The Keys To Evonomics

I loved the America Economia article entitled "The Keys To Evonomics" because finally the great shape of Bolivia's economy is beginning to get attention in decent publications (not just ratty blogs like this one). Go read for yourself about the smart policies put in place by the Morales administration that form the backbone to its recent success (the fastest growing economy in the Americas in 2009, we hasten to remind you). The piece starts like this:

"Record foreign reserves, prudent fiscal policies and solid growth in the midst of the world financial crisis. The Bolivia of Evo Morales has surprised analysts the world over."

Bolivia: Just when you thought you'd seen it all.....

....something turns up to stop you in your tracks and make that whistling sound between your teeth that you make when you realize that you haven't seen it all after all. In this case, the shocker is MIAMI HERALD GIVES FAIR COVERAGE TO BOLIVIA! Yes it's true, check out this report that starts like this

Bolivia's progressive economic model spurs growth

Bolivia saw some of the region's strongest economic growth last year thanks to its socially progressive economic model that bucks traditional capitalism and the neoliberal policies that have ruled the nation for decades, Bolivian Minister of Economy and Public Finance Luis Alberto Arce said Tuesday.
Speaking at the inauguration of the Americas Conference in Coral Gables, Arce said the nation's decision to nationalize oil production, electricity and other strategic sectors have helped insulate it from the global economic crisis.
The Andean nation saw GDP growth of 3.4 percent last year and had unemployment near 7.9 percent -- both strong results in South America.
``There's not one recipe for all countries and we decided to rethink our own economic model,'' Arce said. ``This is [policy] made by Bolivians for Bolivia.''
Since first taking office in 2006, Bolivian President Evo Morales has nationalized key industries and said he favors a system that shifts economic power away from the private sector to indigenous groups and social cooperatives.
Now, the country is running an economic surplus, is seeing the return of foreign direct investment and has helped reduce poverty CONTINUES HERE

But please, esteemed lector of IKN, do take time to check out the comments section in that report because it seems the morons that hang out at the MH are disgusted about having to read a few facts for a change.

Ecuador and the economic recovery you don't get to hear about

Add Ecuador to the list of countries not going down the tubes depsite the hopes and wishes of the idiotic commentators up North.

Exhibit One:

QUITO (Dow Jones)--Ecuador's crude oil export revenues totaled $1.28 billion for January and February, a 137% increase from the $541 million in the same period of 2009, due to the increase in oil prices, the central bank reported Wednesday

Exhibit Two:

QUITO -(Dow Jones)- Ecuador's tax collections rose 29% to $1.91 billion between January and March from $1.48 billion in the same period of 2009, the Internal Revenue Service, or SRI, said Tuesday.

Collections from the value-added tax in the three months reached $1.04 billion, 19% higher than $871 million a year earlier, according to SRI.

The funny thing is that all of LatAm is bouncing back strongly, not just the countries deemed "investor friendly" (aka take the munneh and run North) by the rest of the world. The rebound is seen everywhere but the reporting is confined to Colombia, Peru, Chile and Mexico. Now why should that be? HUH? Not to mention the fact that the biggest growth seen in any countries in the whole of the Americas (really, that's anywhere between Nunavuy and Tierra del Fuego) was enjoyed by Bolivia, which brought inflation down to miniscule figures at the same time. Odd how the elogies are missing on that one, innit?

More evidence of Bolivia's imminent economic collapse

From time to time you get talk in Englang biz circles about how demand for Bolivia's natgas has been dropping, for example the mail received by this humble scribe from some reader who is clearly a great fan and utter admirer of IKN (even though they did use a lot of swear words in the mail, made certain incorrect assumptions concerning the marital status of my parents at the time of my conception and also forgot to leave their name at the bottom of the missive).

The normal tactic from the Evo-haters is to take the highest spike in demand (back in mid 2008, when it was cheaper for Brazil to buy as much Bolivian natgas as possible under the contract terms than for PBR to actually pump it themselves), wait until it drops to 20 million cubic metres per day (that happens occasionally, as its the minimum amount that Brazil can buy in a contract that runs until 2019) and start shouting "END OF WOOORLD!". In other words, the normal biased BS chatter from people that can't wait for a whole nation (that they probably couldn't find on a map) to collapse just so they can watch nine million people starve and riot and kill each other because some asshole in the WSJ or Fox told them that Evo Morales was an ooga booga man.

Sorry dudes, not gonna happen. Let's check out the other export market for Bolivia's natgas, Argentina, and the deal struck today that will be formalized in a super duper signing ceremony twixt Evo and Klishtina late March.

Yup, the 2.4m cubic metres per day getting pumped to Argentina will become a minimum 5mm3/d this year. It then starts ratcheting up bigstyle in 2013 and ever onwards and upwards 2017 to 2026.

Add to that the recent average of 22mm3/d to Brazil, or if you prefer the average of 25mm3/d this month Feb 2010 (the StoopidChorus always goes quiet when that number starts clicking back up), mix in the fact that two major clients are better than one when it comes to price negotiations and you end up thinking that Evo&Co isn't going to be short of a penny or two as this decade unfolds.

Today's Bolivia has the best growth in the region, virtual zero inflation, a strong currency backed by sound monetary policy, savings at record levels, a property boom going on that speaks of growing acquisitive power of its citizens and is getting kids to schools and bellies full at rates never seen. Now that growth is getting locked in by long-term exports contracts that will benefit the state first and the oil companies second. Don't you just hate it when PinkoCommieSocialists are better at running a nation's economy than your neocon liars-in-chief?

Singanis served, the end.

Peru's distorted economy

Farid Matuk has been in fine fettle these last few days, whacking into the hypocritical Twobreakfasts government by using the facts on offer, not the simple bluff and bluster served up by this most pathetic and unpopular of governments.

First up, via this Matuk post we see how Peru's economy is in fact two different economies; there's the one that the dumbasses at Moody's and S&P fawn about which is based on the 1/3rd of the population living in its capital, Lima. This chart taken from this report in La Republica (and re-labelled in English for your viewing pleasure) shows clearly the continued concentration of wealth in the capital, this despite all the silly lies proferred by Twobreakfasts about spreading the love around thew whole country:

(click to enlarge)

For the record, that's 53.3% of all employment in the country centred in one spot.

Next up from Matuk was this, separate but relate, subject. It seems that Peru's official lapdog INEI stats office, second in the continent only to Argentina's as manipulative bullshitters, want to measure the country's economy, GDP growth etc by ignoring those parts of the economy that haven't been performing so well! Yes indeed, all you need to do to get a positive GDP figure these days is to ignore the whole of the agricultural sector in your official census figures and make shit up later.

But Peru can get away with all this, y'see. Peru got da AmerikaFriend lurve. Peru not got da Hugo bad mojo. Peru got da media coverage that will never, ever question the substance and always go for the style.

Viva investment grade. Viva, viva, viva.

Miguel Centellas, winner of this week's coveted award

The fatal flaw of the arrogant, know-all academic is to presume they know everything about anything. Miguel Centellas, a political scientist attached to some US university and specializing in Bolivia, falls into that category.

I was over at Greg Weeks' decent site last weekend when I saw a link he'd put up on his "what am i reading" list entitled Bolivia's Election: A quick postmortem. The subject interested me, but to my dismay when I clicked through it turns out it was written by Miguel Centellas at his blog, pronto. "Whatevs" I thought, and read it through. By way of context, this Centellas dude is a dust-dry humourless rightie. His field is Bolivia, so it's a natch to note he can never find a good thing to say about Evo's impressive achievements that don't come equipped with a grudging "yes, but..." and so you have to filter his clearly biased views when reading the political bits.

But then at the end of the article it all got much, much funnier. Centellas decided he's an expert of economics and stated that Bolivia's economic performance "isn't all it's cracked up to be". What followed was total, utter, uninformed balderdash and bullshit. With his academic airs and graces he grasps at straws and tries to find a few decontextualized statistics to match his prejudice. The end result may impress his fellow political scientists, but anyone with a scrap of economics background would laugh him off stage. Here below is the passage as written by Centellas (inset bold italics) along with my own comments (interspersed).

8. It's the economy, stupid

Finally, Bolivia's economy has some troubling signs as the global recession continues to take its toll. Yes, the economy has grown (as many Evo supporters are often quick to point out).

As if it were a sin to mention a fact in public.

But that growth isn't all it's cracked up to be.

First, because that growth has been primarily based on raw material exports, continuing a tradition that goes back centuries (and one highly susceptible to boom/bust cycles).

Just like those nasty commies in Venezuela with their devil's excrement, hey Mikey? And those hardcore pinkoes in....errr...Chile. And then there's Peru. And Brazil. And Argentina. And Ecuador. So what's the point here, that Bolivia's growth due to raw materials exports is bad, but the rest of South America's growth, that is wholly dependent on those same exports of raw materials can be conveniently ignored? Is that it? Sure Bolivia exports tin and gas and stuff, but why this should be a negative in a whole region that does the same? Mikey, you'd be better off explaining to the world that South America is done for because of this, not just Bolivia.

Second, because that growth isn't that much better than in the early 1990s. From 1993 to 1998, economic growth was consistently between 4-5% per year (see chart).

Rather petulant no? Because a previous government got good growth figures out of Bolivia, the current good growth figures don't count.

It was only in 1999 that the economy entered recession. But throughout that period, GDP growth was outstripped by inflation (see data). Last year, inflation hit 14%, far outstripping the 6.1% GDP growth rate. The 2009 growth rate is currently pegged at only 2.8%.

A neat trick! If you get inflation under control, you're still judged by those past inflation figures! Talk about damned if you do and damned if you don't! But his omissions speak louder than his cherrypicked stats, as Bolivian 2009 growth is pegged at 3.5% (by CEPAL, latest figures which I think will be easily beaten FWIW, because just the first three quarters of 2009 have seen a 3.2% growth rate, quite simply the best in the whole of Latin America) and inflation is currently under 1%. But you can't mention that, because those up to date facts don't fit into the world of prejudice he's trying to create. Jeesh what an asshole this guy is!

If the economy begins to falter, that will put strains on Evo's government, which has already used bank reserves to doll out payments to children, mothers, and pensioners.

And if it doesn't falter, it won't. But hey, again why bother with this pap and nonsense, you could add any old name in here. After all, if the economy begins to falter, that will put strains on Evo's/Alan's/Michelle's/Obama's/Harper's/Brown's/Sarkozy's/EtcAdInfinitum's economy, won't it?

These are all valuable, worthwhile programs.

No shit Sherlock

But they're expensive.

With this one simple sentence, Centellas lays bare his ignorance of economics. We'll come back to this one in a minute.

And now they're viewed as entitlements, which means any incumbent government will be punished if it's unable to continue to deliver (or even expand) them.

Always a mistake to help the poor, isn't it? Darwinism, I say! Let them starve for the greater good! Survival of the fittest, goddamit!

Moreover, the longer the recession continues in the US & Europe—and the Dubai financial mess is a troubling sign of things to come—the less money will be available for both critically needed donor aid & foreign investment.

Banal.

For all his symbolic rhetoric, Evo is still actively courting foreign investors.

On his terms, and what's more the deals are getting done. Do some freakin' homework and find out the most recent hard rock/hydrocarbons deals, Centellas. And when you do, note that the foreign mining companies and oil&gas giants are perfectly happy with the terms of the deals.

If the economy makes them increasingly risk-averse, we may see a recession hit Bolivia. Of course, rising economies (Brazil, Russia, India, China) may pick up the slack. But that's always a gamble. It would be better to have a larger number of options, not fewer.

WTF does that mean??? I've read it three times and still can't work it out! The only line of reasoning I can see here is that the national decisions of the Bolivian economic team are bad because other sovereign states might decide that they don't want to invest in Bolivia any longer due to circumstances beyond everyone's control! What IS this, the 'Waiting For Godot' economic policy?

The bottom line, however, is that Bolivia is not really charting a new “socialist” course, per se.

No, the bottom line is that you are a dumbass.

It's following the 1952 MNR playbook, pursuing a political strategy of multi-class alliance & an economic strategy of “state capitalism.” It's banking on a state-driven economic sector to grow, keeping the middle class happy while also securing better standards of living for the poor.

Yada yada

It was the failure of the state capitalism model to deliver that led to an experiment w/ neoliberalism. Another failure of state capitalism could leave Bolivia primed, yet again, for another neoliberal episode.

And then again, it might not, eh? But let's just go back to that "but it's expensive" line used by this pseudo-economist earlier. The point he tries to make is that you can't use state revenues (taxes etc) or International Currency Reserves (ICR) to fund social programs because they put a strain on things. Well, point one is that Bolivia's ICR is currently at all time record levels, as this chart ripped from the Bolivian Central Bank site shows:

Before Evo came along, nationalized the natgas industry and diverted the enormous profits being made away from the multinational oil companies and into state coffers, Bolivia had little or nothing in the way of reserves. Nowadays, it has U$8.7Bn tucked away, which is an enormous amount for a country so small and represents 9.6% of country GDP, according to CEPAL. The point here is that Bolivia could keep adding and adding to those reserves if it wanted to, but there comes a point when the opportunity cost of holding reserves (they just sit there and don't make you any economic/monetary difference) becomes too great. So the government has (or at least seems to have) made the decision to spend the ongoing, regular and predictable bonanza that the state is enjoying on the population, via school meals programs (that have seen attendances shoot up) maternity benefits, the first ever formal senior citizens retirement pension etc etc.

The second thing to mention here is whether these program really are "expensive". By this, we mean whether they "cost" Bolivia anything. In a previous post I marvelled at a chart created from Central Bank figures. Here it is again....


...but why is it so important? Well, what it shows is that at first, when Evo took over, the Central Bank quickly added to those reserves via the hydrocarbon revenues. We can see that as the ratio of local currency in circulation (M2) to reserves dropped. But since around the beginning of 2008 (when not coincidentally, the bulk of those "expensive" programs kicked off) the amount of money that is in the central bank reserves has been steady against the amount of local currency circulating inside Bolivia.

What does this mean? It means that Evo's government is not spending money that it doesn't have. These social programs that trouble our pseudoeconomist so much have not taken away dollars from the reserves. But not only that (and this is key), the government, via a very sound and prudent fiscal and monetary policy, has made sure it hasn't created money out of thin air. For every new Peso Boliviano that has been created, there's the equivalent amount of dollars added to those central bank reserves first.

In other words, these programs are not "expensive" at all. For one thing, they are avoiding the opportunity cost of overweighting central bank reserves (yes Miguel, this may come as a shock to you but if you'd bothered to learn about macroeconomics before shooting your mouth off you'd know that it actually costs money, a decent wedge of money at that, to hold currency reserves in your central bank). For another, they are only spending the extra new money that's coming in (thus educating the population, providing better healthcare, spending money for the elderly etc that will add to GDP) in a monetarially neutral manner. Or put simply, the cost to the state is a net zero and the result is a net benefit to growth (bottom-up growth at that, not the Reaganesque trickledown bullshit).

This is good housekeeping. This is just one example of why, when people like Centellas spout off about Bolivia's economy not being "all it's cracked up to be" they fly in the face of serious economics bodies that have recently lauded the country's economy. Y'know, people like the Interamerican Development Bank, The World Bank and the IMF.

Miguel, you win, hands down, this week's coveted award. Enjoy, dumbass.

Venezuela: Coming to you live from the world of toldyaso...

.....here's today's story about how Chávez "tones down rhetoric" and the parallel forex and bonds "jump". Of course, this rebound has nothing to do with the way the whole financial community tried its hardest to instill panic in all things Venezuelan, scare the crap out of people and rob them of their money, is it?

Compare what IKN said yesterday.....

Chávez isn't good at economics...we've been here before and seen how he's made these noises and backed off and made the noises and backed off again. This time won't be much different, as at some point in the next couple of days his financial peeps will quietly explain things to him and then the subject gets dropped...again.

...to the message today:

Dec. 4 (Bloomberg) -- Venezuela’s bolivar rose, rebounding from a 9 percent plunge yesterday, and the country’s dollar bonds gained after President Hugo Chavez toned down threats to nationalize the banking sector.

The bolivar gained 1.7 percent in the unregulated market to 6 per dollar at 11:14 a.m. in New York, from 6.1 yesterday, traders said. The yield on Venezuela’s 9.25 percent bonds due in 2027 dropped 39 basis points, or 0.39 percentage point, to 14.29 percent, according to JPMorgan Chase & Co. The bond’s price rose 1.75 cents on the dollar to 67.75 cents after yada yada continues here

Seriously, these Venezuelan wolves in sheep's clothing con artists need to......

Having a left wing or right wing government in South America has made no difference at all to regional economic performances

A great post over at Gran Combo that compares South American countries' economies, specifically by exports and FDI. Here's one of the charts available (go over to Rendon's post for the others).

Apart from the recent winner being Bolivia (YAY!) the pattern is pretty clear over the region. They're all in the same boat. As for the source material used, the stats come from the United Nations via its favoured (and pretty darn sharp) macro-economy studio in LatAm, Chile's ECLAC/CEPAL. The English language report is available right here. As Rendon writes (translated)

"I don't sympathize with the Bolivian or Venezuela models, but the numbers at the moment indicate there is little difference with other countries."

Bolivia really is the miracle economy of South America

This chart just blows me away. Feel free to take all your prejudices about left wing governments not being able to run an economy correctly and throw them out the window.

It needs some explanation for the 99% of human beings that are normal and are not into this wonky stuff, however. What we have here is the combination of two numbers.

• The first number is Bolivia's M2, which is a term used by the bankypeople that basically means "the money in circulation inside a country".

• The second number is the amount of international currency reserves held by Bolivia's Central Bank.

So what we can do with those two numbers is divide M2 by reserves. This is the result you see on that line above, and what it shows you ishow many Bolivian Pesos are in circulation compared to the number of dollars tucked away as savings.

Frankly, it's remarkable. When Evo took office, there were 15 Bolivianos for every dollar saved by the country. Now there are six for every dollar. What this means is that the Bolivian currency has become far stronger under the current government than it was before. This has many beneficial effects, not least of which is that inflation will be far easier to control in the country going forward.

Compared that to The USA, where the printing presses are rolling like never before and everyone fears the stoking of inflation down the line; Bolivia's monetary policy beats the Fed's hands down. I'm not exaggerating when I say that the above chart is a great visualization of the newly found financial security of Bolivia, a policy that will serve the country well into the future.

Ben Bernanke, consider yourself well and truly pwned by an ex-coca leaf grower.

Bolivia: English media acting predicably again

In an amazing, stunning, incredible turn of events, the IMF praised Bolivia's economy to the rafters yesterday. Check out the dozens of Spanish language news stories available on the speech given by IMF bigwig Gilbert Terrier right here. As for content, here's a typical bit translated from the Reuters note.

Gilbert said that, inside a Latin America that has responded better to the (financial) crisis than the industrialized nations, Bolivia stands out with the highest projected growth rate for 2009 of 3.2%, in contrast to Mexico that is heading for a close of negative 7.5%.

"Bolivia has applied successful macroeconomic policies. Its savings and reserves now permit it to apply a countercyclical policy we we suggest it should continue to face any further extrernal economic shocks in the future", he said.

Amongst the successes of Bolivian policy, he highlighted the savings made in the bonanza times of high priced primary goods instead of having spent nearly all the income as other regional countries have done."

The brass-necked bullshittery of the IMF knows no bounds. Anyone with an inkling of economic nous about Bolivia knows that the country managed to increase its international currency reserves to its current all-time record of U$8.5Bn due to one simple policy change, namely the nationalization of the hydrocarbons (i.e. natgas) industry. Now do you remember back in 2005 and 2006 when the world and his wife was decrying this Evo-led policy move? How it would never work? The very same IMF neolib assholes saying it would all end in tears?

So here we are three years later, going through the worst financial crisis in modern times, and the policies of Evo Morales' government are getting praise from those who would have led the country down the path to total ruin. The IMF really deserves this week's coveted award for this one.

But finally, please note how many stories about the IMF's praise for Evo's Bolivia and its macro policy have been published by English language media: Zero. Amazingly..... stunningly... incredibly......

Venezuela's parallel rate

Interestingly, the Venezuelan parallel exchange rate is now at its strongest level versus the dollar in the whole of 2009.

So what was that about Venezuela going to the dogs in 2009 again? You hear the same story every single year from the Chavez-haters and the dumbasses who don't have the intellectual capacity to understand there is more than one way to run a country economy. The "Milton or nothing" brigade have learned squat from the debacle of the last two years in the USA and still insist on raising their voices and telling the world that Venezuela is about to go the hell in a handbasket; the same chickenlittle shilling that we heard from them in 2004 and 2005 and 2006 and 2007 and 2008....and we'll get it from these dumbasses in 2010 too, for sure.

Understanding politics for these people is easy. "We don't like him cos he doesn't think like us." But in the narrow-minded world of uneducated gringos, heterodox economics= cannot possibly work. How many more years of Venezuela's economy NOT failing do you need before you admit you're wrong?

Bringing Brazil Down to Earth, by Armen Kouyoumdjian

There are many reasons to love Armen Kouyoumdjian. The way he knows LatAm better than any other economic/political analyst I know, the way he speaks his mind with eloquence and wit, the independent nothing-is-sacred attitude, the way he recently threw Andres Oppenheimer off his mailing list due to the moronic bullshit published by Schloppenheimer on the region. The list continues.

But here comes another reason to love the dude. Published last week, the following analysis on Brazil gives a much-needed counterweight to the permabull, Brazil-Is-Economic-Miracle sheep bleating of our current era. Kouyoumdjian's view is essential reading for anyone interested in Brazil's economic (and political, for that matter) future. I have been given permission to reprint his analysis here on the blog. I also recommend that you use the mail address included in his title line, shoot the great man a mail and ask nicely if you can join his free mailing list.

BRINGING BRAZIL DOWN TO EARTH
As the “Hadji Yatmaz” Country Inflates its Image

By Armen Kouyoumdjian
kouyvina (AT) cmet.net
October 2, 2009

Once again, Brazil is riding the top of the wave in terms of world consideration. Comments one reads describe it as leading the recovery in Latin America in the short-term, flexing its regional and international muscle on the diplomatic stage, and even on the road to becoming a “new Saudi Arabia” for oil production. When you point out that in a 33-year career covering Latin America, you have all heard it before, several times over, your cynicism is countered by the comment: “ah, but this time, they really have got it right!”. How many times I have heard that one as well. Unfortunately, many of the analysts and journalists behind this enthusiasm were not even born when I started looking at Latin America in November 1976.

This is one of the main problems in not only analysing, but also putting across any contrary views on Brazil. The fan club is so large and militant that they will not hear anything against the subject of their undying love and admiration. Moreover, even with the evidence under their nose, they will not even look at it. “A virtuous circle” as one London analyst described it to me some years ago. The other problem is that, fully conscious of this goodwill, Brazilian authorities themselves take advantage and put across a positive image in an unparalleled decades-old exercise in cosmetic dressing-up.

Though I am fully capable of it (once I see the colour of your money), I am not planning here to undertake a detailed Country Risk analysis of Brazil, but just to underline some cautionary aspects which are always ignored.

WHAT IS A HADJI YATMAZ? I normally do not translate foreign expressions used in my reports, because even though I have little faith in the cultural level of much of my readership, I think it is a job for foreign embassies in Santiago. After all, there is something they should spend their time on, because updating their websites, managing their invitation lists and organising proper catering does not seem to be much of their concern. However, in this case, the concept of “Hadji Yatmaz” is fundamental to this report, so I shall have to explain it.

In the Beirut of my childhood, before it was destroyed by the invading vandals of the territory to the South, there used to be a toy called a “Hadji Yatmaz”. Probably a result of the Ottoman occupation, the expression used is Turkish. It means roughly “the Hadji that won’t lie down”. It consisted of a small plastic figure, with a piece of lead in its base. If you bent it downwards, it always stood up again, because of the heavy lead base. Such a toy was probably available in other countries, though nowadays the lead content would be illegal because it is poisonous. I had several of them, and my playing with lead probably led to the imbecility with which I generously send my reports for free.

So most people regard Brazil as a “Hadji Yatmaz", which will quickly stand up after falling down. The problem with the toy, as with Brazil’s image, is that it was made of very cheap plastic, and it was completely hollow inside.

INFLATING THE PRESTIGE Having had two emperors (Pedro I & II) for a total period of 67 years after independence (1822-89), and contrary to Haiti (Dessalines and Faustin) and Mexico (Iturbide and Maximilian), whose flirtation with imperial status was shorter and unedifying, Brazil never recovered psychologically from losing that status. In fact, soon after a military coup sent Pedro II into exile, they sent a delegation to woo him back (which he refused to do). So the country had to make do with its own imperial size, embassies that are palatial (the one in Santiago has its own chapel), and flexing its muscle from time to time among its smaller neighbours (it shares a border with all but two of South American countries, Chile and Ecuador).

Flexing your muscle is not difficult when you are the size of an elephant. Brazil is only 11 % smaller than China (though it has less than a seventh of its population). Elephants have small brains but powerful muscles, and their mere presence is intimidating. One has to say that Brazil has used its size in a generally benign and certainly “softly softly” fashion, rather than in an openly aggressive way.

Following a long period of crises, and after thinking that their economy had been “stabilised”, the country actively embarked on making its mark on stage. This has gone into overdrive in recent years. It started modestly enough with a bid to represent Latin America in a potential permanent seat of an enlarged Security Council (a UN debate that is far from being resolved anyway). Its only likely contender, Argentina, though pretending that it is still in the running, does not appear to have much of a chance, to put it mildly.

As this matter was dragging on, Brazil thought up another role for itself, closer to home. It convinced the USA, busy killing babies in Iraq and Afghanistan, that it could be its proxy “regional stabiliser”. That was not really Brazil’s real intention. It did not want to be a proxy for anyone, but have a role for itself. So it thought up UNASUR, making sure membership was limited to countries south of the Panama Canal, and more importantly, its offshoot, the South American Defence Council (or CDS). The latter had a double purpose: give a military dimension, and provide an outlet for its growing defence industry. Massive acquisitions of modern weaponry mainly from France, at various stages of confirmation, all insisted on “technology transfer” clauses. One hopes that the quality of training in their armed forces has improved to the point of handling nuclear submarines and U$ 200 million a piece state-of-the-art combat aircraft. During WWII, the Brazilian Navy had the dubious record of a destroyer sinking itself (a badly positioned machine gun fired a “training burst” into ammunition stored on the deck below, causing an explosion from which only two crew members survived to tell the story). There is no limit to the ambitions. Vice-president Alencar recently expressed the wish that Brazil would become a “nuclear power”. Contrary to people’s attitude to Iran, not a single voice protested around the world (not even when the country’s authorities refused access to an IAEA inspection team to an army facility known as IME, where nuclear research is carried out).

Among its immediate neighbours, Brazil played godfather to the start-up Bolivian gas industry, and put pressure to stop a break-up of that country sponsored by local business interests with Israeli help. With Paraguay, after playing an unusual game of toughness and carrying out live ammunition exercises on its borders, it accepted to renegotiate iniquitous agreements on revenue from the joint Itaipu hydroelectric project, trebling the sum paid to its small neighbour.

More recently, Brazil became even more proactive in terms of diplomacy by the crucial role it is playing in trying to restore democratic rule in Honduras, having arranged for the deposed president to return in secret and take refuge in their embassy of Teguchi-galpa (as French TV called the Honduran capital, probably thinking it was a provincial town in Japan). Though the gathering was held in Venezuela, Brazil was a strong voice in the recent African-Latin American summit. It had previously flirted actively in the continent, particularly with the Portuguese-speaking former colonies like Angola and Mozambique. It has also nibbled at the Palestinian problem, the G-20 group and the Doha trade round. Last April, in another fit of panache, the country lent U$ 10 bn to the IMF.

Brazil is not a member of the OECD, but holds observer status there since 1994, and some time ago became the first OECD country to join a trade pact norm with its members. Last but not least, Rio de Janeiro’s just became the seat of the 2016 Olympic Games, the first to be held in the region. This is despite the fact among the four finalists, it had the lowest “suitability” score in the evaluations. The honour will cost the country another U$ 5bn in investments.

POLITICS AND THE LULA PHENOMENON There is exactly a year to go until the October 3rd 2010 elections, which will mark the end of two terms of Lula presidencies. That day will also mark the renewal of all the Lower House and part of the Senate. Lula cannot stand again on this occasion, but he is said to be already eyeing the one election after next, in 2014.

In the meantime, his personal popularity still stands at an incredible 65 to 70 % or so, a score only bettered by Chile’s Ms. Bachelet, also coming to the end of her single term. What can the explanation of such popularity be, after years in power and in the midst of a severe crisis? Unassuming agreeable personalities, trying to stay above daily occurrences (”blindaje” as they call it in Chile), whilst appearing like the person next door (which in a way they both are).

The problem with such popularity is that it does not rub off on an heir, anointed or not. Lula has hand-picked his rather dour chief of cabinet Ms. Dilma Rousseff, a Bulgarian from his own PT party, as heir apparent. It did not help that soon afterwards she was diagnosed with cancer, but the fact is that, exactly a year ahead of the polls, she has only 15 % backing in the polls, running virtually in third position in a field led by the PSDB’s Jaime Serra.

One eyebrow raiser has been the formal announcement on September 30 that Central Bank president Henrique Meirelles would bid for the governorship of Goias state, in alliance with Lula’s PT party, thus putting a question mark on the real independence of the Central Bank ( a concept which in any case rarely goes beyond the theory in Latin America)..

THE DEBT OVERHANG I have often referred to the conspiracy of silence, for there is no other word, surrounding Brazil’s fiscal situation, which everyone appears to wantonly ignore, to the great joy of the authorities. Whereas it might be true that the way their finances currently look, France, Spain and the United Kingdom may declare bankruptcy sooner than Brazil, it is amazing that on September 22, Moody’s joined Fitch and S&P to give the country an “investment grade” rating.

Brazil is very good at pulling the wool over the eyes of the average analyst and journalist, concentrating on the totally irrelevant “primary balance”, and the size of the debt as a percentage of GDP. Debt is a precise figure, which your creditors can calculate down to the second decimal. GDP is a nebulous concept. A quotient of the two is meaningless. In any case, debt is not serviced with GDP (nor with trade surpluses), but with fiscal revenue over and above other needs.

With the just published fiscal results for January-August (the amazing thing is that these figures are available for anyone to see on the Central Bank’s website), we have the following results:

The treasury generated a primary surplus of U$ 23.5 bn over 8 months, but this only covered 40 % of an interest bill equal to U$ 58.5 bn (U$ 241 million in interest per calendar day, or U$ 10 million per hour). The resulting overall deficit was U$ 35 bn in 8 months, nearly SIX TIMES the figure for the same period of 2008. If that is an “investment grade”, I’d hate to see the figures for a junk bond issuer. Total debt as of August 31st stood at U$ 1,055 bn.

The most worrying aspect of this is that the deterioration of public finances took place in a context of falling interest rates, and in particular the benchmark SELIC rate at which around a third of the debt is denominated. A year ago, SELIC was at 13.75 %. It is now at 8.75 %, down by over a third in just a year, but a reversal is expected, with some local forecasters thinking it may go up by 4 points by the end of 2010.

Relax, more statistical games are planned in the cosmetics field (it is time that L’Oréal transfers its corporate headquarters to Brasilia). The authorities, having already taken out a U$ 10 million an hour interest bill from its fiscal deficit calculations, they are now pondering whether to also exclude the cost of reactivation packages.

In late July, Brazil managed to place a 28-year bond issue for U$ 500 million, with a coupon of 7.125 %. Admittedly this is more than Citibank is paying us on our time deposits, but at least these are guaranteed by Uncle Sam (why are you laughing?). There was actually demand for U$ 7 bn and the bonds were placed at 108.63, still giving a yield of 6.45 %. The question is whether they can keep up the coupon and pay the principal in 2037. Look at the past 28 years and you may find the answer.

SOME OTHER STATISTICS Brazil was the Latin American country with the largest stimulus programme, much of it unfortunately directed to consumption, with some going to housing. Credit card use is at a record level, and bank credits for that purpose are up. This will add debt accumulation to the population. Even though they are at a 14 year low, average interest rates on consumer credits are at an average of 7 % A MONTH (that is 125 % per year, unless you are a Chilean economist, and think it is actually 84 %).

In fact, one wonders where this lead in recovery that Brazil is supposed to be taking in Latin America can be seen (“The Clear leader of the region’s recovery”, as JP Morgan described the country in late July). One would have hoped that the shit they put us in over the past year would shut up all these investment bank twits. No, they still talk, write, get invited to speak at seminars and even insist on getting bonuses! Only retail sales and car sales recently showed positive growth, helped by all sorts of incentives. Passenger car sales to September rose by 5.5 %, but the lack of real investment is better reflected by the 20.2 % drop in truck sales over the same period. Industrial Production in the first 8 months was down 12.1 %, and second quarter GDP was a negative 1.2 %, after a first quarter drop of 1.8 %. Passenger car output to August was 10.7 % lower and that of trucks 34.6 % down. The August urban unemployment rate of 8.1 % was the same as in June, and 0.5 points above a year earlier.

On the external front, the 8 % rise in the January-September trade surplus (to U$ 21.28 bn), was only due to imports (-31 %) falling faster than exports (-25.9 %). Capital goods exports alone were down 46 % in January-August. This helped shrink the first semester’s Current Account deficit (- 52.5 % to U$ 9.56 bn).


External reserves as of end September were at a comfortable record of U$224 bn, so at least (thank heavens for small mercies) we do not have to fear a good old fashioned external sector crisis (which used to cause most Latin American disasters in the past, hence the fact that for many psychologically frozen analysts), Country Risk is limited to a study of the external sector.)

Inflation is also under control (under 3 % in the first 8 months, accumulating a 12-month total of 4.4%).

SAUDI ARABIAN MIRAGE? Those familiar with the works of French fabulist La Fontaine, himself inspired by older writers of morality tales going back to Greek literature, may remember the one about Perette et le Pot au Lait. In it, Perette, a carefree milkmaid, is walking with a pot of milk on her head and she starts daydreaming about how she is going to benefit from the milk she is transporting, ending up as the head of a major farming operation. Unfortunately, she fails to see an obstacle on her way, so absorbed she is in her fantasies, that she stumbles and all the milk is spilt, putting an end to her dreams.

No long ago, Brazil announced with great panache (no faltaba menos) that it had found a giant oil field under the sea bed, with such potential as to make the country a new Saudi Arabia. “A passport to our future”, described it presidential hopeful Dilma Rousseff . The money was going to go towards developing the country and eliminate poverty (why didn’t they do it when they had rubber or coffee, one wonders). Heated discussions started as to how it was going to be exploited, by whom and which proportion of earnings would the various stakeholders get. There was even talk of the “Norwegian model” in managing the bonanza.

Back in 1974, Brazil claimed similarly (soon after the first oil shock) that it had found major deposits that would make it self-sufficient in oil over the short-term. In fact, it took over 30 years and several more finds to barely reach that aim. In fact, strictly speaking, the country is not as yet self-sufficient in oil, gas and derivatives, as the sector’s trade balance in the first 8 months of 2009 was still in deficit to the tune of U$ 3.5 bn. Even if we grant the fact that the new deposits, known as “Pre-sal” exist in the quantities mentioned, there are a number of strong doubts and reservations.

-The deposits are some 5,000 metres below the sea-bed. Though the technology to extract at that depth does exist, it is very specialized and expensive.
-There is no single mega-deposit, but a series of “pockets” of oil, which have to be exploited separately. They are also spread over an area measuring 160,000 Km2. Each will need its own expensive perforation and production installations (only two companies in the world currently manufacture them), at a cost of between U$ 80 and 90 a barrel (the figures vary, and they are probably impossible to gauge until you actually get on with it.
-Due to the nature of the deposits, the recovery rate of the oil “in situ” is likely to be below 15 % of what is actually there
-There are some legal problems related to the proximity of some of the Pre-sal to existing concessions held by other firms.

Even if it is true that the new discovery doubles the size of Brazil’s oil reserves, it will require a tremendous investment and technical effort to exploit it, in order to sell at a price which may or may not be economic. Hardly a boon considering the previously described fiscal constraints, particularly as in order to keep control, the authorities seem keen that most of the work will be done by the state firm PETROBRAS.

According to the company’s president, they will invest no less than U$ 111bn to develop Pre-sal by 2020, to which one has to add nearly U$ 300 bn that the private sector would have to invest as suppliers of goods and services. There are strong fears that such sums will crowd out the availability of capital for other needs in both the state and the private sectors. Before Pre-sal became the talk of the town, there was another pharaonic fantasy of building 60 nuclear power stations. Petrobras estimates that it will need 40 rigs by 2017 (there are only 80 similar ones in service today all round the world), of which it insists 28 must to be built in Brazil itself. Is it the best way to spend U$ 400 bn when the rest of the world is trying to reduce dependency on fossil fuels?

STILL AN UNDERDEVELOPED COUNTRY If Brazil wants to emulate Saudi Arabia, it might better consider a policy of cutting the hand of thieves. Even by Latin American standards, the levels of corruption and mismanagement in the public sector are abysmal, as are business manners. In the past two years, I have sent umpteen messages to various Brazilian entities ranging from the Rio Film Festival to the Defence Ministry. Not a single one has ever been answered.

The national infrastructure is seriously lacking in many ways. Ports are a big problem, and recent accidents have also turned up a disastrous situation in airports and air traffic control. Here again, the announced action is on prestige projects. The prime example is the high speed train link between Rio and Sao Paulo, originally estimated at U$ 11 bn, but now expected to cost from U$ 15 to 20 bn. If such a proven technology is difficult to cost up, imagine what can happen to the calculations for Pre-sal investment. Only a third of roads in the country are considered to be in good condition. Energy shortages also loom in the medium-term.

To that, one has to add the worst income distribution on the continent, and abject levels of poverty. Farmers, over and above the 8 % drop in output estimated for this year, have seen concentration of ownership actually worsening in the past 20 years. No less than 30 % of Brazil’s farmers are illiterate. Though some poverty-reduction programmes such as Fome Zero and Bolsa Familia have brought-in relief, rural poverty is still a huge problem.

One day, the Hadji Yatmaz may not stand up after all. If you circulate this report to third parties, I am not interested in their baseless debunking comments. This paper was very well researched, and contrary to their impressionistic opinions, is based on facts and figures, goods which are often in short supply among other scribblers. Also anyone complaining that I did not mention “the good aspects”, should remember that I am a diagnosis doctor, not a publicist.

Bolivia: In a spooky development, mainstream financial newswire actually does its job for a change and reports facts about Evonomy

Hats off to Eduardo Garcia of Reuters Bolivia (we've feted the dude before due to his better-than-the-rest reports on Bolly) who published the following report on Reuters newswires last week (h/t reader PD).

To finally see some credit given by serious financial media (not just sillyblogs like this one) to the Bolivian economic success story is a refreshing change, but Garcia gets into the nitty-gritty as he explains how Evo's radical communist idea of "giving money to the poor" actually helps the economy.....wild huh? It also has wild'n'crazy things called "facts" that include:

• Bolivia's record international currency reserves
• How Bolivia is on track to be the fastest growing country in the whole of Latin America this year
• The manner in which children are getting better schooling
• The communist conspiracy of giving retirement aged people a pension
• The red-in-bed way of "helping pregnant mothers"
  
• The way economic growth brings social stability (neocons: read&weep, dumbasses)
• The absence of bad debts in Bolivia's macroeconomic make-up
  

So here's Garcia's piece. By the way, it's unlikely you've seen it before, because although it was a strong note on the Reuters newswire service, strangely and weirdly not a single open web service picked up on the note so strangely and weirdly it has managed to miss the eyes of those of us not equipped with a U$1,500/month Reuters terminal. It's almost as if they didn't want to you read it...strange'n'weird that, innit?

LA PAZ, Oct 1 (Reuters) - Bolivia's economy is healthy despite the global slump because leftist President Evo Morales is redistributing soaring state revenue as subsidies to the poor, the country's finance minister told Reuters on Thursday.

The Bolivian economy grew 3.2 percent in the first six months of this year, despite lower export income for natural gas, which is key to the Andean country's economy.

The International Monetary Fund says Bolivia is likely to post the highest growth in gross domestic product, in Latin America at 2.8 percent.

Finance Minister Luis Alberto Arce is even more optimistic. He expects GDP to grow 4 percent this year, largely because Morales has handed out money to the country's poor majority, which is boosting their spending.

"Our policy was to make the cake bigger for Bolivians with the nationalization policies, to increase state revenue. Our second policy was to divide the cake better in order to give more to those who have less," said Arce.

Arce said the subsidies are the "small engine of growth" that has allowed Bolivia's economy to grow despite lower export revenue caused by drops in demand and prices for natural gas.

Moody's Investors Service and Fitch Ratings upgraded Bolivia's credit ratings last month, citing the country's good macroeconomic performance.

But they noted that years of above-trend growth, the benefits of external debt forgiveness, limited foreign banking interests in the Andean nation and the absence of bad debts prevalent in developed markets helped Bolivia to avoid a direct fallout from the global crisis.

CASH FOR THE POOR
Morales, an Aymara Indian from a poor background who took office in 2006, has increased taxes on foreign investors and has nationalized energy, mining and telecommunications firms.

State revenue from the key natural gas sector boomed to $2.65 billion last year, from just over $1 billion in 2005, and revenue from the mining sector increased fourfold in the same period to $128.1 million.

The country's foreign reserves have rocketed to around $8.5 billion from $1.7 billion at the end of 2005.

Morales' government is spending some $320 million a year in grants to encourage parents to keep their children in school, in pensions for the elderly and in cash handouts to persuade pregnant women and mothers to go through health checks.

Earlier this year the government said that in 2008 nearly 2.4 million Bolivians received cash subsidies, roughly 25 percent of the country's population.

That is on top of the nearly $200 million donated by Morales' main Latin American ally, Venezuelan President Hugo Chavez, that Morales has spent in hundreds of small education, sports and health projects since 2006.

Although critics have said the government is giving subsidies to buy support from poor Bolivians, Arce says the stipends are a good way to redistribute wealth.

"These are policies to redistribute income ... tomorrow when the poor of today are no longer poor, of course we're going to have to stop giving this support," Arce said.

But the economist said that the government is likely to continue giving subsidies in the medium term because they stabilize the country.

"We can't stop ... because it's something that brings social stability. Social conflicts have decreased greatly with our government because we're solving the social problems that people have," Arce said.

Before Morales took office, three presidents in three years were forced to step down amid social unrest.

Peru's economic liars: A primer for those who need to get up to speed

It has been brought to my attention that certain higher-traffic bloggers and financial commentators who were plug-dumb enough to buy into the "economic miracle" bunkum and lies spread by Peru's government and central bank lackeys (ably helped along by the dumbasses in suits at the IMF and World Bank) and were silly enough to regurgitate official numbers to their innocent flocks of readers have recently discovered IKN and are beginning to wake up, smell coffee and recognize they've been hoodwinked*.

And thus for their benefit, your humble correspondent has thrown together this little primer on the lies spread by this most pathetic of governments. First let's take in the figures in question via this chart:

And now let's hear what we've been told all this time:

January 19th: "Minister Carranza acknowledged the strength that characterizes the Peruvian economy....with a projected growth rate in 2009 of at least 6%. "

March 8th: "The results obtained from the leading indicator studies estimate an increase (of GDP) of 4.5%, 3.0% and 3.9% for the months of January, February and March 2009, respectively." (Peru official INEI stats office)

April 16th: Commenting on the February 0.17% growth rate registered, Carranza said, "February has been atypical and has been a pothole...additionally the impulse from the finance sector will show in the second quarter of the year."

May 5 2009: ""We likely hit the bottom in the first quarter, and we should see a stronger recovery in the second quarter," he (Carranza) told Reuters."

It goes on and on, with each and all this time your humble correspondent laughing tragic laughs and explaining how much bullshit is being spread by these unclothed emperors. Then finally, after half a year had gone by, some of the dumbasses in suits who fell for this crap for month after month up in gringoworld started seeing reason.

August 3rd: ""The lack of recovery signs following the first half 2009 growth collapse has many increasingly skeptical of Peru's growth story," said Merrill Lynch in a report Monday. "

But it's not just Spongebob Carranza, either. Goes without saying that Twobreakfasts is BSsing (his only talent), but as another example Peru's foreign trade minister Martin Perez is quoted in Newsweek as late as July 30th as saying:

" As a result of these actions, during the first half of the year, Peru's economy grew 0.9 percent. Martin Perez, Peru's minister of foreign trade and tourism, told Bloomberg he expects GDP to grow between 2.5 percent and 3 percent this year.

"Exports have suffered around 15 percent but the stimulus package the government has passed is trying to bring forth internal demand," he was quoted as saying by the magazine."

Now we can argue the toss about Peru's final 2009 figure if you like (for the record, he's still aiming high), but there are not one but two factually proveable incorrect statements in that short passage. Firstly, Peru's economy grew 0.34% in the first half of 2009 according to govt figures (that are also BS and way high) and not Perez's 0.9%. Secondly Perez says "exports have suffered around 15%" which is a barefaced lie. Peru's exports dropped 29.66% in the period in question, nigh on double Perez's balderdash. Again, official numbers. And as I hear you asking "what difference does it make anyway, Otto", let me tell you; that 15% understatement makes for two point four billion dollars in exports, or around 2% of Peru's GDP.

These people are liars. Plain and simple, look at the evidence above. This is the country that has a foreign trade minister overestimating foreign trade by $2.4Bn in Newsweek and because it's Amerika's friend nobody bothers to fact check, nobody questions, the nodding donkeys nod their heads and the moving finger, having writ, moves on. Meanwhile, here follows one segment from a whole plethora of posts at IKN that nailed the real story months and months ago. March 16th:

But don't let that worry you, because Twobreakfasts says it's going to be 5% this year, and Carranza says 5% this year, and the Central Bank says 5% this year, and the IMF says 5% this year. I mean, why on earth should you listen to me and ignore all those utterly reliable and impartial sources?

Therefore, the latest story from Spongebob is that Peru's GDP will grow by 2.5% in 2009 and will see "important improvement" to 5% in 2010. Are you going to take him at his word this time? Fool me once, shame on you, fool me twice..............

Moral of this story: Be they your local mayor's office, your own country, Peru or LatAm or Asia or anywhere else you like, politicians do not tell the truth. However the mass hypnosis created by battering out the same "Peru miracle" story from all sources and feeding it to a compliant and brainless media means that the same lies and bullshit pervades into the financial commentaries of those with serious influence that are either 1) too stupid to work it out for themselves or 2) too lazy to bother checking the figures themselves before spreading the BS on. Yeah, that means you, "T"**.


*That was a mouthful of a paragraph, wasn't it?
**Before you mail and accuse me of bolshiness again note that I'm not naming you; my pathetic way of being nice, as I think you're saveable re LatAm.

Oh wow! English language media is starting to get the picture about Peru, too.

The WSJ (via DJNW) is running the story "Peru's Intergroup: No Signs Of Strong Economic Recovery" today and it starts like this:

LIMA (Dow Jones)--Peru's economic recovery will continue to be subdued, although a "mild" rebound is expected in the second half, Intergroup Financial Services Corp.'s (IFS.VL) chief financial officer said Wednesday.

"We are still not seeing strong signals of a recovery," said Jose Antonio Rosas in a conference call with analysts, adding that increased government spending will help boost growth.

Peru's gross domestic product rose close to 10% last year, while in the first five months of this year GDP has expanded by only 0.83%. CONTINUES HERE

For the record Intergroup is the holding company for Interbank, a pretty decent Peruvian high-street banking chain. So what this is is the start of a bit of reality, not much more. My eyes popped out on seeing the adjective "only" as regards Peru's GDP, cos it's the first time I've seen even a mildly derogatory comment about Peru's lop-sided, socially disgraceful "growth" in five years of MSM-watching. So suddenly the voice of English language mainstream media has changed from "Peru Economic Miracle" to "Peru flat for year", so what are they going to say when the next GDP figure comes out way, way negative?

The fruitfly analyses continue in other places however. RGEMonitor (the Roubini place full of the dumbasses in suits that you call economists) is still peddling the party line, as found in my inbox this morning:

A couple countries in Latin America have thus far been able to weather this crisis better than their neighbors. Brazil and Peru stand out for their relatively healthy fundamentals and financial systems. Both countries have benefitted from being relatively closed economies and from having diversified export markets and products.

This is BS. Brazil has an internal economy, but Peru is wholly dependent of the rest of the world and metals prices. The crap spouted by S&P last year wasn't confined to AAA ratings on US financial roadkills, as I still recall the day I guffawed non-stop about its call on the "surging internal economy of Peru" as it justified the worst ever 'investment grade' rating in the history of developing markets. Peru's single major export market is the gold that gets sent directly from Chicama and Yanacocha to vaults in Switzerland. Then comes copper to Asia and that's all she wrote, its about as diversified as the recipe for hotdogs. Not long now til the emperor is shown in his birthday suit and the arrogant know-alls at RGE eat their words, side order of crow. Short the Nuevo Sol.

Related Post: Will Spongebob Carranza resign in disgrace as Peru slips further into recession?

Peru: Will Spongebob Carranza resign in disgrace as Peru slips further into recession?

When the last set of Peru GDP figures hit in July, FinMin and Liar Spongebob quickly came out and said that the economy "had touched bottom" (samo samo he's used all year) and said that the first half of 2009 would finish around +1%.

So inquiring minds would like to know whether Carranza will finally admit his policies have been utterly ineffective and that his constant overestimating bullshit has led his country up the garden path if the latest Banco Continental forecast of a Peru GDP downturn of -2% to -2.4% in June (the official number is expected out mid August) is proven true. According to the report:

"The Economics Studies Service of BBVA Banco Continental projects a fall in June GDP of between 2% and 2.4% after the poor performance (figures) of the primary and manufacturing sectors."

Such a figure would put Peru's GDP at around -1% negative growth for the first half of the year, a mile away from Spongebob's +1% for the first half of the year, a million miles from his 3% yearly forecast (that was as high as 5% in March) and a quadsquillion miles away from the total demagogic piffle spouted by Twobreakfasts late last year when he forecast Peru's 2009 as +6.5% and that his country's economy was "armour plated" against the world financial woes.

While we're at it, that 5% GDP figure mentioned by Carranza in March found its way into this IKN post at the time. A humble blogger like me calling bear on Peru all year against the world's economic brains calling "Peru economic miracle", so let's see now........

"... Twobreakfasts says it's going to be 5% this year, and Carranza says 5% this year, and the Central Bank says 5% this year, and the IMF says 5% this year. I mean, why on earth should you listen to me and ignore all those utterly reliable and impartial sources?"

Nuff said. I am available for hire or autographs so Spongebob, feel free to mail me you dumbass. You were a random walk FinMin who got lucky and did nothing during your first stint at the job, then actually bought into the BS they wrote about you. Fact is you're a zero, a liar, an emperor with no clothes and a knownothing. Resign and put us out of our misery.

Bolivia leads South America

Scrawny, mouthy, opinionated people like your humble correspondent have been saying it for a while, but now the people that really matter are daring to say the unsayable:

Bolivia is the fastest growing country in the region.

Bolivia has a strong economy and low inflation

Bolivia is riding out the financial crisis better than any other regional state.

Yesterday the Bolivian Central Bank (BCB) published its half-year report. You can go look for yourself right here, but what you'll find is an economy that will grow by 4% this year (the first half of 2009 saw 2.1% growth acording to head honcho at the BCB, Gabriel Loza, mainly due to the productive sectors). Loza sez:

"The perspective is that growth in the Bolivian economy will continue, we are talking of rates around 4% and therefore Bolivia will not suffer a recession as in other regional countries."

Bolivia also has an economy with inflation reeled in to just 2.1% (again, thanks largely to wise economic policy) and international currency reserves at all-time highs. Not only that, but Bolivia's exchange rate has, in the words of Loza:

"...has avoided unnecessary exchange volatility. Our exchange rate, which is not fixed but a regimen of administered exchange, has shown a moderated, stable and non-volatile behaviour."

Yet again, this is why you never hear about the Bolivian economy in English language media. It's going far too well, y'see. And all this stability and strength has its roots in one, single policy decision from the government of Evo Morales: Nationalize hydrocarbons. And another smart thing that Evo has done is to leave the financial experts to run the finances and not stick his nose in, as the guy knows what he's good at and what he's not good at.

I'm evermore convinced that Evo scares the hell out of the blue-eyed whiteys more than Hugo could ever manage. He's not changing the rules but doing something far, far more dangerous and subversive: He's beating them at their own game.