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By Gregory Taggart, April 5, 2011 5:50 pm

Alexandre Tombini, president of Brazil’s central bank, said today that the country’s stock and credit markets weren’t up to financing all the projects planned for the country, including projects important to the 2014 World Cup and the 2016 Olympics. Those markets “don’t have the capacity, by themselves, to handle the demand for investment,” he said. “Other sources of funds will be necessary.” That other source will be a new market for corporate bonds announced today by Anbima, the Brazilian Association of Institutional Finance and Capital.

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By Gregory Taggart, April 4, 2011 12:08 pm

At least at Fitch, Brazil is no longer sitting at the bottom of the ratings. Today, the U.S. based rating agency, upped Brazil’s credit rating from BBB- to BBB in part, says the Brazilian business magazine EXAME, because the country “has signaled that it’s serious about improving its fiscal position,” signals that include spending cuts, a modest increase in the minimum wage, and a steady reduction in loans from Treasury to Brazil’s development bank BNDES.

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By Gregory Taggart, March 31, 2011 11:51 pm

The governor of the state of Rio de Janeiro (where the Cidade Maravilhosa is located) is in the U.S. Today he spoke at the United States Chamber of Commerce in Washington D.C. where, according to the Jornal do Brasil, he spoke of the huge amount of investment his state is attracting, claiming that more than $111 billion will be invested in the state of Rio over the next three years, some he says is more investment money per “square kilometer” than in any place in the world.

Sounds pretty good, right?

Well, then there’s that story at Reuters:

Indeed, scenes like this are supposed to become a thing of the past here. Brazil plans more than $1 trillion in construction projects this decade to bring its woeful airports, roads and other infrastructure up to date — an ambitious building boom that will prepare the country to host the 2014 World Cup and 2016 Olympics, provide a bonanza of opportunities for foreign investors, and secure Brazil’s place among the world’s most dynamic emerging economies.

That’s the dream, anyway.

In reality, expectations are coming unraveled — fast. Brazil’s grand infrastructure plans now seem likely to fall well short of President Dilma Rousseff’s ambitions, according to a Reuters investigation of major building projects and interviews with nearly two dozen senior political leaders, investors, government watchdog groups and others.

I’m a big fan of Brazil in general and Rio in particular. I hope the Governor is right, but that Reuter’s story is disturbing.

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By Gregory Taggart, March 27, 2011 2:22 pm

Due to malware problems, I didn’t post on the Fed’s most recent FOMC statement. Here it is. Nothing changed; that is, the federal funds target rate will remain in the 0 to 1/4 percent range, and the Fed will continue to purchase Treasuries pursuant to QEII. That said, there was this interesting snippet (emphasis mine):

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.

What they’re talking about here is the Phillips Curve, which says that with low inflation comes high unemployment. Conversely, higher inflation brings lower unemployment.

In the present case, the FOMC doesn’t think the upward pressure on inflation will be lasting; thus, the committee anticipates that the employment picture will improve, but only gradually. And, it appears, that improvement will will not come because of an increase in the federal funds target rate–not anytime soon anyway.

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By Gregory Taggart, March 26, 2011 5:04 pm

Ten former chairmen and chairwomen of the Council of Economic Advisors have joined in a statement that calls on Congress and the President to step up and get to work on the important task of cutting our monstrous deficit.

There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention.

You can read more here, but there is one thing missing from both their statement and the Bowles/Simpson report they refer to: What can Congress and the President do to regain the trust they’ll need to pull this trick out of a hat?

I’m all for deficit reduction. I’ll even sign on for tax increases. But I will not agree to those increases unless and until Congress and the President show me that they are serious about cutting spending and that they will use the tax increases to cut the deficit rather to spend.

I am not holding my breath.

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By Gregory Taggart, March 26, 2011 12:15 pm

Jason Mitchell has an interesting story in Institutional Investor about the role of private equity in Brazil’s resurgence. It caught my eye because I served a two-year mission for my church in Brazil many years ago and fell in love with the country. My wife and I returned for a visit in February 2008 and hope to return again soon. In fact, my mission president has invited us to serve with him and his wife in the Campinas Temple.

Whether we’ll be able depends on a lot of things happening. We’ll see.

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By Gregory Taggart, March 2, 2011 12:34 pm

Elites. Can’t help themselves. Mark Bittman is at it again. If the government gets something wrong–defined as, something Bittman doesn’t like–well give ’em another bite at the organically grown apple:

Agricultural subsidies have helped bring us high-fructose corn syrup, factory farming, fast food, a two-soda-a-day habit and its accompanying obesity, the near-demise of family farms, monoculture and a host of other ills.

Yet — like so many government programs — what subsidies need is not the ax, but reform that moves them forward. Imagine support designed to encourage a resurgence of small- and medium-size farms producing not corn syrup and animal-feed but food we can touch, see, buy and eat — like apples and carrots — while diminishing handouts to agribusiness and its political cronies.

I really don’t have time to Fisk the entire article, so here is one more clip, and I’m off:

Thus even House Speaker Boehner calls the bill a “slush fund”; the powerful Iowa Farm Bureau suggests that direct payments end; and Glenn Beck is on the bandwagon. (This last should make you suspicious.) Not surprisingly, many Tea Partiers happily accept subsidies, including Vicky Hartzler (R-MO, $775,000), Stephen Fincher (R-TN, $2.5 million) and Michele Bachmann (R-MN $250,000). No hypocrisy there.

Left and right can perhaps agree that these are payments we don’t need to make. But suppose we use this money to steer our agriculture — and our health — in the right direction. A Gallup poll indicates that most Americans oppose cutting aid to farmers, and presumably they’re not including David Rockefeller or Michele Bachmann in that protected group; we still think of farmers as stewards of the land, and the closer that sentiment is to reality the better off we’ll be.

By making the program more sensible the money could benefit us all.

Apparently playing to his audience, Bittman takes unrelated cheap shots at the usual right-wing suspects, appears to agree that farm subsidies are subsidies we should end, but then makes one final pitch–if we just make the program more sensible.

Yeah, like that will happen. As Bittman reported about New Deal farm programs a few paragaphs above the last quote,

That wasn’t the plan, of course. In the 1930s, prices were fixed on a variety of commodities, and some farmers were paid to reduce their crop yields. The program was supported by a tax on processors of food — now there’s a precedent! — and was intended to be temporary. It worked, sort of: prices rose and more farmers survived. But land became concentrated in the hands of fewer farmers, and agribusiness was born, and along with it the sad joke that the government paid farmers for not growing crops.

And this time it will be better because a new, smarter group of elites is in charge? Of course.

Bittman should take up selling the Brooklyn Bridge.

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By Gregory Taggart, March 1, 2011 9:23 pm

This story about Professor Clayton Christensen in Forbes magazine is impressive in no small part because the world-renown professor so effortlessly, so guilelessly shares the story of his battles with diabetes, a heart attack, cancer, and a stroke, aided by a great family and the strong conviction that God has and has had a plan for him.

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By Gregory Taggart, February 28, 2011 11:50 am

The New York post has a column today about the prescience of the late Daniel Patrick Moynihan, one of my favorite people.

According to writer Bob McManus, Moynihan saw the future of public unions, and it was not rosey.

“[NYU economics professor William J.] Baumol started out by asking himself why the costs of the performing arts always seemed to be rising” Moynihan wrote. “I remarked that if you want a Dixieland band for a campaign rally today, you will need the same [number of] players you would have needed at the beginning of the century. Productivity just hasn’t changed much.”

But per-player costs — salaries and benefits — had risen dramatically, and the price of that Dixieland band along with them.

So, too, the price of health care, the senator argued. An already labor-intensive industry was becoming even more so with each technological advance — driving per-patient productivity ever lower and overall costs inexorably higher.

The same, he said, is true of what he termed the “stagnant [public-sector] services” — including “education high and low, welfare, the arts, legal services, the police. This means that the [costs] of the public sector will continue to grow.”

Moynihan had an eye for what seems obvious today. And he was not shy about telling others what he saw, a trait that served him well–and impressed me–when he served as the U.S.’s ambassador to the United Nations.

My cousin, then an aide to Senator Alan Simpson, once arranged a tour of the Capitol for me. The highlight was when a door swung open as I walked by, revealing Senator Moynihan, bow tie and all, talking to someone behind what had been closed doors.

The Democrats–hell, the Republicans–could use someone like him right now.

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By Gregory Taggart, February 28, 2011 11:25 am

I’m a conservative who leans libertarian, and here’s what I think about taxes, entitlements, and deficits. It all comes down to trust, and Congress has lost mine. Consequently, I will not agree to any tax increase unless and until I see real movement on the budget front. By that I mean I want to see real cuts given the realities of the budget. In other words, I realize that defense and entitlements make up such a large proportion of the overall budget that there is no way we’re going to be able to get real deficit reduction without either making big cuts there or raising taxes or both.

Now I’m willing to cut entitlements, even social security–and I’m on the verge of retirement. I could probably find cuts in the Defense budget as well. And I’m agreeable to raising some taxes. However, I’m not willing to do any of this until Congress regains my trust. And it can only do that by getting serious about cutting what can be cut now. No more political gamesmanship. No more calling $80 billion in cuts “draconian.” No more quibbling about this jot and that tittle. Start cutting now and don’t stop until we’ve eliminated every unnecessary program, all wasteful expenditures, and each and every earmark.

Do that, and I’m willing to talk about tax increases and reduced entitlements. Don’t do that, and I’ll do what I can to see that you’re not re-elected.

It’s all about trust. And you don’t have mine.