards and restored national pride. With 187 million people and an area only slightly smaller than the United States, this leading South American economic power together with Chile and Colombia are changing attitudes toward the region as a whole.
What’s the best way to bet on Brazil’s momentum and improving balance sheet. I had been recommending the Brazil iShare (EWZ) which is up 27% this year and 72% in the last 12 months. In June of last year I switched to the S&P Latin America 40 iShare (ILO) that gives you broader exposure with 50% exposure to Brazil, 38% to Mexico, 9% to Chile and 3% to Argentina. This ETF is up 18% this year and 69% over the last year.
One ADR to take a look at is wireless provider that has been on a tear America Movil (AMX) and a safer option is Colgate Palmolive which derives roughly 20% of its sales from Latin American markets.
How important is the October election to Brazil? Even with all the economic growth, lower debt, lower taxes, booming exports and strong currency, public sector debt is still 51% of GDP so continued progress is essential. Like the old saw goes, even if you are on the right track, if you’re not moving you will could get run over.
Sydney and Tokyo and served on the Executive Board of the Asian Development Bank in Manila. He was also a consultant to the U.S. Treasury and the U.S. Congress on international investing and is a columnist on global investing for Forbes Asia magazine.
For more information about Chartwell’s ETF investor advisory services, please go to http://chartwelladvisor.com/etf_investing.html or call Carl Delfeld direct at
(719) 264-1503.