Bolivia in crisis. Booting out the US Ambassador

Recently some conflicts between Latin American countries and the USA have been escalating due to the (omnipresent) fear for US intervention in the Latin America area, the ‘back yard of the USA’. As you certainly know, the USA has always seen Latin America as its ‘back yard’. And it is the people in this back yard that is very scared at this moment, but also expectant in regard to the US presidential elections.

Without doubt you can say that Latin America in the recent years moved to the left. Socialism, if you like to call it that. But socialism is still a dirty word in de US and obviously little is known about its definition. But don't forget that socialism in Latin America is not more than something between the centre and the left-wing of the democrats in the US. It has nothing to do with communism, it is just a movement centring on the wellbeing of ordinary people. Giving the people, after so many years of corruption and exploitation a piece of the cake.

I will not talk about historical US (bloody) interventions in Latin America, such as Chile, Panama, Columbia, Grenada and many others. No, I just want to stipulate the (recent) interventions during the reign of the Busch/Cheney administration.

Let’s start with Bolivia, at this moment the centre of the conflict.
Bolivia, South America’s poorest country, is basically divided between the western highlands, home to the impoverished indigenous majority, and the rich eastern lowlands, where much of the population is made up of people of predominantly European (primarily Spanish) descent and where all the international corporations are sitting.

The support base of President Evo Morales, the country’s first-ever indigenous president, is largely found in the western altiplano. Meanwhile, several eastern provinces have been demanding autonomy and greater control over the rich farmland and natural gas reserves concentrated in that part of the country, and are staunchly opposed to any agrarian reform.
In the east, 90% of all land is owned by 10% of the large landowners, while in the western highlands, 90% of the indigenous campesinos (peasant farmers) own just 10% of the arable land.

The president wants to give more power to indigenous and poor communities, by carrying out land reform and redistributing gas revenues. That’s painful for the rich landowners and (mainly) Corporate America, which are bleeding the country. The answer to the intention of President Evo Morales is a movement (supported by the landowners and Big Oil) to declare the eastern states autonomous.
The opposition bloc tries to force the government to agree to the restitution to the provinces of a portion of the natural gas tax - 49 million USD - that the Morales administration has diverted to the payment of a universal pension of 26 USD a month to people over 60.

The governors of the lowlands provinces of Santa Cruz in the east, Beni in the northeast, Pando in the north, and Tarija and Chuquisaca to the south have made this one of the key demands in their opposition to Morales.
In response, the government argues that the funds diverted from the provinces for the universal pension are insignificant compared to the more than two billion USD that will be transferred to the provincial governments this year, a sum that is double the 952 million USD transferred in 2005.

The president of Bolivia’s Private Business Confederation, Gabriel Dabdoub, argues that a lack of government policies to foment private sector activity and attract investment has kept away 400 million USD a year in private (foreign) investment.
However, exporters are counting on a new record in sales of industrialised products and commodities, which according to the government will amount to more than 6 billion USD this year, compared to 4.78 billion USD in 2007.

A climate favourable to trade, with heavy foreign demand for commodities like natural gas - of which Bolivia has South America’s second-largest reserves, after Venezuela - oil, minerals and agri products accompanied by high international prices, has led to an increase in foreign exchange earnings in a country whose gross domestic product (GDP) stands at 14.7 billion USD. (Note: ExxonMobil’s annual revenue (similar to the GDP of a country) was USD 405 billion in 2007)

Gas revenues soared from 188 million USD in late 2001 to 1.57 billion USD in 2007, after the Morales administration, which took office in January 2006, forced foreign oil companies to renegotiate the terms of their contracts, thus increasing the royalties and taxes paid by the companies.

Over the past year, the leftwing Morales administration has accused the US embassy in Bolivia of offering its backing to provincial governments in Santa Cruz, Beni, Pando, Tarija and Chuquisaca in their crusade for radical autonomy.
The decision to expel US ambassador Philip Goldberg came after major confrontations, such as the Bolivian Foreign Ministry's report that the US ambassador had held a private meeting on Aug. 25 with the rightwing governor of Santa Cruz, President Morales' main political opponent.
The following day, Ambassador Goldberg was summoned to the Foreign Ministry and asked for an explanation. Foreign Minister David Choquehuanca also asked Goldberg to be cautious in his contacts with opposition governors. Nevertheless Goldberg later paid a visit to the opposition governor of Chuquisaca, Savina Cuellar, on Sept. 4, further fuelling the government's annoyance.

So it is no surprise, that Bolivian President Evo Morales has declared the US Ambassador Philip Goldberg "persona non grata", after accusing him of aiding and abetting pro-autonomy opposition groups that are blocking highways and occupying government buildings, reducing the supply of natural gas to Brazil.
"I am not afraid of anyone, not even the empire (the United States)," Morales said when he instructed his Foreign Minister to inform the US ambassador in writing that he was no longer welcome in the country.

But indeed Latin America has all reasons to fear an intervention and even an aggressive active role plaid by the US to create a crisis. May I remind the reader the interference of US diplomats in the coup d’état in 2002 against Hugo Chavez and the attempts to frustrate the last presidential election in Argentina.

According to the 1980 Nobel Peace Prize winner Argentinean Adolfo Perez Esquivel the autonomy movement is just the landowners and corporations pretext to try to stop a far reaching revolutionary process in this Andean nation. The same is true for Venezuela with Hugo Chavez, Ecuador with Rafael Correa and more recently Paraguay with Fernando Lugo, where US attacks are growing, but fortunately "Latin American people have begun to speak with their own voices," he added.

Latin America has been expecting an American military intervention for some time during this presidential election. At the end it was Georgia, where Busch/Cheney found their confederate, stupid enough to provoke Russia in an attempt to help the GOP to reign another 4 years. But, as said, Latin America, and particularly Venezuela, Bolivia and Paraguay, were and still are expecting American aggression to be in their area to steamroll the Dems, as all the signs are there.

This is in a nutshell the recent crisis and the reason to ‘boot out’ the US ambassadors of Bolivia as well as Venezuela.
But there is more. The recent presence of Russia in the Latin America area is due to the Busch/Cheney foreign policy of the last few months and the scary (for Latin America) sudden re-installment (after 60 years) of the 4th US Navy Fleet in this area.
Let me talk about this in my next post.

Facts in this post are based upon articles on the websites: WorldPress (a very reliable source regarding the relations between the US and Latin America) as well as Prensa Latina
80510

Brazil and its ‘green’ bio-diesel

We all know that Brazil champions bio-fuels and as I wrote in a previous post, President Lula promotes worldwide the use (and thus Brazilian export) of ethanol from sugar-cane. You should think puffing out his chest Brazil is the prime example of clean air.

But as Míriam Leitão writes in her column “Economic Panorama” in O Globo, inhaling Brazilian air causes a frontal attack on your nose and your health.
People have to breathe to survive, but when you breathe in Brazil’s large cities, you are bound to inhale the sulphur rich fuel exhausts, mainly diesel. In the United States, Europe, Taiwan and Mexico, the sulphur content in diesel has already fallen. Seven years ago, a resolution determined clean fuel in Brazil. Petrobras, Brazil’s state-owned petroleum giant said that it will commit to this resolution in 2009. Not meeting these requirements will cost more human lives.

The resolution 315 from 2002 published by Conama, the National Environment Institute, established that Brazilian diesel should have 50 parts of sulphur per million (i.e. a maximum of 0,005% of sulphur). Diesel is a composition basically consisted of carbon, hydrogen, and concentrations of sulphur, nitrogen and oxygen. There is a worldwide movement to reduce the share of sulphur as it is responsible for the existence of acid rain. Compared to the product in other countries, diesel in Brazil, a country that champions bio-diesel, is just a shame. For years ago the United States reached the level of 50 parts per million (ppm). At this moment the USA target for 15 parts per million. In Europe, the goal today is 10 ppm. In Brazil, diesel has 500 parts of sulphur per million in the large cities and 2.000 in the rural areas. Petrol (gasoline) has 1.000 ppm. But diesel raises more concern as it is a heavier compound with emitted particles more harmful to human health.

If the regulation of Conama, finally, comes into force in the coming year, the level of sulphur will fall to 50 ppm for diesel in both large cities and rural areas. Even when we get there, we are still far behind countries like Mexico, which today has 50 ppm and will go to 15 ppm next year. Taiwan reached 50 ppm 4 years ago. Canada, which has a heavy oil, had 340 ppm, but moved to 30 ppm. There are several large and medium-sized countries which are already reaching levels causing less pollution and less harm.

Why is this country with its abundance of ‘green’ bio-diesel one of the worst polluters in the world? Because it is typical Brazil, it contains all the signs of the various and many defects in Brazil: the excessive power of Petrobras (the Kingdom within a Republic), the inefficiency of the regulatory bodies, particularly the Agência Nacional do Petróleo (National Agency for Petroleum), the neglect of and the disinterest in the health of the citizens, and last but not least the lobby of the auto industry. Conama submitted to a long term period in which its resolution should be met, but the National Agency for Petroleum (ANP), which had to detail the technical specifications of fuels, let the time running out. Finally in October last year and after much pressure from entities such as the movement “Our São Paulo”, the OAB, the Department of Environment of São Paulo, among others, the ANP reported the specifications.
And then a lobby started to delay the enforcement of the resolution, whose implementation was scheduled for January 2009. The authorities reacted. The Ministry of Environment announced not to be inclined to accept postponements. Minister Carlos Minc of the Ministry of Environment reiterated this, saying that he shall require compensation from Petrobras and Anfavea (the Association of Brazilian Car Manufacturers) if they do not meet the deadline. Petrobras divulged in a bulletin that "the Company shall provide the 50 ppm diesel to be used by vehicles with technology P-6. This product is also available for tests by the auto industry."

Heavy sulphur loaded diesel is the main culprit for the pollution generated by traffic. The pollution causes various respiratory diseases and even lung cancer, 5% of the cases are caused by pollution. Two million people die each year worldwide from diseases caused by air pollution.

Professor Paulo Saldiva of the Laboratory for Atmospheric Pollution of the University of São Paulo, made a calculation regarding the effects on the economically active population, between 20 and 60 years in the metropolitan region of São Paulo; he arrived at a cost of 1,5 billion USD per year because of problems caused by pollution. While only 10% of the fleet is diesel, the fuel is responsible for 50% of the emissions of fine particles, which forms the black smoke, responsible for deaths and respiratory diseases. According to Paulo Saldiva, pollution causes some 400 deaths per year in the city of São Paulo only.

Petrobras, in its memo, said it is gradually removing the sulphur content of diesel and gasoline since the early 90’s and states that it invested 1,6 billion USD from 2000 to 2007 to improve the quality of fuels.
There is no reason for further postponements, the technology to reduce sulphur content is readily available and public health should be at the top of the list of priorities of the socialistic administration of President Lula.

But there is hope, although we have to wait a long time. Yesterday the Ministry of Environment proposed a plan to reduce the share of sulphur to 10 ppm in 2012. Nice, but various sources are reporting that the proposed resolution will not be imposed before 2017. Nine years from now, just to go from 50 ppm to 10 ppm, a level many a country has reached already nowadays. Nine years more to see Brazil change from a lavish green to a dry savannah.

80801

An irreversible trend - It's the economy, stupid!

In Brazil energy products derived from sugar cane were responsible for 16% of the total energy supply in 2007, holding the second position in the total of consumed energy, surpassing for the first time hydraulic power, which supplied 14,7% last year, according to preliminary data released in the balance by the Empresa de Pesquisa Energética (EPE), Brazilian’s Energy Research Company. The fossil-oil and derivatives remained in first place as an energy source, with a 36,7% stake.

The energy consumption rose with 13,5 million tonnes and of this more than 70% was from renewable sources. Once again, renewable energy of sugar cane grew most with 41,4%. The share of renewable energy in the matrix of Brazilian energy increased from 44,9% in 2006 to 46,4% in 2007.

The number of vehicles using bio-fuel exceeded five million in April 2008.

According to the chairman of EPE, the domestic consumption of energy, which takes into account any final energy consumption by individuals, companies and processing, grew 5,9%, more than the GDP, which advanced 5,4%. Of that total, according to him, there was an increase of fuel consumption with a 7,3%, against a 5,4% increase of electric energy, compared with 2006.

“For the first time energy supply from cane sugar exceeded hydro electric energy and became the second source of the Brazilian energy matrix, after fossil oil. I believe it is an irreversible trend” the president of EPE stated. At the end of the presentation of the energy balance of 2007 he defended the production of Brazilian ethanol, saying: “In Brazil, we have sufficient soil to increase the production of ethanol without affecting the production of food”, when asked about the criticism that the production of ethanol affects the prices of food in the world market.

Obviously so far so good. Brazil is a world example for renewable (green) energy resources, thanks to President Lula’s cuddling of his darling pet, promoting his fads and fancies with pride and little essential knowledge during all his official international visits with potential buying countries. Stubbornly fighting off his critics as even his Latin American colleagues call him a traitor.

It is a fact, the country’s emergence is partly accelerated by bio-fuels as bio-fuels have become the vanguard of the green-tech revolution. For politicians and corporations the trendy way to go as most of the damage created by bio-fuels is less direct and less obvious.
Indeed only a tiny portion of the Amazônia region is being torn down to grow the sugarcane that fuels most Brazilian cars. The shocking explosion of deforestation is a result a subtle chain reaction: Farmers in the USA are selling one-fifth of their corn to ethanol production, so US soybean farmers are switching to corn, as a result Brazilian soybean farmers are expanding into cattle pastures, so Brazilian cattlemen are displaced to the Amazônia.

Amazônia rain forest pushed back by large areas of soybean fields in the state of Mato Grosso

So far Lula’s ‘green’ positioning on bio-fuels is correct. Sugar growers here have a greener story to tell than do any other bio-fuel producers. They provide 45% of Brazil's fuel (all cars in the country are able to run on ethanol) on only 1% of its arable land. They've reduced fertilizer use while increasing yields and they convert leftover bio-mass into electricity. With the slogan: "Grain is good for bread, not for cars. But sugar is different." their trade group expects production to double by 2015 with little effect on the Amazônia.

So far, they are right. Corn ethanol and soy bio-diesel produce about twice the emissions of gasoline. Sugarcane ethanol is much cleaner, and bio-fuels created from waste products that don't gobble up land have real potential. So, obviously the Amazônia region is safe.

But take a look at the Cerrado, south of the Amazônia region, an ecological jewel in its own right.

Map of the Cerrado eco-region. The limits of the eco-region are marked in yellow.

Photo: NASA

The Amazônia gets the ink, but the Cerrado is the world's most bio-diverse savannah, with 10.000 species of plants, nearly half of which are found nowhere else on earth, and more mammals than the African bush. You can watch toucans and macaws, find puma tracks and admire a carnivorous flower. The Cerrado's trees aren't as tall or dense as the Amazônia ones, so they don't store as much carbon, but the region of some 2 million km2 (50 times the Netherlands) stores its share. Or should we say ‘stored’ its share, as it is transforming by the march of progress - first into pastures, then into sugarcane fields.

Caracteristic vegetation in the Cerrado

But also in another way sugarcane is a shady business. Sugarcane is a typical product from the slave era and that is exactly what it still is.

In 2007, the federal government freed 3.131 “sugar cane” slaves. In the same period the Brazilian Bank for Development released 3,6 billion USD for projects of the sector.

The Cerrado near "The three lakes" - Mato Grosso do Sul

Almost daily there are stories in the news papers about rescue of sugarcane labour (including children) working under - what is now euphemistically called – a “degrading situation”, but in fact is just pure and simple slavery.
But let us just have a look at one:

In March 2008 the papers headlined, after the Ministry of Labour and Employment visited the premises of a company called Brenco (Brazil Renewable Energy Company, note that this Brazilian company has an English name and you will see why):
- Workers of Brenco are living in precarious housing
- Investigating Brenco ends with 17 labourers freed and 140 “slave” contracts terminated

Brenco is commanded by the former president of Petrobras, Brazil’s giant state-owned petroleum company, Henri Phillipe Reischtul.
Brenco has, among its shareholders, the former US President Bill Clinton, James Wolfensohn, former World Bank chairman, Steve Case, former America Online (AOL)-Time Warner, and Vinod Khosla, multimillionaire Indian rooted in the United States who founded the Sun Microsystems. Not by any means the ordinary slave driver you should expect.

But the story does not end here. In August 2008 Brenco reached the headlines of the news papers another time:
The BNDES (Brazilian’s Bank for Development) releases 1,2 billion USD to deploy four units of sugar cane processing in Mato Grosso, Goias and Mato Grosso do Sul (all Cerrado states). In all, the units will install 15 million tonnes of sugar cane grinding capacity per season, producing 1,4 billion litres of alcohol. And the market could sell up to 220 MW of energy through cogeneration. The project has an estimated investment of 1,8 billion USD, with the BNDES entering with 2/3, although, the BNDESPar should get only some 15% to 20% of the shares of the venture. According to the bank, the venture will generate 8.400 jobs and will run a fully mechanized harvesting.



In regard to the “progressive social policy” of a President who was a militant union leader first, do you understand this? No? Neither do I.
But Clinton himself gave us the answer to this apparent contradiction when he was campaigning for US president in 1992: "It's the economy, stupid!"

Note:
For this post I used some text extracts from the article in Time Magazine “The Clean Energy Scam” by Michael Grunwald published March 27, 2008. The story and facts relating to slavery I took from the websites of Leonardo Sakamoto and Repórter Brasil. Both websites are worth visiting, although unfortunately they are only in Portuguese.

80515

Sorry

Sorry, I have not updated my websites for the last three months.
This summer season was very hectic and I had to upload my spirits also.
From now on, you can read (and enjoy) my regular posts again.
Anton

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.

source: Associated Press

if not stated otherwise, photographs with the courtesy of Reuters
80512

“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

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.

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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.

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Brazilian Beauty Beats France’s First-Lady

When in April this year, the photo collection of Gert Elfering was auctioned by Christie’s in New York, it was only the picture of France’s first-lady Carla Bruni, which picked up the attention of the world press. Although the polemic nude photograph made by Michel Comte in 1993, and before the auction estimated at USD 4.000, did USD 91.000, it was not the highest priced one.

In the auction of the 135 photographs of the German collector Gert Elfering the nude of Carla Bruni “lost” from the nudes of Gisele Bündchen and Kate Moss both photographed by Irving Penn. The nude picture of Gisele (estimated before the auction at USD 60.000) went for USD 193.000 and the Kate Moss’ nude reached USD 97.000.

The results of the auction proved that Brazilian beauty is always highly valued by large margins. For the uneducated who do not know Gisele Bündchen, the following: With 27 years she is the world’s most famous Brazilian model, arguably the No. 1 in fashion shows and arguably the best paid one, as she made 33 million USD between June 2005 and July 2006, while her wealth is estimated at 150 million USD.

Among the other pieces auctioned were photographs of Brigitte Bardot, Lauren Hutton, Pablo Picasso and four psychedelic pictures of the Beatles........ continue reading and view the photographs

Plagiarism in Optima Forma - "Bikini Peaking Jeans"

Although the last years many a high technological and breathtaking innovation originates from Japan, for years on end they have been infamous for their copying and apparently they still do so.

The British press divulged a (what they called) novelty in the world of fashion: the jeans of Sanna’s Brazil Fashion. The creation, which mixes the low designed jeans with the vision of a part of a bikini underneath is from a brand unknown in Brazil, although it is promoted as Brazilian Fashion. Navigating the internet you will discover that it is a Japanese brand.
Reportedly the jeans are developed in Japan, and according to the labels manufactured in Brazil. To uphold the Brazilian image, they are sold in the Brazilian sizes, which are different to the standards used in Europe and the US.

But apparently the British are not well-known with the Brazilian Fashion, being famous for its sexy designs, such as the dental floss bikini (fio dental) and many other designs, as the Brazilian women are not afraid or ashamed to show their bodies or at least a part there of.

So, Sanna’s Brazil Fashion jeans are no novelty at all, as the Brazilian jeans brand Zoomp introduced the "bikini peaking jeans" already in their Summer Collection of 2006.
Judge for yourself. The first picture is from Zoomp, the other ones appear at the website of Sansa.
Plagiarism in optima forma.

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