Brazil: It Is Time to Stop Buying

The total amount of international reserves has surpassed $160 bn. This is an excessive amount, especially considering the country’s needs and its reality. It is time for the Brazilian Central Bank to stop intervening in the exchange rate. By the end of 2003, the external public debt reached $120 bn. In the same year, the […]

Latin America and Asia: Contrasts and Comparisons

Analysts typically treat Latin America and Asia as two completely different entities, with few similarities. Asia tends to be treated as a homogeneous bloc, with the appellation “Tiger” placed after it. Most people conjure up images of high tech manufacturing and modern capitals, whenever someone mentions Asia. Latin America is synonymous with commodity production, with […]

Argentina’s Bogus Miracle

It is time to debunk the myth that Argentina performed an economic miracle by actively managing the real exchange rate (RER) and to demand the authorities in that country that they implement a serious economic plan before conditions further deteriorate. The myth is that Argentina’s strong post-crisis recovery was due, primarily, to the maintenance of a high and […]

Liquidity Crises: The Functioning of Secondary Markets

As conventional wisdom has it, markets stall during financial crises, as sellers struggle to find their buyers. For example, describing the current subprime lending crisis, Paul Krugman notes “…[M]arkets in stuff that is normally traded all the time … have shut down because there are no buyers” (The New York Times, Aug. 11, 2007). Many […]

A Chinese Threat?

Pasta made its way from China to the Middle East through the Silk Road a century before Christ, whilst wine was being ferried in the opposite direction. What better combination than pasta and wine to demonstrate the advantages of globalization? This century, China’s growing global presence has also opened up opportunities for other countries. The […]

Argentina’s Recent Growth Episode

On September 14 Argentina growth data for the 2nd quarter of 2007 was released, showing again a strong performance: 8.7% yoy. Since 2003 Argentina has been growing at an annual average growth close to 9%. If you add the quarters in 2002 since growth started and the data for 2007 it has been about five […]

Ecuador: Correa Plays His Cards Right

On September 30th Ecuador goes to the polls to vote for an assembly that will re-write the constitution. A lot of reputations are riding on the outcome, not least that of Ecuador’s head of state. President Rafael Correa considers the constitutional assembly a vital step in his administration and has stated his intention to step […]

Brazil: A Debate Out of Focus

The debate on postponing the tax on financial transactions (CPMF) is out of focus. In the current scenario, we do not recommend the elimination of such tax. The key issue should not revolve around whether the tax should be renewed or not but on how to control and consciously allocate public spending. A drawback of […]

Brazil Needs a Tax Reform

According to Cervantes, “the best gravy is hunger”. So does it follow that a crisis is necessary to grease the wheels of reform? Not judging from China’s example, where one reform after another has been successfully completed and each one has acted as a stepping stone for the next. Perhaps both eating and implementing reforms […]