Last Monday, the foreign ministers of India and Brazil have called on developed nations, and especially Europe to end their famr subsidies and open their markets for free competition.
Can anybody explain me what the rational is for Europe to subsidize its expensive local farming with tax money? Why don't we use that tax money for other purposes and let the market determine the price of our daily bread and meat?
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Feb 21 2008
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Feb 21 2008
MoneyWeek is one of my favorite news sources in South Africa, they publish excellent articles like these. Last week, the South African business magazine had a special on Latin America. Their argumentation why Brazil has all the elements to become one of the strongest economical players on the globe are head on:
"In a nutshell: the United States and Britain have been victims of their own good luck; the banana republics had the good fortune of bad fortune. In the last twenty years, for example, the world rushed to lend the Anglo-Saxon tribes money. North of the Rio Grande and the Isle of Wight, credit was as abundant as calories. But when lenders visited the tropics, they hid their money in their underwear, and left their watches in the hotel safe. Our man in Rio sweated and counted his change. Our man in London or New York splashed out, and bought a $5 million house...and another one as an investment. In the air-conditioner zone there was no one to borrow from. Residents of the banana republics were spared the lure of debt, thanks to the near universal agreement on the part of lenders everywhere, who wouldn't give them a dime. And now, England and America are caught in the debt trap, while the Latinos swagger down their avenidas with hardly a care in the world. The price of soybeans is at an all time high...and their balance sheets have some of the lowest debt ratios in the world. An investor in Latin America has the trade winds at this back; the rainbow currencies are rising; so is the price of food. Most of these countries are net exporters - of bananas and other agricultural commodities, often of metals as well. Like China and the oil exporters, they are building up large piles of dollar reserves and watching their own currencies go up against the greenback. Several have had to intervene in foreign exchange markets not to protect their local currencies...but to keep them down."
The coming days, the Brazilian Central Bank will indeed have to buy massive amounts of dollars to push the currency back down.
The full article from MoneyWeek can be found behind the break. -
Feb 19 2008
I enjoyed reading the article in De Morgen today on the tax evasion to Liechtenstein; Germany missed more than 3,4 billion Euros. And Schauble weening: "Those people destroy everything". Who is destroying what? On page one of that same newspaper another crocodile, Hugo Camps claims that the nomination of Justin Henin proves that Belgian National pride still exist? Who's not pride on what Justine's success of last year? But national pride? Wake up Hugo, the world has changed.
And while reading all of that I suddenly heared this track on StuBru. I already knew the original '95 version of Nicolette, but this mix of Tocadisco beats it all. Not surprising, the man already overhauled an original to a supreme remix in 2006.
The man from Cologne will be in Pacha club, Buenos Aires on March 8th; his fanbase in Argentina and Brazil is quite big. Not quite sure if the "No Government" message soaks through there though. -
Feb 17 2008
Swissmiss directed me to Jon Huck, which lead me to Blurp, where I found Naftalina007's c a R I O q u i c e s and I eventually ended on Naftalina007's Flickr.
Always wanted to visit Rio, but afraid of flying? Here's your chance for a trip through 4.667pictures and become a Carioca da Gema. Can't get enough of Rio - who can?-, soak up the amazing imagery she gathered on Rio in her favorites.
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Feb 17 2008
We all think that the low US$ FX rate makes US manufactured goods cheaper. Wishful thinking. The Apple pricing strategy is well known: rates are the same in Euros and US dollars. Which means that Europeans pay a premium of nearly 35%. Still fair deal compared to the Dell pricing strategy. Dell charges nominally more in Euros than US dollars. Utmost irritating...
Example: a Dell 2407WFP screen costs 766,73 EU in Belgium and 699 US$ in the US. This means that exactly the same screen costs 475,98 EU in the US, nearly 300 EU less expensive.
Imagine how happy I was when I discovered Borderlinx in the bthere inflight magazine while flying to Budapest. José Zurstrassen, one of the Belgian entrepeneurs I have in my 10-most-respected list, is an investor in this brainchild of Hans Wackwitz. Hans was the man who drove the investment of Baripas in Interxion back in 1999...
The concept of Borderlinx is simple. You pay 5 EU and you get an official address in the US. Not PO Box, but a real address. You start shopping a-gogo in the US and have your goods delivered to your US address. Borderlinx keeps all your goods during 30 days and you decide when you have them shipped to Belgium. To the shops you only pay local shipping fees and Borderlinx will ship all your goods together in one shipment at the best rates. Of course you will pay customs when the goods arrive in Belgium. But even then you are making a very fine deal. This weekend I've been shopping at Design within Reach and Etsy. On Etsy we bought goods from bossybootsdesign, orchardstreetgoods, Aptrick, Morgan Creatures, Vital Industries, Anna Laura and Apak Shop Shopping on Etsy is a sheer delight. The contact with the buyers is absolute heartwarming. More on Etsy in another post. And I did buy 3 of those Dell screens, in the US. I'll have Borderlinx send the goods from Etsy and Design within Reach in one shipment and a second shipment with the 3 Dell screens.
Everything is on it's way to our US address. Once all the goods arrive here in Belgium I'll write a detailed summary of our first experience with Borderlinx and of course the detailed financials. For now only one disadvantage: Some shops (1 out of 10) doesn't allow you to ship goods to a different address than the billing address of your credit card. A solution is to have a US, Brazilian or South African credit card. But that would take me to another (long post). But as I said, this isn't a real problem. In those 10% cases paying through Paypal is in most cases already a quick solution. Once we did the Borderlinx to Europe experience; we'll also do trials to South Africa and Brazil. With the low South African Rand this can prove to be less interesting, but in Brazil the experiment will be the more interesting.
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Feb 16 2008
Tropa the elite won the Golden Bear in Berlin, great news. I've written previously on the movie and its reward of giving an objective view on the roots of violence in Rio. I also wrote that the movie is a pamflet for the legalisation of drugs, at least, that was my conclusion after seeing it.
The bad news of Tropa de Elite winning the Golden Bear is that the movie now has an English title: "The Elite Squad" -horror-. The good news is that the movie will now become as famous as Cidade de Deus and that you'll be able to see the movie soon in a theatre near you. If you can't wait till then: beam me a mail and I'll send you the DVD. -
Feb 14 2008
I just read and watched this post from Shane of the SA Ideate guys.
I already wrote on the issues South Africa is currently facing. The major challenge South Africa and Brazil face is to have an inspirational president. I can write a book on my optinion about Brazil's president Lula. The man used to work on a factory chain less than 20 years ago and is now featuring in the Forbes list of richest people on the planet. Yet, the man inspires his country and above all unites it. "Unity gives power" is written under the Belgian flag. I wonder whey theer's no such a thing as a survey which measures the unity of a country. Yet, it is one of the most determining parameters for a country's future in these times. Chile, Brazil, Costa Rica, Denmark,... would all be countries in the top 20. Despite all our efforts and semi-intellectual bullshit on integration, countries like Belgium, France and even Holland are scattered in a zillion peaces. Lost beyond oblivion.
And the US and South Africa? They live crucial moments. Either they fall apart or they stand up as the strongest united nations in the world. It all depends on a leader which can inspire and unite the citizens of both countries.
The below trailer is a beautiful metaphor of the history, challenges and potential of both countries. Let's send it to the management of Eskom ! -
Feb 11 2008
Jon Stewart interviews CNNs personal finance editor Gerri Willis. Literally aughing with tears in your eyes.
Especially when next week Bush will sign the stimulus package while bankers are smiling around him. Because this stimulus package dumps the mortgage-backed junk back to... the taxpayer. -
Feb 11 2008
You'll find plenty of good analysis on the US$ FX forecast, some foresights on the Brazilian Real but nearly no strategic analysis on the South African Rand FX.
The South African rand is hitting a historical low for the past 10 years. Only in december 2001 it reached a dipping point which is equivalent to the current rate.
Gold is hitting historical highs, while all Central Banks are lowering their interest rates, South Africa is keeping it's interest rate at a 14,5% high. Actually, if you plot the South African prime rate against the Brazilian SELIC for the last 2 years, you would have a completely opposite trend. Despite this high South African prime rate and gold prices, the South African Rand is plumetting.
Why?
When I was visiting South Africa last July I was reading on the first signals of the enormous problems Eskom, the South African electricity company, was about to face. My South African contacts minimalised the problems; Eskom was already remedying the problems with new electricity plants. I was sceptical and rightly so. One of the main reasons why the South African Rand is plumetting is the current energy crisis. And a crisis it is ! South Africa already had problems with a very negative account and with the current electricity crisis shaving away more than 1% of the GDP, South Africa is now needing around 3 billian South African Rand a week in equity and bond inflows to finance the deficit on its current account.
The current account deficit now widened in Q3 2007 to a massive 8,1% of gross domestic product, the most since the beginning of 1982.
Without the benchmark interest rate of 14,5% the South African Reserve Bank is now offering, inflation would reach double digit figures. CPIX inflation is now at 8,6%.
The current energy crisis is absolutely unseen. Google Trends results says it all.
Let's draw a comparison between the BRL and ZAR compared to the EU. The Brazilian story is quite transparant to explain:
- Late 2000 Brazil was impacted by the Argentinian crisis (and so was South Africa, all emerging markets were impacted)
- Brazil's recovery early 2003 was only short lived. Peole eventually feared Brazil might collapse as Argentina did
- The IMF loan of August 2002 stablised the situation; yet, uncertainty over newly voted president Lula's direction kept things down
- Early 2005 gloablly things are going well and comodities are skyrocketting
- Today: All IMF loans are paid back, Brazil is self sufficient in oil (and soon gas?) and became even a creditor. Most of Brazil's foreign reserves however are build up by foreign equities and only to a lesser extent of positive trade balances. If the US really crashes, an uncoupling scenario seems highly improbable. Yet, contrary to South Africa, Brazil is not impacted by the worldwide turndown. Even the Bovespa fully recovered from a serious dip in January.
So, where does this take us with the Souh African Rand in 2008 (and 2009)?
- There is a general agreement amongst analysts that the South African Rand will not recover in 2008.
- Worse, Le Roux of RMB bank estimates that the chance that the ZAR will further fall towards ZAR 9/US$ has a 25% change. The SAR is currently at 7,89 against the US$. So, a further plunge to 9 would equal the SAR trading at ZAR 13/EU.
I give the chance that the ZAR will further tumble to ZAR 13/EU a 60% chance and the scenario where it tumbles to ZAR 14/EU a 30% chance. From Q3 2008 on it's SA bargain time. Also South African exporting ventures will have cheerful years ahead. I also believe that the current energy crisis will have a long term (2010+) positive effect on South Africa. The country needed a shake-up, the energy policies needed fresh dynamics. Brazil only started building it's huge hydro's back in the 80s when the country was swamped with electricty problems. They however never had to do loadshedding, citizens only had a rationalisation scheme where their usage was caped to a certain amount of Kw a day.
<click for bigger image> -
Feb 11 2008
Neigbouring South Africa, Portuguese-speaking and a rosy economical Outlook of 7% GDP growth in 2008, which is quite exceptional in the grim year that 2008 will be.
Moçambique is surely the country I'm most interested in exploring next. I'd love to talk to people with a Rolodex there.
This advertising spot is made by Joburg agency Draft FCB for Vodacam Moçambique. Yesterday over dinner I was talking to a Belgian entrepeneurs active in China who stated that foreign ad agencies are having a hard time getting grip with the Chinese market? You wonder why? Just have a look at the portfolio of South African Christen Iversen. My favorites are the clip for South African Metro FM Radio and the spot for Nike Africa. You need to be South African and a fan of the Springboks to make gems like these.
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