Latin American Tremors: The 'Real ' Fears

Brazil's economic is in crisis on 4 fronts,

1. political uncertainty and corruption,
2. economic fundamentals being weak;
3. the depiction of the currency as an asset value loser and its fall,
4. and finally the sentiments of weakness in the economy which is self fulfilling.

Brazil's inflation rose  to decade high levels this week. With its currency in virtually a free fall,  it is a vicious cycle at play. The sentimental element is hitting price rises even more adversely. Efforts to tame inflation through the  interest rate will / has already affected towards contraction and recessionary tends. So there are all negatives on the economic front which is compounded by political agitations. From being a large economy, it is moving to vulnerable shocks.

Given the state of affairs, the wealthier locals will exit Brazil currency by the hordes  to hold assets in US Dollars. With the socio economic impact of an underemployed economy, fear will drive foreign investors away too. The locals would be among the first to exit the currency. After all the rioting calms, the Brazilians may try to rebuild. Until the, Brazil is in trouble.

There is  tumult and turmoil in the streets of Rio even as it is time for carnival. 

Wiythout any risk or rsponsibility.

Is Latin America the next crisis waiting to happen?

A million people marched in Brazil against the Government. The Real had already lost over 20  % this year against the dollar. Mexican Peso and Chilean Peso are also under pressure. With the strengthening of the dollar there is a strong exodus to that currency. Added to this, is the political storm in Brazil. It looks like a fall time this spring!

One can only see sell signs!

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