Wednesday, 7 May 2008

Chaiten Volcano in Chile Erupts

During heavy storms in the middle of the night on May 3, 2008 the Chaiten volcano in Chile erupted, for the first time in what scientists believe to be 9,370 years. The Chaiten volcano, classified as dormant and therefore left with little attention from scientists, is some 1,000 meters (3,280 feet) high and is located about 1,300 km (808 miles) south of Santiago de Chile. The eruption has forced thousands to flee the surrounding area. With storms continuing, the area has been covered in a blanket of ash. Farmers left some 40,000 head of livestock behind, and officials fear that many of them could die.

Tuesday thereafter the Chaiten volcano spewed lava and blasted ash more than 12 miles (20 km) into the sky, prompting a total evacuation of the provincial capital and other settlements. Wind-blown ash travelled hundreds of kilometres as far as Argentina's Chubut province, where town authorities issued health emergencies, closing down schools, airports and main roads, and distributing drinking water to some areas.

President Michelle Bachelet of Chile interrupted a speech to announce that "the volcano is exploding so a total evacuation of the town of Chaiten has been ordered." Later in the day she visited the area.

Rains following the eruption have carpeted surrounding areas in ash and mud. Hardest hit is Chaiten, a small provincial capital of wooden houses and cobblestone streets just 10 km (6 miles) from the volcano in southern Chile.

"There's no historical record on this volcano, so we have no way of knowing if the ash emissions will continue for weeks or even months," Interior Minister Edmundo Perez Yoma told reporters a day after the Chaiten volcano blew its top.

Chile is one of the most volcanically active regions in the world. It sits on the edge of the South American tectonic plate at a point where it forces the neighbouring Nazca plate, which holds the Pacific Ocean basin, into the earth’s mantle. This creates a weak point in the crust, allowing magma to force its way up. Experts believe that magma has been trickling through the crust into a chamber beneath Chaiten, increasing the pressure as more of the liquid rock and gas filled the void.

This week’s eruption was caused by magma forcing its way up through the crust beneath the volcano. Scientists in Chile are now frantically collecting data in an attempt to measure how much magma has built up under the volcano.
Chaiten is a caldera volcano, which can explode in a cataclysmic eruption, emptying the magma chamber and causing the dome and surrounding land to collapse into the void beneath.

Charles Stern, a volcanologist at the University of Colorado-Boulder who studied Chaiten, said the nearby town could end up buried, much like the Roman city of Pompeii following Mount Vesuvius' eruption in 79 A.D. Volcanic material from Chaiten's last eruption measured up to 5 feet.

So far, Chaiten has emitted only a few thousand tons of sulphur dioxide, "which is very small," said Simon Carn, a University of Maryland-Baltimore volcanologist who uses satellites to measure volcanic gases.
“In general, a volcano must spew at least 1 million tons of sulphur dioxide into the stratosphere to have a global effect on climate,” said Alan Robock, a Rutgers University professor. After eruptions of unusual size, sulphur dioxide, converted into sulphuric acid, can form a thin white cloud in the atmosphere that reflects sunlight away from Earth.
But Robock said this volcano is so close to the South Pole that any cooling would likely be limited to the Southern Hemisphere.

As always natural disasters are reason to the most beautiful and spectacular photographs. It is no different here. Enjoy the spectacle without forgetting the human tragedy.

if not stated otherwise, photographs with the courtesy of Reuters

Sunday, 4 May 2008

“Passamos A Ser Donos Do Nosso Nariz”

At last we are masters of our own nose

The international rating agency Standard & Poor's announced on 30 April the upgrading of Brazil from BB to BBB- (BBB-(minus): is the lowest rating above non-investment grade BB) with which the country joins the group of "reasonably secure countries for investments". On the stock market in São Paulo (Bovespa) the value of shares rose dramatically after the news broke, while the shares of Brazilian companies listed on the stock exchange in New York joined the euphoria.

President Luiz Inácio Lula da Silva commemorated the promotion to "investment grade" with the words:
"I don’t know how to pronounce the word, nor what it means, but if it is translated into a language Brazilians understand, then it seems, that Brazil is classified as a serious country … .. It is a victory for the Brazilian people, which waited for this moment for years. With this new classification, there is no doubt that Brazil is now a serious country." Clearly alluding to the infamous words of Charles de Gaulle.
According to Lula, the upgrading is of great importance. "It is the guarantee that we are now master of our own nose, and can decide on a policy which we deem suitable for Brazil."

Of course the national press was full of praise and positive analysis and even the international press could not remain at the sideline to extol Brazil to the skies.

The British "The Independent" suggested that the Brazilian economy undergoes a "carnivalesque experience.”
The "Financial Times", meanwhile, put Brazil “among the first countries on the investment list", although it warned that the prevailing high interest rates could impede economic growth.
The French newspaper "Les Echos" wrote that the country "is bathing in sweet euphoria" referring to the absurd stock market rise of 6% in São Paulo within one day.
The Spanish "El País" pointed out that the addition of Brazil to the list of "secure countries" will encourage investors to switch from the speculative markets to a secure investment in this country."
Economists expect that some 1,000 billion USdollar will enter the country.

The essential advantage of the change to investment grade is that large institutional investors, who according to their statutes only can invest in low risk assets, are now allowed to invest in Brazil, as the classification is an instrument that reflects the risk of a country being capable of complying with its obligations. The higher the classification, the lower the risk, and with it the likelihood that investment capital will enter the country.

The president of the Central Bank, Henrique Meirelles (see photo), called the S&P decision "very significant." For him, it shows that Brazil has sufficient immunity against external shocks.

But if everything is so positively judged by everyone, why do I feel so worried about it.
Fortunately I am not the only one as a few critical comments appear on various blogs. Just let’s take one. A résumé of the blog of Jose Paulo Kupfer, a renowned Brazilian journalist.

Résumé: By upgrading Brazil, S&P has completely ignored its own fundamental parameters. Where are the tax reforms, the redesign of the labour legislation and the reconstruction of the social security? And what about the correlation between government debt and GDP, which should be 30%, but actually is more than 40%. And Jose ends by saying: "It looks like, that Brazil has given some "grant" to the "dilapidated" reputation of S&P."

I conclude with my own vision.
Across the board the new classification by S&P has induced euphoria. However, it is questionable whether that is based on real grounds. I admit that the elevated standards for Brazil - to investment grade - will cause an influx of foreign capital. As a consequence, many Brazilian companies can negotiate loans against better conditions abroad, but at the same time, many smaller and medium-sized Brazilian production companies will be pushed even harder to keep up their export due to the USdollar falling further against the real. Although the volume of Brazilian exports measured in USdollars will not diminish, as the overwhelming part consists of commodities (not enriched raw materials and agricultural products), which prices are determined by the market in Chicago, many companies with manufactured products are forced to discontinue their exports. It is obvious, that it will not be beneficial to the country as all manufacturing companies have to concentrate exclusively on the home market. Without doubt the home market will grow, but never to the extent that it will benefit from the S&P classification. Exports of manufactured products will decrease, while the imports increase, both due to the declining value of the USdollar. The trade balance will, as a consequence, entirely rely on the export of commodities whose price is determined by Chicago in which Brazil merely is the direct object. No significant exports in manufactured products with added value almost always lead to a fatal blow to a country.

But there is yet another side to the new upgrading of S&P, which is much more dangerous and could even be disastrous. With the crisis in the U.S. housing market, S&P (and other financial graduators) demonstrated its absolute ignorance, or its involvement in the manipulation of the banking system. It would not be the first time that S & P and its peers manipulate an economy of a country, after firstly praising it into the sky, and then opening the door to hell for the mere benefit of the big money guys.
What is more, we live in a special time cycle. The valuation of the real is only partly due to the performance of Brazil itself and for the other part to the fact that the U.S. is ruled by the worst president of all time and that in an election year the economic cycle of a free fall of the currency always can be observed. That means that after the U.S. presidential elections have given certainty about the successor, the dollar will rise worldwide, as the financial institutions "suddenly" discover new confidence in the economy of the country. This will certainly happen if Barack Obama is elected as president. In the unlikely event that John McCain will be president, I believe, the dollar will probably continue its free fall.

This means that in 2009 another ratio will be seen between the dollar and the real. But beginning in 2009 Brazil seriously starts thinking about the succession of Lula. Herewith we enter the next time cycle of elections, which will have a negative impact on the position of (in this case) the real. We have also seen this during the presidential election to replace the predecessor of Lula, during which the real grossly was manipulated (not to use the word speculated) by the financial institutions with the ABN / AMRO as the frontrunner. If we run in a situation that the U.S. economy shows an improvement, as a result of the appointment of a new president and the period before the Brazilian presidential elections shows no absolute clarity about Lula's successor, the value of the real against the dollar will deteriorate.
That is also the moment the international financial world will withdraw its investments from Brazil to profit in the short term.

I shall illustrate this danger. I read in ValorOnLine, the following:
"The private sector has been hopeful about reducing the financial costs due to the upgrading.
For Renato Vale, president of CCR, one of the largest transport companies in the country, Labor Day was one big party. The CCR, which in March won a concession for a piece of the Rodoanel in São Paulo, is currently negotiating abroad a loan of 1.6 billion reais to be paid to the government of São Paulo. The upgrading of Brazil means a savings of several million USdollars in drawing expenditures on foreign funds."

Ok, let’s assume that CCR indeed attracts BRR 1.6 billion (the rate is now USD = 1.60 BRR, thus USD 1 billion) with an interest rate of 5% from the international market. The investor pays in USdollars and both interest and principal have to be paid back in USdollars. 5% interest means an annual interest charge of USD 50 million or 80 million BRR. Suppose he has a payback period of 10 years. That represents is an annual redemption of 100 million USD or 160 million BRR. Total = 150 million USD = 240 million BRR.
I believe the USdollar will return at a rate of around 2.25 BRR, as a result of two presidential elections, restoration of the US economy, the future expectations of the Chicago commodities market, rising imports and the lack of Brazilian exports of products with added value.
This leads for CCR in a rise in annual payments of 240 million to 337 million BRR. It is of no importance whether the dollar changes +5% +10% or in any other different value. The fact remains that a Brazilian company suddenly is facing much higher operating costs and a much higher debt.

We have seen this before. In Pará during the government of Fernando Henrique Cardoso, shipping companies in the Amazônia region could arrange loans from the BNDES (National Development Bank) to build ships for the expansion of the transport capacity in the region. The loans were in USdollars (rate 1:1), although the revenues of the companies were in BRR. We do not have to detail here (see above) what happened during the election year of FHC/Lula (picture right). Suddenly, but insurmountably, the companies faced payments, which were 2 to 3 times higher, than they were accustomed to. It took many on the verge of bankruptcy.
Brazil is not (yet) in a position to withstand foreign manipulation or speculation as the country’s economic cushion is (still) too fragile.
History repeats itself. Always.

I'm afraid that's Lula’s: “Passamos a ser donos do nosso nariz”, will end up with people getting their nose pinched.

80469 - cartoons courtesy of J. Bosco/O Liberal

Friday, 2 May 2008

Do They Blow-Up Christ, the Redeemer?

In an interview in the last issue of the Brazilian weekly Veja the actor Paulo César Pereio spoke about his campaign to get Christ, the Redeemer, one of the Seven New Wonders of the World, imploded. And all that solely because he thinks the statue is a blot to the landscape.

(For the uneducated (I had to look it up myself) imploding is bursting inwards i.e. from the outside to the inside in contrast to explode where the object bursts outwards thus from the inside to the outside, burying Rio de Janeiro under a shower of concrete blocks)

Paulo continues to say: “That statue is an improper disturbance of the landscape. The mountain on which it stands is of great beauty. Christ just disturbs the panoramic view. Why should we maintain such an idiotic puppet there at the top of the mountain?”

The actor (for the reader who never heard of Paulo César Pereio, here is his wiki-link) calls the election of the statue as one of the Seven Wonders of the World, absurd and confirms to have hired a publicity agency to gather signatures for his campaign.

Of course the reactions and comments were rife. “Christ, the Redeemer is homage to Jesus Christ, in other words a religious symbol for the majority of the Brazilian Christians and even for the “heathens”, it is one of the cultural and touristy attractions of Rio de Janeiro.”

The statue stands 39,6 meters (130 ft) high, weighs 700 tons, and is situated at the peak of the 700 m (2,296 ft) Corcovado mountain in the Tijuca Forest National Park, from which it oversees the city of Rio de Janeiro.

The idea to erect a large statue on top of the Corcovado dates from around 1850, but was brushed away in 1889, as Brazil became a republic, with laws separating church and state. The second proposal however, done in 1922, was successful.
The local engineer Heitor da Silva Costa made the first designs of the statue, while the visual artist Carlos Oswald did the final design of the monument, which was sculptured by Paul Landowski, a French sculptor of Polish origin.
A group of engineers and technicians studied Landowski’s plans and decided to use a reinforced concrete structure, which was designed by Albert Caquot.
The outer layers are made from soapstone, as it has sustainable qualities and is easy to carve.

Various historians take the view that the monument was a present from France to Brazil as compensation for the various French attempts to colonise parts of Brazil. This is not an unbelievable supposition as France always has been generous donating statues, among which New York’s Statue of Liberty from 1886.

Modernizing and Devotion go hand in hand
From 20 Jan 2003 on the “cariocas” and the tourists don’t need to climb anymore the 200 carved out steps, which led to the statue. From that day, St Sebastian’s Day, Rio’s patron saint, a set of elevators and escalators were set in motion.

An “invisible” construction
As everybody is used to have an unobstructed view of the statue from any angle and corner of the city, the architect Mauricio Prochnik designed a construction which followed the contours of the northern side of the mountain and be camouflaged by the trees. The design intended to minimize the impact of such a large-scale construction as elevators and escalators on the environment and the visual appearance. The complete construction is painted in a variety of grades of green, and special sun ray reflecting glass was installed. The only part visible is the steel construction, made from special anti-corrosive steel, on which the elevators, escalators and walkways rest.
The 7th of July 2007 Christ, the Redeemer was added to the list of Seven Wonders of the New World published by the in Switzerland based The New Open World Corporation. By the way, the title is not recognised by Unesco.

And now Christ, the Redeemer faces an implosion. But even before the plans could be executed the statue was subject to heated discussions, which divided the country in Catholics and Protestants (ha, the right word). Although it is probably without doubt, that many Protestants from around the world are visiting the statue, the first leaders of the Baptist Church started a controversy on religious principals.

The followers of the Baptist Churches released on 22 of March, 1923 an official note expressing their disgust about the planned construction of Christ, the Redeemer. The note stated, that the construction “will be a portentous prove of idolatry by the Church of Rome” and that it will be an offence to God. “The day this crime will be executed, all real Christians of Brazil should unite in a penance to ask God not to attribute this mortal sin, which is the sole responsibility of the Roman Catholic Church and the government leaders, to the whole of Brazil.” The note continues with “those who have this awkward idea to erect this monument of Christ, the Redeemer, do not have the intention to praise to Christ, but solely want to glorify the Roman Catholicism. ..... They, who pretend to praise to Christ, affront Him and do just that which He absolutely forbade - namely visualise Him in a statue.”

Without doubt Paulo César Pereio's campaign to implode Christ, the Redeemer, will be supported by the Baptists. But forget it, as money always brings home the bacon, so will this tourist attraction, religiously controversial or not, stay where it is. Undisturbed and well cared for.

P.S. Please, don’t mistake this Christ, the Redeemer with the statue, with the same name, high in the Andes on the border of Argentina with Chile. That’s another statue and another story.


Thursday, 1 May 2008

An unwelcome pet - A cobra in the garden

In Brazil and particularly in the Amazon region the word: cobra is used for snake. Any snake is called cobra, whatever the scientific or popular name. A snake is a cobra and a cobra is a snake. Period. So the cobra is going to town. The deforestation of the Amazon causes an invasion of cobras in the neighbourhoods of Belém, according to Ibama, the governmental environment institute. Only this year already 21 cobras are reported by the citizenry, while last year an average of 2 reports per month came in.
Up till now no venomous snake has been caught, although they found species of some 3 meter long. Imagine the fear of the people to step into their garden with the chance to stand eye to eye with a 3 meter long cobra ready to attack. According to Ibama, the infiltration of cobras in the town is a direct result of the illegal deforestation activities in the areas around Belém.
"The deforestation destroys the habitat of the snakes and they move into town", declares a spokeswoman for Ibama. After they have caught the cobras Ibama brings them to local zoological gardens or places them back into the natural habitat of ecological reservations.