http://www.zerohedge.com/news/2015-...ti-compares-fiscal-outlook-bloody-terror-film Guess I won't be buying any Petrobras $PBR ADRs or making any other investments in Brazil in the near future. I don't know how the 2016 Summer Olympics will fare; history shows us past games have been colossal failures. Poor infrastructure and poverty is rampant. I knew Brazil wasn't doing all that well, but this piece suggests it is worse than I thought.
Brazil certainly has it's own share of big issues. Quite frankly a couple of years ago I thought their economy was doing ok but we've gotten a lot of bad news in the past year or so. I've still thought about investing a little in south america and with most ETFs that also includes Brazil. And no, I don't think the 2016 Olympics will make much of a difference on a larger scale. It will certainly provide a good quarter for certain services but that's about it.
One of the main reasons they are in deep s**t is the fact that the criminality rate is extremely high. Liveleak.com is full of videos of people getting robbed in the middle of cities. Now try to imagine: if the police can not control this type of criminality, what about the underground economy? I know that a lot of people recommend to invest in the Brazillian stocks, mainly because it's an emerging market, but I've heard way too many horror stories for me even to consider to invest a single penny over there.
Lula has destroyed the country. He said to have taken out of misery some millions, but he gave with one hand and took with the other because we now look at the country and we don't see that the overall situation is better, quite the opposite.
To say Brazil is in a bit of a pickle would be an understatement (I kind of feel like this is one of those situations where the pot is calling the kettle black given where my country is at). They have a very tough road ahead of them with it's crumbling fiscal credibility. We are currently in an interest rate increasing environment as world economies prepare themselves for the the interest hike in the US. The recession inherently means that they can no longer continue increasing their interest rates, which may cause even further pressure on the economy in an environment where like nations have increased their lending rates.
