Brazil agrees a debt war is going on – UPDATED

Currency war part two starting now.

Brazil’s Finance Minister Guido Mantega is quoted by the FT as saying
“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness,”

Brazil is an exporter and has been doing well.  Will she feel forced to devalue?  If she does, how will she do it?  Chances are Brazil will be forced to take action that could well hurt their citizens in order to protect her industries.

Brazil will have to protect against imports which are now cheaper as the currencies they are exported in are devalued. Question is how to do this without being accused of ‘protectionsim’ by the very nations who are bust devaluing their currencies?

Devaluing their currency is the way to get around having to use ‘protectionist’ import tariffs.  Plus currency devaluation helps exports which is where its really at for Brazil.  But how to devalue?  Japan is trying and failing – expensively.  Unlike Europe, Brazil doesn’t have a clutch of Anglo Irish Bank alikes that are so toxic that devaluation comes easily.

UPDATE – I wasn’t up on this at time of writing. Brazil has been buying up to 1 billion US dollars each day for the past two weeks.  That’s a poke in the eye for the US.  Another uppity South American leader on the MIA’s to do list.

Back to the original

And for the Euro more devaluation is on its way when Moody’s cuts Spain’s debt rating again, later this week.  CDS costs on Irish and Portuguese debt is rising and fast. Irish cds costs were 4.72% yesterday. Today they are 5.1%. A single day!

If the pace keeps up then we are on course for another Euro-debt pushing and shoving match. The European bail out fund the EFSF (European Financial Stability Fund), the one that just last week ‘was never going to be touched’, was, according to German Financial papers, within a hair’s breadth of being used to rescue Ireland from its death dance with Anglo Irish.  So much for stability.

But while we roll around in our own mess we are now beginning to export this hurt to those who had no hand in creating it.  Countries like Brazil. Brazil is now in a fix of our making.  I think she will be best served by trying to get some coordinated action among her ‘bric’ and her South American allies.

One thing is for sure. As more nations get drawn in to and hurt by the currency wars the more dangerous it gets.

8 Responses to Brazil agrees a debt war is going on – UPDATED

  1. brian.angel September 28, 2010 at 11:46 am #

    Hello Golem,

    I saw that on the guardian about 5 mins ago. I also saw this tucked away a well:

    http://www.guardian.co.uk/business/2010/sep/26/portugal-worsening-debt-crisis

    …..

  2. Golem XIV - Thoughts September 28, 2010 at 12:03 pm #

    Hello Brian,

    Thank you . I hadn't seen that.

  3. dave from france September 28, 2010 at 1:30 pm #

    Hi Golem mon pote,

    I see a number of new customers, understandable !

    "Around at the Torygraph there is a lynchmob of 670 giving Charlie Bean a roasting, and 230 at Ambrose Evans-Pritchard's 'Shut down the Fed Part2, who are not at all happy either…"

    You're doing good work,I'm off to spread your link a very little bit. Then a bit of roofing while the sun shines .

    Then some "Austerity Preparation " .

    Seeya

    frog2

  4. Golem XIV - Thoughts September 28, 2010 at 1:47 pm #

    Salut Frog2,

    If I were a wealthy man I would offer to have your roof fixed for you. It's the least I should do, considering how much you help to let people know this place exists.

    Thanks as always!

  5. 24K September 28, 2010 at 4:54 pm #

    To sell the junk they advertise on the telly and buses etc and to convince you to vote for their party they advertise with leaflets etc.
    I was thinking we need a leaflet with all the juicy facts on it.
    If everybody who reads the blog printed it out and spent a couple of hours handing them out in their cities and towns i think we could make a little headway.
    I think that's what alot of people haven't got is a piece of paper infront of them with facts. They could show it to other people too, like their nan or mate in work for example
    Somebody tagged my garage last week, shame their name wasn't Golem XIV.
    I do not condone TAGGING GOLEM XIV on all major BRIDGES, BANKS, COUNCIL BUILDINGS etc but i think it would look spiffing.
    If only i was in with the hoodie network, the teenage mafia have always got the odd spray can hanging round…

  6. Golem XIV - Thoughts September 28, 2010 at 6:16 pm #

    Hello 24K,

    We are actually thinking of trying to use the enemy's tools against him. We are going to create little adverts – on line ones – to advertise the book. Which is now nearly ready. We should have review copies this week.

    Web site should follow in a couple of weeks. So no leaflets as yet, nor tagging of bridges. But electronically we are maing preparations. As well as trying the more mainstream outlets.

    So if anyone out there thinks their local or egional paper could be interested in hearing about the book or doing a review please let us know.

  7. Rob September 28, 2010 at 7:29 pm #

    Hi Everyone,

    Just heard this on Radio 2 – check it out

    AIG : Arrogance, Ignorance and Greed

    by Show of Hands

    I love the line " you're in your yachts, we're on our knees"

  8. Golem XIV - Thoughts September 28, 2010 at 7:42 pm #

    Hello Rob,

    Great to hear a band with something to say.

    Thanks

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