Fewer younger and with its banks working with standards appropriate for the much older, dooms Brazils economy

Sir, Martin Wolf writes: “Brazil is in economic, political and moral crisis…too many people are unemployed, the economy is too feeble, the politics too corrupt, and the state too captured…Brazil needs a political and economic rebirth. The crisis makes this necessary. If that does not happen, the future looks sad.” “Brazil’s crisis creates an opportunity” November 8.

Wolf recommends, among other “A funded pension scheme could raise national savings. The government must also have the freedom to control the numbers and pay of civil servants. Doing all this would liberate resources for other areas”

Indeed. But for those resources to be able to flow to where they can be most productive, Brazil also needs to rid itself of that odious regulatory risk-aversion imbedded in the risk-weighted capital requirements for banks. If not Brazil’s future, as well as that of any other nation that keeps those regulations, is doomed to be very bleak.

From “1970 to 74 in 2017…the fertility rate in Brazil has fallen from five children per woman to just 1.7… the population is ageing”.

I understand that for one of Mr Wolf’s age (and perhaps even mine) a risk minimizing investment strategy makes sense but were any financial advisor to suggest that to a young professional starting out, he might very well lose his accreditation. 

http://teawithft.blogspot.com/2009/10/please-free-us-from-imprudent-risk.html

@PerKurowski

Serious intentions or just a one night stand?

Sir Jonathan Wheatley and Alan Beattie in “Brazil taxes foreign portfolio flows in bid to stem exchange rate rise”, October 21, make a reference to the Chilean capital controls, and it is important to understand that these were of quite different nature than Brazil’s tax.

Chile’s capital controls, intelligently, wanted to make certain that the foreign investments flows wanting to go in into Chile, as pretenders, had serious long term intentions, and were not just looking for any one night affairs. It was therefore based primarily on freezing the use of funds for one year, so as to assure a proper courting.

Compared to that, Brazil’s 2 percent tax, just raises the price of having an affair in Brazil. And what is 2 percent in these days of hedge-funds fees if the signorina is beautiful?

The poor prospective of the Bank against the North

Sir when on your first page you announce the birth of Bank of South you state that the six signing parties aim “to challenge the influence of US-based organizations”. I would contend this is a great exaggeration. Perhaps such a thing might be in the mind of the extremist of the group but for instance a country like Brazil has no interest whatsoever in challenging the World Bank or the Inter American Development Bank, on the contrary it is quite logically doing their utmost to strengthen their voice in those institutions.

Initial funds will be placed in the Bank of South and rapidly withdrawn by each investor for their own favourite projects and thereafter,with its role reduced to paying the salaries of some bureaucrats, it will most probably linger unproductively forever and ever. Could not the south benefit from a Bank of South? Of course, but not from a Bank against the North.

The addict and his new sourcerer!

Sir, Paulo Sotero and Edward Alden wrote about the United States and Brazil “Building a Biofuels Alliance”, Washington Post, March 8 and which in these days of climate change sound as far as it can from being a holy alliance. What a shame, when the United States should be cutting down on its addiction to cars, it is only looking for a new supplier, and when Brazil should be putting forward proposals to the world of how to keep the Amazon, they are just thinking of cutting it down in order to be that sourcerer.