This is the second topic that dominates talks in Brazil. The first and more popular, is holding its enormous success: the millions of poor people who have ceased to be the impressive strength of their enterprises, the massive opportunities and greater prosperity. While the problems are still large (poverty, crime, corruption, inequality), so too is optimism.
The Brazilians, always cheerful, are now happier than ever. And with good reason. Things are going very well. And that leads to the second conversation required: how long will the party? How-who-we can derail this train swiftly toward prosperity, they ask. Paradoxically, the reasons for success are also the source of anxieties.
In the past five years, credit has grown to 45% the size of the economy. Thus, Brazilians have found their lenders to buy homes, motorcycles, refrigerators and everything else, many for the first time. And not have cared that interest rates on these loans are the second highest in the world or Brazilian families must now devote 20% of their income to pay their debts.
This credit boom and the consumption is due in part to the millions of new jobs and higher wages generated by economic expansion. While wealthier economies fell by 2.7% during the crisis of 2008-2009, Brazil grew 5%, and last year made it to 7.5%. Unemployment has fallen to the lowest levels in decades and in many sectors firms do not get the workers they need.
High international prices of minerals and agricultural products, Brazil exported in large quantities, contribute to this expansion. International investors are also elated with Brazil. Foreign direct investment grew by 90% last year. The flood of foreign money that is falling on Brazil, attracted by high interest rates is forcing the government to consider imposing tighter limits on speculative capital.
Flows of foreign capital and export revenues have filled the coffers Brazilian foreign exchange from other countries, which has gone up the value of its currency. The exchange rate adjusted for inflation is now 47% more expensive than it was his average in the last decade. The more real is overvalued currency in the world.
Inevitably, the combination of an expensive currency, the foreign investor euphoria, increased consumption and bottlenecks that exist to meet rapidly growing demand makes everything more expensive. Brazil, which remains a very poor nation, is now one of the most expensive countries in the world.
The housing prices in Rio de Janeiro and São Paulo has almost doubled since 2008. Renting offices in Rio is now more expensive to do in New York, and executive pay in São Paulo are higher than in London or Manhattan. And inflation is rising all to the point that the president, Dilma Rousseff, said its main concern.
There is no doubt that the economy is overheated. But Brazil is a financial bubble? No. Brazil's progress and potential are not an illusion. They are based on concrete achievements and real strengths. But the Brazilian economy itself is unsustainable aspects. Credit expansion and growth of public spending can not continue at current rates.
There are many important structural reforms that the president Lula da Silva, Brazil has postponed some of the world's youngest retiree, for example. The Chinese government invested annually in infrastructure (roads, airports, hospitals, etc.) an amount equal to 12% of its economy. Brazil, only 1.5%.
This explains in part why the Brazilian economy was "overheating" although this year only grew 4.5%. What if it grew to 10% several years in a row? Its decrepit infrastructure does not allow it. At the moment the priority is to stabilize the economy. This involves taking politically unpopular measures: slow consumption, for example.
And others. Or will President Dilma Rousseff down the volume to the party and it does now in a controlled manner, or the market "will" in an uncontrolled manner and socially painful. The euphoria and complacency are the enemies more threatening to the successful Brazil today. mnaim @. is 
The Brazilians, always cheerful, are now happier than ever. And with good reason. Things are going very well. And that leads to the second conversation required: how long will the party? How-who-we can derail this train swiftly toward prosperity, they ask. Paradoxically, the reasons for success are also the source of anxieties.
In the past five years, credit has grown to 45% the size of the economy. Thus, Brazilians have found their lenders to buy homes, motorcycles, refrigerators and everything else, many for the first time. And not have cared that interest rates on these loans are the second highest in the world or Brazilian families must now devote 20% of their income to pay their debts.
This credit boom and the consumption is due in part to the millions of new jobs and higher wages generated by economic expansion. While wealthier economies fell by 2.7% during the crisis of 2008-2009, Brazil grew 5%, and last year made it to 7.5%. Unemployment has fallen to the lowest levels in decades and in many sectors firms do not get the workers they need.
High international prices of minerals and agricultural products, Brazil exported in large quantities, contribute to this expansion. International investors are also elated with Brazil. Foreign direct investment grew by 90% last year. The flood of foreign money that is falling on Brazil, attracted by high interest rates is forcing the government to consider imposing tighter limits on speculative capital.
Flows of foreign capital and export revenues have filled the coffers Brazilian foreign exchange from other countries, which has gone up the value of its currency. The exchange rate adjusted for inflation is now 47% more expensive than it was his average in the last decade. The more real is overvalued currency in the world.
Inevitably, the combination of an expensive currency, the foreign investor euphoria, increased consumption and bottlenecks that exist to meet rapidly growing demand makes everything more expensive. Brazil, which remains a very poor nation, is now one of the most expensive countries in the world.
The housing prices in Rio de Janeiro and São Paulo has almost doubled since 2008. Renting offices in Rio is now more expensive to do in New York, and executive pay in São Paulo are higher than in London or Manhattan. And inflation is rising all to the point that the president, Dilma Rousseff, said its main concern.
There is no doubt that the economy is overheated. But Brazil is a financial bubble? No. Brazil's progress and potential are not an illusion. They are based on concrete achievements and real strengths. But the Brazilian economy itself is unsustainable aspects. Credit expansion and growth of public spending can not continue at current rates.
There are many important structural reforms that the president Lula da Silva, Brazil has postponed some of the world's youngest retiree, for example. The Chinese government invested annually in infrastructure (roads, airports, hospitals, etc.) an amount equal to 12% of its economy. Brazil, only 1.5%.
This explains in part why the Brazilian economy was "overheating" although this year only grew 4.5%. What if it grew to 10% several years in a row? Its decrepit infrastructure does not allow it. At the moment the priority is to stabilize the economy. This involves taking politically unpopular measures: slow consumption, for example.
And others. Or will President Dilma Rousseff down the volume to the party and it does now in a controlled manner, or the market "will" in an uncontrolled manner and socially painful. The euphoria and complacency are the enemies more threatening to the successful Brazil today. mnaim @. is
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