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Foreign Investment: It’s always sunny in Brazil

Posted February 26, 2008

"Brazil was once the poster-boy for financial mismanagement. Spiraling inflation, massive debts and a chronic history of currency devaluation is Brazil’s legacy from the 1970s and 1980s. But not anymore." — Mike Burnick

by Mike Burnick, The Sovereign Society

Baltimore – (TFN):  The U.S. credit crunch is far from over as vulture-investors, and Warren Buffett, now circle the troubled monoline insurers. These distressed insurers, including Ambac and MBIA, are the latest victims of the “repricing of risk” as the Oracle of Omaha calls it.

However, several thousand miles and worlds away from Wall Street, the credit crunch appears to be having little spillover impact on South America’s biggest economy.

“Brazil’s credit markets are shrugging off the effects of the U.S. sub-prime mortgage debacle and maintaining business largely as usual,” according to a recent story in the Financial Times.

This is a significant statement considering how much of a fiscal basket-case this country has been in the past. Brazil was once the poster-boy for financial mismanagement. Spiraling inflation, massive debts and a chronic history of currency devaluation is Brazil’s legacy from the 1970s and 1980s. But not anymore.

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Foreign Investment: The sunny side of the rua

Today, Brazil looks like a paragon of fiscal virtue compared to the United States. Brazil has paid down its foreign debts significantly in recent years. Inflation is low and has been falling, while interest rates are steadily coming down too.

Even the Brazilian real is one of the world’s strongest currencies. It’s appreciated about 8% against the greenback over the past year. That’s quite a reversal of fortune for Brazil. Read on to learn more about Brazil's vibrant economy.

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Posted by TFN-International · Filed Under International Investing 

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