Brazil: The Challenges Facing the New Minister

The Finance Minister should declare that accounting tricks will no longer be used to meet the fiscal target.

There are many challenges facing the new Finance Minister. On the external front—which, in Brazil, has historically been associated with crises—, the country, on the contrary, is nowadays witnessing excessive capital inflows. The capital which is flooding into Brazil is helping to appreciate the real, causing problems for exporters of manufactured goods and sectors that compete with imports. In order to mitigate the problem, the current minister has resorted to capital controls, in the shape of the IOF (Tax on Financial Operations), which try to make non-resident financial investments in Brazil less profitable.

Germany Is Old Too

So, the butcher’s bill on Ireland is in and stands at 85 billion Euro jointly financed by the EU (the European Financial Stability Fund (EFSF) and the European Financial Stability Mechanism), the IMF and bilateral loans from a number of countries including Sweden, Denmark and the UK. Of course, it only worked a couple of hours and today markets are reeling again in the face of the Eurozone crisis which seem to have no end. Worryingly, markets seem to be contend on going for all together larger game this time around with Spanish bonds bearing the brunt of the attention

Another Lesson in How Not to Go About Things from the EU Commission

The present generation of European leaders will doubtless be remembered for many things, but somewhere high up there on the list will be the appalling sense of bad-timing they seem to have when making critical announcements. The confusion caused by certain ill-considered remarks from Angela Merkel about how private sectors bondholders would need to participate in future EU bailout processes is evidently one good example. Another, without doubt is going to be the decision by EU Commissioner Olli Rehn to appear before the world’s press today (yes, today of all days, one day after the sensitive announcement of the Irish Bank Bail-out plan and the decision to create the European Financial Mechanism), and inform the assembled throngs that, as far as the EU Commission could see, Spain will not be sticking to its 6% of GDP fiscal deficit commitment next year, simply because according to EU calculations the deficit is going to be 6.4% – unless, of course – there is another round of fiscal reduction measures. 

Resilient Markets

Say what you will about QE2, holiday sales, economic fundamentals: This market is resilient.  

Look, anyone with even half a brain knows that the massive bailouts only papered over the structural problems. We all know that no country can borrow/stimulate/ease its way to prosperity. That said, you would have to be a fool to ignore the impact of a tidal wave of Treasury and Fed monies since early 2009.

Will the Irish Crisis Spread to Italy?

Here we go again with talks of the end of the Euro. This time, however, the row was stirred by President of the European Council in person, Mr. Van Rumpuy.   The reason for this alarm is well known. As soon as it became evident that Greece would miss, albeit slightly, the deficit reduction targets agreed with the IMF and the UE, the nightmares of Ireland and Portugal default immediately materialized. the European Union, together with the European Central Bank and International Monetary Fund are now keen  to draw  a recalcitrant Ireland into accepting a life-jacket package (with strings) of 80-90 billion Euro,  that would stop, in the EU mind,  the disease from spreading to other vulnerable countries. Clearly, the ultimate crack would be Italy’s default.

Pricing Corporate Governance

Do markets appreciate and correctly price the corporate-governance provisions of companies? In new empirical research, Alma Cohen, Charles C.Y. Wang, and I show how stock markets have learned to price anti-takeover provisions. This learning by markets has important implications for both managements of publicly traded companies and their investors.

Listening to Voices: The IMF’s Dialogue with Civil Society

The IMF has made a concerted effort to engage more actively with civil society organizations in recent years. This is part of a broader effort to be more transparent and accountable to the broader public in our member countries.

So, an emphasis on change at the 2010 IMF-World Bank Annual Meetings provided the perfect opportunity to break new ground in our relationship with civil society.

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