The Brazilian Economy

The Economist, which while I can read online is one of the things I miss about being able to buy when I was back in the States, and probably the best magazine out there, has an interesting article on the state of the Brazilian economy.

TAKE two neighbouring economies, both heavily dependent on commodity prices to make their trade figures look good. Give one an orthodox monetary policy, watch it embrace foreign investors and float its currency. Hand the other over to mavericks who have resorted to fixing prices, banning or taxing some of their own exports and baldly lying about the inflation rate. The result? The rascal—Argentina—continues to grow at a blistering 9% clip, while by contrast well-behaved Brazil plods along (see chart). Is it time to rewrite the economics textbooks? Argentines would like to think so. But there are signs that Brazil may yet come out ahead.

Check out the full write up here.

The price of a can of Pepsi? 10 gum balls and 5 chocolates.

There is a coin shortage in Brazil. A big problem for stores, bars, businesses in general is getting change from the banks. A common practice is rounding up or down 5 cents: sometimes you win, sometimes you lose. I really don't have a problem with that. I figure on average it all balances out. There are even times where I come up 5 or 10 cents short and the keeper just waves me off and rings up the purchase. But there is a really weird practice of giving candy and the like as "change". At most registers and counters you will see types of candy, chocolate, gum, etc for sale. There are times, when the register just does not have enough coins to give change so they "offer" the candy. Supposedly this practice is illegal. The curious thing is, if a store does this, then the store "is required" to accept the candy as payment, even though the issuing of the candy as change is not permitted in the first place. This is supposedly "law" but no one can point me to the statute. I have seen customers at the counter make a point about it, and the person at the register backs down. (Both ways, I have seen a person refuse the candy, and the coins that the store "did not have" magically appear, and I have seen people say "you gave me a 5 cent candy 10 times as change, so here they are in lieu of 50 cents") The problem is I cannot use the candy on the bus to pay the fare, use it to pay a light bill, etc. You can only "do this" at the same place that did it to you. And I really have a problem when they do it to kids. Despite Brazil's reputation for violence, it is very common (at least where I live, and have seen) to send kids over to the store to buy bread, milk, eggs, etc. They even sell cigarettes and alcohol (although it is against the law) to them, if the store keeper knows the kid and the family, and know it is for an adult. Of course a kid is going to accept the candy, and I am sure this has caused problems at times. Brazil!?! I love this place, but this is one of the many things that makes me scratch my head at times.

Recession? What Recession?

Location, location, location goes the saying. All politics is local is another. This article from The Economist shows how some areas of the US are in a boom, and others are a bust:

YOU won't hear the R-word much in the modest governor's mansion in Helena, Montana. The occupant, Brian Schweitzer, insists that Montana's economy is in better shape than it has ever been. It has had one of the fastest rates of job growth in the country. The state is prospering on the back of booms in mining and farming, as well as steady growth in tourism. Paul Polzin of the University of Montana forecasts that the state's economy will grow by 4.1% this year, the fifth consecutive year of growth above 4%. “We've been searching for realistic doomsday scenarios,” he says, “and we just can't find any.”

Go to Michigan, by contrast, and it is hard to find anything but gloom. The collapse of America's car industry, coupled with a nasty subprime mortgage bust, has left the state reeling. It has the highest unemployment rate in the country (7.6%) and the third-highest foreclosure rate, and was the only state to lose a large number of jobs in 2007. In the run-up to the state's Republican primary (which he won) Mitt Romney traversed Michigan, promising to save voters from a “one-state recession”.

The infographic they have is pretty interesting too. Miami and Tampa among others have a more than 10% drop in housing prices, while others have zero or even positive growth. Unemployment rates are varying as well.

Hey Ma, I'm Famous!!!

No matter how many times it happens, it is always exciting to see your name, get credited, or hat tipped for a link or tip!! I sent this link about Paul Krugman to Donald Luskin of Poor and Stupid, and he used it today on his site. WOOHOO!!!!

Interesting Articles

This is one of the "features" or "services" I hope to provide on the blog. Just a hodgepodge of different articles and blogposts I found around the web that I found interesting and informative:

Donald Luskin has this to say about an interesting looking book called "Liberal Fascism":

National Review's Jonah Goldberg has a new book out -- Liberal Fascism. Love the cover! Like Goldberg, I'm tired of liberals endlessly accusing conservatives of fascism, Nazism, Hilterism, and so on -- when the liberal agenda, is in fact, the very kind of state supremacy that quite literally defines fascism.

Take a look at the cover, a smiley face with a Hitler mustache. Luskin is on point, and no need to expound his comments which pretty much cover what I think. I enjoy Luskin's blog, he usually writes about Economics, so if you enjoy that, visit his site.

Amity Shlaes writes a piece on the Wall Street Journal's OpinionJournal called "The New Deal Jobs Myth" about a favorite subject among the left vs. right, and many economists,: is a job in the public sector as good as one in the private. Shlaes revists the "New Deal" and touches on "emergencies" creating jobs. My view on this is rather simple. Known as "The Parable of the Broken Window", it comes from an essay by Frédéric Bastiat. If you have never read or heard it, you should check it out, but I will try to sum it up briefly. It deals with a shopkeeper who arrives at his store and finds some hoodlum threw a rock through his window. While it sucks that the keeper has to buy a new window, it does make business for the repair man. The repair man now has money to spend elsewhere, and the "invisible hand", in this case the hand that threw the rock through the window, keeps the economy chugging along. While on the surface this is true, it fails to recognize the fact that because the shopkeeper spent his money on the window, he did not spend it elsewhere, as he originally planned. It simply took money (taxes, anyone?) from one source and gave it to another (social programs?). I plan to revisit this whole topic at another time, so I will leave it at that, but the article is worth a read.

Finally, Don Boudreaux at Cafe Hayek calls our attention to an article by Joel Kotkin of The Washington Post, about how today's headlines foretell "doom and gloom" for the economy and the coming years, and how in the 70's, the headlines seemed the same. Oil prices high now, Oil prices high in the 70's. The dollar is struggling now, the dollar was taken off the gold peg in the 70's and some thought that when the toilet paper ran out you might as well use the notes as a substitute. They said a piece of the Amazon the size of Rhode Island disappears every day and our kids would never get to see it and guess what, it hasn't gone anywhere. Keep the alarmists in check. Not so long ago many thought the American economy would tank we would be buying groceries with the Yen. It's a cycle guys, it goes up, it goes down, it comes back round again.