Brazil Erupting: Stagflation (Inflation UP/Growth DOWN)Submitted by goldenequity on Tue, 06/18/2013 - 23:30
I live in Rio de Janeiro
"For a long time we made fun of ourselves for being too apathetic, now the pride is returning to our hearts. Let's see whats going to happen." -- Submitted by Amick/DailyPaul
About 20 minutes ago in Rio (11pm EST)
Gov't protests started (supposedly) from a 20cent bus fare increase.
I'd have to say.... thhhaat doesn't seem to cover it.
It's the economy stupid...
1. Wages were increased (by decree) to (try) and keep up with inflation (oops!)
2. Costs of production (therefore) increased.. (making products less competitive/more expensive)
3. This curtailed GDP growth as markets found better prices elsewhere.
4. Their central bank responded by suppressing interest rates (oops!)
5. This spurred 'temporary' growth by consumers using CREDIT (oops!)
6. The consumers are (now) maxed out... with 'disposable' income at an all time low (after debt servicing).
7. Govt lowered taxes (to their credit)... but it never took hold (enough) to prevent (this) tipping point after 5 quarters of stagflation.
Like the US... it will work... until it doesn't.
I'm sure there's 'other' social issues involved as well.
but when you're broke...
and outta money...
it ignites everything else in your life.
The crowd slogan "NO PARTIES!" demonstrates their loathing of political ineptitude stifling Good Governance... whether that means
1. Provide BETTER for us, or
2. Get out of our way
remains to be seen.
Perhaps some Brazilians here can comment further.