Post: #1

An interesting article on Brazil's boom.
Are the resources and property prices and over valued currency going to POP anytime soon?

http://www.telegraph.co.uk/finance/comme...aters.html

Excerpt:

"Prices are crazy," said Eduardo Paes, Rio’s mayor. Even 'favelas' are frothy as developers close in. A good slum is worth a four-bedroom house in Arizona - if you can prove ownership.

"Brazil is experiencing a typical housing bubble," said Samy Davy from the Getulio Vargas Foundation. "It risks widespread damage to the Brazilian financial system and economy as occurred in the US."

Post: #2

(04-17-2012 04:14 PM)Pilgrim37 Wrote:  An interesting article on Brazil's boom.
Are the resources and property prices and over valued currency going to POP anytime soon?

http://www.telegraph.co.uk/finance/comme...aters.html

Excerpt:

"Prices are crazy," said Eduardo Paes, Rio’s mayor. Even 'favelas' are frothy as developers close in. A good slum is worth a four-bedroom house in Arizona - if you can prove ownership.

"Brazil is experiencing a typical housing bubble," said Samy Davy from the Getulio Vargas Foundation. "It risks widespread damage to the Brazilian financial system and economy as occurred in the US."

What goes up...must come down at some point.

Post: #3

yes, I can see the bubble bursting any time soon. The difference is that here the government is much more interventionist
(not the "auto-regulated" market philosophy like in the US under Bush , derivatives etc) and they also learned with the 2008 crisis.. but we are seeing an overpricing in the real state sector , thats for sure.

Post: #4

The dollar has made up a lot of loss ground against the Real in the last year. For a minute there I thought we'd be at 1:1.

Post: #5

Yeah me too Speakeasy. The lowest I got was 1.5 in June of 2008.
But I don't see the Brasilian economy slowing down, quite the contrary. With the 2014 WC, the 2016 Olympics not to mention the biggest oil reserves in the world just outside the shores of Brasil which are yet to be developped, I can see Brasil becoming a G5 within 10 years. It's already the 6th or 7th biggest economy in the world, ahead of the likes of France or the UK...
Let me ask you Amour, Mr. GM, Chocolatinha and other Brasileiros here: how is this new economical boom in Brasil improving your personal life and that of those around you? Do you see more personal opportunities for you than say a few years ago, in the era before Lula and before all this buzz going on about Brasil?

Post: #6

Keep in Mind that our government is artificially bringing the Real down (buying USD in the market every day) , in order to help the exports sector. Other wise the Dollar would be almost 1:1 right now.

VP , Honestly : Thankfully I am a white, middle-class guy so I didn't felt any changes in my life (and therefore I recognize that my life is very different from the poorest majority), on the contrary , my family always struggled to pay the bills etc and things are getting expensive everyday.

But I do see a change in the way Brazilians see themselves, and for a country who suffered decades of + 1000% inflation rates , dictatorship etc no one can deny that Brazil , since FHC presidency , following with Lula , has a functioning democracy , freedom of speech and a stable , capitalist economy. The job market is also better right now , specially for people on engineering.

But we are still far from being a "developed" country as a whole , the level of corruption , poverty and inequality stills outrageous , what we have is some pools of "first world" life in the middle of a huge , polarized and yes, racist country.

In that case it doesn't change much for the average guy if the country is the 5th , 4th or 3rd economy in the world.

Post: #7

(04-17-2012 08:21 PM)Vacancier Permanent Wrote:  But I don't see the Brasilian economy slowing down, quite the contrary. With the 2014 WC, the 2016 Olympics not to mention the biggest oil reserves in the world just outside the shores of Brasil which are yet to be developped, I can see Brasil becoming a G5 within 10 years. It's already the 6th or 7th biggest economy in the world, ahead of the likes of France or the UK...

Good read on the actual economic benefits of hosting the olympic games:
http://darkwing.uoregon.edu/~harbaugh/Re...ympics.pdf

The Brazilian economy is riding the commodity/china bubble, but feel free to put your money where your mouth is

Post: #8

The dollar has been going up quite fast in the last couple weeks, almost back up to R$2

Post: #9

There will be no bubble for the next +5 years. The MAJOR difference between real estate in Brazil & the real estate bubble in for example the US, is that in Brazil most people buy property to live in them-selfs. Not talking yet about the crisis in the US & Europe, where Brazil is growing rapidly.

Adding to this, most people (foreigners) tend to look to the real estate prices in Rio (Zona Sul) and Sao Paulo. These areas cater to the rich(er) part of populations & foreigners with money to invest/moving to Brazil. The prices in other areas went up quickly, but in pace with the growing economy.

And maybe the biggest power against a potential bubble lays here:
"Brazil has a hand of trump cards. Public debt is just 37pc of GDP. The central bank can slash rates - now 9.75pc - if need be. The country no longer owes debts in dollars. It holds $353bn (£223bn) in foreign reserves. It is an agrarian superpower in an era of scarce food supply."

When talking about Brazil as a super power & seeing this in daily life, I can say that from Rio to Sao Paulo to cities in the North such as Fortaleza, Brazilians now start to see them-selfs as an important player in the world where just 6-7 years ago every taxi driver told me I was crazy to go living in Brazil. Lower income people now have more opportunities as work conditions improved a lot.

If you have an engineering or IT degree in Brazil (as a Brazilian) nice income can be earned, way better then what can be made in Europe. If working is your thing of course.

Post: #10

(04-19-2012 06:01 AM)GiovanniRio Wrote:  And maybe the biggest power against a potential bubble lays here:
"Brazil has a hand of trump cards. Public debt is just 37pc of GDP. The central bank can slash rates - now 9.75pc - if need be. The country no longer owes debts in dollars. It holds $353bn (£223bn) in foreign reserves. It is an agrarian superpower in an era of scarce food supply."

If there is an asset bubble forming, in this case real-estate, the central bank would want to raise interest rates to quell the appreciation, not lower them. That quote is in reference to a response to a potential oncoming economic recession, in which case they would want to lower rates. As the quote points out, the country has capacity for much higher debt levels, so if interest rates are cut to stimulate the economy, that would likely only reinforce the real-estate bubble. Unfortunately, there's no panacea.

Post: #11

(04-17-2012 09:43 PM)Mr.GM Wrote:  Keep in Mind that our government is artificially bringing the Real down (buying USD in the market every day) , in order to help the exports sector. Other wise the Dollar would be almost 1:1 right now.

VP , Honestly : Thankfully I am a white, middle-class guy so I didn't felt any changes in my life (and therefore I recognize that my life is very different from the poorest majority), on the contrary , my family always struggled to pay the bills etc and things are getting expensive everyday.

But I do see a change in the way Brazilians see themselves, and for a country who suffered decades of + 1000% inflation rates , dictatorship etc no one can deny that Brazil , since FHC presidency , following with Lula , has a functioning democracy , freedom of speech and a stable , capitalist economy. The job market is also better right now , specially for people on engineering.

But we are still far from being a "developed" country as a whole , the level of corruption , poverty and inequality stills outrageous , what we have is some pools of "first world" life in the middle of a huge , polarized and yes, racist country.

In that case it doesn't change much for the average guy if the country is the 5th , 4th or 3rd economy in the world.

Mr.GM can you confirm if it is true that Brazil's fastest growth is occurring in the North and Northeast?

I was reading this article and was wondering if there's any truth to this?

http://latindispatch.com/2012/04/15/blac...s-persist/

Quote:Magnoli argues that the FGV survey results represent changes in Brazil’s economic and regional reality over the last decade. “The so-called new Brazilian middle-class emerged in droves from the northeast and north, where everybody is self-declared pardos and where the economy is booming like China. In the center-south region, most people call themselves whites, but the economy didn’t grow much and there was already a large middle-class in states like São Paulo or Rio Grande do Sul,” he said.

Post: #12

(04-19-2012 12:22 PM)DjembaDjemba Wrote:  

(04-17-2012 09:43 PM)Mr.GM Wrote:  Keep in Mind that our government is artificially bringing the Real down (buying USD in the market every day) , in order to help the exports sector. Other wise the Dollar would be almost 1:1 right now.

VP , Honestly : Thankfully I am a white, middle-class guy so I didn't felt any changes in my life (and therefore I recognize that my life is very different from the poorest majority), on the contrary , my family always struggled to pay the bills etc and things are getting expensive everyday.

But I do see a change in the way Brazilians see themselves, and for a country who suffered decades of + 1000% inflation rates , dictatorship etc no one can deny that Brazil , since FHC presidency , following with Lula , has a functioning democracy , freedom of speech and a stable , capitalist economy. The job market is also better right now , specially for people on engineering.

But we are still far from being a "developed" country as a whole , the level of corruption , poverty and inequality stills outrageous , what we have is some pools of "first world" life in the middle of a huge , polarized and yes, racist country.

In that case it doesn't change much for the average guy if the country is the 5th , 4th or 3rd economy in the world.

Mr.GM can you confirm if it is true that Brazil's fastest growth is occurring in the North and Northeast?

I was reading this article and was wondering if there's any truth to this?

http://latindispatch.com/2012/04/15/blac...s-persist/

Quote:Magnoli argues that the FGV survey results represent changes in Brazil’s economic and regional reality over the last decade. “The so-called new Brazilian middle-class emerged in droves from the northeast and north, where everybody is self-declared pardos and where the economy is booming like China. In the center-south region, most people call themselves whites, but the economy didn’t grow much and there was already a large middle-class in states like São Paulo or Rio Grande do Sul,” he said.

It's not. The North is growing to, but at another speed then the South. All major companies are in the South of Brazil, as well as oil ,...

Post: #13

Giovonny is spot on , the North is growing at high rates , but development there is still incipient if you compare it to the Southern\ South states.

Nordeste is good to invest if you are looking for long,long-term returns.

Post: #14

To add: many developers focusing on the North use (incorrect) figures all the time to try to persuade people in buying a property there. In this case, it is true that the salary increase in % is higher in the North then in the South of Brazil. But this is due the fact that the North comes from an extremely poor background, meaning that every single R$ increase will make a high %.

I see more problems when talking about a real estate bubble in the North then it will ever be in the South, due to the fact that many new developments in the last 5 years are build for investors & foreigners. I see it's getting harder to sell them, especially new developments out of the cities.

I guess that the South will keep it's price increase on for another 5 year or so, and will leverage it's prices at that time, without however ever talking about a bubble. I just don't see it happen. The situation is way different then it was in the US or UK market. I see my apartment growing with an average of 26% per year (Ipanema, Zona Sul) since the last 3 years.

Anyhow, whats worrying me more is that the woman are changing ... The financial growth gives them more & more an American/European attitude

Post: #15

VP, my life is getting more expensive and my pay check is not comming along.
Seriouslly.
Poor people are enjoying the time of their life more than average, since now we have more facilities to buy popular cars and houses.

Post: #16

Wide credit (unsecured) availability has a tendency to make people think they're richer than they are.

Not good!