In response to recent claims by the Obama administration and others that “millions of jobs” have recently been created We 'skeptically' examined the data to see if the claims were true. It turns out that job growth since the 2008 recession has actually been quite weak, and hardly something to boast about. Nevertheless, our conclusions from these analyses tend to rest on the idea that job growth is synonymous with gains in wealth and economic prosperity. But is that a good assumption?
Dear Donald and Hillary: In around ten months, one of you will wake up as Mr. or Mrs. President. After the fabulous fun of post-inaugural balls, you will walk into the Oval Office on Saturday, January 22 and launch into your first 90 days in office. To make your job just a little more manageable, what we would like to do is take you around the world and review some of the economic realities faced by our global partners. For many of them, those realities are not pretty. And you want this job why?
Petrobras reported a record loss for the fourth quarter, a horrendous performance that raises questions about the company’s ability to handle its mountain of debt.
It's all falling apart for Brazil's embattled President Dilma Rousseff whose political career could be over in a matter of months. With the impeachment committee in place and VP Michel Temer's PMDB set to break from the government, the fate of Lula's Worker's Party hangs in the balance. Meanwhile, the economy continues to collapse as last month was the worst February on record for jobs. As for the central bank, Alexandre Tombini is attempting to use reverse FX swaps to keep the BRL just weak enough to help the economy adjust and just strong enough to permit a Selic cut (or two). What could go wrong?
Have we gotten a “confession” to all of that? No.
If you are a foreign investor in Brazilian equities and you can't look at the net purchases chart shown here and tell us who the sucker is, well then you are the sucker.
As we’ve documented extensively this month, the BRL is now trading pretty much exclusively on Lula, as his fate is seen as a proxy for whether Rousseff will ultimately be forced from office. The market apparently believes that anything would be better than the current political arrangement when it comes to shoring up the country’s flagging economy which last year plunged into what might as well be a depression. Now that the high court has blocked his appointment, Brazil should be wary of further currency appreciation, Goldman warns, as an economic rebalancing requires a weaker BRL.
In the same way that FDR had an existential political interest in generating inflation and preventing volatility in the US labor market, so does the US Executive branch today (regardless of what party holds the office) have an existential political interest in generating inflation and preventing volatility in the US capital markets. Transforming Wall Street into a political utility was an afterthought for FDR; today the relative importance of the labor markets and capital markets have completely switched positions. Today, the quote would be "markets are too important to be left to investors."
On Wednesday evening, it all fell apart in Brazil when the judge spearheading government corruption probes released wiretaps which seem to prove that Dilma Rousseff indeed appointed former President Lula to chief of staff in order to shield him from prosecution. When the tapes were released, Congress broke into a shouting match and Brazilians poured into the streets in 17 of 26 states calling for an overthrow of the government.
We now have an absolutely clear idea of why the Fed is impaled on its own petard. At the end of the day, managed rates will prove to be the ultimate destroyer of capitalism. They transform financial markets from organizers and allocators of real capital and the savings of producers and workers into gambling casinos which fuel massive speculative bubbles.
It seems as though Brazil can’t get through a single day without some piece of political news or economic data creating confusion and turmoil. Wednesday was no different.
When it comes to raking in questionable dough via the abuse of political power, the Clintons are in a league all to themselves. In fact, their shamelessness is so rampant and sloppy, the only explanation is they simply thought no one would ever dare hold them to account.
Just last week, the BRL was riding high on news that former President Luiz Inácio Lula da Silva was detained in connection with money laundering. He was then charged with corruption by state prosecutors. The market hoped his arrest and possible prosecution would give momentum to the effort to impeach Rousseff. Then, in a dramatic turn of events, Rousseff invited Lula to accept a ministry post yesterday. Initially, reports indicated he would resist the idea of accepting, but that soon changed.