1) For many years, the Brazilian economy was plagued by inflation, yet this is one of the richest countries in the World in terms of natural resources. This complex combination of inflation and wealth...

1) For many years, the Brazilian economy was plagued by inflation,

yet this is one of the richest countries in the World in terms of natural

resources. This complex combination of inflation and wealth of resources

coined the phrase “The Brazil Syndrome.”

In recent year’s the Brazilian economy has stabilized, and

Brazil has become one of the most influential economies in the World. It

is now a member of the BRICS Nations, along with

Russia, China, India and South Africa.

How did Brazil achieve this turnaround? What has been the

inflation rate in Brazil in recent years – until the past 24 months? What

is the inflation rate now?

This is the World’s 7th largest economy.

One measure of Brazil’s success it the appreciation of the Real

vs. the US Dollar in the past 10 years, until about two years ago.

However, Brazil’s Economy has run into some problems in the last

few years: 2013-2015.

There were some protests in 2013, re Government policies in Brazil

giving priority to the building of sports venues for the 2014 World Cup and the

2016 Olympics. In 2014, there are demonstrations re Government

involvement in the Petrobras’ corruption scandal

(Brazil’s largest oil company).

There were also demonstrations in Aug., 2015,

re the corruption and the economic slowdown.

On Aug. 20, 2014, the Reals value was:

$1.00 = 2.26 Real.

Now the value of the Real has declined to: $1.00 =

4.02. (Feb. 18, 2016)

You are welcome to comment about the improvement of the Brazilian

Real vs. the US Dollar over the past 10 years, as well as

the decline during the past two years.

What do you think about Brazil’s long term future? (Please note

the attached CNN Article.)

Will it return to its years of high inflation rates in the 1990’s

and prior years? Is this just a temporary “hiccup”?

Should US based companies continue to expand in Brazil?

.png” alt=”http://threadcontent.next.ecollege.com/Images/document.gif”> BRAZIL – ECON

DECLINING – FEB 19 – 2015 – CNN.docx

2) China through

foreign exchange controls has not allowed its citizens full opportunities

to invest in the stocks of foreign listed companies, incl. those companies

listed in foreign stock exchanges but operating in China.

Therefore, the savings and investments of most Chinese has flowed

into China’s real estate sector to the extent that now there is a “glut” of

finished or almost finished apartment buildings that are remaining as empty

shells.

This could be a major financial and economic disaster for China,

as the real estate sector represents 15% of China’s economy. China’s

economy grew 7.4% in 2014; this is the slowest in the past 24 years, where the

annual growth rate has been at least around 10%. The growth rate for 2015

is officially around 7%; however, it may be closer to 3% – 4%.

China’s economic growth is projected to be around 3% – 4%

this year (2016) and in the near future.

Now real estate prices have declined in 69 out of 70 cities

over the past year by an average of 5.1%.

This overbuilding is compounded by China’s shadow banking; whereby

the Chinese have used non-traditional lenders or “trusts” to channel their

funds to the real estate sector.

Kaisa Group Holdings (listed on the Hong Kong Stock Exchange) is

the first Chinese real estate developer to default on off-shore debt. It

could not make its Feb., 2015 interest payment of $128 Million – on $500

Million debt funded by foreign investors.

This may not only impact the Chinese banks and investors directly,

but also foreign lenders.

Your comments are welcome regarding the risks in China’s real

estate sector and China’s economy as a whole. How does impact the

economies of China’s major trading partners, the United States, Japan and the

European Union?

How does this economic slowdown impact companies like Apple, Ford

and YUM Brands (KFC, Pizza Hut, Taco Bell), that have consumer focused

businesses in China?

3) During 2015, Denmark, Sweden and Switzerland

implemented negative interest rates.

In Dec., 2015, the European Central Bank (ECB)

started charging commercial banks 0.3% to hold their cash overnight.

In Jan., 2016, the Bank of Japan (Japan’s

Central Bank) cut its rate to -0.1% on accounts that commercial banks hold, and

it stated that it would lower it further if needed. This is to devalue

the Yen, to increase exports and to stimulate economic growth.

What do you think about these actions? Do

you think they will work?

4) China devalued its

currency, the Yuan. During 2015 several times to a total amount of around

5%. China’s currency is not free floating; it is managed by the

Peoples Bank of China (PBOC).

Now, One US Dollar is worth 6.496 Yuan (Feb. 15, 2016).

There may be additional small devaluations of the Yuan, or one

time devaluation of 10% in 2016.

China is the World’s second largest economy, and it is

experiencing slow economic growth this year (around 3% – 4% GDP growth).

In the last 20 plus years, China’s GDP has grown mostly around 10% per

year.

Major reason cited for this devaluation are to stimulate China’s

exports and to grow the economy faster than 3% – 4% this year (2016).

What does this mean for the US and Eurozone Economies in

general? Economic slowdowns? Recessions?

How will this impact China’s exports to the US and the

Eurozone? How will this impact China’s imports from the US and the

Eurozone?