Tag Archives: Latin America Situation

LATIN AMERICA: BAHIA MEETING, CHAVEZ, MORALES & GABRIELA

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The Rio Group had its Meeting in Bahia, the north state of Brazil, and home of one of our major novelists, Jorge Amado (famous for one of its novels “Gabriela, Cravo e Canela”, a masterpiece).

 And with the sun, extremely beautiful “praias” (beaches), and colorful ambient, our two Latin Idols, launched the idea of constructing a new Financial System. The IMF and the World Bank didn’t matter.

 

The truth is, with a price of US 35.00 Dollars per Oil Barrel, Chavez & Company need urgent help.  With no major resources to accede, Venezuela, and Bolivia, and Ecuador will start to feel impatient. And so its populations.

Venezuela had clearly stated its impatient wait for a government change, in a public differendo some weeks ago. The Government still maintains its border problems with Colombia only to focus the popular attention outside.  

Bolivia is nearly to explode,  with a Morales trying not  to hear what the two main  regions ask for: independence.  The tropical Santa Cruz calls for its independence, stating its own identity and claiming for a representative government.  By the other side, the Altiplano sets it apart too, based on its pride for its indigenous heritage, and the urgent sotial needs of its population.

Ecuador is not making better. What is for sure is that people in this three countries will not tolerate this kind of specimens as leaders for far.  What will determine the lenght of its goverments is its economic resources.

 

That’s why they also launched his second initiative: to urge Mr. Obama to change US politics toward Cuba. A few questions: do they understand really the world context as the US does?  Do they understand its priorities and needs?

 

And finally, this leaders ended his performance with the creation of the South American Defense System. 

It was music for the ears of Brazil and Chile, two countries interested in developing its defense industry. Customers were there.

What not was there is the feeling of Latin America as unique, and united. That feeling that appears when we read Amado, and imagine Gabriela (“Gabriela, Cravo e Canela”) waking like a gazelle in the, again, colorful streets of Bahia.

And Chrysler, GM, and…Bush Administration

In the US the two sisters, Chrysler and GM announced its plans not to operate fifty manufacture plants in America.  And the Bush Administration launched a billionaire credit, announced lower interest rates, and all the car industry need to still standing. 

The world economy responded with the depreciation of the Dollar. Is this an injection of Trust for America?  We think honestly its not. Its time to think in a new world, without America as its center.

References

http://en.wikipedia.org/wiki/Jorge_Amado

 

PS If your imagination is a little bit tired, just look the characterization of Gabriela by Sonia Braga.  Just a Godess.

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PERU`S COLD CHRISTMAS, STILL

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The past week three main elements dominated the economic context in Peru. First, the demand, even in Christmas retail campaign, did not respond by far to the expectations. Second, the commercial credit for small and medium entrepreneurs showed a decline of 3.5% vs. previous year. Third, the dollar price had some troubles, and motivated a major buy from the BCR in the Lima money market.

 

It means the Fiesta ended? Not at all, have we thought. Export prices and foreign investment can conduct the expansion for the next year.  But the response to the context of the major economic actors really worried us a lot. 

 

The Government tries to start its spending plans as soon as possible. But bureaucracy and over-ruled sectors block the rush. The Peruvian privates conducted as ever: they urge for major capital access, after confessing they had to lay-off 60,000 workers in 2008. And Unions claim for a real wage increase, lower interest rates, and tax exonerations, all at the same time.  

 

We need a national project.  We need to set the major lines of our own development as a nation. Total cooperation is needed.  Zero lobbying, national interest above all.

  

 

 

 

 

 

 

 

 

 

CHRISTMAS JOKE & DOUBTING 2009 IN PERU

This post is motivated by an unusual Christmas Season in Peru.  This is the coldest we have seen in years.   Low traffic flow in the streets (and its Friday Evening, take note), and even fewer customers in the Department Stores.  Asked for the situation,  a retail sales clerck anwsered with hope: they expect to make this weekend its major sales. But important, the salesman recognized that theres no public, and a feeling of absence of  buying rush in the whole peruvian retail.

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As former Sales Manager, my instinct appoints to the exactly the same feeling.  Worst, appoints directly to a cold 2009.  It means, the Fiesta ended, and its highly possible that we return to the normal context in Peru: fight for survival, again.      

As Economist, the panorama seems to be crystal clear: there is no disposable income now. Not at the levels of last year for example.  Peruvians are calculating with care every penny they spend. 

Because to the usual expenses they are accustomed to, this Christmas they are confronting a brand new member of the family: the credit bill. In average, its taking as much as a 20% of the net income.  Result of two main factors we are going to explain.

First, the credit consumption since middle year was growing at an unusual raging pace. According to the ASBANC, the National Banking Association, we are ending the 2008 with a 40% growth rate in consumption credit vs. 2007. Too much, for my professional opinion. 

Second, the given consumption credit has no relation to the disposable income of its target population.  With a net income of S/ 2,000 (600 Dollars) there were S/ 10,000  credit lines approved.  Five times the income! At first sight, a wonderful business, at an annual interest rate of 18%, to be payed in 24 months.  But, …read the little letters: the monthly credit bill is around S/ 600, a third of the net income. Thats because theres no money to spend now.

In addition to the two main factors ennumerated, theres no credit culture in Peru. Thats why the current problems in consumption (and soon in production) are not hundred percent customer (ir)responsability. The Banks and its salesmen are half responsable for this unusual cold, cold Christmas.

Recommended: we need urgent a Possitive  Income Shock, because wages in Peru did not rise since the 80`s. And the cummulated inflation was…simple too much. We need recover minimum a half of our consumption capability.  Scheduled, and carefully conducted, because if not…once time again, our dreams of a better years will as ever remain in dreams.

And the above mentioned Christmas Joke: One Joker (with all respect to this Character, that with Heath Ledger became a Legend) recommended in public…to drop the minimum wages (since many years around 150 Dollars) to prevent an eventual increase in unemployement….that means, ….Ha, He, Ho…Call Batman!

PS. Its Saturday Evening…the streets would have been captured by christmas consumers. But its not happening