Brazil: The anti-globalist?

NYTimes has a profile on Brazil today. Probably the most interesting part of the story is about Brazil's self-sufficiency.

Here's the money quote:
“What makes Brazil more resilient is that the rest of the world matters less,” said Don Hanna, the head of emerging market economics at Citibank.

As I've looked at Brazil that has been the one thing that has impressed me the most. The country really has been able to build and grow domestic industries and feed its own growth through internal consumption.

Of course, Brazil hasn't had the GDP growth numbers that other large, more "globalized" emerging markets have demonstrated; Brazil's GDP growth has been in the 4-5% range vs. India's 7% range and China's +9-10% range.

But what it lacks in GDP growth, it makes up in resiliency. It is still a tough story to tell because despite the great social advances as of late in Brazil, it is hard to see how 5% growth will really make a dent in the huge social inequalities in the country.

Barefisted development

Great story on Digicel, a company that has a very barefisted approach to development and market creation. They (apparently) go into a country, develop their infrastructure and sell mobile phones to the masses, all before the government knows what is going on. The gamble is that when people get their mobiles, they are not willing to give them up without a fight.

Fun business model, but it is perhaps not for the faint at heart.

Babble Rouser - Forbes.com

Telecoms in Mexico

More competition is needed in the telecoms market in Mexico.

Telecoms in Mexico | Slim’s pickings | Economist.com

Adding the "World" in worldwide web

It is clichéd by now to say that as soon as your company is on the web, it is global. But that is not so as witnessed by the experiences of some major web companies.

The globalization paradox that I love talking about is that in order to be global, you really need to be intensely local. Big web companies are realizing this are starting to localize their offering and event their trademarked look and feel.

Here's a great money quote:
"Creating a national company is like rocket science," said John Strand of Strand Consulting in Denmark. "But creating an international company is like proton physics."



An un-American feel aids expanding US Web firms - Yahoo! News

Forget growth, forget inflation. The main concern...???

...plain old stability!

I remember the days of "don't worry, it'll be a mild recession" talk of a few months back. Now we're looking down the wrong end of a full on financial crisis.

I'm glad some people still have a "don't worry be happy now is the time to buy attitude" but I remain unconvinced. I thought that a few weeks ago and now feel duly chastened.

I'm not panicking or doing anything rash.

But I'm not happy either.

Quietly, Brazil Eclipses an Ally - NYTimes.com

Interesting look at Brazil's rise to become a regional (and global) power.

Quietly, Brazil Eclipses an Ally - NYTimes.com

Why the US auto industry is sinking....

... in a word "innovation" or lack thereof.

Great article in today's NYTimes "Asleep at the spigot" on how US automakers and unions blustered and lobbied politicians and did anything but the right thing, innovate and make cars for the future. Now they are paying the price and are a great cautionary tale for other industries that may become complacent and lazy.

That’s the great thing about economics and markets, eventually it'll trump any sort of backward ideology. For some reason, US carmakers and their supporters thought it was a right to make and sell backward-thinking behemoths, regardless of what was happening in global oil markets. They didn't pay attention to where the auto and fuel markets were going and are now far behind more intelligent competitors that understood the market for how it really is, not for how they can manipulate politicians to say it should be.

"As the auto industry goes...

... so goes the US economy."

At least according to the old saying.



Geez, I hope not!

comScore Releases Top Latin America Web Rankings for April 2008

More interesting data on Internet useage in LatAm

comScore Releases Top Latin America Web Rankings for April 2008

Catching up with moral hazard

In the U.S., we recently saw the unprecedented opening of the Federal Reserve discount window to nonbanks. By definition, unprecedented events set a precedent. And regardless of whether that window is officially opened or closed, the market now assumes that it will be open if necessary on an ad hoc basis.

Interesting OpEd in today's WSJ from Vikram Pandit of Citigroup. As he highlights, the moral hazard has already been established, the Fed will bail out failing institutions that threaten the entire financial system. We now need regulations to manage that moral hazard.

Toward a Transparent Financial System - WSJ.com

The economic future of my daughter: pt i

With the birth of my daughter, as well as with all the crazy news in the market as of late (oil prices, subprime blah blah, inflation and so on) I’ve been thinking about what sort of economy my daughter will grow up with. I’m 36, which is pretty much the same age my dad was when he had me. So here are some thoughts on what economic forces will be bearing down on my daughter when she is 36.

Her diet will be different: Meat and animal products will continue to get more expensive as feed prices continue to rise. The price of feed/meat won’t be a direct straight-line to the upper right, but the inexorable trend will be in that direction. The result is that meat and animal products will continue to become more of a luxury. There may be meat substitutions, which will be entirely synthetic meat that is manufactured in a lab somewhere.

Transportation will be reduced: People simply won’t travel as much. Oil prices will rise at a rate faster than our ability to replace oil as the basis for our fuel. This will result in changes in our behavior and the increased use of substitution technologies.

Increased urbanization: One behavioral change will be an increased migration back to the city. The economic of travel will force us to live closer to work and amenities. She won’t be driving to the store as much as she’ll be walking to it, perhaps on her way back from work. That downside is she may not travel as much for pleasure, but there may be some solutions for that.

Substitutions technologies: Things like holograms and advanced video conferencing will step out of the pages of scifi novels and become a practical reality for my daughter. She’ll be telecommuting to work probably more often than actually commuting. Such technologies will also begin to shape her social life as well as she may have some friends who she may never actually meet in person, and she may visit some locations without ever leaving her livingroom.

I’ve got a lot more on this subject… more to come.

Hoping for higher rates

So here's my call.. I'd love to see interest rates begin to creep up, it would add some stability to the US markets. Higher rates would send a signal to the market that the fed is serious about shoring up the dollar and tackling any hint of inflation (well, it is more than a hint now).

So higher rates would mean strong dollar, curb in oil prices and a reduction in inflation expectations. All those things would be a huge help.

Don't think it would impact consumer lending right now because how much of it is now going on? Would hurt an already wounded housing market, though.

Has Danger to U.S. Economy 'Diminished'? : NPR

The Latin American social networking wars: Market leader Hi5 has been growing, but so has Facebook — and Sonico? » VentureBeat

I need to make note of this...

The Latin American social networking wars: Market leader Hi5 has been growing, but so has Facebook — and Sonico? » VentureBeat

UK and the Euro

I'm not posting this because I want to advocate the UK joining the Euro (even though I think it is a good idea... hell, I think Canada should join it as well but that is another story.)

I'm posting this because of this factoid:

Only the US and the euro area have serious global reserve currencies, with about 63 per cent and 27 per cent of the global stock of reserves respectively.

There are a lot more global reserves in Euros than I had thought. Interesting.

FT.com / Comment & analysis / FT Columnists - There is no excuse for Britain not to join euro

Brazil after the upgrade

Good Q&A... my main take-aways:

1) Brazil needs to invest more in human capital
2) Brazil needs to invest more in productivity (which means IT investment in my world)
3) Strong Real may mean more global investments for Brazilian companies
4) Brazil has had a strong bull market this year (draw your own conclusions... are you feeling lucky)

Me, I invested in EWZ a long time ago and has been by FAR the smartest (or luckiest) financial decision I've ever made.




FT.com / Markets / Ask the expert - Brazil after the upgrade

When Shakira Calls, Even the Shy Appear - New York Times

The rise of PPP-- new private, public and pop-star partnerships in LatAm.

When Shakira Calls, Even the Shy Appear - New York Times

The World Is Upside Down

NAN, that's a new acronym for me. It means (apparently) newly acquisitive nations and refers to companies from Brazil, Mexico, India and China going on a global buying spree usually snatching up US or European (or Canadian) assets.)

A lot of the action is in commodities, oil and gas, and manufacturing. Those markets are where all the money is currently flowing (well, maybe not manufacturing) so it is not surprising.

The most interesting story mentioned here Grupo Mexico battling with Vedanta Resources for Asarco; a Mexican company fighting with an Indian company to buy an American copper company.

With China being an increasingly larger consumer of commodities, the battle over American assets won't be to better serve the American market, but to make more of an in-road in the Chinese one.

Some may be inclined to think this represents the end of the US market as the world's most influential one, I don't think I would agree with that proposition. However, it does indicate that we are entering an increasingly multipolar era where global companies and "must-win" markets originate from every corner of the globe.



Op-Ed Columnist - The World Is Upside Down - Op-Ed - NYTimes.com

What Microloans Miss: Financial Page: The New Yorker

The problem is a dearth not just of lenders but also of people willing to buy an ownership stake in companies, like the angel investors and venture capitalists that American entrepreneurs often rely on.

This has been a theme in some of the recent literature on development, that a more VC approach needs to be taken to promote the founding and expanding of SMBs in emerging countries.

The relationship between lender and SMB is transactional, with the lender only interested in getting back the principle plus interest.

With interests aligned around the success of an enterprise, however, a unique symbiotic relationship forms between owner and manager (when the process works well.) This encourages sharing of resources, contacts and business ideas.


What Microloans Miss: Financial Page: The New Yorker

7 billion development experts worldwide

The end of the “development expert” paradigm does not mean the end of hope for development. Development is al­ready gradually ending poverty (global poverty rates have fallen by more than half in the past three decades) – not be- cause of development experts such as those who wrote the World Bank Growth Commission report – but thanks to more freedom for more of the 6.7bn individual development experts alive today.

Couldn't agree more.


FT.com / Comment & analysis / Comment - Trust the development experts – all 7bn

Palestinians pin biz hopes on high-tech industry - Yahoo! News

The question of the Middle East is obviously a very complex one, but I have to think that economic development that provides jobs and financial security has to be a good thing. It looks like a number of innovators in both Israel and Palestine agree and are putting money and expertise to help build an indigenous Palestinian IT industry.

Palestinian information technology is still in its infancy with just two dozen software houses, a few thousand engineers and $15 million in exports a year.

I have to admit, these numbers surprised me. I didn't think the Palestinian IT industry was even this big. It looks like a very positive development.


Palestinians pin biz hopes on high-tech industry - Yahoo! News